WINDTREE THERAPEUTICS, INC. 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 activities, includes forward-looking statements that involve risks, uncertainties and assumptions. These statements are based on our beliefs and expectations about future outcomes and are subject to risks and uncertainties that could cause our actual results to differ materially from anticipated results. We undertake no obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise. The reader should review the Forward-Looking Statements section, any risk factors discussed elsewhere in this Quarterly Report on Form 10-Q, which are in addition to and supplement the risk factors discussed in our Annual Report on Form 10-K for the year endedDecember 31, 2019 that we filed with theSecurities and Exchange Commission , orSEC , onApril 3, 2020 , our Quarterly Reports on Form 10-Q filed thereafter, and our other filings with theSEC , and any amendments thereto, for a discussion of 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 or elsewhere in this Quarterly Report on Form 10-Q. This Management's Discussion and Analysis, or MD&A, is provided as a supplement to the accompanying interim unaudited Condensed Consolidated Financial Statements (including the notes thereto) to help provide an understanding of our financial condition and changes in our financial condition and our results of operations. This item should be read in connection with our accompanying interim unaudited Condensed Consolidated Financial Statements (including the notes thereto) and our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Unless otherwise specified, references to Notes in this MD&A shall refer to the Notes to Condensed Consolidated Financial Statements (unaudited) in this Quarterly Report on Form 10-Q. OVERVIEW We are a clinical-stage, biopharmaceutical and medical device company focused on the development of novel therapeutics intended to address significant unmet medical needs in important acute care markets. Our development programs are primarily focused in the treatment of acute cardiovascular and pulmonary diseases. Our lead cardiovascular product candidate istaroxime, a first-in-class, dual-acting agent being developed to improve cardiac function in patients with acute heart failure, or AHF, and early cardiogenic shock with a potentially differentiated safety profile from existing treatments. Istaroxime demonstrated significant improvement in both diastolic and systolic aspects of cardiac function and was generally well tolerated in two phase 2 clinical trials and has been granted Fast Track designation for the treatment of AHF by theU.S. Food and Drug Administration , or FDA. We have also focused on developing AEROSURF (lucinactant for inhalation), a novel drug/medical device combination for non-invasive delivery of our proprietary aerosolized KL4 surfactant, using our proprietary aerosol delivery system, or ADS, technology for the treatment of respiratory distress syndrome, or RDS, in premature infants. Our licensee inAsia , Lee's Pharmaceutical (HK) Ltd., or Lee's (HK), will conduct the development of AEROSURF inAsia . We are exploring potential licensing agreements with companies ex-Asia . We are conducting a small pilot study of our proprietary KL4 surfactant for the treatment of lung injury resulting from severe novel coronavirus, or COVID-19, infections. Our other drug product candidates include rostafuroxin, a novel medicine for the treatment of hypertension in patients with a specific genetic profile. We also have a number of pipeline preclinical product candidates that we are evaluating for progression into clinical development. These include evaluating and pursuing a number of early exploratory research programs to identify potential product candidates, including oral and intravenousSERCA 2a heart failure compounds and other product candidates utilizing our KL4 surfactant and ADS technologies.
Business and Program Updates
The reader is referred to, and encouraged to read in its entirety, Item 1 - Business in our Annual Report on Form 10-K for the year endedDecember 31, 2019 that we filed with theSEC onApril 3, 2020 , which contains a discussion of our business and business plans, as well as information concerning our proprietary technologies and our current and planned development programs. Istaroxime (AHF) InApril 2020 , we announced the presentation at theAmerican College of Cardiology 2020 virtual meeting of a new subset analysis from a phase 2b study of istaroxime in patients hospitalized with AHF. We previously presented the overall results of the study where the primary endpoint demonstrated a significant improvement (p<0.05) in cardiac function at both istaroxime study doses. This post-hoc analysis characterized the responses between Caucasian and Asian patients. The istaroxime dose of 0.5 µg/kg/min produced a similar response on E/e', the primary study endpoint, and stroke volume index, an important measure of cardiac performance, in Asian and Caucasian patients.
