Management's Discussion and Analysis
(In thousands, except per share data)
(Unaudited)
You should read the discussion and analysis of our financial condition and
results of operations set forth in this Item 2 together with our unaudited
condensed consolidated financial statements and the related notes appearing
elsewhere in this Quarterly Report on Form 10-Q. Some of the information
contained in this discussion and analysis or set forth elsewhere in this
Quarterly Report on Form 10-Q, including information with respect to our plans
and strategy for our business and related financing, includes forward-looking
statements that involve risks and uncertainties, and reference is made to the
"Cautionary Note Regarding Forward-Looking Statements" set forth immediately
following the Table of Contents of this Quarterly Report on Form 10-Q for
further information on the forward looking statements herein. In addition, you
should read the "Risk Factors" section in Part I, Item 1A of our Annual Report
on Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on
March 29, 2023 and Part II, Item 1A in this Quarterly Report on Form 10-Q for a
discussion of additional important factors that could cause actual results to
differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion and analysis
and elsewhere in this Quarterly Report.
Overview
General Overview
Avadel Pharmaceuticals plc (Nasdaq: AVDL) ("Avadel," the "Company," "we," "our," or "us") is a biopharmaceutical company. Our lead product, LUMRYZ, formerly known as FT218, is an extended-release formulation of sodium oxybate indicated to be taken once at bedtime for the treatment of cataplexy or excessive daytime sleepiness ("EDS") in adults with narcolepsy. Outside of our lead product, we continue to evaluate opportunities to expand our product portfolio. As of the date of this Quarterly Report, LUMRYZ is the only commercialized product in our portfolio.
LUMRYZ
Our lead product LUMRYZ was approved bythe United States ("U.S.")Food and Drug Administration ("FDA") inMay 2023 for the treatment of cataplexy or EDS in adults with narcolepsy. In approving LUMRYZ, the FDA approved a risk evaluation and mitigation strategy ("REMS") for LUMRYZ to help ensure that the benefits of the drug in the treatment of cataplexy and EDS in narcolepsy outweigh the risks of serious adverse outcomes resulting from inappropriate prescribing, misuse, abuse, and diversion of the drug. Under this REMS, healthcare providers must be specially certified, pharmacies, practitioners, or health care settings that dispense the drug must be specially certified and the drug must be dispensed to patients with documentation of safe use conditions. Additionally, with its approval, the FDA also granted seven years of orphan drug exclusivity to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy due to a finding of clinical superiority of LUMRYZ relative to currently marketed oxybate treatments. In particular, FDA found that LUMRYZ makes a major contribution to patient care over currently marketed, twice-nightly oxybate treatments by providing a once-nightly dosing regimen that avoids nocturnal arousal to take a second dose. We are advancing our preparations for the commercial launch of LUMRYZ. For example, onMarch 15, 2023 , we were notified by the FDA that we are permitted to conduct certain pre-launch activities including the importation of foreign manufactured product under the Pre-launch Activities Importation Request ("PLAIR") Program. With respect to clinical data generated for LUMRYZ, we conducted a Phase 3 clinical trial of LUMRYZ (the "REST-ON trial"), which was a randomized, double-blind, placebo-controlled study that enrolled 212 patients who received at least one dose of LUMRYZ or placebo, and was conducted in clinical sites in theU.S. ,Canada ,Western Europe andAustralia . The last patient's last visit was completed at the end of the first quarter of 2020, and positive top line data from the REST-ON trial was announced onApril 27, 2020 . Patients who received 9 g of once-at-bedtime LUMRYZ, the highest dose administered in the trial, demonstrated statistically significant and clinically meaningful improvement compared to placebo across the three co-primary endpoints of the trial: maintenance of wakefulness test ("MWT"), clinical global impression-improvement ("CGI-I"), and mean weekly cataplexy attacks. The lower doses assessed, 6 g and 7.5 g, also demonstrated statistically significant and clinically meaningful improvement on all three co-primary endpoints compared to placebo. We observed the 9 g dose of once-at-bedtime LUMRYZ to be generally well-tolerated. Adverse reactions commonly associated with sodium oxybate were observed in a small number of patients (nausea 1.3%, vomiting 5.2%, decreased appetite 2.6%, dizziness 5.2%, somnolence - 22 - --------------------------------------------------------------------------------
3.9%, tremor 1.3% and enuresis 9%), and 3.9% of the patients who received 9 g of LUMRYZ discontinued the trial due to adverse reactions.
