0001558370-22-017463 | 10-Q | XBRL Viewer

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Revenues - Narrative (Details) - Santen Pharmaceutical Co. Ltd. $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Exercise of option to expand the territories to include Russia
Disaggregation of Revenue [Line Items]
Upfront cash payment	$ 2.0
Developmental and regulatory cash milestone payments	1.0
Maximum
Disaggregation of Revenue [Line Items]
Developmental and regulatory cash milestone payments	1.0
License Agreement
Disaggregation of Revenue [Line Items]
Upfront cash payment	$ 15.5
Period of option to expand territories following amendment date	5 years

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accrued Liabilities
Accrued expenses and other liabilities	$ 6,392	$ 7,897
Accrued compensation	5,051	4,504
Accrued royalties	1,140	200
Deferred revenue	1,236	67
Accrued research and development	130	409
Total accrued liabilities	$ 13,949	$ 13,077

Share-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Share-Based Compensation (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Equity, Class of Treasury Stock [Line Items]
Share-based compensation expense	$ 758	$ 3,755	$ 3,176	$ 5,960
Unrecognized compensation expense	4,000		$ 4,000
Unrecognized compensation cost, recognition period			1 year 3 months 18 days
Share options to purchase ordinary shares
Equity, Class of Treasury Stock [Line Items]
Share-based compensation expense	238	341	$ 1,230	564
Performance stock units
Equity, Class of Treasury Stock [Line Items]
Share-based compensation expense		2,355		2,808
Restricted stock units
Equity, Class of Treasury Stock [Line Items]
Share-based compensation expense	452	1,015	1,791	2,507
Employee share purchase plan
Equity, Class of Treasury Stock [Line Items]
Share-based compensation expense	$ 68	$ 44	$ 155	$ 81

Revenues - Adjustment to gross product sales (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Gross product sales	$ 10,291	$ 2,355	$ 24,856	$ 4,611
Revenues	10,022	2,196	39,914	14,641
Chargebacks
Disaggregation of Revenue [Line Items]
Adjustments to gross products sales	(2)	(1)	(5)	(2)
Discounts and allowances
Disaggregation of Revenue [Line Items]
Adjustments to gross products sales	(267)	(158)	(437)	(158)
Net product sales
Disaggregation of Revenue [Line Items]
Revenues	$ 10,022	$ 2,196	$ 24,414	$ 4,451

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

Financing Arrangements - Maturities of long-term debt and financing obligations (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Long-term Debt, Fiscal Year Maturity [Abstract]
Remainder of 2022	$ 0
2023	0
2024	15,000
2025	15,000
2026	45,000
Total future minimum payments	75,000
Less: current portion of debt principal	0	$ (2,409)
Non-current portion of debt principal	$ 75,000

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Accounts Receivable and Other Receivables (Tables)

9 Months Ended

Sep. 30, 2022

Accounts Receivable and Other Receivables

Schedule of components of accounts receivable and other receivables

The following table presents the components of accounts receivable and other receivables (in thousands):


	September 30,		December 31,
	2022		2021
Trade accounts receivable	$	1,368	$	—
Other receivables		1,912		2,133
Total accounts receivable and other receivables	$	3,280	$	2,133

Discontinued Operations - Gain on Sale (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash proceeds		$ 110,845
Gain on sale, pre-tax	$ 4,373	4,373
Legacy Products And Manufacturing Facility [Member] \| Discontinued Operations, Held-for-sale or Disposed of by Sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash proceeds	111,848	111,848
Less: transaction costs	(6,335)	(6,335)
Less: net assets transferred	(101,140)	(101,140)
Gain on sale, pre-tax	$ 4,373	$ 4,373

Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Unaudited Condensed Consolidated Balance Sheets
Fair value long-term debt	$ 75,000	$ 55,000
Ordinary shares, nominal value (in dollars per share)	$ 0.01	$ 0.01
Ordinary shares, number of shares authorized	400,000,000	400,000,000
Ordinary shares, number of shares issued	99,151,706	83,297,567
Ordinary shares, number of shares outstanding	99,151,706	83,297,567
Preferred shares, nominal value (in dollars per share)	$ 0.01	$ 0.01
Preferred shares, number of shares authorized	40,000,000	40,000,000
Preferred shares, number of shares issued	0	0
Preferred shares, number of shares outstanding	0	0
Euro deferred shares, nominal value (in euros per share)	$ 1.00	$ 1.00
Euro deferred shares, number of shares authorized	25,000	25,000
Euro deferred shares, number of shares issued	0	0
Euro deferred shares, number of shares outstanding	0	0

Shareholders' Equity

9 Months Ended

Sep. 30, 2022

Stockholders' Equity

Shareholders' Equity

Note 15. Shareholders' Equity

As a condition to the effectiveness of the Amendment (see Note 8), on August 4, 2022 the Company entered into a series of share subscription agreements (collectively, the “Share Subscription Agreements”) with Athyrium Opportunities IV Co-Invest 2 LP (“Athyrium”), Avista Healthcare Partners, L.P. (“Avista”), Brian Markison, Chief Executive Officer, and James Schaub, Executive Vice President and Chief Operating Officer, (together, the “Equity Purchasers”) pursuant to

which the Company sold and issued to the Equity Purchasers, in a private placement (the “Private Placement”), an aggregate of 15,451,612 ordinary shares of the Company, nominal value $0.01 per share (the “Ordinary Shares”), at a purchase price of $1.55 per Ordinary Share, the closing market trading price on August 4, 2022.