Istaroxime (Early Cardiogenic Shock)
We have initiated the study of istaroxime for the treatment of early cardiogenic shock in patients with severe heart failure, a presentation of heart failure characterized by very low blood pressure and hypo-perfusion to critical organs which is associated with high mortality and morbidity and is not well treated with current therapies. We believe istaroxime may fulfill an unmet need in early cardiogenic shock based on the profile observed in our phase 2 clinical studies in AHF. Because of the unmet need in the treatment of early cardiogenic shock, we believe there may be an opportunity with a breakthrough therapy designation, which may provide an expedited development program. Receipt of either Fast Track or breakthrough therapy designation may increase the likelihood of receiving priority review of a marketing application, which would provide for an expedited review timeframe. InOctober 2020 , we announced that we had dosed the first patient in our phase 2 study of istaroxime for the acute treatment of early cardiogenic shock in heart failure patients to evaluate the potential to improve blood pressure and organ perfusion. The study will also evaluate the safety and side effect profile of istaroxime in this patient population. Due to the current global outbreak of COVID-19 and its effect on hospital intensive care units, the location of this study, and the study staff and resources, our study has been impacted and we have experienced some delays in anticipated timelines and milestones. 16
--------------------------------------------------------------------------------
Table of Contents
AEROSURF (lucinactant for inhalation)
InApril 2020 , as part of the phase 2 clinical program, we enrolled the first patient and commenced our small, approximately 90-patient, phase 2b bridging study in premature infants with RDS to prepare to transition to a phase 3 clinical program by demonstrating the performance of our new ADS, in the neonatal intensive care unit as well as a more intensive dosing regimen. The AEROSURF phase 2b bridging study is a multicenter, randomized, controlled study with masked treatment assignment in up to 90 premature infants 26 to 32 weeks gestational age receiving nasal continuous airway pressure, or nCPAP, for RDS. The trial will leverage the favorable safety profile from the previous phase 2 studies to evaluate higher and more frequent dosing of aerosolized KL4 surfactant compared to premature infants receiving standard care of nCPAP alone. The trial will utilize the new ADS and bridge to data generated in the phase 2 program utilizing a prototype device on the following endpoints: time to nCPAP failure (the need for intubation and delayed surfactant therapy), incidence of nCPAP failure and physiological parameters indicating the effectiveness of lung function. InJune 2020 , we announced that all initial European trial sites were active and enrolling or able to enroll patients into the phase 2b bridging study. Most recently, the European study sites were affected by increased rates of COVID-19, which has impacted key study personnel, and resulted in periodic holds on screenings for new patients and dosing. Following termination of the PF Agreement (as defined below), these European trial sites will no longer enroll patients and Lee's (HK) will conduct a clinical trial inAsia . As a result,Asia will be the only location to complete the phase 2b bridging study. Lee's (HK) will conduct, fund and execute the AEROSURF phase 2b bridging study while we focus on the study of lucinactant to prevent lung injury in patients with COVID-19, as described below.