InJanuary 2018 , the FDA granted LUMRYZ orphan drug designation for the treatment of narcolepsy, which made LUMRYZ eligible for certain development and commercial incentives, including potential U.S. market exclusivity for up to seven years. With the approval of LUMRYZ onMay 1, 2023 , the FDA also granted seven years of orphan drug exclusivity to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy. That orphan exclusivity will continue untilMay 1, 2030 . Additionally, thirteen LUMRYZ-relatedU.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at theU.S. Patent and Trademark Office ("USPTO"), as well as foreign patent offices. InJuly 2020 , we announced that the first patient was dosed in our open-label extension ("OLE")/switch study of LUMRYZ as a potential treatment for cataplexy or EDS in patients with narcolepsy ("RESTORE"). The RESTORE study is examining the long-term safety and maintenance of efficacy of LUMRYZ in patients with narcolepsy who participated in the REST-ON study, as well as dosing and preference data for patients switching from twice-nightly sodium oxybate to once-at-bedtime LUMRYZ, regardless of whether they participated in REST-ON. InMay 2021 , inclusion criteria were expanded to allow for oxybate naïve patients to enter the study. New secondary endpoints from the REST-ON trial were presented at theAmerican Academy of Neurology , beginningApril 17, 2021 . The first poster described LUMRYZ improvements in disturbed nocturnal sleep ("DNS"), defined in REST-ON as the number of shifts from stages N1, N2, N3, and rapid eye movement ("REM") sleep to wake and from stages N2, N3, and REM sleep to stage N1. LUMRYZ also decreased the number of nocturnal arousals as measured on polysomnography. Improvements in DNS were further supported by post-hoc analyses demonstrating increased time in deep sleep (N3, also known as slow wave sleep), and less time in N1. A second poster described the statistically significant improvements in the Epworth Sleepiness Scale ("ESS"), both the quality of sleep and the refreshing nature of sleep, and a decrease in sleep paralysis. These clinically relevant improvements were observed for all doses, beginning at week 3, for the lowest 6 g dose, compared to placebo. LUMRYZ did not demonstrate significant improvement for hypnagogic hallucinations compared to placebo. Additional data supportive of the efficacy findings in REST-ON were presented at the 35th Annual Meeting of the Associated Professional Sleep Societies, a joint meeting of theAmerican Academy of Sleep Medicine and theSleep Research Society , also known as SLEEP 2021, beginningJune 10, 2021 . New data included post-hoc analyses demonstrating endpoints improvements, regardless of concomitant stimulant use, in both narcolepsy Type 1 ("NT1") or Type 2 ("NT2"). Additionally, a post-hoc analysis showed that LUMRYZ was associated with decreased body mass index compared to placebo, which may be relevant as people with narcolepsy often have co-morbid obesity. InAugust 2021 , the primary results from the REST-ON trial were published by Kushida et al. in the journal SLEEP. New data was presented at theAmerican College of Chest Physicians annual meeting ("CHEST"), beginningOctober 17, 2021 , including additional post-hoc analyses from the REST-ON trial, demonstrating a greater proportion of patients receiving LUMRYZ experienced reductions in weekly cataplexy attacks and improvement in mean sleep latency compared to placebo, as well as the results of a discrete choice experiment, indicating that the overall driver of patient preference between sodium oxybate treatments is a once-at-bedtime, versus twice-nightly, formulation. New data was presented at World Sleep 2022Congress inMarch 2022 , inRome, Italy . A total of eight posters were presented, including five new post-hoc analyses from the REST-ON trial. Most notably, the post-hoc analyses showed that LUMRYZ demonstrated improvement in subjective measures of daytime sleepiness, sleep quality and refreshing nature of sleep as early as week 1 with the 4.5 g starting dose, with even greater improvement at week 2 soon after starting the 6 g dose compared to placebo. Additional post-hoc analyses, stratified by narcolepsy type, as well as concomitant stimulant use, or without stimulants, demonstrated positive results that are generally consistent with previously reported positive endpoints from REST-ON and add to the existing body of evidence for LUMRYZ. In addition, the results of a discrete choice experiment ("DCE") were presented, which showed that once-at-bedtime dosing, when compared to twice-nightly dosing, was the most important attribute driving both patient and clinician preference for overall oxybate product choice, as well as patient quality of life and reduction of patient anxiety/stress; dosing frequency (twice-nightly versus once-at-bedtime) was also viewed as a more important attribute as compared to other attributes assessed, including sodium content. Accompanying the DCE was a background survey for both patients and clinicians, which showed that dosing frequency was noted as a significant stressor by both patients and clinicians. The World Sleep 2022 presentations also included the first presentation of an interim safety analysis from the ongoing RESTORE study, which showed that LUMRYZ has generally been well-tolerated, with some patients receiving therapy for more than 18 months. - 23 - -------------------------------------------------------------------------------- Additional peer-reviewed publications have included data on improvement on DNS, the first DCE and a Plain Language Summary reviewing sodium oxybate and cardiovascular health, which did not identify a signal of cardiovascular disease in the twenty years that sodium oxybate has been available. At the annualSLEEP Congress inJune 2022 , nine posters were presented, including five post-hoc analyses from REST-ON which support the following:
•A low number-needed-to-treat to achieve effectiveness across all three evaluated doses, as well as effect sizes, showing a moderate-to-high effect for improving MWT, ESS, and number of cataplexy attacks;
•Confirmation via various statistical methods to handle missing data that LUMRYZ improved cataplexy and EDS symptoms versus placebo;
•Confirmation of benefit for NT1 and NT2 for DNS and ESS;
•Confirmation of benefit for subgroups taking stimulants and those without stimulants for DNS and ESS; and
•Early efficacy (Week 1 and Week 2) for ESS, refreshing nature of sleep and quality of sleep.
In addition, interim data from RESTORE were presented demonstrating that a high proportion of patients switching from twice-nightly sodium oxybate formulations had difficulty in taking the second dose, with a high proportion (92.5%) stating a preference for the once-at-bedtime dosing regimen and that most participants (62%) switching from twice-nightly sodium oxybate formulations had a stable dose equal to their starting dose; participants not currently taking sodium oxybate formulations or oxybate naive reached a stable dose with 2-4 dose titrations within four weeks.
Additional peer-review publications have included a relative bioavailability pharmacokinetics ("PK") study and a Plain Language Summary of the primary REST-ON trial results.
We believe LUMRYZ has the potential to demonstrate improved dosing compliance, safety and patient satisfaction over the current standards of care for cataplexy or EDS in patients with narcolepsy.
Key Business Trends and Highlights
In operating our business and monitoring our performance, we consider a number of performance measures, as well as trends affecting our industry as a whole, which include the following: •Healthcare and Regulatory Reform: Various health care reform laws in theU.S. may impact our ability to successfully commercialize our products and technologies. The success of our commercialization efforts may depend on the extent to which the government health administration authorities, the health insurance funds in the E.U. Member States, private health insurers and other third-party payers in theU.S. will reimburse consumers for the cost of healthcare products and services. •Competition and Technological Change: Competition in the pharmaceutical and biotechnology industry continues to be intense and is expected to increase. We compete with academic laboratories, research institutions, universities, joint ventures, and other pharmaceutical and biotechnology companies, including other companies developing niche branded or generic specialty pharmaceutical products or drug delivery platforms. Furthermore, major technological changes can happen quickly in the pharmaceutical and biotechnology industries. Such rapid technological change, or the development by our competitors of technologically improved or differentiated products, could render our products, product candidates, or drug delivery platforms obsolete or noncompetitive. •Pricing Environment for Pharmaceuticals: The pricing environment continues to be in the political spotlight in theU.S. As a result, the need to obtain and maintain appropriate pricing for pharmaceutical products may become more challenging due to, among other things, the attention being paid to healthcare cost containment and other austerity measures in theU.S. and worldwide. •Generics Playing a Larger Role in Healthcare: Generic pharmaceutical products will continue to play a large role in theU.S. healthcare system. As such, we expect to see generic competition for our products in the future. - 24 - -------------------------------------------------------------------------------- •Access to and Cost of Capital: We have a recent history of generating losses from operations and expect to continue generating losses until we are able to commercially launch LUMRYZ, and generate revenues sufficient to generate positive cash flow from operations. Similar to other businesses in our industry and at our stage of development, we will continue to rely on external sources of capital to fund our business. The process of raising capital and associated cost of such capital for a company of our financial profile can be difficult and potentially expensive. If the need were to arise to raise additional capital, access to that capital may be difficult, expensive and/or dilutive and, as a result, could create liquidity challenges for us.