Pursuant to the Share Subscription Agreements, the closing of the Private Placement occurred on August 8, 2022. The Company issued and allotted (i) 6,451,612 Ordinary Shares to Athyrium; (ii) 8,000,000 Ordinary Shares to Avista; (iii) 850,000 Ordinary Shares to Brian Markison; and (iv) 150,000 Ordinary Shares to James Schaub, for aggregate gross proceeds to the Company of $23.9 million, before deducting offering expenses of $0.3 million. Proceeds from the Private Placement were used for working capital and general corporate purposes. The Share Subscription Agreements also provide the Equity Purchasers with certain registration rights. The Ordinary Shares underlying the Share Subscription Agreements were registered on the Company’s Registration Statement on Form S-3 (File No. 333-266984), filed with the SEC on August 19, 2022 and declared effective on August 26, 2022.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
Discontinued Operations (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Aug. 27, 2021
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Gain on sales of discontinued operations	$ 4,373		$ 4,373
Income from discontinued operations, net of tax	8,488		17,975
Legacy Products And Manufacturing Facility [Member] \| Discontinued Operations, Held-for-sale or Disposed of by Sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration				$ 111,000
Additional milestone payments				$ 60,000
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenues	15,551		61,785
Cost of goods sold (inclusive of depreciation and amortization)	4,973		30,018
Selling, general and administrative expenses	740		4,209
Research and development expenses	3,189		5,882
Income from operations	6,649		21,676
Interest expense and amortization of debt discount	1,495		6,399
Other non-operating expense, net	1,171		1,058
Income from discontinued operations before gain on disposal and provision for income taxes	3,983		14,219
Income tax (benefit) expense	(132)		617
Income from discontinued operations before gain on disposal	4,115		13,602
Gain on sales of discontinued operations	4,373		4,373
Income from discontinued operations, net of tax	$ 8,488		$ 17,975
Alora Pharmaceuticals, Llc \| Discontinued Operations, Held-for-sale or Disposed of by Sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contingent milestone payments earned		$ 5,000

Earnings (Loss) Per Ordinary Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings (Loss) Per Ordinary Share

Schedule of potentially dilutive securities excluded from computation of diluted weighted average shares


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Performance and restricted stock units	1,046,315	1,456,910	1,046,315	1,456,910
Share options to purchase ordinary shares	4,770,808	2,650,946	4,770,808	2,650,946
Warrants to purchase ordinary shares	16,100,000	—	16,100,000	—
Ordinary shares to be purchased through employee stock purchase plan	271,571	79,919	271,571	79,919

Financial Instruments and Fair Value Measurements -Schedule of financial liabilities subject to Level 3 fair value measurements on a recurring basis (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Fair Value Adjustment of Warrants, Fair Value Adjustment Of Debt
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Liability, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration]	Other Comprehensive Income (Loss), Financial Liability, Fair Value Option, after Tax and Reclassification Adjustment, Attributable to Parent
Recurring
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Nonfinancial liabilities		$ 0
Senior secured notes
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, At December 31, 2021	$ (43,800)
Principal issuance of second tranche notes (Note 8)	(20,000)
Cash payments for interest	4,843
Fair value adjustments through earnings (inclusive of related accrued interest expense)	4,757
Fair value adjustments through accumulated other comprehensive income or loss	(1,700)
Balance, At September 30, 2022	(55,900)
Warrants
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, At December 31, 2021	(3,220)
Fair value adjustments through earnings (inclusive of related accrued interest expense)	(5,706)
Balance, At September 30, 2022	$ (8,926)

Earnings (Loss) Per Ordinary Share

9 Months Ended

Sep. 30, 2022

Earnings (Loss) Per Ordinary Share

Earnings (Loss) Per Ordinary Share

Note 10. Earnings (Loss) Per Ordinary Share

The following potentially dilutive securities have been excluded from the weighted average ordinary shares outstanding in the computation of diluted earnings (loss) per share because the impact of including them would have been anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Performance and restricted stock units	1,046,315	1,456,910	1,046,315	1,456,910
Share options to purchase ordinary shares	4,770,808	2,650,946	4,770,808	2,650,946
Warrants to purchase ordinary shares	16,100,000	—	16,100,000	—
Ordinary shares to be purchased through employee stock purchase plan	271,571	79,919	271,571	79,919

Organization and Nature of Operations

9 Months Ended

Sep. 30, 2022

Organization and Nature of Operations

Organization and Nature of Operations

Note 1. Organization and Nature of Operations

RVL Pharmaceuticals plc, an Irish public limited company, together with its subsidiaries (the “Company”), is a specialty pharmaceutical company focused on the development and commercialization of products that target markets with underserved patient populations. In July 2020, the Company received regulatory approval from the FDA for RVL-1201, or Upneeq, (oxymetazoline hydrochloride ophthalmic solution), 0.1%, for the treatment of acquired blepharoptosis, or droopy or low-lying eyelids in adults. Upneeq was commercially launched in September 2020 to a limited number of eye care professionals with commercial operations expanded in 2021 among ophthalmology, optometry and oculoplastic specialties. In February 2022, Upneeq was commercially expanded into the medical aesthetics market.

On August 27, 2021, the Company closed the divestiture of its portfolio of branded and non-promoted products and its Marietta, Georgia, manufacturing facility (the “Legacy Business”) to certain affiliates of Alora Pharmaceuticals (“Alora”) for $111 million in cash upon closing, subject to certain adjustments, and up to $60 million in additional contingent milestone payments. Pursuant to the agreement the Company retained the rights to Upneeq and to arbaclofen extended release (“ER”) tablets which is under development for the treatment of spasticity in multiple sclerosis.

With the divestiture of the Legacy Business the Company’s commercial operations are conducted by its wholly-owned subsidiaries, RVL Pharmaceuticals, Inc. (“RVL Pharmaceuticals”) and RVL Pharmacy, LLC, (“RVL Pharmacy”). RVL Pharmacy operates pharmacy operations dedicated to the processing and fulfillment of prescriptions for Upneeq.

