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f

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, 2021

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 001-36193

Trevena, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)

26-1469215
(I.R.S. Employer Identification No.)

955 Chesterbrook Boulevard, Suite 110
Chesterbrook, PA
(Address of Principal Executive Offices)

19087
(Zip Code)

Registrant’s telephone number, including area code: (610354-8840

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

TRVN

The Nasdaq Stock Market LLC

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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $0.001 par value

Shares outstanding as of November 12, 2021: 164,518,213

Table of Contents

TABLE OF CONTENTS

Page

Cautionary Note Regarding Forward-Looking Statements

iii

PART I- FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

1

Balance Sheets

1

Statements of Operations and Comprehensive Loss

2

Statement of Stockholders’ Equity

3

Statements of Cash Flows

4

Notes to Unaudited Financial Statements

5

Item 2.

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

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II- OTHER INFORMATION

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults Upon Senior Securities

26

Item 4.

Mine Safety Disclosures

26

Item 5.

Other Information

26

Item 6.

Exhibits

26

SIGNATURES

27

ii

Table of Contents

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this “Quarterly Report,” contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but also are contained elsewhere in this Quarterly Report, as well as in sections such as “Risk Factors” that are incorporated by reference into this Quarterly Report from our most recent Annual Report on Form 10-K, or the “Annual Report.” In particular, we caution you that our forward-looking statements are subject to the ongoing and developing circumstances related to the COVID-19 pandemic, which may have a material adverse effect on our business, operations and future financial results. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

our ability to successfully commercialize OLINVYK and any other product candidates for which we may obtain regulatory approval;

our sales, marketing and manufacturing capabilities and strategies;

any ongoing or planned clinical trials and preclinical studies for our product candidates;

our ability to have the FDA clinical hold lifted on the TRV045 Phase 1 study;

the extent of future clinical trials potentially required by the U.S. Food and Drug Administration for our product candidates;

our ability to fund future operating expenses and capital expenditures with our current cash resources or to secure additional funding in the future;

the timing and likelihood of obtaining and maintaining regulatory approvals for our product candidates;

our plan to develop and potentially commercialize our product candidates;

the clinical utility and potential market acceptance of our product candidates, particularly in light of existing and future competition;

the size of the markets for our product candidates;

the performance of third-parties upon which we depend, including contract manufacturing organizations, suppliers, contract research organizations, distributors and logistic providers;

our ability to identify or acquire additional product candidates with significant commercial potential that are consistent with our commercial objectives;

the extent to which health epidemics and other outbreaks of communicable diseases, including the ongoing COVID-19 pandemic, could disrupt our operations and/or materially and adversely affect our business and financial conditions;

our intellectual property position and our ability to obtain and maintain patent protection and defend our intellectual property rights against third parties;

iii

Table of Contents

ongoing litigation; and

our ability to satisfy all applicable Nasdaq continued listing requirements.

You should refer to the “Risk Factors” section of this Quarterly Report and our Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

iv

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

TREVENA, INC.

Balance Sheets

(in thousands, except share and per share data)

    

September 30, 2021

    

December 31, 2020

(unaudited)

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

78,646

$

109,403

Accounts receivable, net

103

71

Inventories

1,310

Insurance recovery

9,000

Prepaid expenses and other current assets

 

2,345

 

570

Total current assets

 

82,404

 

119,044

Restricted cash

 

1,311

 

1,310

Property and equipment, net

 

1,947

 

2,253

Right-of-use lease asset

4,815

5,119

Other assets

 

1,171

 

13

Total assets

$

91,648

$

127,739

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable, net

$

2,969

$

1,693

Accrued expenses and other current liabilities

 

3,678

 

5,168

Estimated settlement liability

9,000

Lease liability

770

703

Total current liabilities

 

7,417

 

16,564

Leases, net of current portion

 

6,516

 

7,101

Warrant liability

 

 

6

Total liabilities

 

13,933

 

23,671

Commitments and contingencies (Note 6)

 

  

 

  

Stockholders’ equity:

 

  

 

  

