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 June 30, 2021

☐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: (610) 354-8840

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 August 10, 2021: 164,508,838

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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

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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;

●

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;

●

ongoing litigation; and

iii

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●

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.

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PART I

ITEM 1. FINANCIAL STATEMENTS

TREVENA, INC.

Balance Sheets

(in thousands, except share and per share data)


	June 30, 2021		December 31, 2020
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	90,952	$	109,403
Accounts receivable, net		137		71
Inventories		1,045		—
Insurance recovery		9,000		9,000
Prepaid expenses and other current assets		1,998		570
Total current assets		103,132		119,044
Restricted cash		1,310		1,310
Property and equipment, net		2,039		2,253
Right-of-use lease asset		4,921		5,119
Other assets		799		13
Total assets	$	112,201	$	127,739
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, net	$	2,374	$	1,693
Accrued expenses and other current liabilities		2,852		5,168
Estimated settlement liability		9,000		9,000
Lease liability		748		703
Total current liabilities		14,974		16,564
Leases, net of current portion		6,718		7,101
Warrant liability		1		6
Total liabilities		21,693		23,671
Commitments and contingencies (Note 6)
Stockholders’ equity:
Common stock—$0.001 par value; 200,000,000 shares authorized at June 30, 2021 and December 31, 2020; 164,508,838 and 159,999,917 shares issued and outstanding at June 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 June 30, 2021 and December 31, 2020		—		—
Additional paid-in capital		556,721		546,422
Accumulated deficit		(466,378)		(442,514)
Total stockholders’ equity		90,508		104,068
Total liabilities and stockholders’ equity	$	112,201	$	127,739

See accompanying notes to financial statements.

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TREVENA, INC.

Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue:
Product revenue	$	178	$	—	$	387	$	—
Total revenue		178		—		387		—
Operating expenses:
Cost of goods sold		258		—		421		—
Selling, general and administrative		10,545		3,300		17,913		6,932
Research and development		3,449		2,958		6,085		5,149
Total operating expenses		14,252		6,258		24,419		12,081
Loss from operations		(14,074)		(6,258)		(24,032)		(12,081)
Other income (expense):
Change in fair value of warrant liability		2		(6)		5		(3)
Other income, net		7		26		76		95
Interest income		43		16		91		68
Interest expense		—		—		—		(29)
(Loss) gain on foreign currency exchange		—		—		(4)		3
Total other income		52		36		168		134
Net loss and comprehensive loss	$	(14,022)	$	(6,222)	$	(23,864)	$	(11,947)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.09)	$	(0.06)	$	(0.15)	$	(0.12)
Weighted average common shares outstanding, basic and diluted		163,370,485		111,297,428		161,936,680		103,814,876

See accompanying notes to financial statements.

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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		Accumulated		Stockholders'
	Shares	Value		Capital		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


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

See accompanying notes to financial statements.

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TREVENA, INC.

Statements of Cash Flows (Unaudited)

(in thousands)


	Six Months Ended
	June 30,
	2021		2020
Operating activities:
Net loss	$	(23,864)	$	(11,947)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		214		257
Stock-based compensation		2,293		1,657
Noncash interest expense on loans		—		8
Revaluation of warrant liability		(5)		3
Change in right-of-use asset		198		169
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other assets		(1,490)		(765)
Inventories		(1,045)		—
Operating lease liabilities		(334)		(293)
Accounts payable, accrued expenses and other liabilities		(1,635)		(628)
Net cash used in operating activities		(25,668)		(11,539)
Investing activities:
Long term deposits		(790)		—
Maturities of marketable securities		—		3,500
Net cash (used in) provided by investing activities		(790)		3,500
Financing activities:
Proceeds from exercise of common stock options		180		—
Proceeds from issuance of common stock, net		7,948		35,580
Payment of employee withholding taxes on vested restricted stock units		(117)		—
Finance lease payments		(4)		(5)
Repayments of loans payable, net		—		(5,045)
Net cash provided by financing activities		8,007		30,530
Net decrease in cash, cash equivalents and restricted cash		(18,451)		22,491
Cash, cash equivalents and restricted cash—beginning of period		110,713		33,614
Cash, cash equivalents and restricted cash—end of period	$	92,262	$	56,105
Supplemental disclosure of cash flow information:
Cash paid for interest	$	—	$	18

See accompanying notes to financial statements.