Lyophilized KL4 Surfactant - Lung Injury and Other Studies
We are initiating a study of our proprietary KL4 surfactant for the treatment of lung injury resulting from severe COVID-19 infection. InSeptember 2020 , the FDA accepted our investigational new drug, or IND, application for a phase 2 clinical trial to assess the ability of our proprietary KL4 surfactant to impact key respiratory parameters in ventilated COVID-19 patients. The small pilot study will evaluate changes in physiological parameters in patients who are intubated and mechanically ventilated for COVID-19 associated lung injury and acute respiratory distress syndrome, or ARDS. The study will evaluate the dosing regimen, tolerability, and functional changes in gas exchange and lung compliance after KL4 surfactant administration. We plan to enroll up to 20 patients with COVID-19 and ARDS, who are on mechanical ventilation, from four to fiveU.S. sites. We plan to start the study during the fourth quarter of 2020. We applied to theBiomedical Advanced Research and Development Authority , or BARDA, requesting funding for our development plans of KL4 surfactant in COVID-19 patients and we were granted a meeting to review our proposal with BARDA representatives. With the acceptance of the IND by the FDA and planned start of the trial, we plan to reengage with the federal government on the program. There is no assurance that we will receive funding from BARDA. Impact of COVID-19 The COVID-19 pandemic continues to evolve, and we are closely monitoring the situation, including its potential impact on our clinical development plans and timelines. As of the date of the filing of this Quarterly Report on Form 10-Q, however, our operations, capital and financial resources and overall liquidity position and outlook have not been materially impacted by COVID-19, while our operations have experienced delays, including in clinical study initiation and early productivity. For example, certain of our ongoing clinical trials have experienced delays, including our phase 2 study of istaroxime for early cardiogenic shock in heart failure patients. In addition, travel restrictions and other COVID-19 mitigation efforts have impacted our business development activities with respect to out-licensing certain of our product candidates for which we are seeking partnership. The full extent, duration, or impact that the COVID-19 pandemic will have, directly or indirectly, on our financial condition and operations, including ongoing and planned clinical trials, will depend on future developments that are highly uncertain and cannot be accurately predicted. These potential future developments include new information that may emerge concerning the severity of the COVID-19 outbreak, including any regional resurgences in one or more markets where our current or intended clinical trial sites, our principal executive offices, research and development laboratories or other facilities are located, and the actions taken to contain it or treat its impact, which may include, among others, the timing and extent of governments reopening activities and the economic impact on local, regional, national, and international markets. The strategic re-implementation of mitigating COVID-19 measures in one or more markets where our clinical trial sites, principal executive offices, research and development laboratories or other facilities are located remains possible and we believe there could be further impact on the clinical development of our product candidates, which may include potential delays, halts or modifications to our ongoing and planned trials in the fourth quarter of 2020 and beyond. CRITICAL ACCOUNTING POLICIES There have been no changes to our critical accounting policies sinceDecember 31, 2019 . For a discussion of our accounting policies, see Note 4 - Summary of Significant Accounting Policies and, in the Notes to Consolidated Financial Statements (Notes) in our Annual Report on Form 10-K for the year endedDecember 31, 2019 , Note 5 - Accounting Policies and Recent Accounting Pronouncements. Readers are encouraged to review those disclosures in conjunction with this Quarterly Report on Form 10-Q. RESULTS OF OPERATIONS Operating Loss and Net Loss
The operating loss for the three months ended
The operating loss for the nine months endedSeptember 30, 2020 and 2019 was$23.4 million and$20.3 million , respectively. The increase in operating loss from 2019 to 2020 was due to a$2.8 million increase in operating expenses and a$0.2 million decrease in license revenue with affiliate.
The net loss for the three months ended
17--------------------------------------------------------------------------------
Table of Contents
Research and Development Expenses
Our research and development expenses are charged to operations as incurred and we account for such costs by category rather than by project. As many of our research and development activities likely form the foundation for the potential development of multiple product candidates, including istaroxime, our KL4 surfactant and drug delivery technologies, and rostafuroxin, they are expected to benefit more than a single project. For that reason, we cannot reasonably estimate the costs of our research and development activities on a project-by-project basis. We believe that tracking our expenses by category is a more accurate method of accounting for these activities. Our research and development costs consist primarily of expenses associated with (a) product development and manufacturing, (b) clinical, medical and regulatory operations, and (c) direct preclinical and clinical development programs. We also account for research and development and report annually by major expense category as follows: (i) salaries and benefits, (ii) contracted services, (iii) raw materials, aerosol devices and supplies, (iv) rents and utilities, (v) depreciation, (vi) contract manufacturing, (vii) travel, (viii) stock-based compensation and (ix) other.