Common stock—$0.001 par value; 200,000,000 shares authorized at September 30, 2021 and December 31, 2020; 164,518,213 and 159,999,917 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

165

 

160

Preferred stock—$0.001 par value; 5,000,000 shares authorized, none issued or outstanding at September 30, 2021 and December 31, 2020

 

 

Additional paid-in capital

 

557,707

 

546,422

Subscription receivable

(8)

Accumulated deficit

 

(480,149)

 

(442,514)

Total stockholders’ equity

 

77,715

 

104,068

Total liabilities and stockholders’ equity

$

91,648

$

127,739

See accompanying notes to financial statements.

1

Table of Contents

TREVENA, INC.

Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except share and per share data)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

Revenue:

  

  

  

  

Product revenue

$

112

$

$

499

$

License revenue

69

3,000

69

3,000

Total revenue

 

181

 

3,000

 

568

 

3,000

Operating expenses:

 

 

 

 

Cost of goods sold

199

620

Selling, general and administrative

 

10,438

 

4,089

 

28,351

 

11,021

Research and development

 

3,404

 

4,301

 

9,489

 

9,450

Total operating expenses

 

14,041

 

8,390

 

38,460

 

20,471

Loss from operations

 

(13,860)

 

(5,390)

 

(37,892)

 

(17,471)

Other income (expense):

 

  

 

  

 

  

 

Change in fair value of warrant liability

 

1

 

(14)

 

6

 

(17)

Other income, net

 

51

 

75

 

127

 

170

Interest income

 

39

 

78

 

130

 

146

Interest expense

 

 

 

(29)

(Loss) gain on foreign currency exchange

(2)

(6)

3

Total other income

 

89

 

139

 

257

 

273

Loss before income tax expense

(13,771)

(5,251)

(37,635)

(17,198)

Foreign income tax expense

(300)

(300)

Net loss and comprehensive loss

$

(13,771)

$

(5,551)

$

(37,635)

$

(17,498)

Per share information:

 

  

 

  

 

  

 

  

Net loss per share of common stock, basic and diluted

$

(0.08)

$

(0.04)

$

(0.23)

$

(0.15)

Weighted average common shares outstanding, basic and diluted

 

164,510,570

 

144,335,143

162,811,136

 

117,420,221

See accompanying notes to financial statements.

2

Table of Contents

TREVENA, INC.

Statement of Stockholders’ Equity (Unaudited)
(in thousands, except share data)

Stockholders' Equity

Common Stock

Number

$0.001

Additional

Total

of

Par

Paid-in

Subscription

Accumulated

Stockholders'

    

Shares

    

Value

    

Capital

    

Receivable

    

Deficit

    

Equity

Balance, January 1, 2021

 

159,999,917

$

160

$

546,422

$

$

(442,514)

$

104,068

Stock-based compensation expense

 

1,111

 

1,111

Exercise of stock options

 

5,000

9

 

9

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

 

49,720

(69)

 

(69)

Issuance of common stock, net of issuance costs

 

1,219,023

1

2,791

 

2,792

Net loss

 

(9,842)

 

(9,842)

Balance, March 31, 2021

 

161,273,660

$

161

$

550,264

$

$

(452,356)

$

98,069

Stock-based compensation expense

 

1,182

 

1,182

Exercise of stock options

 

132,184

1

170

 

171

Issuance of common stock, net of issuance costs

 

3,058,879

3

5,153

 

5,156

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

 

44,115

(48)

 

(48)

Net loss

 

(14,022)

 

(14,022)

Balance, June 30, 2021

 

164,508,838

$

165

$

556,721

$

$

(466,378)

$

90,508

Stock-based compensation expense

 

978

 

978

Subscription receivable

9,375

8

(8)

Net loss

 

(13,771)

 

(13,771)

Balance, September 30, 2021

 

164,518,213

$

165

$

557,707

$

(8)

$

(480,149)

$

77,715

Balance, January 1, 2020

 

94,213,760

$

94

$

443,129

$

$

(413,145)

$

30,078

Stock-based compensation expense

 