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TREVENA, INC.

Notes to Unaudited Financial Statements

June 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 June 30, 2021, the Company had an accumulated deficit of $466.4 million. The Company’s net loss was $23.9 million and $11.9 million for the six months ended June 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 June 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 June 30, 2021, its results of operations and its comprehensive loss for the three and six months ended June 30, 2021 and 2020, its statement of stockholders’ equity for the period from January 1, 2021 to June 30, 2021 and for the period January 1, 2020 to June 30, 2020, and its statements of cash flows for the six months ended June 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 six months ended June 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 during the quarter. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are

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highly uncertain, including vaccine adoption and effectiveness, the impact of emerging variants of the novel coronavirus, the actions taken to contain or treat COVID-19, including as a result of new information that may emerge concerning 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. Certain of the Company’s common stock warrants are carried at fair value, as disclosed in Note 5.

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 June 30, 2021 and December 31, 2020 (in thousands):


	June 30, 2021
	Adjusted		Unrealized		Unrealized				Cash and Cash		Restricted		Marketable
	Cost		Gains		Losses		Fair Value		Equivalents		Cash		Securities
Cash	$	10,557	$	—	$	—	$	10,557	$	9,247	$	1,310	$	—
Level 1 (1):
Money market funds		81,705		—		—		81,705		81,705		—		—
Subtotal		81,705		—		—		81,705		81,705		—		—
Total	$	92,262	$	—	$	—	$	92,262	$	90,952	$	1,310	$	—


	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 classifies investments available to fund current operations as current assets on its balance sheets. As of June 30, 2021, the Company did not hold any investment securities exceeding a one-year maturity.

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.

Unrealized gains and losses on marketable securities are recorded as a separate component of accumulated other comprehensive income (loss) included in stockholders’ equity. Realized gains (losses) are included in interest income (expense) in the statement of operations and comprehensive income (loss) on a specific identification basis. The Company did not record any realized gains or losses during the three and six months ended June 30, 2021 and 2020. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value.

Accretion of bond discount on marketable securities is included in other income as a separate component of other income (expense) on the statement of operations and comprehensive loss. Interest income on marketable securities is recorded as interest income on the statement of operations and comprehensive loss.

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 six months ended June 30, 2021, or the year ended December 31, 2020.

4. Inventories, net

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.

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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 June 30, 2021. The Company also was authorized to issue up to 5,000,000 shares of preferred stock as of June 30, 2021. The Company is required, at all times, to reserve and keep available out of its authorized 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.

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. Between April 1, 2021 and May 10, 2021, the Company issued and sold approximately 3.1 million shares of common stock under the HCW ATM Program for net proceeds of approximately $5.2 million, after deducting related expenses, including commissions. There were no sales under the HCW ATM Program subsequent to May 10, 2021. For the six months ended June 30, 2021, the Company issued and sold approximately 4.3 million shares of common stock under the HCW ATM Program for net proceeds of approximately $8.1 million, after deducting related expenses, including commissions. As of June 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

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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 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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	248	$	204	$	508	$	413
Selling, general and administrative		925		562		1,765		1,244
Cost of goods sold		9		—		20		—
Total stock-based compensation	$	1,182	$	766	$	2,293	$	1,657

Stock Options

A summary of stock option activity and related information through June 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	2,496,242		1.90
Exercised	(137,184)		1.31
Forfeited/Cancelled	(127,818)		3.02
Balance, June 30, 2021	11,795,759	$	2.85	7.28
Vested or expected to vest at June 30, 2021	11,795,759	$	2.85	7.28
Exercisable at June 30, 2021	6,662,268	$	3.57	5.87

The aggregate intrinsic value of options exercisable as of June 30, 2021 was $1.2 million, based on the difference between the Company’s closing stock price of $1.69 and the exercise price of each stock option. At June 30, 2021, there was $6.7 million of total unrecognized compensation expense related to unvested options that will be recognized over the weighted average remaining vesting period of 3.16 years.

