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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

 

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

For the quarterly period ended September 30, 2020

OR

 

 

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

Commission File Number 001-35892

 

 

GW PHARMACEUTICALS PLC

(Exact name of Registrant as specified in its charter)

 

 

England and Wales

 

Not Applicable

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

Sovereign House, Vision Park
Chivers Way, Histon
Cambridge, CB24 9BZ
United Kingdom

 

+44 1223 266800

(Address of principal executive offices)

 

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of exchange on which registered

American Depositary Shares, each representing 12 Ordinary Shares, par value £0.001 per share

 

GWPH

 

The Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES   NO

As of October 29, 2020, 374,180,696 Ordinary Shares were outstanding including 363,572,688 Ordinary Shares held as American Depositary Shares, each representing twelve Ordinary Shares, par value of £0.001 per share and 10,608,008 Ordinary Shares.

 

 

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

1

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019

2

 

Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2020 and 2019

3

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019

4

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

25

 

 

 

PART II.

OTHER INFORMATION

26

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 6.

Exhibits

34

Signatures

35

 

 

 

 


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GW PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

480,330

 

 

$

536,933

 

Accounts receivable, net

 

 

80,424

 

 

 

48,883

 

Inventory

 

 

115,036

 

 

 

85,528

 

Prepaid expenses and other current assets

 

 

44,485

 

 

 

28,292

 

Total current assets

 

 

720,275

 

 

 

699,636

 

Property, plant, and equipment, net

 

 

131,204

 

 

 

127,765

 

Operating lease assets

 

 

22,297

 

 

 

24,916

 

Intangible assets

 

 

5,564

 

 

 

 

Goodwill

 

 

6,959

 

 

 

6,959

 

Deferred tax assets

 

 

18,123

 

 

 

18,123

 

Other assets

 

 

5,839

 

 

 

4,850

 

Total assets

 

$

910,261

 

 

$

882,249

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

17,841

 

 

$

9,990

 

Accrued liabilities

 

 

114,898

 

 

 

99,374

 

Current tax liabilities

 

 

 

 

 

437

 

Other current liabilities

 

 

7,549

 

 

 

7,760

 

Total current liabilities

 

 

140,288

 

 

 

117,561

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Finance lease liabilities

 

 

5,219

 

 

 

5,573

 

Operating lease liabilities

 

 

19,607

 

 

 

21,650

 

Other liabilities

 

 

10,699

 

 

 

11,431

 

Total long-term liabilities

 

 

35,525

 

 

 

38,654

 

Total liabilities

 

 

175,813

 

 

 

156,215

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock - Ordinary shares par value £0.001;

   374,169,836 shares outstanding as of September 30, 2020;

   371,068,436 shares outstanding as of December 31, 2019

 

 

575

 

 

 

570

 

Additional paid-in capital

 

 

1,672,237

 

 

 

1,632,046

 

Accumulated deficit

 

 

(866,940

)

 

 

(837,959

)

Accumulated other comprehensive loss

 

 

(71,424

)

 

 

(68,623

)

Total stockholders’ equity

 

 

734,448

 

 

 

726,034

 

Total liabilities and stockholders’ equity

 

$

910,261

 

 

$

882,249

 

 

See accompanying notes to these condensed consolidated financial statements.

1


GW PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product net sales

 

$

136,846

 

 

$

90,849

 

 

$

378,608

 

 

$

201,312

 

Other revenue

 

 

207

 

 

 

122

 

 

 

375

 

 

 

944

 

Total revenues

 

 

137,053

 

 

 

90,971

 

 

 

378,983

 

 

 

202,256

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

7,635

 

 

 

8,150

 

 

 

27,112

 

 

 

19,901

 

Research and development

 

 

56,934

 

 

 

36,301

 

 

 

148,542

 

 

 

99,143

 

Selling, general and administrative

 

 

85,205

 

 

 

64,178

 

 

 

232,282

 

 

 

181,529

 

Total operating expenses

 

 

149,774

 

 

 

108,629

 

 

 

407,936

 

 

 

300,573

 

Loss from operations

 

 

(12,721

)

 

 

(17,658

)

 

 

(28,953

)

 

 

(98,317

)

Interest income

 

 

208

 

 

 

2,249

 

 

 

1,727

 

 

 

6,646

 

Interest expense

 

 

(269

)

 

 

(272

)

 

 

(850

)

 

 

(805

)

Other income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

104,117

 

Foreign exchange (loss) gain

 

 

(1,796

)

 

 

1,889

 

 

 

(430

)

 

 

2,801

 

(Loss) income before income taxes

 

 

(14,578

)

 

 

(13,792

)

 

 

(28,506

)

 

 

14,442

 

Income tax (benefit)expense

 

 

(2,390

)

 

 

(35

)

 

 

475

 

 

 

(1,485

)

Net (loss) income

 

$

(12,188

)

 

$

(13,757

)

 

$

(28,981

)

 

$

15,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.03

)

 

$

(0.04

)

 

$

(0.08

)

 

$

0.04

 

Diluted

 

$

(0.03

)

 

$

(0.04

)

 

$

(0.08

)

 

$

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

376,281

 

 

 

372,246

 

 

 

375,218

 

 

 

371,286

 

Diluted

 

 

376,281

 

 

 

372,246

 

 

 

375,218

 

 

 

376,985

 

 

See accompanying notes to these condensed consolidated financial statements.

2


GW PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net (loss) income

 

$

(12,188

)

 

$

(13,757

)

 

$

(28,981

)

 

$

15,927

 

Foreign currency translation adjustments

 

 

12,962

 

 

 

(7,783

)

 

 

(2,801

)

 

 

(8,863

)

Comprehensive (loss) income

 

$

774

 

 

$

(21,540

)

 

$

(31,782

)

 

$

7,064

 

 

See accompanying notes to these condensed consolidated financial statements.