891

 

891

Issuance of common stock, net of issuance costs

 

4,816,244

5

3,546

 

3,551

Net loss

 

(5,725)

 

(5,725)

Balance, March 31, 2020

 

99,030,004

$

99

$

447,566

$

$

(418,870)

$

28,795

Stock-based compensation expense

 

766

 

766

Issuance of common stock, net of issuance costs

 

28,135,057

28

32,001

 

32,029

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

 

45,211

(40)

 

(40)

Net loss

 

(6,222)

 

(6,222)

Balance, June 30, 2020

 

127,210,272

$

127

$

480,293

$

$

(425,092)

$

55,328

Stock-based compensation expense

 

787

 

787

Subscription receivable

 

197,640

135

(135)

 

Issuance of common stock, net of issuance costs

 

29,420,175

30

60,614

 

60,644

Net exercise of common stock warrant

 

201,925

 

Net loss

 

(5,551)

 

(5,551)

Balance, September 30, 2020

 

157,030,012

$

157

$

541,829

$

(135)

$

(430,643)

$

111,208

See accompanying notes to financial statements.

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TREVENA, INC.

Statements of Cash Flows (Unaudited)

(in thousands)

Nine Months Ended

September 30, 

    

2021

    

2020

Operating activities:

Net loss

$

(37,635)

$

(17,498)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

Depreciation

 

322

 

368

Stock-based compensation

 

3,271

 

2,444

Noncash interest expense on loans

 

 

8

Revaluation of warrant liability

 

(6)

 

17

Change in right-of-use asset

304

259

Changes in operating assets and liabilities:

 

 

Accounts receivable, prepaid expenses and other assets

 

(1,801)

 

680

Inventories

(1,310)

Insurance recovery

9,000

Settlement liability

(9,000)

Operating lease liabilities

(512)

(448)

Accounts payable, accrued expenses and other liabilities

 

(214)

 

(92)

Net cash used in operating activities

 

(37,581)

 

(14,262)

Investing activities:

 

  

 

  

Purchases of property and equipment

 

(16)

 

Long term deposits

(1,164)

Maturities of marketable securities

 

 

3,500

Net cash (used in) provided by investing activities

 

(1,180)

 

3,500

Financing activities:

 

  

 

  

Proceeds from exercise of common stock options

 

180

 

Proceeds from issuance of common stock, net

 

7,948

 

96,233

Payment of employee withholding taxes on vested restricted stock units

(117)

(40)

Finance lease payments

 

(6)

 

(8)

Repayments of loans payable, net

(5,045)

Net cash provided by financing activities

 

8,005

 

91,140

Net decrease in cash, cash equivalents and restricted cash

 

(30,756)

 

80,378

Cash, cash equivalents and restricted cash—beginning of period

 

110,713

 

33,614

Cash, cash equivalents and restricted cash—end of period

$

79,957

$

113,992

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid for interest

$

$

19

Subscription receivable on exercise of options

$

8

$

135

See accompanying notes to financial statements.

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TREVENA, INC.

Notes to Unaudited Financial Statements

September 30, 2021

1. Organization and Description of the Business

Trevena, Inc., or the Company, was incorporated in Delaware as Parallax Therapeutics, Inc. in November 2007. The Company began operations in December 2007, and its name was changed to Trevena, Inc. in January 2008. The Company is a biopharmaceutical company focused on the development and commercialization of novel medicines for patients affected by central nervous system, or CNS, disorders. The Company operates in one segment and has its principal office in Chesterbrook, Pennsylvania.

Since commencing operations in 2007, the Company has devoted substantially all of its financial resources and efforts to commercializing its lead asset, OLINVYK® (oliceridine) injection, or OLINVYK, and to research and development, including nonclinical studies and clinical trials. The Company has never been profitable. In August 2020, the United States Food and Drug Administration, or FDA, approved the new drug application, or NDA, for OLINVYK. The Company initiated commercial launch of OLINVYK in the first quarter of 2021.