Unless otherwise indicated or required by the context, references throughout to “RVL,” or the “Company,” refer to the Company’s continuing operations following the sale of the Legacy Business to Alora.

Share-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Compensation.

Share-Based Compensation

Note 9. Share-Based Compensation

The following table presents the components of share-based compensation expense (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Share options	$	238	$	341	$	1,230	$	564
Performance stock units		—		2,355		—		2,808
Restricted stock units		452		1,015		1,791		2,507
Employee share purchase plan		68		44		155		81
Total share-based compensation expense	$	758	$	3,755	$	3,176	$	5,960

At September 30, 2022, aggregate unrecognized share compensation expense related to unvested awards was $4.0 million which is expected to be recognized over a weighted-average remaining service period of 1.3 years.

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2022

Legacy Products And Manufacturing Facility [Member] | Discontinued Operations, Held-for-sale or Disposed of by Sale [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of results of operations and carrying amounts of assets and liabilities of discontinued operations

The following table presents the components of the gain on the sale of the Legacy Business as recognized upon closing (in thousands):


	Three and Nine Months Ended
	September 30, 2021
Cash proceeds	$	111,848
Less: transaction costs		(6,335)
Less: net assets transferred		(101,140)
Gain on sale, pre-tax	$	4,373

The following table presents the results of discontinued operations (in thousands):


	Three Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2021
Total revenues	$	15,551	$	61,785
Cost of goods sold (inclusive of depreciation and amortization)		4,973		30,018
Selling, general and administrative expenses		740		4,209
Research and development expenses		3,189		5,882
Income from operations		6,649		21,676
Interest expense and amortization of debt discount		1,495		6,399
Other non-operating expense, net		1,171		1,058
Income from discontinued operations before gain on disposal and provision for income taxes		3,983		14,219
Income tax (benefit) expense		(132)		617
Income from discontinued operations before gain on disposal		4,115		13,602
Gain on sales of discontinued operations		4,373		4,373
Income from discontinued operations, net of tax	$	8,488	$	17,975

The following table presents the significant non-cash items and purchases of property, plant and equipment for the discontinued operations that are included in the accompanying unaudited condensed consolidated statements of cash flows (in thousands):


	Nine Months Ended
Cash flows from operating activities:	September 30, 2021
Depreciation and amortization	$	6,583
Share compensation		619

Cash flows from investing activities:
Purchases of property, plant and equipment	$	(1,335)

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

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+ Details

Financing Arrangements (Tables)

9 Months Ended

Sep. 30, 2022

Financing Arrangements

Schedule of Composition of Company's Debt and Financing Obligations

The following table presents the components of long-term debt and financing obligations (in thousands):


	September 30,		December 31,
	2022		2021
Senior Secured Notes (measured at fair value)	$	55,900	$	43,800
Note payable — insurance financing		—		2,409
Total debt and financing obligations		55,900		46,209
Less: current portion of debt		—		(2,409)
Long-term debt	$	55,900	$	43,800

Schedule of Maturities of Long-Term Debt

The following table presents the aggregation of principal maturities of long-term debt and financing obligations (in thousands):



Year Ending December 31,	Debt Obligations
Remainder of 2022	$	—
2023		—
2024		15,000
2025		15,000
2026		45,000
Total future minimum payments		75,000
Less: current portion of debt principal		—
Non-current portion of debt principal	$	75,000

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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+ Details

Financing Arrangements (Details) - USD ($)				1 Months Ended	3 Months Ended			6 Months Ended	9 Months Ended		12 Months Ended
Financing Arrangements (Details) - USD ($)	Aug. 08, 2022	Aug. 27, 2021	Jun. 25, 2021	Aug. 31, 2022	Dec. 31, 2022	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Oct. 01, 2022	Aug. 04, 2022	Oct. 12, 2021
Financing Arrangements
Financial Commitment Asset											$ 3,063,000
Net proceeds									$ 23,655,000
Write off of deferred financing and loan origination fees							$ 1,400,000			$ 1,387,000
Debt repayment										$ 191,360,000
Total debt and financing obligations						$ 75,000,000			75,000,000
Quarter ending June 30, 2024 and thereafter \| Upneeq
Financing Arrangements
Minimum Quarterly Revenue Threshold Limit									12,000,000.0
Alora Pharmaceuticals, Llc \| Disposal Group, Not Discontinued Operations [Member]
Financing Arrangements
Waiver of principal									5,000,000.0
Consent fee									200,000
Net proceeds									4,800,000
Senior Secured Notes Under Note Purchase Agreement [Member]
Financing Arrangements
Face amount of debt				$ 43,900,000
Minimum Restricted Cash and Cash Equivalent to be Maintained						15,000,000.0			15,000,000.0
Debt issuance costs											2,100,000
Exit fee (as a percent)	2.00%
Debt Instrument periodic payment principal percent	5.00%
Senior Secured Notes Under Note Purchase Agreement [Member] \| Subsequent Events
Financing Arrangements
Interest rate												12.00%
Senior Secured Notes Under Note Purchase Agreement [Member] \| Upneeq
Financing Arrangements
Quarterly Increment in Revenue									$ 1,000,000.0
Senior Secured Notes Under Note Purchase Agreement [Member] \| Quarter ending September 30, 2022
Financing Arrangements
Minimum Quarterly Revenue Threshold Limit					$ 6,000,000.0
Senior Secured Notes Under Note Purchase Agreement [Member] \| SOFR floor
Financing Arrangements
Margin rate, as a percent	1.50%
Senior Secured Notes Under Note Purchase Agreement, Tranche One [Member]
Financing Arrangements
Face amount of debt														$ 55,000,000.0
Interest rate	9.00%
Debt issuance costs											1,500,000
Senior Secured Notes Under Note Purchase Agreement, Tranche One [Member] \| SOFR cap
Financing Arrangements
Margin rate, as a percent	3.00%
Senior Secured Notes Under Note Purchase Agreement, Tranche Two [Member]
Financing Arrangements
Face amount of debt	$ 20,000,000.0			20,000,000.0
Debt issuance costs											600,000
Financial Commitment Asset, Amortization Period									1 year
Financial Commitment Asset, Amortization Expense						1,100,000			$ 3,100,000
Financial Commitment Asset						$ 0			$ 0		$ 3,100,000
Senior Secured Notes Under Note Purchase Agreement, Tranche Two [Member] \| Selling, general and administrative expenses
Financing Arrangements
Write off of deferred financing and loan origination fees				$ 900,000
Senior Secured Notes Under Note Purchase Agreement, Tranche Three [Member]
Financing Arrangements
Face amount of debt													$ 25,000,000.0
Prior term loans
Financing Arrangements
Face amount of debt														327,500,000
Amount outstanding														$ 50,000,000.0
Debt repayment		$ 186,100,000						$ 5,300,000
Debt Instrument, Termination Upon Signing Of Fifth Amendment, Percentage			50.00%
Debt Instrument, Termination Upon Legacy Business Divestiture, Percentage			50.00%
Total debt and financing obligations			$ 30,000,000.0

