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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022 
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______to______.
 
Commission File Number: 001-38193
 
OPIANT PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter) 
Delaware46-4744124
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)
  
233 Wilshire Blvd.Suite 400Santa Monica,CA90401
(Address of principal executive offices)(Zip Code)
 
(310)-598-5410 
(Registrant’s telephone number, including area code) 
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, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
Large Accelerated FilerAccelerated 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 November 10, 2022, the registrant had 5,167,814 shares of common stock outstanding.
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, par value $0.001 per shareOPNTNasdaq Stock Market LLC



CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
    This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue”, negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.
    We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts. 
    From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-K and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
    Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
CERTAIN TERMS USED IN THIS REPORT
    When this Report uses the words “we,” “us,” “our,” “Opiant,” and the “Company,” they refer to Opiant Pharmaceuticals, Inc. “SEC” refers to the Securities and Exchange Commission.




OPIANT PHARMACEUTICALS, INC. 
TABLE OF CONTENTS
 
 
   
   
   
Defaults Upon Senior Securities


3


PART 1 - FINANCIAL INFORMATION

Item 1.           Financial Statements
Opiant Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
September 30, 2022December 31, 2021
Assets(unaudited) 
Current assets  
Cash and cash equivalents$35,375,865 $37,853,947 
Marketable securities 15,014,750 
Accounts receivable41,113 13,327,364 
Prepaid and other current assets3,131,299 2,962,903 
Total current assets38,548,277 69,158,964 
Other assets  
Property and equipment, net417,646 78,107 
Right of use assets - operating leases2,739,239 999,567 
Patents and patent applications, net10,598 11,628 
Other non-current assets234,389 179,532 
Total assets$41,950,149 $70,427,798 
Liabilities and Stockholders' Equity  
Liabilities  
Current liabilities  
Accounts payable and accrued liabilities$3,113,068 $3,369,848 
Accrued salaries and wages1,821,438 201,254 
Royalty payable 2,920,148 
Deferred revenue 16,618 
Operating leases - current669,209 337,690 
Convertible debt - current1,436,660  
Total current liabilities7,040,375 6,845,558 
Long-term liabilities
Operating leases - long term2,083,548 673,347 
   Convertible debt, net of unamortized discount12,324,237 16,069,085 
Total liabilities21,448,160 23,587,990 
Stockholders' equity  
Common stock; par value $0.001; 200,000,000 shares authorized; 5,164,951 and 4,909,846 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
5,165 4,910 
Additional paid-in capital116,266,243 108,569,988 
Accumulated other comprehensive loss(248,129)(54,815)
Accumulated deficit(95,521,290)(61,680,275)
Total stockholders' equity20,501,989 46,839,808 
Total liabilities and stockholders' equity$41,950,149 $70,427,798 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


Opiant Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
Three months ended September 30,Nine months ended September 30,
 2022202120222021
Revenues    
Royalty revenue$ $14,041,006 $4,519,505 $27,688,713 
Grant and contract revenue173,874 2,298,055 4,018,653 6,296,542 
Total revenue173,874 16,339,061 8,538,158 33,985,255 
Operating expenses    
General and administrative3,073,114 3,378,707 11,415,746 8,758,601 
Research and development4,133,982 4,881,398 20,873,449 12,119,088 
Sales and marketing2,596,562 1,059,649 8,088,860 3,080,211 
Royalty expense 3,058,865 943,269 6,145,057 
Total operating expenses9,803,658 12,378,619 41,321,324 30,102,957 
Income (loss) from operations(9,629,784)3,960,442 (32,783,166)3,882,298 
Other income (expense)  
Interest income160,114 3,498 227,830 10,334 
Interest expense(390,850)(547,296)(1,213,021)(1,626,273)
Loss on sale of assets(49,437) (49,437) 
Gain (loss) on foreign exchange1,868 455 17,818 (9,899)
Total other income (expense)(278,305)(543,343)(1,016,810)(1,625,838)
Income (loss) before income taxes(9,908,089)3,417,099 (33,799,976)2,256,460 
Income tax (expense)(8,550) (41,039) 
Net income (loss)$(9,916,639)$3,417,099 $(33,841,015)$2,256,460 
Other comprehensive loss:
Foreign currency translation adjustment(4,979)(7,974)(193,314)81 
Comprehensive income (loss)$(9,921,618)$3,409,125 $(34,034,329)$2,256,541 
Net income (loss) per share of common stock:  
Basic$(1.93)$0.77 $(6.66)$0.52 
Diluted$(1.93)$0.56 $(6.66)$0.41 
Weighted average shares outstanding used to compute net income (loss) per share:    
Basic5,138,274 4,462,236 5,083,222 4,359,759 
Diluted5,138,274 6,065,044 5,083,222 5,565,065 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