•Continuing Net Loss from Operations: LUMRYZ is the only commercialized product in our portfolio. We will incur substantial expenses to continue our preparations for commercial launch of LUMRYZ.
Impact of COVID-19
We continue to actively monitor the COVID-19 pandemic, as well as new variants of the virus and recent increases in case numbers, and have taken measures to mitigate the potential impacts to our employees and business, such as continuing to offer a work from home policy. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition. Despite vaccination efforts, future developments and impact on our operations remain uncertain and cannot be predicted with confidence, including the duration of the COVID-19 pandemic, new variants of the virus, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or we, may direct, which may result in extending continued business disruptions.
2022 Corporate Restructuring Plan
InJune 2022 , we announced a plan to optimize our cost structure to reduce total quarterly cash operating expenses to between$12,000 and$14,000 , excluding inventory purchases, by the quarter endedDecember 31, 2022 . The targeted reduction in cash operating expenses, together with cash, cash equivalents and marketable securities currently on hand, was implemented to extend our cash runway to the middle of 2023. Our cost structure optimization efforts included a nearly 50% reduction in our workforce (the "2022 Corporate Restructuring Plan"). See Note 10: Restructuring Costs to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
At-the-Market Offering Program
InFebruary 2020 , we entered into an Open Market Sale AgreementSM (the "Sales Agreement") withJefferies LLC ("Jefferies") with respect to an at-the-market offering program ("ATM Program") under which we may offer and sell our ADSs (and such ADSs sold under the ATM Program, "ATM ADSs") through Jefferies as our sales agent. We agreed to pay Jefferies a commission up to 3.0% of the aggregate gross sales proceeds of such ATM ADSs. The initial aggregate offering price of the ATM Program was up to$50,000 of ADSs pursuant to its prospectus, datedFebruary 14, 2020 , included with our Registration Statement on Form S-3 (File No. 333-236258) (the "2020 Shelf Registration"). InAugust 2022 , we filed an additional prospectus, datedSeptember 12, 2022 , included with our new Registration Statement on Form S-3 (File No. 333-267198) (the "2022 Shelf Registration"), in order to allocate up to$100,000 in additional ADSs to the ATM Program. The 2020 Shelf Registration expired onFebruary 14, 2023 .
Pursuant to the Sales Agreement, we issued and sold 1,564 ADSs during the
quarter ended
Financial Highlights
Highlights of our consolidated results for the three months ended
•Operating loss was$28,298 for the three months endedMarch 31, 2023 , compared to operating loss of$28,626 for the three months endedMarch 31, 2022 . Selling, general and administrative expenses increased in the current period by$2,833 , driven by higher legal costs of approximately$2,000 , costs related to financing activities of approximately$1,300 and higher consulting fees of approximately$800 , offset by lower compensation costs of$1,000 . Research and development expenses decreased in the current period by$3,161 , driven by lower active pharmaceutical ingredients ("API") purchases during the current period of approximately$2,600 . - 25 - --------------------------------------------------------------------------------
•Net loss was
•Diluted net loss per share was
•Cash and marketable securities increased$4,424 to$100,923 atMarch 31, 2023 , from$96,499 atDecember 31, 2022 . The increase in cash during the three months endedMarch 31, 2023 was driven primarily by net cash provided by financing activities of$34,442 , which included approximately$40,000 of proceeds received in advance of Series B Preferred Shares issuance for the public offering and$11,913 of net proceeds from the sale of ADSs through the ATM Program, offset by$17,500 of payments for theFebruary 2023 Notes, and net cash provided by investing activities of$5,066 due to net proceeds received from the excess of sales over purchases of marketable securities.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted inthe United States of America . To prepare these financial statements, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosures of contingent assets and liabilities. Actual results could be significantly different from these estimates. Our significant accounting policies are described in Note 1 of the audited consolidated financial statements included in our Annual Report Form 10-K for the year endedDecember 31, 2022 (the "2022 Form 10-K"). TheSEC suggests companies provide additional disclosure on those accounting policies considered most critical. TheSEC considers an accounting policy to be critical if it is important to our financial condition and results of operations and requires significant judgments and estimates on the part of management in its application. Our estimates are often based on complex judgments, probabilities and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. For a complete discussion of our critical accounting policies, see the "Critical Accounting Policies" section of the Management's Discussion & Analysis in our 2022 Form 10-K. Results of Operations The following is a summary of our financial results (in thousands, except per share amounts) for the three months endedMarch 31, 2023 and 2022, respectively: Change Three Months Ended March 31, 2023 vs. 2022 Comparative Statements of Loss 2023 2022 $ %