Customer Concentration (Details) - Net product sales - Gross Sales - Product Concentration Risk [Member] - customer	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Concentrations and Credit Risk
Number of customers	1	1
Concentration risk (as a percent)	16.00%	8.00%

Commitments and Contingencies - Legal (Details) - USD ($) $ in Thousands		1 Months Ended	9 Months Ended
	Dec. 02, 2020	Jan. 31, 2021	Sep. 30, 2021
Commitments and Contingencies
Proceeds from product rights disposal	$ 7,500		$ 7,300
Gain on sales of product rights, net		$ 5,600	$ 5,636

Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Indefinite-lived Intangible Assets [Line Items]
Impairment of intangible assets			$ 7,880
In-Process Research and Development project
Indefinite-lived Intangible Assets [Line Items]
Carrying value	$ 64,000	$ 64,000		$ 64,000
Aggregate impairment losses	36,800	36,800		36,800
Net carrying amounts	27,200	27,200		$ 27,200
Impairment of intangible assets	$ 0	$ 0	$ 7,900

Organization and Nature of Operations (Details) - Legacy Products And Manufacturing Facility [Member] - Discontinued Operations, Held-for-sale or Disposed of by Sale [Member] $ in Millions	Aug. 27, 2021 USD ($)
Stock transactions
Consideration	$ 111
Additional milestone payments	$ 60

Accounts Receivable and Other Receivables (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accounts Receivable and Other Receivables
Trade accounts receivable	$ 1,368
Other receivables	1,912	$ 2,133
Total accounts receivable and other receivables	$ 3,280	$ 2,133

Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Revenues (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total revenues	$ 10,022	$ 2,196	$ 39,914	$ 14,641
Contract with customer, asset and liability
Deferred revenue	1,200		1,200
Contract assets	0		0		$ 0
Upneeq
Disaggregation of Revenue [Line Items]
Total revenues	$ 10,022	$ 2,196	24,414	4,451
Royalty Revenue
Disaggregation of Revenue [Line Items]
Total revenues				190
License and contract revenue
Disaggregation of Revenue [Line Items]
Total revenues			$ 15,500	$ 10,000

- Definition

+ References

+ Details

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and under the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. In management’s opinion, the interim financial data presented herein includes all adjustments (consisting solely of normal, recurring adjustments) that are necessary for a fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by U.S. GAAP has been condensed or omitted in accordance with rules and regulations of the SEC. The operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2022 or any period thereafter. The accompanying condensed consolidated balance sheet data as of December 31, 2021 was derived from the audited consolidated financial statements.

Management believes that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Those audited consolidated financial statements include a summary of our significant accounting policies, updates to which are included in this Note 2.

Discontinued Operations

Discontinued Operations—Upon divestiture of a business, the Company classifies such business as a discontinued operation, if the divested business represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. The results of businesses that have qualified as discontinued operations have been presented as such for all reporting periods. Results of discontinued operations include all revenues and expenses directly derived from such businesses; general corporate overhead is not allocated to discontinued operations.

The divestiture of the Legacy Business qualifies as a discontinued operation and therefore has been presented as such. See Note 4, Discontinued Operations, for more information.

Use of Estimates

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported throughout the financial statements. Actual results could differ materially from those estimates.

Supplemental Cash Flow Disclosures

Supplemental Cash Flow Disclosures—Supplemental cash flow disclosures are as follows (in thousands):


	Nine Months Ended September 30,
	2022		2021
Cash paid for:
Interest	$	4,874	$	7,166
Income taxes	$	153	$	2,060

The Company received $3.1 million in tax refunds during the nine months ended September 30, 2022 related to income taxes paid in prior periods.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In August 2020, the FASB issued Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This standard simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The standard requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. The standard, which allows entities to adopt the guidance through either a modified or fully retrospective method of transition, becomes effective for the Company, as a smaller reporting company, for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently assessing the impact of adoption of ASU 2020-06.

There are no other recently issued accounting standards that are expected to have a material impact to the Company’s financial position or results of operations upon adoption.

Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Accrued Liabilities

Schedule of accrued liabilities

The following table presents the components of accrued liabilities (in thousands):


	September 30,		December 31,
	2022		2021
Accrued expenses and other liabilities	$	6,392	$	7,897
Accrued compensation		5,051		4,504
Accrued royalties		1,140		200
Deferred revenue		1,236		67
Accrued research and development		130		409
Total accrued liabilities	$	13,949	$	13,077

Financial Instruments and Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Financial Instruments and Fair Value Measurements

Financial Instruments and Fair Value Measurements

Note 14. Financial Instruments and Fair Value Measurements

The Company’s financial instruments subject to fair value measurements include cash and cash equivalents, accounts receivable and other receivables, trade accounts payable, accrued liabilities, long-term debt and warrant liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial Assets— Cash and cash equivalents, generally consisting of investments in interest-bearing money market accounts, are measured at fair value on a recurring basis using Level 1 measurements. Fair value inputs for these investments are considered Level 1 measurements within the fair value hierarchy because money market account fair values are known and observable through daily published floating net asset values. The fair value of the Company’s cash and cash equivalents, being the same as their carrying value, were $59.8 million and $40.4 million at September 30, 2022 and December 31, 2021, respectively.

Financial Liabilities— The Senior Secured Notes, a material component of long-term debt (see Note 8), and our warrant liabilities, a material component of total liabilities have each been measured and carried at fair value since their issuance in October 2021. Such instruments represent financial liabilities whose measurement contains significant unobservable inputs, which management considers to be Level 3 measurements under the fair value hierarchy.

The Company uses a discounted cash flow technique, an income-based approach, to determine the fair value of the Senior Secured Notes. This technique relies upon an assumption of pricing the Senior Secured Notes to their maturity (without mandatory or voluntary prepayments) and incorporates inputs such as contractual repayment terms, maturity, and discount rate. The most significant unobservable input for the Senior Secured Notes is the discount rate which is estimated by performing a yield analysis that relies upon the discount rate observed in the initial issuance of the Senior Secured Notes as well as certain benchmark debt instruments with observable pricing from which conclusions are drawn on the change in the discount rate from period to period.

The Company uses the Black-Scholes Merton option-pricing model to value the warrants. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, and volatility. The most significant unobservable input for the warrant liabilities is volatility. Given the limited trading volume and period of time the Company’s stock has been traded in an active market, the expected volatility is estimated by taking the average historical price volatility for industry peers, consisting of several public companies in the Company’s industry that are similar in size, stage, or financial leverage, over a period of time commensurate to the expected term of the warrants.

The following tables show financial liabilities subject to fair value measurement on a recurring basis and related information on fair values, valuation techniques and unobservable inputs (dollars in thousands):


		At September 30, 2022

Financial Instrument	Fair Value		Valuation Technique	Unobservable Inputs
Senior Secured Notes	$	(55,900)	Income Approach - DCF	Discount rate	23.5	%
				Term (in years)	4.0

Warrants	$	(8,926)	Black-Scholes Merton	Equity volatility	57.5	%
				Term (in years)	2.5


		At December 31, 2021

Financial Instrument	Fair Value		Valuation Technique	Unobservable Inputs
Senior Secured Notes	$	(43,800)	Income Approach - DCF	Discount rate	17.9	%
				Term (in years)	4.8

Warrants	$	(3,220)	Black-Scholes Merton	Equity volatility	65.0	%
				Term (in years)	3.3

The following table shows changes in the fair value of financial liabilities subject to Level 3 fair value measurements on a recurring basis (in thousands):


		Senior Secured Notes		Warrants
Balance, At December 31, 2021	$	(43,800)	$	(3,220)
Principal issuance of second tranche notes (Note 8)		(20,000)		-
Cash payments for interest		4,843		-
Fair value adjustments through earnings (inclusive of related accrued interest expense)		4,757		(5,706)
Fair value adjustments through accumulated other comprehensive income or loss		(1,700)		-
Balance, At September 30, 2022	$	(55,900)	$	(8,926)

Changes in the fair value of debt that is accounted for at fair value, inclusive of related accrued interest expense, are presented as gains or losses in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss under change in fair value of debt and interest expense. The portion of total changes in fair value of debt attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income or loss in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

No financial liabilities were subject to fair value measurements on a recurring basis prior to October 2021.

Assets and Liabilities for Which Fair Value is Only Disclosed

The carrying amounts for accounts receivable and other receivables, trade accounts payable, accrued liabilities and the residual amounts of long-term debt not otherwise measured at fair value on a recurring basis approximate their relative fair values due to their short-term nature with relevant inputs considered Level 2 measurements within the fair value hierarchy.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Accounts Receivable and Other Receivables

9 Months Ended

Sep. 30, 2022

Accounts Receivable and Other Receivables

Accounts Receivable and Other Receivables

Note 6. Accounts Receivable and Other Receivables

Accounts receivable result primarily from sales of Upneeq and from amounts due under revenue sharing, license and royalty arrangements. Other receivables result primarily from payroll retention credits and other miscellaneous activities.

The following table presents the components of accounts receivable and other receivables (in thousands):


	September 30,		December 31,
	2022		2021
Trade accounts receivable	$	1,368	$	—
Other receivables		1,912		2,133
Total accounts receivable and other receivables	$	3,280	$	2,133

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2022

Income Taxes

Schedule of Income Tax Expense

The following table presents the relationship between income tax expense or benefit from continuing operations and income or loss before income taxes from continuing operations (dollars in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Loss before income taxes, continuing operations	$	(14,383)		$	(26,023)		$	(33,108)		$	(62,758)
Income tax expense, continuing operations		63			324			265			415
Effective income tax rate		(0.44)	%		(1.25)	%		(0.80)	%		(0.66)	%

Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events.