Opiant Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(unaudited)
 Common StockAdditional
Paid In
Capital
Accumulated
Deficit
Accumulated
Other Comprehensive Loss
 Total
 SharesAmount
Balance at December 31, 20214,909,846 $4,910 $108,569,988 $(61,680,275)$(54,815)$46,839,808 
Return of profit— — 5,824 — — 5,824 
Exercise of stock options7,097 7 91,627 — — 91,634 
Restricted stock issued31,746 32(32)— —  
Stock issued from converted debt130,916 1312,571,069 — — 2,571,200 
Debt issuance cost associated with debt conversion— — (109,399)— — (109,399)
Stock based compensation— — 2,079,159 — — 2,079,159 
Net loss— — — (12,187,830)— (12,187,830)
Other comprehensive loss - foreign currency translation adjustment — — — — (27,150)(27,150)
Balance at March 31, 20225,079,605 $5,080 $113,208,236 $(73,868,105)$(81,965)$39,263,246 
Exercise of stock options— — — — —  
Restricted stock issued15,375 15(15)— —  
Performance stock units issued20,185 20 (20)— —  
Issuance of common stock, net of issuance cost7,410 6 135,672 — — 135,678 
Stock based compensation— — 2,095,118 — — 2,095,118 
Net loss— — — (11,736,546)— (11,736,546)
Other comprehensive loss - foreign currency translation adjustment — — — — (161,185)(161,185)
Balance at June 30, 20225,122,575 $5,121 $115,438,991 $(85,604,651)$(243,150)$29,596,311 
Restricted stock issued4,550 6 (6)— —  
Issuance of common stock, net of issuance cost37,826 38 402,577 — — 402,615 
Stock based compensation— — 424,681 — — 424,681 
Net loss— — — (9,916,639)— (9,916,639)
Other comprehensive loss - foreign currency translation adjustment — — — — (4,979)(4,979)
Balance at September 30, 20225,164,951 $5,165 $116,266,243 $(95,521,290)$(248,129)$20,501,989 
Balance at December 31, 20204,258,105 $4,259 $100,203,979 $(64,689,065)(26,931)$35,492,242 
Exercise of stock options65,962 66 579,553 — — 579,619 
Restricted stock issued6,527 6 (6)— —  
Stock based compensation— — 745,620 — — 745,620 
Net loss— — — (2,844,230)— (2,844,230)
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Other comprehensive loss - foreign currency translation adjustment — — — — 12,501 12,501 
Balance at March 31, 20214,330,594 $4,331 $101,529,146 $(67,533,295)(14,430)$33,985,752 
Exercise of stock options5,630 6 36,599 — — 36,605 
Restricted stock issued13,375 13 (13)— —  
Stock based compensation— — 654,562 — — 654,562 
Net income— — — 1,683,591 — 1,683,591 
Other comprehensive loss - foreign currency translation adjustment — — — — (4,446)(4,446)
Balance at June 30, 20214,349,599 $4,350 $102,220,294 $(65,849,704)$(18,876)$36,356,064 
Exercise of stock options268,622 268 1,545,566 — — 1,545,834 
Stock based compensation— — 694,334 — 694,334 
Net Income— — — 3,417,099 — 3,417,099 
Other comprehensive loss - foreign currency translation adjustment — — — — (7,974)(7,974)
Balance at September 30, 20214,618,221 $4,618 $104,460,194 $(62,432,605)$(26,850)$42,005,357 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