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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.

The per-share weighted-average grant date fair value of the options granted to employees and directors during the six months ended June 30, 2021 and 2020 was estimated at $1.48 and $0.73 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:


	June 30,
	2021		2020
Expected term of options (in years)	6.1		5.7
Risk-free interest rate	0.9	%	0.7	%
Expected volatility	97.7	%	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	—		—
Vested	(143,750)		0.85
Forfeited	(124,560)		1.97
Non-vested at June 30, 2021	3,503,032	$	1.69

For the six months ended June 30, 2021, the Company recorded $1.0 million in stock-based compensation expense related to RSUs, which is reflected in the statement of operations and comprehensive loss.

As of June 30, 2021, there was $4.8 million of total unrecognized compensation expense related to unvested RSUs that will be recognized over the weighted average remaining period of 3.21 years.

Shares Available for Future Grant

At June 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	(2,496,242)	—
Shares withheld for taxes not issued	49,915	—
Forfeited/Cancelled	252,378	—
Available at June 30, 2021	8,259,549	252,500

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Shares Reserved for Future Issuance

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


Stock options outstanding under 2013 Plan		11,548,259
Restricted stock units outstanding under 2013 Plan		3,503,032
Shares reserved for future issuance under 2013 Plan		8,259,549
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		24,332,237

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):


	June 30, 2021		December 31, 2020
Operating leases:
Operating lease right-of-use assets	$	4,921	$	5,119
Other current liabilities		741		696
Operating lease liabilities		6,717		7,097
Total operating lease liabilities	$	7,458	$	7,793

Finance leases:
Property and equipment, at cost	$	45	$	45
Accumulated depreciation		(38)		(34)
Property and equipment, net		7		11
Other current liabilities		7		7
Other long-term liabilities		1		4
Total finance lease liabilities	$	8	$	11

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Operating lease costs:
Operating lease rental expense	$	311	$	373	$	829	$	692
Other income		(304)		(301)		(617)		(601)
Total operating lease costs	$	7	$	72	$	212	$	91

Finance lease costs:
Amortization of right-of-use assets		2		2		4		4
Interest on lease liabilities		—		—		—		—
Total finance lease costs	$	2	$	2	$	4	$	4

Supplemental cash flow information related to leases was as follows (in thousands):


	Six Months Ended
	June 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(347)	$	(188)
Operating cash flows from finance leases		—		—
Financing cash flows from finance leases		(4)		(5)

Our operating lease liabilities will mature, as follows (in thousands):


	Operating Leases		Financing Leases
2021 (July 1 - December 31)	$	693	$	4
2022		1,401		4
2023		1,425		—
2024		1,450		—
2025		1,474		—
2026 and beyond		3,661		—
Total minimum lease payments	$	10,104	$	8
Interest Expense		(2,646)		-
Lease liability	$	7,458	$	8

Per the terms of our sublease, we expect the following inflows (in thousands):


	Sublease
2021 (July 1 - December 31)	$	550
2022		1,118
2023		1,139
2024		996
2025		—
2026 and beyond		—
Total minimum lease payments	$	3,803

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Lease term and discount rates are as follows:


	Six Months Ended June 30,
	2021		2020
Weighted average remaining lease term (years)
Operating leases		7		8
Finance leases		1		1
Weighted average discount rate
Operating leases		9.2%		9.2%
Finance leases		6.5%		6.5%