Subsequent Events

Note 18. Subsequent Events

OPEN

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies

Schedule of supplemental cash flow disclosures

Supplemental cash flow disclosures are as follows (in thousands):


	Nine Months Ended September 30,
	2022		2021
Cash paid for:
Interest	$	4,874	$	7,166
Income taxes	$	153	$	2,060

Financial Instruments and Fair Value Measurements - Schedule of valuation techniques and unobservable inputs (Details)	Sep. 30, 2022 $ / shares	Dec. 31, 2021 $ / shares
Income Approach - DCF
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	(55,900)	(43,800)
Income Approach - DCF \| Term (in years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable Inputs	4.0	4.8
Income Approach - DCF \| Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable Inputs	23.5	17.9
Black-Scholes Merton
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	(8,926)	(3,220)
Black-Scholes Merton \| Term (in years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable Inputs	2.5	3.3
Black-Scholes Merton \| Equity volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable Inputs	57.5	65.0

Financial Instruments and Fair Value Measurements (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Financial Instruments and Fair Value Measurements
Fair value of cash and cash equivalents	$ 59.8	$ 40.4

Indefinite-Lived Intangible Assets

9 Months Ended

Sep. 30, 2022

Indefinite-Lived Intangible Assets

Indefinite-Lived Intangible Assets

Note 17. Indefinite-Lived Intangible Assets

Subsequent to the divestiture of the Legacy Business in 2021, the Company retained the rights to arbaclofen ER tablets (see Note 1) which is under development for the alleviation of signs and symptoms of spasticity resulting from multiple sclerosis for which the Company has completed Phase III clinical trials and for which the Company is exploring opportunities to divest, out-license or otherwise partner with a third party to monetize its net investment (see Note 3).

At September 30, 2022 and December 31, 2021, the Company held indefinite-lived intangible assets for the right to develop and sell arbaclofen ER that had a gross carrying value of $64.0 million, aggregate impairment losses of $36.8 million and a net carrying amount of $27.2 million.

Based on the results of quantitative impairment assessments performed relative to arbaclofen ER, an In-Process Research and Development project-based intangible asset, the Company recognized an impairment charge of $7.9 million in the nine months ended September 30, 2021, related to delays in anticipated commercialization of the product candidate, if approved. No such impairments were recognized in the three or nine months ended September 30, 2022.

Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes

Income Taxes

Note 13. Income Taxes


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Loss before income taxes, continuing operations	$	(14,383)		$	(26,023)		$	(33,108)		$	(62,758)
Income tax expense, continuing operations		63			324			265			415
Effective income tax rate		(0.44)	%		(1.25)	%		(0.80)	%		(0.66)	%

Income tax expense or benefit in the quarterly periods is based upon the estimated income or loss for the full year. The composition of the income or loss in different jurisdictions and adjustments, if any, in the applicable quarterly periods influences the periodic expense or benefit.

The relationship between pre-tax income or loss and income tax expense or benefit is greatly affected by the impact of losses for which management cannot claim a tax benefit, non-deductible expenses, and other items that increase tax expense without a relationship to income, such as withholding taxes and changes with respect to uncertain tax positions. The change in the effective income tax rate for the three and nine months ended September 30, 2022 when compared to the three and nine months ended September 30, 2021, is primarily related to our recognition of individually minor net tax expenses during the respective periods.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 2
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-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
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-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Earnings (Loss) Per Ordinary Share (Details) - shares	3 Months Ended		9 Months Ended
Earnings (Loss) Per Ordinary Share (Details) - shares	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Performance and restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities	1,046,315	1,456,910	1,046,315	1,456,910
Share options to purchase ordinary shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities	4,770,808	2,650,946	4,770,808	2,650,946
Warrants to purchase ordinary shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities	16,100,000		16,100,000
Ordinary shares to be purchased through employee stock purchase plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities	271,571	79,919	271,571	79,919

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 59,752	$ 40,444
Accounts receivable and other receivables	3,280	2,133
Inventories, net	621	838
Prepaid expenses and other current assets	7,261	12,901
Financial commitment asset		3,063
Total current assets	70,914	59,379
Property, plant and equipment, net	676	866
Operating lease assets	708	1,368
Indefinite-lived intangible assets	27,210	27,210
Goodwill	55,847	55,847
Total assets	155,355	144,670
Current liabilities:
Trade accounts payable	7,003	3,777
Accrued liabilities	13,949	13,077
Current portion of debt	0	2,409
Current portion of obligations under finance leases	10	5
Current portion of lease liability	510	839
Income taxes payable - current portion	12	1
Total current liabilities	21,484	20,108
Long-term debt (measured at fair value and representing $75,000 and $55,000 of aggregate unpaid principal at September 30, 2022 and December 31, 2021, respectively)	55,900	43,800
Warrant liability	8,926	3,220
Long-term portion of obligations under finance leases	20
Long-term portion of lease liability	220	592
Income taxes payable - long term portion	70	66
Deferred taxes	189	151
Total liabilities	86,809	67,937
Commitments and contingencies (see Note 12)
Shareholders' equity:
Ordinary shares ($0.01 nominal value, 400,000,000 shares authorized, 99,151,706 and 83,297,567 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	992	833
Preferred shares ($0.01 nominal value, 40,000,000 shares authorized, no shares issued and outstanding)	0	0
Euro deferred shares (€1.00 nominal value, 25,000 shares authorized, no shares issued and outstanding)	0	0
Additional paid in capital	618,457	591,730
Accumulated deficit	(550,903)	(517,530)
Accumulated other comprehensive income		1,700
Total shareholders' equity	68,546	76,733
Total liabilities and shareholders' equity	$ 155,355	$ 144,670

Financing Arrangements

9 Months Ended

Sep. 30, 2022

Financing Arrangements

Financing Arrangements

Note 8. Financing Arrangements

The following table presents the components of long-term debt and financing obligations (in thousands):