Opiant Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
For the Nine Months Ended
September 30, 2022September 30, 2021
Cash flows from operating activities  
Net income (loss)$(33,841,015)$2,256,460 
Adjustments to reconcile net income (loss) to net cash used in operating activities:  
   Depreciation and amortization28,013 78,701 
Amortization of debt discount153,613 205,177 
Loss on sale of fixed assets49,437  
   Non-cash lease expense384,916 388,598 
   Stock based compensation4,598,958 2,094,516 
Change in assets and liabilities: 
   (Increase) decrease in accounts receivable13,286,251 (6,514,964)
   (Increase) decrease in prepaid expenses(296,020)860,631 
    Increase (decrease) in accounts payable and accrued liabilities(198,361)(481,464)
    Increase (decrease) in accrued salaries and wages1,672,129 553,996 
    Increase (decrease) in lease liabilities(370,033)(392,564)
    Increase (decrease) in royalty payable(2,920,148)1,228,605 
    Increase (decrease) in deferred revenue(16,618)(354,756)
Net cash used in operating activities(17,468,878)(77,064)
Cash flows from investing activities
Maturity (purchase) of marketable securities15,014,750 (15,044,750)
Purchase of property and equipment(418,962) 
   Net cash provided by (used in) investing activities14,595,788 (15,044,750)
Cash flows from financing activities 
  Proceeds from issuance of common shares538,293  
  Proceeds from stock option and warrant exercises97,458 2,162,058
Net cash provided by financing activities635,751 2,162,058 
Effect of foreign currency translation on cash(240,743)(6,985)
Net increase (decrease) in cash and cash equivalents(2,478,082)(12,966,741)
Cash and cash equivalents, beginning of period37,853,947 48,251,336 
Cash and cash equivalents, end of period$35,375,865 $35,284,595 
Supplemental disclosure
   Interest paid during the period$1,158,940 $1,051,508 
   Income taxes paid during the period$66,924 $ 
Supplemental disclosure of non-cash finance transactions
Common stock issued for debt conversion$2,571,200 $ 
Debt issuance cost associated with debt conversion$109,399 $ 
Right of use assets obtained in exchange for new lease obligations$2,106,776 $1,094,259 
Issuance of restricted stock and performance stock units$73 $19 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Opiant Pharmaceuticals, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Description of Business 
Company 
    Opiant is a specialty pharmaceutical company developing medicines for addiction and drug overdose. The Company developed NARCAN® (naloxone hydrochloride) Nasal Spray (“NARCAN®”), a treatment to reverse opioid overdose. This product was conceived and developed by the Company, licensed to Adapt Pharma Operations Limited (“Adapt”), an Ireland based pharmaceutical company in December 2014 and approved by the U.S. Food and Drug Administration (“FDA”) in November 2015. In October 2018, Emergent BioSolutions, Inc. ("EBS") completed its acquisition of Adapt.
    The Company's current pipeline includes medicines in development for Opioid Overdose Reversal (“OOR”), Alcohol Use Disorder (“AUD”), and Acute Cannabinoid Overdose (“ACO”). The Company is also pursuing other treatment opportunities within the addiction and drug overdose field.
    The Company has not had a bankruptcy, receivership or similar proceeding. The Company is required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the clinical testing and manufacturing and sale of pharmaceutical products.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies 
Basis of Presentation
    The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the SEC for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.
    The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position as of September 30, 2022 and December 31, 2021, results of operations for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021. The interim results are not necessarily indicative of the results for any future interim period or for the entire year.
    The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Opiant Pharmaceuticals UK Limited, a company incorporated on November 4, 2016 under the England and Wales Companies Act of 2006. Intercompany balances and transactions are eliminated upon consolidation.  
    The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2021 included in the Company's Annual Report on Form 10-K filed with the SEC on March 15, 2022.
Use of Estimates
    The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of expenses in the financial statements and accompanying notes. Actual results could differ from those estimates. Key estimates included in the financial statements include the valuation of: deferred income tax assets, equity instruments, stock-based compensation, acquired intangibles, and allowances for accounts receivable.
Cash and Cash Equivalents
    The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents were approximately $35.4 million and $37.9 million at September 30, 2022 and December 31, 2021, respectively. The Company maintains cash balances at financial institutions insured up to $250 thousand by the Federal Deposit Insurance Corporation. Balances in the UK are insured up to £85 thousand by the Financial Services Compensation Scheme (UK Equivalent). Although the Company’s cash balances exceeded these insured amounts at various times during the nine months ended September 30, 2022, the Company has not experienced any losses on its deposits of cash and cash equivalents for the periods presented.
9


Earnings (Loss) Per Share
Basic and diluted earnings (loss) per share is computed by dividing loss attributable to common stockholders by the weighted average number of shares of Common Stock outstanding during the period.
    Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of shares of Common Stock outstanding during the respective period presented in the Company’s accompanying condensed consolidated financial statements. Fully-diluted earnings (loss) per share is computed similarly to basic income (loss) per share except that the denominator is increased to include the number of Common Stock equivalents (primarily outstanding options and warrants).
(in thousands, except per share data)For the Three Months Ended September 30,For the Nine Months Ended September 30,
Numerator:2022202120222021
Net Income (loss)$(9,917)$3,417 $(33,841)$2,256 
Denominator:
Denominator for basic income (loss)
per share - weighted average shares5,138,274 4,462,236 5,083,222 4,359,759 
Effect of dilutive securities:
Equity incentive plans 1,602,808  1,205,306 
Denominator for diluted income (loss) per share5,138,274 6,065,044 5,083,222 5,565,065 
Income (loss) per share - Basic$(1.93)$0.77$(6.66)$0.52 
Income (loss) per share - Diluted$(1.93)$0.56$(6.66)$0.41 

    The Company excluded the following securities from the calculation of basic and diluted net loss per share as the effect would have been antidilutive.
For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
Options to purchase common stock2,745,815 295,550 2,745,815 407,975 
Warrants to purchase common stock278,800  278,800  
Unvested restricted stock268,093  268,093 21,425 
Unvested performance stock20,185  20,185  
Shares issuable upon conversion of convertible debt222,332 509,165 222,332 509,165 
Total3,535,225 804,715 3,535,225 938,565 
Foreign Currency Translation
    The functional currency of the Company's wholly-owned subsidiary, Opiant UK is the British Pound, its local currency. Consequently, its assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of Opiant Pharmaceuticals UK Limited (“Opiant UK”), into U.S. dollars, the reporting currency, are excluded from the determination of net loss and are recorded in accumulated other comprehensive loss, a separate component of equity. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
Recently Adopted Accounting Pronouncements
    From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, ("FASB"), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
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    The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.
Note 3.     Marketable Securities
The Company invests in debt securities and has the intent and ability to hold until maturity. Therefore, the Company's Securities are classified as held-to-maturity. The Company's debt securities are all U.S. Treasury securities. The investments in debt securities are carried at either amortized cost or fair value. As of September 30, 2022, the Company had no marketable securities. Any debt securities with original maturities of three months or less are classified as cash equivalents.
Note 4.     Accounts Receivable
    As of September 30, 2022, the Company had $41 thousand in accounts receivable due from BARDA. As of December 31, 2021, the Company had $13.3 million in accounts receivable, which primarily related to royalty revenue from net sales of NARCAN®.

