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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 001-37590
CERECOR INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
45-0705648
(I.R.S. Employer Identification No.)
540 Gaither Road, Suite 400
Rockville, Maryland 20850
(Address of principal executive offices)
(410522-8707
(Registrant’s telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par value

CERCNasdaq Capital Market
        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐ 
        Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐
        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 
        As of August 4, 2020, the registrant had 74,900,047 shares of common stock outstanding.


Table of Contents

CERECOR INC.
 
FORM 10-Q
 
For the Quarter Ended June 30, 2020
 
TABLE OF CONTENTS 
      
     Page
    
  
      
   
      
  a) 
     
  b) 
     
  c) 
d)
    
  e) 
     
  
     
  
     
  
 
     
  
     
  
  
    
  
2


Table of Contents

PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements.
CERECOR INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets
 
June 30, 2020December 31, 2019
(unaudited)
Assets        
Current assets:  
Cash and cash equivalents$45,390,553  $3,609,438  
Accounts receivable, net2,031,682  1,001,645  
Other receivables1,953,036  4,240,572  
Inventory, net12,196  21,334  
Prepaid expenses and other current assets823,900  706,968  
Restricted cash, current portion33,449  17,535  
Investment in Aytu  7,628,947  
Current assets of discontinued operations  497,577  
Total current assets50,244,816  17,724,016  
Property and equipment, net1,740,610  1,447,663  
Intangible assets, net2,292,175  2,426,258  
Goodwill14,409,088  14,409,088  
Restricted cash, net of current portion180,336  101,945  
Deferred tax asset, net337,797    
Total assets$69,204,822  $36,108,970  
Liabilities and stockholders’ equity  
Current liabilities:  
Accounts payable$2,557,702  $2,077,524  
Accrued expenses and other current liabilities6,487,658  5,640,252  
Income taxes payable  551,671  
Current liabilities of discontinued operations5,549,751  3,891,012  
Total current liabilities14,595,111  12,160,459  
Royalty obligation2,000,000    
Deferred tax liability, net  85,981  
Other long-term liabilities2,031,560  1,111,965  
Long-term liabilities of discontinued operations  1,755,000  
Total liabilities18,626,671  15,113,405  
Stockholders’ equity:  
Common stock—$0.001 par value; 200,000,000 shares authorized at June 30, 2020 and December 31, 2019; 74,900,047 and 44,384,222 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
74,899  44,384  
Preferred stock—$0.001 par value; 5,000,000 shares authorized at June 30, 2020 and December 31, 2019; 1,257,143 and 2,857,143 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
1,257  2,857  
Additional paid-in capital199,191,022  135,238,941  
Accumulated deficit(148,689,027) (114,290,617) 
Total stockholders’ equity50,578,151  20,995,565  
Total liabilities and stockholders’ equity$69,204,822  $36,108,970  
 
See accompanying notes to the unaudited condensed consolidated financial statements.
3

Table of Contents

CERECOR INC. and SUBSIDIARIES
 
Condensed Consolidated Statements of Operations (Unaudited)
 
