NVUS 2018 Annual Report

UHSRUWLQJ XQLW¶V IDLU YDOXH IURP WKH ODVW TXDQWLWDWLYH DVVHVVPHQW WR GHWHUPLQH LI WKHUH LV SRWHQWLDO LPSDLUPHQW 7KH &RPSDQ\ may do a qualitative assessmen W ZKHQ WKH UHVXOWV RI WKH SUHYLRXV TXDQWLWDWLYH WHVW LQGLFDWHG WKH UHSRUWLQJ XQLW¶V HVWLPDWHG IDLU value was significantly in excess of the carrying value of its net assets and it does not believe there have been significant FKDQJHV LQ WKH UHSRUWLQJ XQLW¶V operations that would significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies. Key assumptions for these projections include revenue growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The revenue and margin growth is based on increased sales of new products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products WR EH FRPPHUFLDOL]HG 7KH &RPSDQ\¶V PDUNHW FDSLWDOL]DWLRQ LV DOVR FRQVLGHUHG DV D SDUW RI LWV DQDO\VLV RESULTS OF OPERATIONS Comparison of the Years Ended December 31, 2018 and 2017 The following table provides comparative results of operations for the years ended December 31, 2018 and 2017 (in thousands):

Year Ended December 31,

2018

2017 $ Variance % Variance

Operating expenses:

Research and Development General and Administrative Total operating expenses

$

6,817 $

2,022 $

4,795

237% -35%

7,243 14,060

11,099 13,121

(3,856)

939

7% 7%

Loss from operations

(14,060) (13,121)

(939)

Other income (expense), net

(5)

5

(10)

(200)%

Net loss and other comprehensive loss

$ (14,065) $ (13,116) $

(949)

7%

Research and Development Expenses The increase in research and development expenses of $4.8 million for the year ended December 31, 2018 was primarily due to an increase in formulation and device development costs of $2.1 million, an increase in clinical development costs of $1.7 million, and an increase in consulting costs of $242,000 related to the advancement of our OP0201 programs. Additionally, personnel costs to support our programs increased $713,000 due to additional headcount in clinical operations and regulatory operations and bonus accrual. We expect research and development expenses to increase in subsequent periods as we advance our OP0201 programs. General and Administrative Expenses The decrease in general and administrative expenses of $3.9 million for the year ended December 31, 2018 was primarily due to a reduction of $5.1 million in merger-related expenses, partially offset by an increase of $659,000 in administrative costs associated with operating a public company and a $511,000 increase in personnel related costs due to additional headcount and bonus accrual. Other Income (Expense), Net The change in other income (expense), net was primarily related to interest income received on interest bearing accounts in the year ended December 31, 2017. As cash was used in operations, all cash was needed in operating accounts and there was less balances in interest bearing accounts during the year ended December 31,2018. Other expense consisted primarily of realized losses related to foreign currency translation for vendor payments in the 2018 period.

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