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SEC Filings

PROTEON THERAPEUTICS INC filed this Form 10-Q on 11/07/2017
Entire Document

We believe that, our existing cash, cash equivalents and available-for-sale investments will be sufficient to fund operations and capital expenditures into the fourth quarter of 2019, thus allowing us to report top-line data from our second Phase 3 trial of vonapanitase in radiocephalic fistulas and to fund our chemistry, manufacturing and controls, or CMC, activities.


We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for vonapanitase, which we expect will take a number of years and is subject to significant uncertainty. We have no manufacturing facilities and all of our manufacturing activities are contracted out to third parties. Additionally, we currently use third-party clinical research organizations, or CROs, to carry out our clinical development activities and we do not yet have a sales organization. If we obtain regulatory approval for vonapanitase, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we may seek to further fund our operations through public or private equity or debt financings or other sources, including strategic collaborations. We may, however, be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise additional capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop vonapanitase or any additional product candidates, if developed.


Recent Developments


On June 22, 2017, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a syndicate of current and new institutional investors (collectively, the “Investors”), led by an affiliate of Deerfield Management Company, L.P., pursuant to which the Company agreed to issue and sell to the Investors an aggregate of 22,000 shares (the “Preferred Shares”) of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Transaction”), for a purchase price of $1,000 per share, or an aggregate purchase price of $22.0 million, all upon the terms and conditions set forth in the Purchase Agreement. We also entered into certain Voting Agreements and the Fifth Amended and Restated Investors’ Rights Agreement in connection on June 22, 2017. We closed the Transaction on August 2, 2017.


The rights, preferences and privileges of the Series A Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock that we filed on August 1, 2017, with the Secretary of State of the State of Delaware. The holders of a majority of the outstanding shares of Series A Convertible Preferred Stock are entitled to elect one (1) member of the Company’s Board of Directors (the “Series A Director”). Jonathan Leff was elected as the Series A Director on August 2, 2017.


In addition, on August 2, 2017, we entered into a registration rights agreement with the Investors (the “Registration Rights Agreement”). On August 3, 2017, in accordance with the Registration Rights Agreement, we filed a registration statement on Form S-3 to register the common stock issuable upon conversion of the Preferred Shares.


Financial Overview


Research and Development Expenses


Research and development expenses consist primarily of costs incurred for the development of vonapanitase, which include:


 ·employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;
 ·expenses incurred under agreements with CROs and investigative sites that will conduct our clinical trials;
 ·the cost of acquiring, developing and manufacturing clinical trial materials;
 ·costs associated with regulatory operations; and
·facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.


We expense research and development costs to operations as incurred. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.