Note 5. Prepaid Expenses and Other Current Assets
    As of September 30, 2022 and December 31, 2021, the Company had prepaid expenses and other current assets of approximately $3.1 million and $3.0 million, respectively. The Company's prepaid expenses are primarily for advance research and development payments, insurance, software licenses, prepaid rent, and other amounts that relate to future periods of service. Other current assets primarily consist of such items as other receivables and security deposits.
Note 6. Leases
    On January 1, 2019, the Company adopted a new accounting standard, Topic 842, that amends the guidance for the accounting and reporting of leases. Leases with terms of 12 months or less are expensed on a straight-line basis over the term and are not recorded in the Company's Condensed Consolidated Balance Sheets.
    The Company has two operating leases with terms greater than 12 months as of September 30, 2022. In accordance with the guidance of Topic 842, the leases which are classified as operating leases must be included in the Company's Condensed Consolidated Balance Sheets. The Santa Monica operating lease contains an option to renew once for five years, which the Company does not expect to exercise, the other lease does not contain a renewal option. The operating leases do not contain residual value guarantees, do not have variable lease components, or impose significant restrictions or covenants.
Right of use assets, "ROU assets", represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments over the respective lease term, with the ROU asset adjusted for deferred rent liability. Lease expense is recognized on a straight line basis over the lease term. As the implicit rate on the leases is not determinable, the Company uses judgement to estimate the incremental borrowing rate which is used as the discount rate to determine the present value of lease payments. The weighted average discount rate used was 8.8% and the weighted average remaining lease term is 4.6 years.
The following table summarizes information related to the Company's operating leases and are included in the Company's Balance Sheet as of September 30, 2022.
Balance Sheet descriptionsSeptember 30, 2022
Assets:(in thousands)
Right of use assets - operating leases$2,739 
Liabilities:
Operating leases - current669 
Operating leases - long term2,084 
Total lease liabilities:$2,753 

The following table summarizes the components of operating lease cost for the three and nine months ended September 30, 2022:
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Lease costs, (in thousands)
Three months ended September 30, 2022Nine months ended September 30, 2022
Operating expenses lease costs$149 $395 
    As of September 30, 2022, future minimum operating leases payments related to the Company’s operating lease liabilities were as follows:
(in thousands)
September 30, 2022
2022 (three months remaining)$179 
2023709 
2024737 
2025780 
2026 and thereafter1,036 
Total lease payments3,441 
Less imputed interest(688)
Present value of operating lease liabilities$2,753 
Note 7. Other Non-Current Assets
As of September 30, 2022 and December 31, 2021, the Company had other non-current assets of approximately $234 thousand and $180 thousand, respectively. The Company's non-current prepaid expenses are primarily for deposits.
Note 8. Revenue
NARCAN® Royalties
The Company's primary source of revenue has been from royalty payments received from NARCAN® net sales by EBS. During the three months ended September 30, 2022 the Company did not record any royalty revenue. On August 10, 2022, the Company, delivered a notice (the "Default Notice") to EBS under section 10.3 the Adapt Agreement to put EBS on notice that EBS had breached one or more of its obligations under the Adapt Agreement. On November 14, 2022, the Company entered into an agreement with EBS to settle the Default Notice dated August 10, 2022 and terminate the Company's rights to receive any further payments, including royalties, under the License Agreement (see Note 13). For the nine months ended September 30, 2022, the Company recorded $4.5 million in royalty revenue related to its agreement with EBS, before it was terminated.
BARDA Contract
    On September 19, 2018, the Company entered into a contract with the Biomedical Advanced Research and Development Authority (“BARDA”), which is part of the U.S. Health and Human Services Office of the Assistant Secretary for Preparedness and Response, to accelerate the Company’s development of OPTN003, its lead product candidate. OPTN003, nasal nalmefene, is a potent, long-acting opioid antagonist currently in development for the treatment of opioid overdose. The contract provides funding up to approximately $10.8 million and covers activities related to the New Drug Application for OPTN003 with the Food and Drug Administration. BARDA has awarded approximately $10.8 million of the contract as of September 30, 2022. During the three and nine months ended September 30, 2022, the Company recognized revenue of $0.2 million and $4.0 million, respectively related to this contract.
Deferred revenue
    On April 17, 2018, the Company was awarded a grant of approximately $7.4 million from the National Institutes of Health’s National Institute on Drug Abuse, ("NIDA"). The grant provided the Company with additional resources for the development of OPNT003.
Government grants are agreements that generally provide cost reimbursement for certain types of expenditures in return for research and development activities over a contractually defined period. The Company recognized revenues from grants in the period during which the related costs were incurred, provided that the conditions under which the grants were provided had been met and only perfunctory obligations were outstanding.
As of March 31, 2022, the Company had received the entire $7.4 million, and all the work related to the grant was complete. During the three and nine months ended September 30, 2022, the Company recognized revenue of $0 and $17 thousand, respectively related to this grant.
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The following is a summary of the Company’s deferred revenue activity as of September 30, 2022:

(in thousands)NIDA Grant Total
Balance as of December 31, 2021$17 $17 
Additions to deferred revenue  
Recognized as revenue(17)(17)
Balance as of September 30, 2022$ $ 


Note 9. Royalty Payable
    The Company entered into various agreements and subsequently received funding from investors for use by the Company for the research and development of its Opioid Overdose Reversal Treatment Product ("OORTP"). In exchange for this funding, the Company agreed to provide investors with interest in the OORTP net profit generated from NARCAN® sales by EBS into perpetuity. As of September 30, 2022, the Company did not record any royalty payable (see Note 13). As of December 31, 2021, the Company recorded a $2.9 million royalty payable.
Note 10. Debt
As of September 30, 2022 the Company had short and long term debt (net of amortization discount) of $13.8 million. As of December 31, 2021, the Company had long term debt (net of amortization discount) of $16.1 million. There have been no changes to the maturity or other conditions of the debt for the nine months ended September 30, 2022. During the nine months ended September 30, 2022 approximately $2.6 million of debt was converted to Common Stock at a conversion price of $19.64 per share.
Note 11. Stockholders' Equity 
Common Stock
    During the nine months ended September 30, 2022, the Company issued 7,097 shares of Common Stock as a result of stock option exercises, and received net cash proceeds of approximately $92 thousand.    
During the nine months ended September 30, 2022, the Company sold 45,236 shares of Common Stock and received net proceeds of $538 thousand after deducting sales commission under its Controlled Equity Offering with Cantor Fitzgerald & Company.
During the nine months ended September 30, 2022, the Company issued 51,671 shares of Common Stock for restricted stock units that vested.
During the nine months ended September 30, 2022, the Company issued 20,185 shares of Common Stock for performance stock units that vested.
Equity Plans 
    On September 8, 2017, the Company held its Annual Meeting of Stockholders (the “Annual Meeting”), at which time the 2017 Long-Term Incentive Plan ("2017 Plan") was approved by stockholder vote. The 2017 Plan allows the Company to grant both incentive stock options (“ISOs”) and non-qualified stock options (“NSOs”) to purchase a maximum of 400,000 shares of the Company's Common Stock. Under the terms of the 2017 Plan, ISOs may only be granted to Company employees and directors, while NSOs may be granted to employees, directors, advisors, and consultants. The Company's Board of Directors (the "Board") has the authority to determine to whom options will be granted, the number of options, the term, and the exercise price. Options are to be granted at an exercise price not less than fair value for an ISO or an NSO. The vesting period is normally over a period of four years from the vesting date. The contractual term of an option is no longer than 10 years. The 2017 Plan also allows the Company to issue restricted stock.

    As provided in the 2017 Plan, on January 1, 2022 the number of shares available for issuance was increased by 4% of the outstanding stock as of December 31, 2021, which represents an increase of 196,394 shares. As of September 30, 2022, the Company had 92,510 shares available for future issuance under the 2017 Plan.

    Prior to adopting the 2017 Plan, the Company did not have a formal long-term incentive stock plan. Prior to the implementation of the 2017 Plan, the Company had discretion to provide designated employees of the Company and its
13


affiliates, certain consultants, and advisors who perform services for the Company and its affiliates, and non-employee members of the Board and its affiliates with the opportunity to receive grants of non-qualified stock options (the "Pre-2017 Non-Qualified Stock Options"). All of the Pre-2017 Non-Qualified Stock Option Grants were intended to qualify as non-qualified stock options. There were no Pre-2017 Non-Qualified Stock Option Grants that were intended to qualify as incentive stock options.
On July 8, 2021, the Board of Directors of the Company adopted the 2021 Inducement Equity Incentive Plan (the “Inducement Plan”) and, subject to the adjustment provisions of the Inducement Plan, reserved 100,000 shares of the Company’s Common Stock for issuance pursuant to equity awards granted under the Inducement Plan. On December 9, 2021, the Board of Directors of the Company amended the Inducement Plan to reserve an additional 100,000 shares of the Company’s Common Stock under the Inducement Plan. As of September 30, 2022, the Company had 70,250 shares available for grant under the 2021 Inducement Plan.
Pre-2017 Non-Qualified Stock Options
    As of December 31, 2021, the Company had outstanding Pre-2017 Non-Qualified Stock Options to purchase, in the aggregate, 1,950,500 shares of the Company's Common Stock. During the nine months ended September 30, 2022, the Company did not grant any Pre-2017 Non-Qualified Stock Options.
    Stock option activity for the Pre-2017 Non-Qualified Stock Options for the nine months ended September 30, 2022 is presented in the table below:
 Number of SharesWeighted-average Exercise PriceWeighted-average Remaining Contractual Term (years)Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 20211,950,500 $7.17 3.4$51,602 
Exercised  
Forfeited  
Outstanding at September 30, 20221,950,500 $7.17 2.65$6,975 

A summary of the status of the Company’s non-vested Pre-2017 Non-Qualified Stock Options as of September 30, 2022 is presented in the table below:
Number of OptionsWeighted Average Grant Date Fair Value
Vested at September 30, 20221,950,500 $7.17 