	September 30,		December 31,
	2022		2021
Senior Secured Notes (measured at fair value)	$	55,900	$	43,800
Note payable — insurance financing		—		2,409
Total debt and financing obligations		55,900		46,209
Less: current portion of debt		—		(2,409)
Long-term debt	$	55,900	$	43,800

The following table presents the aggregation of principal maturities of long-term debt and financing obligations (in thousands):



Year Ending December 31,	Debt Obligations
Remainder of 2022	$	—
2023		—
2024		15,000
2025		15,000
2026		45,000
Total future minimum payments		75,000
Less: current portion of debt principal		—
Non-current portion of debt principal	$	75,000

Senior Secured Notes

On October 1, 2021, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with, among others, Athyrium Opportunities IV Acquisition LP (the “Administrative Agent”) and Athyrium Opportunities IV Acquisition 2 LP, as a purchaser, providing for the issuance of senior secured notes in three separate tranches (the “Senior Secured Notes”). On October 12, 2021, the Company issued $55.0 million first tranche notes, a portion of the proceeds of which, together with the proceeds from a concurrent underwritten equity offering, were used to repay in full the obligations under a prior credit agreement.

On August 4, 2022, the Company entered into a first amendment to the Note Purchase Agreement (the “Amendment”) with, among others, Athyrium Opportunities IV Co-Invest 1 LP (the “New Purchaser”), certain other purchasers party thereto (together with the New Purchaser, the “Purchasers”) and the Administrative Agent, which amended the Note Purchase Agreement (as amended, the “Amended Note Purchase Agreement”).

The Amendment provided, among other things, for the issuance of $20.0 million of secured second tranche notes, dated as of August 8, 2022. Furthermore, under the Amendment, the Purchasers committed to purchase certain third tranche notes in an aggregate principal amount of up to $25.0 million at any time prior to April 15, 2023, upon the satisfaction of certain conditions, including a minimum net product sales target for Upneeq over a specified period of time.

Further, the Amendment provides for the replacement of a LIBOR-based interest rate under the Note Purchase Agreement with a Term SOFR-based interest rate. After September 30, 2022, the Senior Secured Notes bear interest at an annual rate of 9.0% plus adjusted three-month term SOFR, with a floor of 1.50% and a cap of 3.00%, payable in cash quarterly in arrears. For the three-month interest period beginning October 1, 2022, the interest rate applicable to the aggregate outstanding Senior Secured Notes is 12.0%.

The Senior Secured Notes require quarterly repayments equal to 5.0% of the principal outstanding beginning on March 31, 2024, with any residual balance due at maturity on October 12, 2026. The Senior Secured Notes may be voluntarily prepaid upon the satisfaction of certain conditions and with each such prepayment being accompanied by, as applicable, (i) a make-whole premium, (ii) an exit fee of 2% of the principal amount of the Senior Secured Notes prepaid, (iii) certain other fees, indemnities and expenses, and (iv) all accrued interest on the principal amount of the Senior Secured Notes being so prepaid. The Amendment provided for the reset of the date from which the make-whole premium is applicable with respect to the first tranche notes. Specifically, the make-whole premium start date with respect to the first tranche notes changed from October 12, 2021, to either (A) March 1, 2022, if the third tranche notes are not issued or (B) August 8, 2022, if the third tranche notes are issued.

The Senior Secured Notes must be prepaid upon the receipt of cash under certain defined conditions, including from voluntary and involuntary asset dispositions, extraordinary receipts, issuance of new indebtedness, and contingent milestone payments for the Legacy Business paid by Alora, each such prepayment being accompanied by, as applicable,

the fees described in (i) through (iv) above. The exit fee described in (ii) above is payable on the principal amount of all notes prepaid or repaid, including upon the repayment of the notes upon maturity.

The Senior Secured Notes are guaranteed on a senior secured basis by the Company and certain of its subsidiaries. The Senior Secured Notes and guarantees are secured by substantially all of the assets of the Company and its U.S. subsidiaries. Subject to certain exceptions and qualifications, the Amended Note Purchase Agreement contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, including the guarantors, to (i) incur additional indebtedness or issue certain disqualified capital stock, (ii) create liens, (iii) transfer or sell assets, (iv) make certain investments, loans, advances and acquisitions, (v) engage in consolidations, amalgamations or mergers, or sell, transfer or otherwise dispose of all or substantially all of their assets, and (vi) enter into certain transactions with affiliates. The Amended Note Purchase Agreement also provides for customary events of default.

In addition, the restrictive covenants in the Amended Note Purchase Agreement require the Company to comply with certain minimum liquidity requirements and minimum quarterly net product sales requirements. At any time and subject to downward adjustment in certain circumstances, the Company is required to maintain unrestricted cash and cash equivalents in an amount greater than or equal to $15.0 million, and, as of the end of each fiscal quarter, it is required to maintain consolidated Upneeq net product sales greater than or equal to specified quarterly thresholds (currently at $6.0 million for the fiscal quarter ending December 31, 2022, and increasing in $1.0 million increments each fiscal quarter thereafter until the fiscal quarter ending June 30, 2024, for which such fiscal quarter and all subsequent fiscal quarters the threshold is $12.0 million). At September 30, 2022, the Company was in compliance with all conditions of the Amended Note Purchase Agreement.

During the year ended December 31, 2021, the Company incurred aggregate debt issuance costs of $2.1 million related

to the Senior Secured Notes, $1.5 million and $0.6 million of which were recognized as financial commitment assets

underlying the first and second tranche notes, respectively.