Three Months EndedSix Months Ended
 June 30,June 30,
 2020201920202019
Revenues:
Product revenue, net$1,337,764  $1,391,942  $4,091,628  $3,968,310  
Total revenues, net1,337,764  1,391,942  4,091,628  3,968,310  
Operating expenses:
Cost of product sales77,580  (1,496,677) 144,139  (744,128) 
Research and development5,916,869  3,712,596  10,684,619  7,113,785  
Acquired in-process research and development    25,549,344    
General and administrative6,101,475  2,340,634  8,777,088  5,016,243  
Sales and marketing653,265  325,861  1,329,790  722,137  
Amortization expense403,500  334,747  834,083  669,495  
Change in fair value of contingent consideration  (1,277,150)   (1,256,210) 
Total operating expenses13,152,689  3,940,011  47,319,063  11,521,322  
Loss from continuing operations(11,814,925) (2,548,069) (43,227,435) (7,553,012) 
Other income (expense):
Change in fair value of Investment in Aytu(1,872,031)   5,207,789    
Change in fair value of warrant liability and unit purchase option liability2,647  18,910  13,928  (28,668) 
Other income (expense), net395,800    395,800  (9,400) 
Interest income, net8,711  38,412  18,501  68,632  
Total other (expense) income, net from continuing operations(1,464,873) 57,322  5,636,018  30,564  
Loss from continuing operations before taxes(13,279,798) (2,490,747) (37,591,417) (7,522,448) 
Income tax (benefit) expense(453,957) 53,446  (2,610,812) 184,119  
Loss from continuing operations$(12,825,841) $(2,544,193) $(34,980,605) $(7,706,567) 
(Loss) income from discontinued operations, net of tax(455,463) (3,678,906) 582,195  (5,970,580) 
Net loss$(13,281,304) $(6,223,099) $(34,398,410) $(13,677,147) 
Net (loss) income per share of common stock, basic and diluted:
Continuing operations$(0.18) $(0.05) $(0.53) $(0.14) 
Discontinued operations(0.01) (0.06) 0.01  (0.10) 
Net loss per share of common stock, basic and diluted$(0.19) $(0.11) $(0.52) $(0.24) 
Net (loss) income per share of preferred stock, basic and diluted:
Continuing operations$(0.93) $(0.23) $(2.66) $(0.68) 
Discontinued operations(0.03) (0.32) 0.04  (0.53) 
Net loss per share of preferred stock, basic and diluted$(0.96) $(0.55) $(2.62) $(1.21) 
 
See accompanying notes to the unaudited condensed consolidated financial statements.

4


Table of Contents


CERECOR INC. and SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
5


Table of Contents

 Six Months Ended June 30,
 20202019
Operating activities        
Net loss$(34,398,410) $(13,677,147) 
Adjustments to reconcile net loss used in operating activities:
Depreciation and amortization878,949  2,203,423  
Impairment of intangible assets  1,449,121  
Stock-based compensation3,901,897  1,123,402  
Acquired in-process research and development25,549,344    
Deferred taxes(423,778) 18,870  
Amortization of inventory fair value associated with acquisition of TRx and Avadel's pediatric products  40,240  
Change in fair value of Investment in Aytu(5,207,789)   
Change in fair value of warrant liability and unit purchase option liability(13,928) 28,668  
Change in value of Guarantee(1,755,000)   
Change in fair value of contingent consideration  (811,948) 
Changes in assets and liabilities:
Accounts receivable, net(532,460) 297,267  
Other receivables(1,851,867) 5,326,000  
Inventory, net9,138  452,931  
Prepaid expenses and other assets(23,782) 664,454  
Accounts payable82,674  (666) 
Income taxes payable288,329  (639,784) 
Accrued expenses and other liabilities(815,014) (6,313,686) 
Lease liability, net17,510    
Net cash used in operating activities(14,294,187) (9,838,855) 
Investing activities  
Proceeds from sale of Investment in Aytu, net12,836,736    
Net cash paid in merger with Aevi(1,250,650)   
Purchase of property and equipment  (256,926) 
Net cash provided by (used in) investing activities11,586,086  (256,926) 
Financing activities  
Proceeds from underwritten public offering, net35,427,963  8,975,960  
Proceeds from registered direct offering, net5,136,184    
Proceeds from sale of shares pursuant to common stock private placement, net3,887,991    
Proceeds from exercise of stock options and warrants92,342  256,816  
Proceeds from shares purchased through employee stock purchase plan 132,910  127,537  
Restricted Stock Units withheld for taxes(93,869) (18,057) 
Payment of contingent consideration  (379,255) 
Payment of long-term debt  (48,684) 
Net cash provided by financing activities44,583,521  8,914,317  
Increase (decrease) in cash, cash equivalents and restricted cash41,875,420  (1,181,464) 
Cash, cash equivalents, and restricted cash at beginning of period3,728,918  10,746,756  
Cash, cash equivalents, and restricted cash at end of period$45,604,338  $9,565,292  
Supplemental disclosures of cash flow information  
Cash paid for interest$  $525,000  
Cash paid for taxes$316,000  $852,025  
Supplemental disclosures of non-cash activities
Issuance of common stock in Aevi Merger$15,495,578  $  
Leased asset obtained in exchange for new operating lease liability$376,448  $743,025  
        The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:
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June 30,
20202019
Cash and cash equivalents$45,390,553  $9,386,865  
Restricted cash, current33,449  26,265  
Restricted cash, non-current180,336  152,162  
Total cash, cash equivalents and restricted cash$45,604,338  $9,565,292  
See accompanying notes to the unaudited condensed consolidated financial statements.