Legal Proceedings

In October and November 2018, the Company and certain current and former officers and directors were sued in three purported class actions filed in the U.S. District Court for the Eastern District of Pennsylvania, or the EDPA, alleging violations of the federal securities laws. In January 2019, the three lawsuits were consolidated into one action, and on May 29, 2019, the District Court appointed a group of five individual investors as lead plaintiffs. A consolidated amended complaint was filed on August 2, 2019, alleging, among other things, that the Company and two former officers made false and misleading statements regarding the Company’s business, operations, and prospects, including certain statements made relating to the Company’s End-of-Phase 2 meeting with the FDA, and certain statements concerning top-line results from the Company’s Phase 3 studies. The plaintiffs seek, among other remedies, unspecified damages, attorneys’ fees and other costs, and unspecified equitable or injunctive relief. On August 28, 2020, the EDPA granted in part and denied in part the defendants’ motion to dismiss. On October 2, 2020, the Company and the individual defendants filed their answer to the amended complaint, denying all liability. On February 11, 2021, the parties agreed in principle to a settlement, which is subject to approval by the Court, and the Court issued its preliminary approval of the settlement on May 3, 2021 and finally approved the settlement on August 2, 2021. The Company and the individual defendants do not acknowledge any wrongdoing as part of the settlement, and a monetary payment of $8.5 million will be made to the plaintiffs and their counsel, all of which will be funded by the Company’s insurance carriers. The Company has recorded the $8.5 million estimated settlement liability and the $8.5 million estimated insurance recovery in its 2020 financial statements. The Company continues to believe that the claims are without merit, and if necessary, the Company intends to vigorously defend itself and its former officers against the allegations.

In December 2018, a shareholder derivative action was filed on behalf of the Company and against certain current and former officers and directors in the EDPA, and in February 2019, two additional, similar shareholder derivative actions were filed in the U.S. District Court for the District of Delaware. A fourth similar shareholder derivative action was filed in the EDPA in September 2019, and a fifth, similar derivative action was filed in the EDPA in November 2019. A similar sixth derivative action was filed in the EDPA in September 2020. These cases, which involve facts similar to the consolidated securities lawsuits, assert claims against the individual defendants for, among other things, breach of fiduciary duty, waste of corporate assets, violations of the federal securities laws, and unjust enrichment, and they make a number of demands, including for monetary damages and other equitable and injunctive relief. The parties agreed to a settlement, which was preliminarily approved by the Court on May 27, 2021, and finally approved by the Court on August 2, 2021. The individual defendants do not acknowledge any wrongdoing as part of the settlement. The Company has agreed to make certain corporate governance changes, and a monetary payment of $500,000 will be made to plaintiffs’ counsel, all of which will be funded by the Company’s insurance carriers. The Company recorded in the fourth quarter of 2020 an estimated liability of $0.5 million and a corresponding insurance recovery of the same amount.

7. Product Revenue

Performance Obligation

The Company’s performance obligation is the supply of finished pharmaceutical products to its customers. The Company’s customers consist of major wholesale distributors. The Company’s customer contracts generally consist of both a master agreement, which is signed by the Company and its customer, and a customer submitted purchase order, which is governed by the terms and conditions of the master agreement.

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Revenue is recognized when the Company transfers control of its products to the customer, which occurs at a point-in-time, upon delivery.

The Company offers standard payment terms to its customers and has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing, since the period between when the Company transfers the product to the customer and when the customer pays for that product is one year or less. Taxes collected from customers relating to product revenue and remitted to governmental authorities are excluded from revenues. The consideration amounts due from customers as a result of product revenue are subject to variable consideration.

The Company offers standard product warranties which provide assurance that the product will function as expected and in accordance with specifications. Customers cannot purchase warranties separately and these warranties do not give rise to a separate performance obligation. The Company permits the return of product under certain circumstances, mainly upon at or near product expiration, instances of shipping errors or where product is damaged in transit. The Company accrues for the customer’s right to return as part of its variable consideration.

Concentration of Revenue

Two of the Company’s largest customers account for 100% of total product revenue for the six months ended June 30, 2021.

The following table presents a rollforward of the major categories of sales-related deductions included in trade receivable allowances for the six months ended June 30, 2021 (in thousands):


	Sales Discounts		Chargebacks		Fee for Service
Balance, January 1, 2021	$	2	$	5	$	10
Provision related to current period sales		19		28