During the nine months ended September 30, 2022 and 2021, the Company did not recognize any non-cash expense related to Pre-2017 Non-Qualified Stock Options, and there is no further compensation expense to be recognized for the Pre-2017 Non-Qualified Stock Options.
The 2017 Plan
    During the nine months ended September 30, 2022, the Company did not grant any options under the 2017 Plan.
Stock option activity for options granted under the 2017 Plan during the nine months ended September 30, 2022 is presented in the table below:
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Number of Options OutstandingWeighted-average Exercise PriceWeighted-average Remaining Contractual Term (years)Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2021759,058 $19.61 7.31$10,997 
Granted $ 
Exercised(7,097)$12.91 
Forfeited(13,146)$13.69 
Balance at September 30, 2022738,815 $19.78 6.52$56 

A summary of the status of the Company’s vested and non-vested options granted under the 2017 Plan as of September 30, 2022 is presented in the table below:
Number of SharesWeighted Average Grant Date Fair Value per Share
Vested at September 30, 2022595,716 $20.23 
Non-vested at September 30, 2022143,009 $9.54 

During the nine months ended September 30, 2022 and 2021, the Company recognized approximately $491 thousand and $1.4 million, respectively of non-cash expense related to options granted under the 2017 Plan. As of September 30, 2022, there was approximately $393 thousand of unrecognized compensation costs related to non-vested stock options that were granted under the 2017 Plan.
Restricted Stock Activity
    The following summarizes the restricted stock activity under the Company's 2017 Plan during the nine months ended September 30, 2022:
Number of SharesWeighted Average Fair Value Per Share
Restricted stock outstanding and unvested at December 31, 2021104,416 $12.57 
Restricted stock granted147,475 $31.04 
Restricted stock vested(47,123)$12.58 
Restricted stock forfeited(6,925)$24.76 
Restricted stock outstanding and unvested at September 30, 2022197,843 $25.91 
    The Company has two different vesting terms for RSUs. For most grants, twenty five percent or (1/4) of the restricted stock units will vest on the one year anniversary of the vesting commencement date, and twenty-five percent or (1/4) will vest annually thereafter on the same day as the vesting commencement date, and for others approximately thirty-three percent (1/3) of the restricted stock units will vest on the one year anniversary of the vesting commencement date, and approximately thirty-three percent or (1/3) will vest annually thereafter on the same day as the vesting commencement date. During the nine months ended September 30, 2022 and 2021, the Company recognized approximately $2.3 million and $563 thousand, respectively of non-cash expense related to restricted stock units. As of September 30, 2022, there was $2.7 million of total unrecognized compensation cost related to restricted stock units.
Performance Stock Unit Activity
During the nine months ended September 30, 2022, the Company granted 80,735 performance stock units to certain employees. The performance stock units vest upon meeting various performance criteria established by the Compensation and Human Capital Committee of the Board of Directors.
Performance stock unit activity granted under the 2017 Plan during the nine months ended September 30, 2022 is presented in the table below:

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Number of SharesWeighted Average Fair Value Per Share
Performance stock outstanding and unvested at December 31, 2021 $ 
Performance stock granted80,735 $32.85 
Performance stock vested(20,185)$32.85 
Performance stock forfeited(40,365)$32.85 
Performance stock outstanding and unvested at September 30, 202220,185 $32.85 
During the nine months ended September 30, 2022, the Company recognized approximately $1.1 million of non-cash expense related to performance stock units under the 2017 Plan. As of September 30, 2022, there was $0.4 million of total unrecognized compensation cost related to performance stock units under the 2017 Plan.
Inducement Plan
During the nine months ended September 30, 2022, the Company did not grant any options under the Inducement Plan.
Stock option activity for options granted under the Inducement Plan during the nine months ended September 30, 2022 is presented in the table below:

Number of Options OutstandingWeighted-average Exercise PriceWeighted-average Remaining Contractual Term (years)Aggregate Intrinsic Value (in thousands)
Balance at December 31, 202156,500 $16.41 9.55$973 
Granted $ 
Exercised $ 
Forfeited $ 
Balance at September 30, 202256,500 $16.41 8.8$ 

During the nine months ended September 30, 2022, the Company recognized approximately $232 thousand of non-cash expense related to options granted under the Inducement Plan. As of September 30, 2022, there was approximately $205 thousand of total unrecognized compensation cost related to the non-vested stock options that were granted under the Inducement Plan.
Restricted Stock Activity
The following summarizes the restricted stock activity under the Inducement Plan during the nine months ended September 30, 2022:


Number of SharesWeighted Average Fair Value Per Share
Restricted stock outstanding and unvested at December 31, 202149,800 $26.98 
Restricted stock granted30,450 $13.89 
Restricted stock vested(4,550)$16.41 
Restricted stock forfeited(5,450)$32.11 
Restricted stock outstanding and unvested at September 30, 202270,250 $21.59 