Research and development expenses by category are as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2020 2019 2020 2019
Product development and manufacturing $ 1,002 $ 1,165 $ 3,610 $ 3,262
Clinical, medical and regulatory
operations 1,591 1,734 5,009 5,339
Direct preclinical and clinical
programs 1,289 893 3,219 1,946
Total research and development
expenses $ 3,882 $ 3,792 $ 11,838 $ 10,547 Research and development expenses include non-cash charges associated with
stock-based compensation and depreciation of
Product Development and Manufacturing
Product development and manufacturing includes (i) manufacturing operations, both in-house and with contract manufacturing organizations, validation activities, quality assurance and analytical chemistry capabilities that support the manufacture of our drug products used in research and development activities, and our medical devices, including our ADS, (ii) design and development activities related to our ADS for use in our AEROSURF clinical development program; and (iii) pharmaceutical and manufacturing development activities of our drug product candidates including development of istaroxime, lyophilized KL4 surfactant, and rostafuroxin. These costs include employee expenses, facility-related costs, depreciation, costs of drug substances (including raw materials), supplies, quality control and assurance activities, analytical services, and expert consultants and outside services to support pharmaceutical and device development activities. Product development and manufacturing expenses decreased$0.2 million for the three months endedSeptember 30, 2020 compared to the same period in 2019 due to a decrease in analytical testing costs related to our AEROSURF clinical development program. Product development and manufacturing expenses increased$0.3 million for the nine months endedSeptember 30, 2020 compared to the same period in 2019 due to a$0.4 million purchase of raw materials during the second quarter of 2020, partially offset by a decrease in analytical testing costs related to our AEROSURF clinical development program.
Clinical, Medical and Regulatory Operations
Clinical, medical and regulatory operations include (i) medical, scientific, preclinical and clinical, regulatory, data management and biostatistics activities in support of our research and development programs; and (ii) medical affairs activities to provide scientific and medical education support for our KL4 surfactant and aerosol delivery systems under development. These costs include personnel, expert consultants, outside services to support regulatory and data management, symposiums at key medical meetings, facilities-related costs, and other costs for the management of clinical trials. Clinical, medical and regulatory operations expenses decreased$0.1 million for the three months endedSeptember 30, 2020 compared to the same period in 2019 due to a decrease of$0.2 million in non-cash, stock compensation expense, partially offset by an increase of$0.1 million in personnel costs. Clinical, medical and regulatory operations expenses decreased$0.3 million for the nine months endedSeptember 30, 2020 compared to the same period in 2019 due to (i) a decrease of$0.2 million in personnel and travel costs and (ii) a decrease of$0.2 million in employee-related incentive bonus expense, partially offset by (iii) an increase of$0.1 million in non-cash, stock compensation expense.
Direct Preclinical and Clinical Development Programs
Direct preclinical and clinical development programs include: (i) development activities, toxicology studies and other preclinical studies; and (ii) activities associated with conducting clinical trials, including patient enrollment costs, clinical site costs, clinical device and drug supply, and related external costs, such as consultant fees and expenses.
Direct preclinical and clinical development programs expenses increased$0.4 million and$1.3 million , respectively, for the three and nine months endedSeptember 30, 2020 compared to the same periods in 2019 due to an increase in costs related to our continued clinical development of istaroxime and AEROSURF.
General and Administrative Expenses
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2020 2019 2020 2019
General and administrative expenses $ 4,823 $ 3,395 $ 11,518 $ 9,990
General and administrative expenses consist of costs for executive management, business development, intellectual property, finance and accounting, legal, human resources, information technology, facility, and other administrative costs.
