Neos Therapeutics
Neos Therapeutics (NEOS) is a pharmaceutical company focused on developing, manufacturing and commercializing products utilizing its proprietary modified-release drug delivery technology platform, which Neos Therapeutics has already used to develop Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER, for the treatment of attention deficit hyperactivity disorder (ADHD). The company's products and product candidates are extended-release (XR), medications in patient-friendly, orally disintegrating tablets (ODT) or liquid suspension dosage forms. The company's proprietary modified-release drug delivery platform has enabled it to create novel, extended-release ODT and liquid suspension dosage forms. The company received approval from the U.S. Food and Drug Administration (FDA), for Adzenys XR-ODT, its amphetamine XR-ODT, on January 27, 2016 and launched the commercialization of this product on May 16, 2016. The company received approval from the FDA for Cotempla XR-ODT, its methylphenidate XR-ODT for the treatment of ADHD in patients 6 to 17 years old, on June 19, 2017, initiating an early experience program with limited product availability on September 5, 2017 before launching this product nationwide on October 2, 2017. Also, the company received approval from the FDA for Adzenys ER, its amphetamine extended-release liquid suspension, on September 15, 2017, and plan to launch this product in January 2018. The company believe Adzenys XR-ODT and Cotempla XR-ODT are the first amphetamine XR-ODT and the first methylphenidate XR-ODT, respectively, for the treatment of ADHD on the market.1
On July 25, 2016, the company received a paragraph IV certification from Actavis Laboratories FL, Inc. (Actavis) advising it that Actavis has filed an Abbreviated New Drug Application (ANDA) with the FDA for a generic version of Adzenys XR-ODT. On September 1, 2016, the company filed a patent infringement lawsuit in federal district court in the District of Delaware against Actavis, Inc. This case alleges that Actavis infringed its Adzenys XR-ODT patents by submitting to the FDA an ANDA seeking to market a generic version of Adzenys XR-ODT prior to the expiration of its patents. This lawsuit automatically stayed, or barred, the FDA from approving Actaviss ANDA for 30 months or until a district court decision that is adverse to the asserted patents is rendered, whichever is earlier. On October 17, 2017, the company entered into a Settlement and Licensing Agreement (Agreement) with Actavis. This Agreement resolves all ongoing litigation involving its Adzenys XR-ODT patents and Actavis's ANDA. Under the Agreement, Neos Therapeutics has granted Actavis the right to manufacture and market its generic version of Adzenys XR-ODT under the ANDA beginning on September 1, 2025, or earlier under certain circumstances. A stipulation and order of dismissal was entered by the U.S. District Court for the District of Delaware. The Agreement has been submitted to the applicable governmental agencies (see Note 14 to the notes to its unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details).
On October 31, 2017, the company received a paragraph IV certification from Teva Pharmaceuticals USA, Inc. advising it that Teva has filed an ANDA with the FDA for a generic version of Cotempla XR-ODT. Neos Therapeutics is evaluating the paragraph IV certification and intend to vigorously enforce its intellectual property rights relating to Cotempla XR-ODT. Should the company determine that litigation is warranted, the company anticipate incurring increasing amounts of legal fees in the enforcement of its intellectual property rights.
Neos Therapeutics is commercializing Adzenys XR-ODT and Cotempla XR-ODT and plan to commercialize Adzenys ER in the United States using its own commercial infrastructure. Neos Therapeutics is manufacturing Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER in its current Good Manufacturing Practice and U.S. Drug Enforcement Administration (DEA)-registered manufacturing facilities, thereby obtaining its products at cost without manufacturers margins and better controlling supply quality and timing. The company also currently use these facilities to manufacture its generic equivalent to the branded product, Tussionex, an XR liquid suspension of hydrocodone and chlorpheniramine indicated for the relief of cough and upper respiratory symptoms of a cold (generic Tussionex).
The company's predecessor company was incorporated in Texas on November 30, 1994 as PharmaFab, Inc. and subsequently changed its name to Neostx, Inc. On June 15, 2009, the company completed a reorganization pursuant to which substantially all of the capital stock of Neostx, Inc. was acquired by a newly formed Delaware corporation, named Neos Therapeutics, Inc. The remaining capital stock of Neostx, Inc. was acquired by it on June 29, 2015, and Neostx, Inc. was merged with and into Neos Therapeutics, Inc. Historically, the company were primarily engaged in the development and contract manufacturing of unapproved or Drug Efficacy Study Implementation (DESI), pharmaceuticals and, to a lesser extent, nutraceuticals for third parties. The unapproved or DESI pharmaceuticals contract business was discontinued in 2007, and the manufacture of nutraceuticals for third parties was discontinued in March 2013.
Since its reorganization in 2009, Neos Therapeutics has devoted substantially all of its resources to funding its manufacturing operations and to its commercial products and product candidates which consist of implementation of its commercialization strategies, research and development activities, clinical trials for its product candidates, the general and administrative support of these operations and intellectual property protection and maintenance. Prior to its initial public offering of its common stock in July 2015, the company funded its operations principally through private placements of its common stock, redeemable convertible preferred stock, bank and other lender financings and through payments received under collaborative arrangements.
On August 28, 2014, the company completed an acquisition of all of the rights to the Tussionex Abbreviated New Drug Application (Tussionex ANDA), which include the rights to produce, develop, market and sell, as well as all the profits from such selling activities, its generic Tussionex, which the company previously owned the rights to manufacture, but which was marketed and sold by the generic drug division of Cornerstone Biopharma, Inc. (Cornerstone). These rights were acquired from the collaboration of the Company, Cornerstone and Coating Place, Inc. Prior to the acquisition, the company shared profits generated by the sale and manufacture of the product under a development and manufacturing agreement with those companies.
Neos Therapeutics has incurred significant losses in each year since its reorganization in 2009. The company's net losses were $52.0 million and $83.3 million for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. As of September 30, 2017 and December 31, 2016, the company had an accumulated deficit of approximately $252.1 million and $200.1 million, respectively. The company expect to continue to incur significant expenses and increasing operating losses in the near term. The company expect its expenses will increase substantially in connection with its ongoing activities, as we:
- build and operate commercial infrastructure to support sales and marketing for Adzenys XR-ODT, Cotempla XR-ODT, and Adzenys ER;
- continue research and development activities for new product candidates;
- conduct post-marketing approval research activities for its approved products;
- manufacture supplies for its preclinical studies and clinical trials;
- continue to enforce its intellectual property rights; and
- operate as a public company.