During the nine months ended September 30, 2022, the Company recognized approximately $540 thousand of non-cash expense related to restricted stock units granted under the Inducement Plan. As of September 30, 2022, there was $0.9 million of total unrecognized compensation cost related to restricted stock units granted under the Inducement Plan.
Warrants
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During the nine months ended September 30, 2022, the Company did not issue any warrants.
Warrant activity for the nine months ended September 30, 2022 is presented in the table below:

Number of SharesWeighted-average Exercise PriceWeighted-average Remaining Contractual Term (years)Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021278,800 $9.72 2.51$6,666 
Exercised $ 
Forfeited $ 
Outstanding at September 30, 2022278,800 $9.72 1.76$107 
Exercisable at September 30, 2022278,800 $9.72 1.76$107 
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Note 12. Commitments and Contingencies
Commitments
    The Company has entered into various agreements related to its business activities. The following is a summary of the Company’s commitments:
Aptar Agreement
On October 26, 2020, the Company entered into a Master Services Agreement (“MSA”) with AptarGroup, Inc. and Aptar France (collectively “Aptar”) to provide non-exclusive technology access and co-development services for the development and submission of an opioid antagonist for the treatment of opioid overdose using Aptar’s nasal Unidose device (the “UDS Device”). In addition to the cost of the UDS Devices, the Company expects to spend up to approximately $5.2 million over the course of the development program. Under the Master Service Agreement, the Company will be required to pay Aptar 750 thousand Euro upon the successful NDA filing.
On June 8, 2022, the Company entered into a Capacity Investment Agreement (the "Capacity Agreement") with Aptar, whereby the Company will make non-refundable payments in the aggregate amount of 2.0 million Euros over eighteen months. In consideration of these payments, Aptar will guarantee that it has equipment installed and maintained for the future production of Aptar's unidose nasal device to meet the Company's potential commercial demand for OPNT003, nasal nalmefene. During the nine months ended September 30, 2022 the Company made the first payment of 1 million Euro to Aptar related to the Capacity Agreement.
Summit Agreement
On July 22, 2020, the Company entered into a Project Scope Agreement ("PSA") pursuant to a Master Services Agreement ("MSA") with Summit Biosciences, Inc. ("Summit"), to support the development and manufacture of a nasal spray device for opioid overdose, with the ability to expand to additional programs in the future. In accordance with the PSA, Summit will develop and produce certain pre-filled nasal spray products using a device previously evaluated as part of other FDA-approved nasal spray products. The Company will pay Summit estimated costs and fees up to approximately $11.0 million which includes paid deposits of approximately $1.1 million, which is included in current assets in the condensed consolidated balance sheet as of September 30, 2022. As of September 30, 2022 the Company has incurred $9.3 million of expense under PSAs related to the MSA with Summit.
Torreya Agreement
    The Company entered into a consulting agreement with Torreya Partners LLP ("Torreya"), a financial advisory firm, under which Torreya agreed to provide certain financial advisory services. The Company is required to pay fees equivalent to 3.375% of all amounts received by the Company from net sales of NARCAN® into perpetuity.
During the nine months ended September 30, 2022 and 2021, the Company recorded $153 thousand and $935 thousand, respectively of expense related to Torreya.
Exclusive License and Collaboration Agreement
    On November 19, 2015, the Company entered into an exclusive license agreement and collaboration agreement (“LOI”) with a pharmaceutical company with certain desirable proprietary information. Pursuant to the agreement, the Company is obligated to issue shares of unregistered Common Stock upon the occurrence of various milestones. No shares were required to be issued under this agreement during the nine months ended September 30, 2022 and 2021.
Supply Agreement
    On June 22, 2017, the Company entered into a license agreement (the "License Agreement") and a related supply agreement (the “Supply Agreement”) with Aegis Therapeutics LLC ("Aegis") pursuant to which the Company was granted an exclusive license (the “License”) to Aegis’ proprietary chemically synthesizable delivery enhancement and stabilization agents, including, but not limited to, Aegis’ Intravail® absorption enhancement agents, ProTek® and HydroGel® (collectively, the “Technology”) to exploit (a) the Compounds (as such are defined in the License Agreement) and (b) a product containing a Compound and formulated using the Technology (“Product”), in each case of (a) and (b) for any and all purposes. The License Agreement restricts the Company's ability to manufacture any Aegis excipients included in the Technology (“Excipients”), except for certain instances of supply failure, supply shortage or termination of the Supply Agreement, and the Company shall obtain all supply of such Excipients from Aegis under the Supply Agreement. The License Agreement also restricts Aegis’s ability to compete with the Company worldwide with respect to the Exploitation (as defined in the License Agreement) of any therapeutic containing a Compound or derivative or active metabolite of a Compound without the Company's prior written consent. The effective date of the License Agreement and the Supply Agreement is January 1, 2017.
    As consideration for the grant of the License, the Company paid Aegis two immaterial upfront payments, of which the Company paid 50% by issuing the Company's Common Stock to Aegis, with the number of shares issued equal to 75% of the average closing price of the Company's Common Stock over the 20 trading days preceding the date of payment. The License