The Company elected the fair value option of accounting on the first tranche notes upon issuance and, accordingly, a proportionate amount of related debt issuance costs were immediately written off in October 2021. The Company’s residual financial commitment asset related to the undrawn second tranche notes, was being amortized over the relevant one-year commitment period, however, upon the issuance of the second tranche notes in August 2022 the residual financial commitment asset was immediately expensed. For the three and nine months ended September 30, 2022, the Company recognized $1.1 million and $3.1 million, respectively, of amortization expense from the second tranche financial commitment asset with such expense being recorded within interest expense and amortization of debt discount in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. At September 30, 2022 and December 31, 2021, the second tranche financial commitment asset had a carrying value of zero and $3.1 million, respectively, and was recorded within current assets in the accompanying unaudited condensed consolidated balance sheets.

The Company also elected the fair value option of accounting on the second tranche notes upon issuance and, accordingly, $0.9 million of related debt issuance costs were immediately written off in August 2022, with such expense being recorded within selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

On a recurring basis, changes in fair value of Senior Secured Notes will be presented in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss at each reporting period (see Note 14).

In the nine months ended September 30, 2022, the Company obtained waivers from the applicable purchasers of mandatory repayments of an aggregate of $5.0 million in principal of the Senior Secured Notes as otherwise required

under the Amended Note Purchase Agreement, in exchange for a consent fee of $0.2 million, resulting in net retained proceeds of $4.8 million.

Prior Credit Agreement

Prior to October 12, 2021, the Company was party to a Credit Agreement, dated February 3, 2016 and as amended from

time to time, under which an aggregate principal amount of $327.5 million of secured term loans were previously issued (the “Prior Term Loans”) and that provided for revolving credit commitments up to $50.0 million (the “Prior Revolving

Facility,” and together with the Prior Term Loans, the “Prior Credit Agreement”).

During the six months ended June 30, 2021, pursuant to the terms of the Prior Credit Agreement, the Company exercised its right to cure a shortfall in certain financial covenants which resulted in the mandatory prepayment of $5.3 million against the Prior Term Loans.

On June 25, 2021, the Company amended the Prior Credit Agreement (the “Fifth Amendment”), pursuant to which liens

on the Legacy Business were released and the parties agreed to (i) reduce the outstanding Prior Term Loans balance to

$30.0 million upon the closing of the divestiture of the Legacy Business, (ii) terminate the Prior Revolving Facility (50%

upon signing of the Fifth Amendment and the remaining 50% upon closing of the Legacy Business divestiture), and (iii)

shorten the maturity of any remaining term loans to November 21, 2021.

On August 27, 2021, the Company announced the closing of the divestiture of the Legacy Business (see Note 4).

Proceeds from the divestiture of the Legacy Business, together with cash on hand were used to repay $186.1 million of

debt under the Prior Term Loans and the Prior Revolving Facility expired without ever having been drawn upon.

For the three and nine months ended September 30, 2021, the Company incurred immaterial fees and expenses upon termination of the Prior Credit Agreement and also wrote off $1.4 million and $1.4 million of debt issuance costs, respectively, relating to the prepayments, with the related expense classified within other non-operating gain or loss in the unaudited condensed consolidated statements of operations and comprehensive loss.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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+ Details

Restructuring Expenses (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
Restructuring Expenses (Details) - USD ($) $ in Millions	Sep. 30, 2022	Sep. 30, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		$ 4.5
Selling, general and administrative expenses
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		2.0
Severance benefits	$ 1.0	2.9
Research and development
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		1.2
Non-operating expenses
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		1.3
Special Termination Benefits [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		3.2
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		$ 1.3

Restructuring Expenses

9 Months Ended

Sep. 30, 2022

Restructuring Expenses

Restructuring Expenses

Note 16. Restructuring Expenses

In the three and nine months ended September 30, 2022, as part of an initiative to refine the Company’s go to market strategy, the Company recognized an aggregate of $1.0 million and $2.9 million, respectively, in expenses primarily associated with employee severance benefits that were classified in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

In April 2021, the Company curtailed operations and implemented workforce reductions in its research and development subsidiary in Buenos Aires, Argentina. These restructuring activities were associated with the Company’s plans to reduce expenses and better align business activities with the Company’s then-current corporate strategy. As a result, the Company recognized $4.5 million of restructuring expenses in the nine months ended September 30, 2021. The restructuring expenses consisted of $3.2 million one-time employee related termination benefits and $1.3 million of asset disposal costs related to leasehold improvements at the Buenos Aires location. Of the $4.5 million of restructuring expenses, $2.0 million were recognized in selling, general and administrative expenses, $1.2 million were recognized in research and development expenses, and $1.3 million of asset disposal costs were recognized in non-operating expenses.

Shareholders' Equity - Equity Offering (Details) - USD ($) $ / shares in Units, $ in Millions	Aug. 08, 2022	Aug. 04, 2022
Subsidiary, Sale of Stock [Line Items]
Number of ordinary shares issued		15,451,612
Share Price		$ 0.01
Share Issued And Allotted, Price Per Share		1.55
Avista Health Care (Member)
Subsidiary, Sale of Stock [Line Items]
Number of ordinary shares issued	8,000,000
Athyrium (Member)
Subsidiary, Sale of Stock [Line Items]
Number of ordinary shares issued	6,451,612
Brian Markison (Member)
Subsidiary, Sale of Stock [Line Items]
Number of ordinary shares issued	850,000
James Schaub (Member)
Subsidiary, Sale of Stock [Line Items]
Number of ordinary shares issued	150,000
Payments of stock issuance cost	$ 0.3
Proceeds from issuance of common stock, gross	$ 23.9

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Taxes
Effective income tax rate	(0.44%)	(1.25%)	(0.80%)	(0.66%)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest [Abstract]				&#