Operating expenses:
Research and development expenses $ 3,830$ 6,991 $ (3,161) (45.2) % Selling, general and administrative expenses 24,468 21,635 2,833 13.1 % Total operating expense 28,298 28,626 (328) (1.1) % Operating loss (28,298) (28,626) 328 1.1 % Investment and other income (expense), net 193 (104) 297 (285.6) % Interest expense (3,259) (2,017) (1,242) 61.6 % Loss before income taxes (31,364) (30,747) (617) 2.0 % Income tax benefit (580) (4,323) 3,743 (86.6) % Net loss$ (30,784) $ (26,424) $ (4,360) 16.5 % Net loss per share - diluted $ (0.48)$ (0.45) $ (0.03) 6.7 % - 26 -
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Change
Three Months Ended March 31, 2023 vs. 2022
Research and Development Expenses: 2023 2022 $ %
Research and development expenses $ 3,830 $ 6,991 $ (3,161) (45.2) %
Research and development expenses decreased
Change
Three Months Ended March 31, 2023 vs. 2022
Selling, General and Administrative Expenses: 2023 2022 $ %
Selling, general and administrative expenses $ 24,468 $ 21,635 $ 2,833 13.1 %
Selling, general and administrative expenses increased $2,833 or 13.1% during
the three months ended March 31, 2023 as compared to the same period in the
prior year, driven by higher legal costs of approximately $2,000 , costs related
to financing activities of approximately $1,300 and higher consulting fees of
approximately $800 . The increase in selling, general and administrative expense
was offset by lower compensation costs of approximately $1,000 .
Change
Three Months Ended March 31, 2023 vs. 2022
Interest Expense 2023 2022 $ %
Interest Expense $ (3,259) $ (2,017) $ (1,242) 61.6 %
Interest expense increased $1,242 or 61.6% during the three months ended
March 31, 2023 as compared to the same period in the prior year. Interest
expense increased by approximately $900 due to amortization of the $5,500 of
debt discount related to the change in the fair value of the conversion feature
of the October 2023 Notes. In addition, interest expense increased by $600 due
to amortization of the $4,800 of debt issuance fees paid to note holders that
participated in the Exchange Transaction in April 2022 . These fees are amortized
over the life of the October 2023 Notes. See Note 4: Long-Term Debt to our
unaudited condensed consolidated financial statements included in Part 1, Item 1
of this Quarterly Report on Form 10-Q for further details for further details.
Change
Three Months Ended March 31, 2023 vs. 2022
Income Tax Benefit: 2023 2022 $ %
Income tax benefit $ (580) $ (4,323) $ 3,743 86.6 %
Percentage of loss before income taxes 1.8 % 14.1 %
The income tax benefit was$580 for the three months endedMarch 31, 2023 resulting in an effective tax rate of 1.8%. The income tax benefit was$4,323 for the three months endedMarch 31, 2022 resulting in an effective tax rate of 14.1%. The change in the effective tax rate for the three months endedMarch 31, 2023 , when compared to the same period in 2022, is primarily driven by the valuation allowances recorded against net deferred tax assets established in the second quarter of 2022. - 27 - --------------------------------------------------------------------------------
Liquidity and Capital Resources
Our cash flows from operating, investing and financing activities, as reflected
in the unaudited condensed consolidated statements of cash flows, are summarized
in the following table:
Change
Three Months Ended March 31, 2023 vs. 2022
Net cash (used in) provided by: 2023 2022 $ %
Operating activities $ (30,233) $ (34,045) $ 3,812 11.2 %
Investing activities 5,066 42,251 (37,185) (88.0) %
Financing activities 34,442 2,009 32,433 1,614.4 %
Operating Activities
Net cash used in operating activities was $30,233 and $34,045 for the three
months ended March 31, 2023 and 2022. Net cash used in operating activities for
the three months ended March 31, 2023 was driven by net loss of $30,784 and
unfavorable changes in working capital of $3,431 , offset by favorable non-cash
adjustments of $3,982 . For the three months ended March 31, 2022 , net cash used
in operating activities was driven by net loss of $26,424 and a $7,043
unfavorable change in working capital.