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CERECOR INC. and SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


 Common stockPreferred StockAdditional paid-inAccumulatedTotal stockholders’
 SharesAmountSharesAmountcapitaldeficitequity
Three Months Ended June 30, 2020
Balance, March 31, 202059,560,252  $59,560  1,257,143  $1,257  $160,935,648  $(135,407,723) $25,588,742  
Issuance of shares of common stock in underwritten public offering, net of offering costs15,180,000  15,180  —  35,412,783  —  35,427,963  
Exercise of stock options and warrants25,071  25  —  18,110  —  18,135  
Restricted Stock Units vested during period111,667  111  —  (111) —    
Restricted Stock Units withheld for taxes(35,279) (35) —  (93,834) —  (93,869) 
Shares purchased through employee stock purchase plan58,336  58  —  132,852  —  132,910  
Stock-based compensation—  —  2,785,574  —  2,785,574  
Net loss—  —  —  (13,281,304) (13,281,304) 
Balance, June 30, 202074,900,047  $74,899  1,257,143  $1,257  $199,191,022  $(148,689,027) $50,578,151  

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Common stockPreferred StockAdditional paid-inAccumulatedTotal stockholders’
SharesAmountSharesAmountcapitaldeficitequity
Six Months Ended June 30, 2020
Balance, December 31, 201944,384,222  $44,384  2,857,143  $2,857  $135,238,941  $(114,290,617) $20,995,565  
Conversion of preferred stock to common stock8,000,000  8,000  (1,600,000) (1,600) (6,400) —    
Issuance of shares related to Aevi Merger3,893,361  3,894  —  15,491,684  —  15,495,578  
Issuance of shares pursuant to registered direct offering, net of offering costs1,306,282  1,306  —  5,134,878  —  5,136,184  
Issuance of shares pursuant to common stock private placement, net of offering costs1,951,219  1,951  —  3,886,040  —  3,887,991  
Issuance of shares of common stock in underwritten public offering, net of offering costs15,180,000  15,180  —  35,412,783  —  35,427,963  
Exercise of stock options and warrants50,239  50  —  92,292  —  92,342  
Restricted Stock Units vested during period111,667  111  —  (111) —    
Restricted Stock Units withheld for taxes(35,279) (35) —  (93,834) —  (93,869) 
Shares purchased through employee stock purchase plan58,336  58  —  132,852  —  132,910  
Stock-based compensation—  —  3,901,897  —  3,901,897  
Net loss—  —  —  (34,398,410) (34,398,410) 
Balance, June 30, 202074,900,047  $74,899  1,257,143  $1,257  $199,191,022  $(148,689,027) $50,578,151  

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 Common stockPreferred StockAdditional paid-inAccumulatedTotal stockholders’
 SharesAmountSharesAmountcapitaldeficitequity
Three Months Ended June 30, 2019
Balance, March 31, 201942,753,659  $42,754  2,857,143  $2,857  $128,747,037  $(105,672,118) $23,120,530  
Exercise of stock options and warrants43,125  43  —  162,596  —  162,639  
Restricted Stock Units vested during period61,250  61  —  (61) —    
Restricted Stock Units withheld for taxes(3,723) (4) —  (18,053) —  (18,057) 
Shares purchased through employee stock purchase plan43,940  44  —  127,493  —  127,537  
Stock-based compensation—  —  526,709  —  526,709  
Net loss—  —  —  (6,223,099) (6,223,099) 
Balance, June 30, 201942,898,251  $42,898  2,857,143  $2,857  $129,545,721  $(111,895,217) $17,696,259  
Common stockPreferred StockAdditional paid-inAccumulatedTotal stockholders’
SharesAmountSharesAmountcapitaldeficitequity
Six Months Ended June 30, 2019
Balance, December 31, 201840,804,189  $40,804