Since its inception, the Company has incurred losses and negative cash flows from operations. At September 30, 2021, the Company had an accumulated deficit of $480.1 million. The Company’s net loss was $37.6 million and $17.5 million for the nine months ended September 30, 2021 and 2020, respectively. The Company follows the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. The Company expects that its existing balance of cash and cash equivalents as of September 30, 2021 is sufficient to fund operations for more than one year after the date of this filing. There can be no assurance that the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company, or that the Company will be successful in deferring certain operating expenses, or that the COVID-19 pandemic will not have an impact on the Company’s ability to raise capital or fund its operations as planned. If the Company is unable to raise sufficient additional capital or defer sufficient operating expenses, the Company may be compelled to reduce the scope of its operations and planned capital expenditures.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the ASC and Accounting Standards Update, or ASU, of FASB. The Company’s functional currency is the U.S. dollar.

The financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s balance sheets as of September 30, 2021, its results of operations and its comprehensive loss for the three and nine months ended September 30, 2021 and 2020, its statement of stockholders’ equity for the period from January 1, 2021 to September 30, 2021 and for the period January 1, 2020 to September 30, 2020, and its statements of cash flows for the nine months ended September 30, 2021 and 2020. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2020. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies. The financial data and other information disclosed in these notes related to the nine months ended September 30, 2021 and 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

We have been actively monitoring the novel coronavirus, or COVID-19, situation and its impact globally. Remote working arrangements and travel restrictions imposed by various jurisdictions have had a limited impact on our ability to maintain operations. The full extent to which the COVID-19 pandemic will directly or indirectly impact our

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business, results of operations and financial condition will depend on future developments that are highly uncertain, including vaccine adoption and effectiveness, the impact of emerging variants of the novel coronavirus, and the actions taken to contain or treat COVID-19.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. These estimates and assumptions are based on current facts, historical experience as well as other pertinent industry and regulatory authority information, including the potential future effects of COVID-19, the results of which form the basis for making judgements about the carrying values of assets and liabilities and the recording expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments, which include cash and cash equivalents, marketable securities, restricted cash, accounts payable and accrued expenses approximate their fair values, given their short-term nature.

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removed certain exceptions to the general principles of the accounting for income taxes and also improves consistent application of and simplification of other areas when accounting for income taxes. The effective date for this standard was January 1, 2021. The Company adopted this standard on January 1, 2021. There was no impact to the Company’s financial statements or related disclosures upon the adoption.

3. Fair Value of Financial Instruments

ASC 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

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Cash, Cash Equivalents and Marketable Securities

The following table presents fair value of the Company’s cash, cash equivalents, and marketable securities as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021

    

Adjusted 

Unrealized

Unrealized

Cash and Cash

Restricted

Marketable

Cost

    

Gains

    

Losses

    

Fair Value

    

Equivalents

    

Cash

    

Securities

Cash

$

7,214

$

$

$

7,214

$

5,903

$

1,311

$

Level 1 (1):

 

  

 

  

 

  

 

  

 

 

  

 

  

Money market funds

 

72,743

 

 

 

72,743

 

72,743

 

 

Subtotal

 

72,743

 

 

 

72,743

 

72,743

 

 

Total

$

79,957

$

$

$

79,957

$

78,646

$

1,311

$

December 31, 2020

Adjusted 

Unrealized

Unrealized

Cash and Cash

Restricted

Marketable

    

Cost

    

Gains

    

Losses

    

Fair Value

    

Equivalents

    

Cash

    

Securities

Cash

$

6,100

$

$

$

6,100

$

4,790

$

1,310

$

Level 1 (1):

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Money market funds

 

104,613

 

 

 

104,613

 

104,613

 

 

Subtotal

 

104,613

 

 

 

104,613

 

104,613

 

 

Total

$

110,713

$

$

$

110,713

$

109,403

$

1,310

$

(1)The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities.

The Company maintains $1.3 million as collateral under a letter of credit for the Company’s facility lease obligations in Chesterbrook, Pennsylvania. The Company has recorded this deposit and accumulated interest thereon as restricted cash on its balance sheet.

