Business |
3 Months Ended |
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Mar. 31, 2018 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Business |
1. Business
Cerecor Inc. (the "Company," or "Cerecor") is an integrated biopharmaceutical company that is focused on pediatric healthcare. The Company has a diverse portfolio of marketed products. Our marked products are led by our prescribed dietary supplements and prescribed drugs. Our prescribed dietary supplements include Poly-Vi-Flor and Tri-Vi-Flor which are prescription vitamin and fluoride supplements used in infants and children to treat or prevent deficiency of essential vitamins and fluoride, often caused by poor diet or low levels of fluoride in drinking water and other sources. Poly-Vi-Flor and Tri-Vi-Flor are available in various formulations, including an oral suspension and chewable tablets. The Company also markets a number of prescription drugs that treat a range of pediatric diseases, disorders and conditions. Cerecor's prescription drugs include Millipred®, Veripred®, Ulesfia®, Karbinal™ ER, AcipHex® Sprinkle™ and Cefaclor for Oral Suspension. Finally, the Company has one marketed medical device, Flexichamber™. The Company's pipeline is led by CERC-301, which is currently in a Phase I safety study for Neurogenic Orthostatic Hypotension ("nOH"). In March 2018, Cerecor gained clearance of its Investigational New Drug ("IND") application from the U.S. Food & Drug Administration to initiate clinical studies of CERC-301 in nOH. The Company is also developing three preclinical stage compounds, CERC-611,CERC-406 and CERC-425.
Cerecor was incorporated in 2011 and commenced operations in the second quarter of 2011. In August 2017, the Company sold its worldwide rights to CERC-501 to Janssen Pharmaceuticals, Inc. (“Janssen”) in exchange for initial gross proceeds of $25 million, of which $3.75 million was deposited into a twelve-month escrow to secure indemnification obligations to Janssen, as well as a potential future $20 million regulatory milestone payment. The terms of the agreement provide that Janssen will assume ongoing clinical trials and be responsible for any new development and commercialization of CERC-501. On November 17, 2017, the Company acquired TRx Pharmaceuticals, LLC (“TRx”) and its wholly-owned subsidiaries (see "TRx Acquisition" in Note 4 below for a description of the transaction).
On February 16, 2018, Cerecor purchased and acquired all rights to Avadel Pharmaceuticals PLC’s (“Avadel”) marketed pediatric products (the “Acquired Products”) for the assumption of certain of Avadel's financial obligations to Deerfield CSF, LLC ("Deerfield"), which includes $15.3 million in debt due in January 2021 and its related interest payments as well as a 15% annual royalty on net sales of the Acquired Products through February 2026 (see "Avadel Pediatric Products Acquisition" in Note 4 below for a description of the transaction).
Liquidity
For the three months ended March 31, 2018, Cerecor generated a net loss of $3.9 million and negative cash flow from operations of $0.3 million. As a result of the TRx and Avadel acquisitions, the Company's commercial operations are expected to generate positive cash flows from product sales.
As of March 31, 2018, Cerecor had an accumulated deficit of $62.0 million and a balance of $2.5 million in cash and cash equivalents. The Company anticipates generating positive cash flows from the Company's commercial operations to offset costs related to its preclinical programs, clinical development for CERC-301 in nOH, business development, costs associated with its organizational infrastructure and debt principal and interest payments to be incurred from the acquisition of Avadel products. The Company applies a disciplined decision making methodology as it evaluates the optimal allocation of the Company's resources between investing in the Company's current commercial product line, the Company's development portfolio and acquisitions or in-licensing of new assets in order to meet its cash flow needs. The Company, however, may require additional financing to continue to execute its clinical development strategy. The Company plans to meet its capital requirements primarily through gross profits from product sales and potentially some combination of equity or debt financings, collaborations, or out-licensing arrangements, strategic alliances, federal and private grants, marketing, distribution or licensing arrangements.
The Company expects its cash on hand as of March 31, 2018 and its cash flows from operations to fund future expenses and other non-operating payments such as debt payments through at least May 2019.
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