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Agreement also provides for (A) additional developmental milestone payments for each Product containing a different Compound equal to up to an aggregate of $1.8 million, (B) additional commercialization milestone payments for each Product containing a different Compound equal to up to an aggregate of $5.0 million, and (C) single low digit royalties on the Annual Net Sales (as defined in the License Agreement) of all Products during the Royalty Term (as defined in the License Agreement) according to a tiered royalty rate based on Annual Net Sales of the Products by the Company, the Company's sublicensees and affiliates. The Company shall also pay to Aegis a sublicense fee based on a sublicense rate negotiated in good faith by the parties. The License Agreement contains customary representations and warranties, ownership, patent rights, confidentiality, indemnification and insurance provisions. The License Agreement shall expire upon the expiration of the Company's obligation to pay royalties under such License Agreement; provided, however, that the Company shall have the right to terminate the License granted on a Product-by-Product or country-by-country basis upon 30 days prior written notice to Aegis.
    Under the terms of the Supply Agreement, Aegis shall deliver to the Company any preclinical, clinical and commercial supply of the Excipients, which Aegis sources from various contract manufacturers. The Supply Agreement has a term of 20 years but shall terminate automatically in the event of expiration or termination of the License Agreement or at any time upon the written agreement of both parties. The Supply Agreement contains customary provisions relating to pricing for such materials, forecasts, delivery, inspection, indemnification, insurance and representations, warranties and covenants. The Supply Agreement includes technology transfer provisions for the transfer of all materials and know-how specific to the manufacturing of the Excipients that is necessary or useful for the Company to manufacture such Excipients. The Company does not have the right to manufacture such Excipients except in the event that Aegis is unable to supply and sell any portion of the material to the Company (subject to a 60-day cure period).
    Under the License Agreement, the Company will be required to pay Aegis $250 thousand upon the successful NDA filing.
    For the nine months ended September 30, 2022, and September 30, 2021, the Company did not have any expenses associated with the License Agreement.
Contingencies
The Company may be subject to various legal proceedings and claims that arise in the ordinary course of business. The Company records a liability when it is probable that a loss will be incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. If any legal matter, were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s would reflect any potential claim in the consolidated financial statements for that reporting period.
The Company and Emergent BioSolutions Inc., through its Adapt Pharma subsidiaries (collectively, “Plaintiffs”), filed complaints, in 2016 against Teva Pharmaceuticals Industries Ltd. (“Teva”), and in 2018 against Perrigo UK FINCO Limited Partnership (“Perrigo”), relating to Teva’s and Perrigo’s respective abbreviated new drug applications (each, an “ANDA”) seeking to market generic versions of NARCAN® (naloxone hydrochloride) Nasal Spray 4mg/spray. On January 21, 2022, the Plaintiffs and Teva Canada Limited entered into a settlement agreement to resolve the ongoing litigation. Under the terms of the settlement, Teva Canada can launch a generic NARCAN® after December 15, 2023. This date can be accelerated if a third party receives approval from the Canadian Food Inspection Agency prior to this date.
On February 12, 2020, Plaintiffs and Perrigo entered into a settlement agreement to resolve the ongoing litigation. Under the terms of the settlement, Perrigo has received a non-exclusive license under the Company's patents licensed to Adapt to make, have made and market its generic naloxone hydrochloride nasal spray under its own ANDA. Perrigo’s license will be effective as of January 5, 2033 or earlier under certain circumstances including circumstances related to the outcome of the current litigation against Teva or litigation against future ANDA filers. The Perrigo settlement agreement is subject to review by the U.S. Department of Justice and the Federal Trade Commission, and entry of an order dismissing the litigation by the U.S. District Court for the District of New Jersey.
Closing arguments in the Teva trial were held on February 26, 2020. On June 5, 2020, the U.S. District Court for the District of New Jersey entered a decision in the patent litigation regarding NARCAN® (naloxone HCl) Nasal Spray 4mg/spray product. The Court ruled in favor of Teva.
The Company's commercial partner EBS, appealed the decision to the Court of Appeals for the Federal Circuit.
On February 10, 2022, the Court of Appeals for the Federal Circuit affirmed the decision by the U.S. District Court for the District of New Jersey in favor of Teva.

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Note 13. Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements are filed for potential recognition or disclosure. Based upon this review, the Company identified the following subsequent events:
Merger
On November 14, 2022, the Company announced it has that entered into a definitive merger agreement under which Indivior Inc., a subsidiary of Indivior PLC, ("Indivior") will acquire the Company for an upfront consideration of $20.00 per share, in cash (approximately $145 million in the aggregate), plus up to $8.00 per share in non-tradable contingent value rights (“CVRs”) that may become payable in the event that certain net revenue milestones are achieved by OPNT003 after its approval and US commercial launch.
Pursuant to the CVRs, Indivior would pay $2.00 per CVR if OPNT003 achieves the following net revenue thresholds during any period of four consecutive quarters prior to the seventh anniversary of the US commercial launch: (i) $225 million, (ii) $300 million, and (iii) $325 million. The remaining $2.00 per CVR would be paid if OPNT003 achieves net revenue of $250 million during any period of four consecutive quarters prior to the third anniversary of the US commercial launch. The maximum amount payable by Indivior should OPNT003 achieve all four CVRs would be approximately $