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers between Level 2 and Level 3 during the nine months ended September 30, 2021, or the year ended December 31, 2020.

4. Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories. Inventory includes the cost of API, raw materials and third-party contract manufacturing and packaging services. Indirect overhead costs associated with production and distribution are recorded as period costs in the period incurred. OLINVYK was approved by the FDA in August 2020. Prior to FDA approval, all manufacturing costs for OLINVYK were expensed to research and development. Upon FDA approval, manufacturing costs for OLINVYK manufactured for commercial sale have been capitalized as inventory cost. Costs of drug product to be consumed in any current or future clinical trials will continue to be recognized as research and development expense.

The Company periodically evaluates the carrying value of inventory on hand using the same lower of cost or net realizable value approach as that used to initially value the inventory. Valuation adjustments may be required for slow-moving or obsolete inventory or in any situations where market conditions have caused net realizable value to fall below the carrying cost of the inventory.

5. Stockholders’ Equity

Equity Offerings

Under its certificate of incorporation, the Company was authorized to issue up to 200,000,000 shares of common stock as of September 30, 2021. The Company also was authorized to issue up to 5,000,000 shares of preferred stock as of September 30, 2021. The Company is required, at all times, to reserve and keep available out of its authorized

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but unissued shares of common stock sufficient shares to effect the conversion of the shares of the preferred stock and all outstanding stock options and warrants.

Registered Underwritten Public Offering

In August 2020, the Company closed a registered underwritten public offering of 25,000,000 shares of its common stock at a public offering price of $2.30 per share for net proceeds to the Company of approximately $53.7 million, after deducting underwriting discounts and commissions and offering expenses.

ATM Programs

In April 2019, the Company entered into a Common Stock Sales Agreement with H.C. Wainwright & Co., LLC, or Wainwright, pursuant to which the Company may offer and sell through Wainwright, from time to time at the Company’s sole discretion, shares of its common stock, having an aggregate offering price of up to $50.0 million, or the HCW ATM Program. Sales of the shares of common stock are deemed to be “at-the-market offerings,” as defined in Rule 415 under the Securities Act. In December 2020, the Company and Wainwright entered into Amendment No. 1 to Common Stock Sales Agreement, or the Amendment, to amend the Common Stock Sales Agreement to, among other things, update the reference to the registration statement pursuant to which the shares of common stock may be sold and to include an additional $50.0 million of shares of common stock in the HCW ATM Program. There were no sales under the HCW ATM Program in the third quarter of 2021. As of September 30, 2021, there was approximately $41.9 million remaining available for future issuances under the HCW ATM Program.

Registered Direct Offering and Concurrent Warrant Issuance

In January 2019, the Company entered into securities purchase agreements with two institutional investors wherein the Company agreed to sell to the investors an aggregate of 10,000,000 shares of its common stock, at an offering price of $1.00 per share, in a registered direct offering made pursuant to the Company’s existing registration statement on Form S-3. The net proceeds to the Company from the offering were $9.2 million, after deducting fees and the expenses of the placement agent. Pursuant to a letter agreement dated January 28, 2019, the Company engaged H.C. Wainwright & Co., LLC, or Wainwright, to act as its exclusive placement agent in connection with the issuance and sale of the shares. The Company paid Wainwright 7.0% of the aggregate gross proceeds in the offering and $50,000 for certain expenses, and it issued warrants to purchase 500,000 shares of common stock to certain designees of Wainwright. These warrants have a term of five years, are immediately exercisable and have an exercise price of $1.25 per share. During the year ended December 31, 2020, 327,500 of these warrants were exercised in a cashless exercise for 201,925 common shares. The warrants are classified as equity and were recorded at fair value as of the date of issuance on the Company’s Consolidated Balance Sheets and no further adjustments to their valuation are made. The letter agreement also includes indemnification obligations of the Company and other provisions customary for transactions of this nature.

Equity Incentive Plans

In 2008, the Company adopted the 2008 Equity Incentive Plan, as amended on February 29, 2008, January 7, 2010, July 8, 2010, December 10, 2010, June 23, 2011 and June 17, 2013, collectively, the 2008 Plan, that authorized the Company to grant restricted stock and stock options to eligible employees, directors and consultants to the Company.