18
--------------------------------------------------------------------------------
Table of Contents
General and administrative expenses increased$1.4 million and$1.5 million , respectively, for the three and nine months endedSeptember 30, 2020 compared to the same periods in 2019 due to (i) an increase of$1.0 million and$1.8 million , respectively, in professional fees, taxes, and insurance and (ii) severance costs of$0.8 million and$0.9 million , respectively, (iii) an increase of$0.1 million and a decrease of$0.4 million , respectively, in employee-related incentive bonus expense, partially offset by (iv) a decrease of$0.5 million and$0.8 million , respectively, in non-cash, stock compensation expense. Other (Expense) Income Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Interest income 21 25 115 124 Interest expense (46 ) (105 ) (121 ) (358 ) Other (expense) income, net (290 ) 141 (1,750 ) 473
Total other (expense) income, net $ (315 ) $
61$ (1,756 ) $ 239
Interest income relates to interest on our money market account and
For the three and nine months endedSeptember 30, 2020 and 2019, interest expense consists of interest expense associated with the collaboration and device development payables and with the loans payable. The decrease of$0.1 million and$0.2 million , respectively, in interest expense for the three and nine months endedSeptember 30, 2020 to the comparable periods in 2019 is related to the repayment of$2.1 million in loans payable during the year endedDecember 31, 2019 . For the three months endedSeptember 30, 2020 , other (expense) income, net primarily consists of losses on foreign currency translation of$0.3 million . For the nine months endedSeptember 30, 2020 , other (expense) income, net primarily consists of$1.1 million in non-cash expenses related to the modification of certain warrants and losses on foreign currency translation of$0.6 million .
For the three and nine months ended
LIQUIDITY AND CAPITAL RESOURCES
We are subject to risks common to companies in the biotechnology industry,
including but not limited to, the need for additional capital, risks of failure
of preclinical and clinical studies, the need to obtain marketing approval and
reimbursement for any drug product candidate that we may identify and develop,
the need to successfully commercialize and gain market acceptance of our product
candidates, dependence on key personnel, protection of proprietary technology,
compliance with government regulations, development of technological innovations
by competitors, and reliance on third party manufacturers.
We have incurred net losses since inception. Our net loss was $9.0 million and
$7.1 million , respectively, for the three-month periods ended September 30, 2020
and 2019. Our net loss was $25.1 million and $20.1 million , respectively, for
the nine-month periods ended September 30, 2020 and 2019. We expect to continue
to incur operating losses for at least the next several years. As of September
30, 2020 , we had an accumulated deficit of $710.2 million . Our future success is
dependent on our ability to identify and develop our product candidates, and
ultimately upon our ability to attain profitable operations. We have devoted
substantially all of our financial resources and efforts to research and
development and general and administrative expense to support such research and
development. Net losses and negative cash flows have had, and will continue to
have, an adverse effect on our stockholders' equity and working capital, and
accordingly, our ability to execute our future operating plans.
In May 2020 , we received net proceeds of approximately $20.2 million related to
a public offering, or the May 2020 Offering, of 3,172,413 units, inclusive of
413,793 units related to a fully exercised over-allotment option, at a price per
unit of $7.25 . Each unit consisted of one share of our common stock and a
warrant to purchase one share of common stock, or the Warrant. The Warrants are
immediately exercisable for shares of common stock at a price of $7.975 per
share and expire five years from the date of issuance.
In March 2020 , we entered into a binding term sheet, or the Term Sheet, with
Lee's (HK), pursuant to which Lee's (HK) will provide financing for the
development of AEROSURF and in August 2020 , we entered into a Project Financing
Agreement with Lee's (HK), or the PF Agreement, under which we have received
payments of $2.8 million . Pursuant to the PF Agreement, Lee's (HK) agreed to pay
additional amounts to be set forth in an updated development budget to be agreed
between the parties by September 1, 2020 and updated every six months
thereafter, to fund the continued development of AEROSURF and to be paid with
the payment schedule to be set forth in each updated development budget. On
November 12, 2020 , Lee's (HK) provided notice of termination of the PF
Agreement. Lee's (HK) will conduct clinical development of AEROSURF in Asia and
we will wind-down our clinical development of AEROSURF. Lee's (HK) will fund an
additional $1.0 million to us in 2021, repayable pursuant to the terms of the PF
Agreement, for certain transition and analytical services to be provided by
us with respect to the development of AEROSURF.
We believe that our cash and cash equivalents as of the filing of our Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2020 are
sufficient to fund operations through at least the next twelve months. In the
future, we will need to raise additional capital to continue funding our
operations. We plan to obtain funding through a combination of public or private
equity offerings, or strategic transactions including collaborations, licensing
arrangements or other strategic partnerships. There is inherent uncertainty
associated with these fundraising activities, and thus they are not considered
probable.