3


GW PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balances at December 31, 2019

 

 

371,069

 

 

$

570

 

 

$

1,632,046

 

 

$

(837,959

)

 

$

(68,623

)

 

$

726,034

 

Issuance of common stock from exercise of

   stock options

 

 

1,493

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,965

)

 

 

 

 

 

(7,965

)

Share-based compensation

 

 

 

 

 

 

 

 

11,361

 

 

 

 

 

 

 

 

 

11,361

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,428

)

 

 

(14,428

)

Balances at March 31, 2020

 

 

372,562

 

 

$

573

 

 

$

1,643,407

 

 

$

(845,924

)

 

$

(83,051

)

 

$

715,005

 

Issuance of common stock from exercise of

   stock options

 

 

1,147

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,828

)

 

 

 

 

 

(8,828

)

Common stock withheld for employee tax

   obligations

 

 

 

 

 

 

 

 

 

(1,223

)

 

 

 

 

 

 

 

 

 

 

(1,223

)

Share-based compensation

 

 

 

 

 

 

 

 

13,316

 

 

 

 

 

 

 

 

 

13,316

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,335

)

 

 

(1,335

)

Balances at June 30, 2020

 

 

373,709

 

 

$

575

 

 

$

1,655,500

 

 

$

(854,752

)

 

$

(84,386

)

 

$

716,937

 

Issuance of common stock from exercise of

   stock options

 

 

460

 

 

 

 

 

 

1,572

 

 

 

 

 

 

 

 

 

1,572

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,188

)

 

 

 

 

 

(12,188

)

Common stock withheld for employee tax

   obligations

 

 

 

 

 

 

 

 

 

(604

)

 

 

 

 

 

 

 

 

 

 

(604

)

Share-based compensation

 

 

 

 

 

 

 

 

15,769

 

 

 

 

 

 

 

 

 

15,769

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,962

 

 

 

12,962

 

Balances at September 30, 2020

 

 

374,169

 

 

$

575

 

 

$

1,672,237

 

 

$

(866,940

)

 

$

(71,424

)

 

$

734,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balances at December 31, 2018

 

 

366,617

 

 

$

564

 

 

$

1,581,144

 

 

$

(828,940

)

 

$

(78,688

)

 

$

674,080

 

Issuance of common stock from exercise of

   stock options

 

 

1,996

 

 

 

3

 

 

 

770

 

 

 

 

 

 

 

 

 

773

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(50,064

)

 

 

 

 

 

(50,064

)

Share-based compensation

 

 

 

 

 

 

 

 

11,142

 

 

 

 

 

 

 

 

 

11,142

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,798

 

 

 

3,798

 

Balances at March 31, 2019

 

 

368,613

 

 

$

567

 

 

$

1,593,056

 

 

$

(879,004

)

 

$

(74,890

)

 

$

639,729

 

Issuance of common stock from exercise of

   stock options

 

 

2,008

 

 

 

3

 

 

 

2,102

 

 

 

 

 

 

 

 

 

2,105

 

Net income

 

 

 

 

 

 

 

 

 

 

 

79,748

 

 

 

 

 

 

79,748

 

Share-based compensation

 

 

 

 

 

 

 

 

12,188

 

 

 

 

 

 

 

 

 

12,188

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,878

)

 

 

(4,878

)

Balances at June 30, 2019

 

 

370,621

 

 

$

570

 

 

$

1,607,346

 

 

$

(799,256

)

 

$

(79,768

)

 

$

728,892

 

Issuance of common stock from exercise of

   stock options

 

 

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Net income

 

 

 

 

 

 

 

 

 

 

 

(13,757

)

 

 

 

 

 

(13,757

)

Share-based compensation

 

 

 

 

 

 

 

 

12,303

 

 

 

 

 

 

 

 

 

12,303

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,783

)

 

 

(7,783

)

Balances at September 30, 2019

 

 

370,937

 

 

$

570

 

 

$

1,619,649

 

 

$

(813,013

)

 

$

(87,551

)

 

$

719,655

 

See accompanying notes to these condensed consolidated financial statements.

4


GW PHARMACEUTICALS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(28,981

)

 

$

15,927

 

Adjustments to reconcile net loss to net cash used in

   operating activities:

 

 

 

 

 

 

 

 

Foreign exchange gain

 

 

(132

)

 

 

(418

)

Share-based compensation

 

 

40,446

 

 

 

35,633

 

Depreciation and amortization

 

 

9,144

 

 

 

7,096

 

Gain from sale of priority review voucher

 

 

 

 

 

(104,117

)

Other

 

 

27

 

 

 

39

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(31,654

)

 

 

(37,691

)

Inventory

 

 

(31,184

)

 

 

(37,561

)

Prepaid expenses and other current assets

 

 

(8,466

)

 

 

(14,869

)

Other assets

 

 

2,369

 

 

 

2,968

 

Accounts payable

 

 

8,116

 

 

 

(1,161

)

Current tax liabilities

 

 

(8,570

)

 

 

(601

)

Accrued liabilities

 

 

18,030

 

 

 

29,176

 

Other liabilities

 

 

(2,459

)

 

 

(1,943

)

Net cash used in operating activities

 

 

(33,314

)

 

 

(107,522

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Proceeds from sale of priority review voucher

 

 

 

 

 

104,117

 

Additions to property, plant and equipment

 

 

(14,259

)

 

 

(29,915

)

Additions to capitalized software

 

 

(2,365

)

 

 

(1,183

)

Additions to intangible assets

 

 

(6,404

)

 

 

 

Net cash (used) provided by in investing activities

 

 

(23,028

)

 

 

73,019

 

Cash flows from financing activities