In 2013, the Company adopted the 2013 Equity Incentive Plan, as amended on May 14, 2014, collectively, 2013 Plan. The 2013 Plan became effective upon the Company’s entry into the underwriting agreement related to its IPO in January 2014 and, as of such date, no further grants were permitted under the 2008 Plan. The 2013 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards and other forms of equity compensation (collectively, stock awards), all of which may be granted to employees, including officers, non-employee directors and consultants of the Company. Additionally, the 2013 Plan provides for the grant of cash and stock-based performance awards. The 2013 Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock available for issuance under the plan automatically increases on January 1 of each year beginning in 2015.

On December 15, 2016, the Company adopted the Trevena, Inc. Inducement Plan, or the Inducement Plan, effective January 1, 2017, pursuant to which the Company reserved 500,000 shares of the Company’s common stock for

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issuance under the Inducement Plan. The Inducement Plan provides for nonstatutory stock options and restricted stock unit awards. The only persons eligible to receive grants of awards under the Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) and the related guidance under Nasdaq IM 5635-1, including individuals who were not previously an employee or director of the Company or are following a bona fide period of non-employment, in each case as an inducement material to such individual’s agreement to enter into employment with the Company.

Under all such plans, the amount, terms of grants and exercisability provisions are determined by the board of directors or its designee. The term of the options may be up to 10 years, and options are exercisable in cash or as otherwise determined by the board of directors or its designee. Vesting generally occurs over a period of not greater than four years. For performance-based stock awards, the Company recognizes expense when achievement of the performance condition is probable, over the requisite service period.

The estimated grant-date fair value of the Company’s stock-based awards is amortized on a straight-line basis over the awards’ service periods. Stock-based compensation expense recognized was as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2021

    

2020

    

2021

    

2020

    

Research and development

$

279

$

203

$

787

$

616

Selling, general and administrative

 

690

 

584

 

2,455

 

1,828

Cost of goods sold

9

29

Total stock-based compensation

$

978

$

787

$

3,271

$

2,444

Stock Options

A summary of stock option activity and related information through September 30, 2021 follows:

Options Outstanding

    

    

    

Weighted 

Average 

Weighted 

Remaining 

Average 

Contractual 

Number of 

Exercise 

Term 

Shares

Price

(in years)

Balance, December 31, 2020

 

9,564,519

$

3.07

 

7.17

Granted

 

2,657,642

 

1.86

Exercised

 

(146,559)

 

1.28

Forfeited/Cancelled

 

(521,726)

 

2.77

Balance, September 30, 2021

 

11,553,876

$

2.83

 

6.99

Vested or expected to vest at September 30, 2021

 

11,553,876

$

2.83

 

6.99

Exercisable at September 30, 2021

 

6,917,596

$

3.45

 

5.69

The aggregate intrinsic value of options exercisable as of September 30, 2021 was $0.5 million, based on the difference between the Company’s closing stock price of $1.23 and the exercise price of each stock option. At September 30, 2021, there was $5.9 million of total unrecognized compensation expense related to unvested options that will be recognized over the weighted average remaining vesting period of 3.01 years.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s common stock, assumptions related to the expected price volatility of the Company’s common stock, the period during which the options will be outstanding, the rate of return on risk-free investments and the expected dividend yield for the Company’s common stock.

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The per-share weighted-average grant date fair value of the options granted to employees and directors during the nine months ended September 30, 2021 and 2020 was estimated at $1.45 and $0.73 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

September 30, 

    

2021

    

2020

    

    

Expected term of options (in years)

 

6.1

 

5.7

 

 

Risk-free interest rate

 

0.9

%  

0.7

%  

 

Expected volatility

 

97.8

%  

96.1

%  

 

Dividend yield

 

%  

%  

 

Restricted Stock Units

RSU-related expense is recognized on a straight-line basis over the vesting period. Upon vesting, these awards may be settled on a net-exercise basis to cover any required withholding tax with the remaining amount converted into an equivalent number of shares of common stock.