Investing Activities
Net cash provided by investing activities was$5,066 and$42,251 for the three months endedMarch 31, 2023 and 2022, respectively. Net cash provided by investing activities for the three months endedMarch 31, 2023 was due to net proceeds received from the excess of sales over purchases of marketable securities of$5,066 . Net cash provided by investing activities for the three months endedMarch 31, 2022 was due to net proceeds received from the excess of sales over purchases of marketable securities of$42,251 .
Financing Activities
Net cash provided by financing activities for the three months endedMarch 31, 2023 of$34,442 related to proceeds received in advance of Series B Preferred Shares issuance for the public offering of$40,000 and net proceeds from the sale of ADSs through the ATM Program of$11,913 , offset by payments for theFebruary 2023 Notes of$17,500 . Net cash provided by financing activities for the three months endedMarch 31, 2022 of$2,009 related to proceeds from stock option exercises and ESPP issuances.
Risk Management
The adequacy of our cash resources depends on the outcome of certain business conditions including the cost of our LUMRYZ commercial launch plans, our cost structure, and other factors set forth in "Risk Factors" within Part I, Item 1A of our Annual Report on Form 10-K filed with theSEC onMarch 29, 2023 . To complete the LUMRYZ commercial launch plans we will need to commit substantial resources, which could result in future losses or otherwise limit our opportunities or affect our ability to operate our business. Our assumptions concerning the outcome of certain business conditions may prove to be wrong or other factors may adversely affect our business, and as a result we could exhaust or significantly decrease our available cash and marketable securities balances which could, among other things, force us to raise additional funds and/or force us to reduce our expenses, either of which could have a material adverse effect on our business. Additionally, we are unable to estimate the near or long term impacts of COVID-19 and inflation, which may have a material adverse impact on our business. We have a recent history of generating losses and negative cash flows from operations, an accumulated shareholders' deficit as of the date of these unaudited condensed consolidated financial statements and approximately$83,391 of cash and cash equivalents and$17,532 of marketable securities available for use to fund its operations, debt service and capital requirements. Our ability to generate revenue is expected to start following the commercial launch of LUMRYZ in theU.S. , which is dependent, in part, on our ability to successfully complete our commercialization efforts and on market acceptance of LUMRYZ in theU.S.
On
- 28 -
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first shipment of LUMRYZ. The second tranche is available to use, at the our
election, upon achieving quarterly net revenue of $25,000 . The second tranche
will expire on August 31, 2024 , if the quarterly net revenue target is not
reached and if it is not used by the Company by that time.
At March 31, 2023 , we had outstanding $117,375 aggregate principal amount of its
4.50% exchangeable senior notes due October 2023 (the "October 2023 Notes").
Over the course of April 3 and April 4, 2023 , we completed an exchange of
$96,188 of our $117,375 October 2023 Notes for $106,268 of a new series 6.0%
exchangeable notes due April 2027 (the "April 2027 Notes") (the "2023 Exchange
Transaction"). The remaining $21,187 aggregate principal amount of the October
2023 Notes will maintain a maturity date of October 2, 2023 .
On April 3, 2023 , we completed the sale of ordinary shares, nominal value $0.01
per share ("Ordinary Shares") in the form of ADSs and Series B Non-Voting
Convertible Preferred Shares ("Series B Preferred Shares") in an underwritten
public offering. We received net proceeds from the equity financing of $135,125 ,
of which $40,000 was received on March 31, 2023 and $95,125 was received on
April 3, 2023 . The $40,000 of net proceeds received prior to the completed
public offering was included in the unaudited condensed consolidated balance
sheet as proceeds received in advance of Series B Preferred Shares issuance at
March 31, 2023 .
As a result of the 2023 Exchange Transaction and public offering, we have
concluded that cash on hand provides sufficient capital to meet our operating,
debt service and capital requirements for the next twelve months following the
date of this Quarterly Report.
Other Matters
Litigation
We are subject to potential liabilities generally incidental to our business arising out of present and future lawsuits and claims related to product liability, personal injury, contract, commercial, intellectual property, tax, employment, compliance and other matters that arise in the ordinary course of business. We accrue for potential liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. AtMarch 31, 2023 andDecember 31, 2022 , there were no contingent liabilities with respect to any litigation, arbitration or administrative or other proceeding that are reasonably likely to have a material adverse effect on our consolidated financial position, results of operations, cash flows or liquidity. For information regarding legal proceedings we are involved in, see Note 9: Commitments and Contingencies - Litigation to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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