Our funding requirements, however, are based on estimates that are subject to
risks and uncertainties and may change as a result of many factors currently
unknown. Although management continues to pursue the plans described above,
there is no assurance that we will be successful in obtaining sufficient funding
on terms acceptable to us to fund continuing operations, if at all, including as
a result of market volatility following the COVID-19 pandemic. Until such time
as we can generate substantial product revenues, if ever, we expect to finance
our cash needs through a combination of equity offerings, strategic partnerships
and licensing arrangements. The terms of any future financing may adversely
affect the holdings or the rights of our existing stockholders.
19--------------------------------------------------------------------------------
Table of Contents Cash Flows Cash outflows for the nine months endedSeptember 30, 2020 consist of$20.8 million used in ongoing operating activities and$19.9 million provided by financing activities. Cash outflows for the nine months endedSeptember 30, 2019 consist of$19.2 million used in ongoing operating activities and$1.0 million used in financing activities, offset by cash inflows for the nine months endedSeptember 30, 2019 of$13.9 million for investing activities. Operating Activities Net cash used in operating activities for the nine months endedSeptember 30, 2020 and 2019 was$20.8 million and$19.2 million , respectively. Net cash used in operating activities is a result of our net losses for the period, adjusted for non-cash items and changes in working capital. The increase in net cash used in operating activities from 2019 to 2020 is due to (i) a$5.0 million increase in net loss for the nine months endedSeptember 30, 2020 compared to the same period in 2019; and (ii) a$1.1 million increase in payments related to our collaboration and device development payable withBattelle Memorial Institute as a result of contractual milestone payments during the nine months endedSeptember 30, 2020 ; partially offset by (iii) costs related to the acquisition ofCVie Investments Limited , or the CVie Acquisition, costs from theDecember 2018 private placement financing and the payment of pre-existing obligations with the proceeds of theDecember 2018 private placement financing during the nine months endedSeptember 30, 2019 . Investing Activities Net cash used in investing activities for the nine months endedSeptember 30, 2019 represents$14.0 million related to the sale of marketable securities, partially offset by$0.1 million in purchase of property and equipment compared with a de minimis amount of net cash used in investing activities for the nine months endedSeptember 30, 2020 . Financing Activities Net cash provided by financing activities for the nine months endedSeptember 30, 2020 was$19.9 million and includes the following: (i)$20.2 million in net proceeds from theMay 2020 Offering; (ii)$2.4 million in proceeds from our research and development funding arrangement with Lee's (HK); (iii)$0.1 million in proceeds from the exercise of common stock warrants; and (iv)$2.9 million of principal payments on loans payable. Net cash used in financing activities for the nine months endedSeptember 30, 2019 was$1.0 million and represents$0.8 million in principal payments on our loans payable and$0.2 million related to withholding tax payments for net share settlements of restricted stock units.
The following sections provide a more detailed discussion of our available financing facilities.
Loans Payable
Loan payable to Bank Direct Capital Finance
InMay 2019 , we entered into an insurance premium financing and security agreement with Bank Direct Capital Finance, or Bank Direct. Under the agreement, we financed$0.7 million of certain premiums at a 5.35% annual interest rate. As ofDecember 31, 2019 , the outstanding principal of the loan was$0.2 million . The balance of the loan was repaid during the quarter endedMarch 31, 2020 . InJune 2020 , we entered into an insurance premium financing and security agreement with Bank Direct. Under the agreement, we financed$1.1 million of certain premiums at a 4.26% annual interest rate. Payments of approximately$117,000 are due monthly fromJuly 2020 throughMarch 2021 . As ofSeptember 30, 2020 , the outstanding principal of the loan was$0.7 million .