The following is a summary of changes in the status of non-vested RSUs during the year:

    

    

Weighted 

Average 

Number of 

Grant Date

Awards

Fair Value

Non-vested at December 31, 2020

 

3,771,342

$

1.66

Granted

 

27,500

1.20

Vested

 

(143,750)

0.85

Forfeited

 

(624,075)

1.61

Non-vested at September 30, 2021

 

3,031,017

$

1.71

For the nine months ended September 30, 2021, the Company recorded $1.4 million in stock-based compensation expense related to RSUs, which is reflected in the statement of operations and comprehensive loss.

As of September 30, 2021, there was $3.8 million of total unrecognized compensation expense related to unvested RSUs that will be recognized over the weighted average remaining period of 3.08 years.

Shares Available for Future Grant

At September 30, 2021, the Company has the following shares available to be granted under its equity incentive plans:

    

    

Inducement 

2013 Plan

Plan

Available at December 31, 2020

 

4,053,501

 

252,500

Authorized

 

6,399,997

Granted

 

(2,685,142)

Shares withheld for taxes not issued

49,915

Forfeited/Cancelled

 

1,145,801

Available at September 30, 2021

 

8,964,072

 

252,500

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Shares Reserved for Future Issuance

At September 30, 2021, the Company has reserved the following shares of common stock for issuance:

Stock options outstanding under 2013 Plan

    

11,306,376

Restricted stock units outstanding under 2013 Plan

3,031,017

Shares reserved for future issuance under 2013 Plan

 

8,964,072

Stock options outstanding under Inducement Plan

 

247,500

Shares reserved for future issuance under Inducement Plan

 

252,500

Shares reserved for future issuance under 2013 Employee Stock Purchase Plan

 

225,806

Warrants outstanding

 

295,591

Total shares of common stock reserved for future issuance

 

24,322,862

6. Commitments and Contingencies

Leases

The Company leases office space in Chesterbrook, Pennsylvania and equipment. The Company’s principal office is located at 955 Chesterbrook Boulevard, Chesterbrook, Pennsylvania, where the Company currently leases approximately 8,231 square feet of developed office space on the first floor and 40,565 square feet of developed office space on the second floor. The lease term for this space extends through May 2028. On October 11, 2018, the Company entered into an agreement with The Vanguard Group, Inc., or Vanguard, whereby Vanguard agreed to sublease the 40,565 square feet of space on the second floor for an initial term of 37 months. On October 2, 2020, Vanguard notified the Company that they exercised the first option to extend the sublease term for three years through November 30, 2024. Vanguard has a second option to extend the sublease term for an additional three years through November 30, 2027. The sublease provides for rent abatement for the first month of the term; thereafter, the rent payable to the Company by Vanguard under the sublease is (i) $0.50 less during months 2 through 13 of the sublease and (ii) in month 14 and thereafter of the sublease, $1.00 less than the base rent payable by the Company under its master lease with Chesterbrook Partners, L.P. Vanguard also is responsible for paying to the Company all tenant energy costs, annual operating costs, and annual tax costs attributable to the subleased space during the term of the sublease. Rent expense and associated sublease income are recorded in the Company’s statements of operations and comprehensive loss as other income (expense).

Supplemental balance sheet information related to leases was as follows (in thousands):

    

September 30, 2021

    

December 31, 2020

Operating leases:

 

  

 

  

Operating lease right-of-use assets

 

$

4,815

 

$

5,119

Other current liabilities

765

696

Operating lease liabilities

6,516

7,097

Total operating lease liabilities

$

7,281

$

7,793

Finance leases:

Property and equipment, at cost

$

44

$

45

Accumulated depreciation

(38)

(34)

Property and equipment, net

6

11

Other current liabilities

5

7

Other long-term liabilities

4

Total finance lease liabilities

$

5

$

11

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The components of lease expense were as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

Operating lease costs:

Operating lease rental expense

$

309

$

277

$

1,362

$