Assumption of bank debt as part of the CVie Acquisition
InSeptember 2016 ,CVie Therapeutics Limited entered into a 12-month revolving credit facility of approximately$2.9 million with O-Bank Co., Ltd., or O-Bank, to finance operating activities, or the O-Bank Facility. The O-Bank Facility was later renewed and increased to approximately$5.8 million inSeptember 2017 . The O-Bank Facility is guaranteed by Lee's Pharmaceutical Holdings Limited, or Lee's, which pledged bank deposits in the amount of 110% of the actual borrowing amount. Interest, payable in cash on a monthly basis, is determined based on the 90-day Taipei Interbank Offer Rate, or TAIBOR, plus 0.91%. The O-Bank Facility expired onSeptember 11, 2019 and the loans were set to mature six months after the expiration date, onMarch 11, 2020 . InMarch 2020 , the O-Bank Facility was amended, among other things, to extend the maturity date toMarch 2022 , to decrease the total amount of the O-Bank Facility to approximately$5.0 million , to change the applicable interest rate to the TAIBOR plus 1.17% and to adjust the term to 24-month non-revolving. As ofSeptember 30, 2020 andDecember 31, 2019 , the outstanding principal of the O-Bank Facility was approximately$2.4 million and$4.6 million , respectively. In the second quarter of 2020, we were informed by Lee's of their desire to reduce the amount of pledged bank deposits with O-Bank by 50%. To remain in compliance with the terms of the O-Bank Facility, we repaid approximately$2.3 million of the outstanding principal inAugust 2020 . InNovember 2020 , Lee's committed to maintain the required level of pledged bank deposits with O-Bank through the date of full repayment of the O-Bank Facility. 20
--------------------------------------------------------------------------------
Table of Contents Common Stock Offerings Historically, we have funded, and expect that we will continue to fund, our business operations through various sources, including financings in the form of common stock offerings. InSeptember 2020 , we filed with theSEC a "shelf" registration statement on Form S-3 (No. 333-248874), or the Universal Shelf, that was declared effective onSeptember 29, 2020 , for the proposed offering from time to time of up to$75.0 million of our securities, including common stock, preferred stock, debt securities, warrants, units, subscription rights, or any combination of the foregoing, on terms and conditions that will be determined at the time of an offering. As ofSeptember 30, 2020 , approximately$75.0 million remained available under the Universal Shelf. The Universal Shelf will expire upon the earlier to occur of (i) the sale of$75.0 million of our securities or (ii)September 29, 2023 . At-The-Market Program OnSeptember 17, 2020 , we entered into an At-The-Market Offering Agreement withLadenburg Thalmann & Co. Inc. , or Ladenburg, pursuant to which we may offer and sell, from time to time at our sole discretion, up to a maximum of$10.0 million of shares of our common stock through Ladenburg as agent and/or principal through an at-the-market program, or the ATM Program. We are not obligated to make any sales under the ATM Program, and as ofNovember 16, 2020 , we have not sold any shares under the ATM Program. If we issue a sale notice to Ladenburg, we will designate the maximum amount of shares to be sold by Ladenburg daily and the minimum price per share at which shares may be sold. Ladenburg may sell shares by any method permitted by law deemed to be an "at-the-market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, or in privately negotiated transactions. Sales under the ATM Program will be made pursuant to the Universal Shelf. Either party may suspend the offering under the ATM Program by notice to the other party. The ATM Program will terminate upon the earlier of (i) the sale of all shares subject to the ATM Program or (ii) termination of the ATM Program in accordance with its terms. Either party may terminate the ATM Program at any time upon five business days' prior written notification to the other party in accordance with the related agreement. We agreed to pay Ladenburg a commission of 3% of the gross sales price of any shares sold pursuant to the ATM Program. The rate of compensation will not apply when Ladenburg acts as principal. We also agreed to reimburse Ladenburg for the fees and disbursements of its counsel in an amount not to exceed$50,000 , in addition to certain ongoing disbursements of its legal counsel up to$3,000 per calendar quarter.
Off-Balance Sheet Arrangements
We did not have any material off-balance sheet arrangements at
© Edgar Online, source
