November 7, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

Trevena, Inc.

Trevena, Inc.

Form: 10-Q

Documents

Restricted Stock Units (“RSUs”)

Restricted Stock Units (“RSUs”)

Table of Contents

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, 2024

☐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

(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

OTC Pink Open 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, 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 5, 2024: 863,788

Table of Contents

TABLE OF CONTENTS

Page

Cautionary Note Regarding Forward-Looking Statements

PART I- FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements (Unaudited)

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

Notes to Unaudited Consolidated Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II- OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

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,” including those that are incorporated by reference into this Quarterly Report from our most recent Annual Report on Form 10-K, or the “Annual Report.” 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 plans and expectations regarding our strategic alternative review process and the timing and success of such process regarding a potential transaction;

●

the volatility of the trading price of our common stock and our ability to maintain an active trading market in our common stock, especially in light of the trading of our common stock on the OTC Pink Open Market;

●

success in retaining, or changes required in, our officers, key employees or directors;

●

our sales of OLINVYK and our ability to successfully commercialize 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 nonclinical 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 logistics 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 could disrupt our operations and/or materially and adversely affect our business and financial conditions; and

Table of Contents

●

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

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.

iii

Table of Contents

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

TREVENA, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	13,462	$	32,975
Restricted cash		282		—
Prepaid expenses and other current assets		991		2,230
Total current assets		14,735		35,205
Restricted cash, net of current portion		340		540
Property and equipment, net		923		1,195
Right-of-use lease assets		3,190		3,665
Total assets	$	19,188	$	40,605
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable, net	$	918	$	2,303
Accrued expenses and other current liabilities		3,164		4,239
Current portion of loans payable, net		902		—
Lease liabilities		1,102		1,012
Total current liabilities		6,086		7,554
Loans payable, net		31,972		30,809
Leases, net of current portion		3,588		4,424
Warrant liability		851		5,475
Total liabilities		42,497		48,262
Stockholders’ deficit:
Preferred stock—$0.001 par value; 5,000,000 shares authorized, none issued or outstanding at September 30, 2024 and December 31, 2023		—		—
Common stock—$0.001 par value; 200,000,000 shares authorized at September 30, 2024 and December 31, 2023; 854,769 and 691,109 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		1		1
Additional paid-in capital		582,259		580,403
Accumulated deficit		(605,569)		(588,061)
Total stockholders’ deficit		(23,309)		(7,657)
Total liabilities and stockholders’ deficit	$	19,188	$	40,605

See accompanying notes to consolidated financial statements.

Table of Contents

TREVENA, INC.

Consolidated 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,
	2024		2023		2024		2023
Revenue:
Product revenue	$	(21)	$	1	$	13	$	28
License and royalty revenue		304		179		615		3,179
Total revenue		283		180		628		3,207
Operating expenses:
Cost of goods sold		114		175		305		389
Selling, general and administrative		3,880		4,572		13,323		15,799
Research and development		1,866		4,260		8,958		12,160
Total operating expenses		5,860		9,007		22,586		28,348
Loss from operations		(5,577)		(8,827)		(21,958)		(25,141)
Other income (expense):
Change in fair value of warrant liability		441		682		4,624		2,385
Other income, net		38		61		145		118
Interest income		190		377		781		989
Interest expense		(1)		(210)		(1,035)		(1,778)
Loss on foreign currency exchange		—		(13)		(4)		(34)
Foreign income tax expense		(30)		—		(61)		(300)
Total other income, net		638		897		4,450		1,380
Net loss	$	(4,939)	$	(7,930)	$	(17,508)	$	(23,761)
Per share information:
Net loss per share of common stock, basic and diluted	$	(5.79)	$	(14.20)	$	(20.54)	$	(50.65)
Weighted average common shares outstanding, basic and diluted		852,801		558,564		852,253		469,149

See accompanying notes to consolidated financial statements.

Table of Contents

TREVENA, INC.

Consolidated Statements of Stockholders’ (Deficit) Equity (Unaudited)
(in thousands, except share data)


	Stockholders' (Deficit) Equity
								Accumulated
	Common Stock							Other
	Number	$0.001		Additional				Comprehensive		Total
	of	Par		Paid-in		Accumulated		Income		Stockholders'
	Shares	Value		Capital		Deficit		(Loss)		(Deficit) Equity
Balance, January 1, 2024	691,109	$	1	$	580,403	$	(588,061)	$	—	$	(7,657)
Stock-based compensation expense	—		—		681		—		—		681
Exercise of pre-funded warrant	41,276		—		—		—		—		—
Net loss	—		—		—		(7,678)		—		(7,678)
Balance, March 31, 2024	732,385	$	1	$	581,084	$	(595,739)	$	—	$	(14,654)
Stock-based compensation expense	—		—		588		—		—		588
Exercise of pre-funded warrant	69,920		—		—		—		—		—
Transfer of shares held in abeyance	49,375		—		—		—		—		—
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	797		—		—		—		—		—
Net loss	—		—		—		(4,891)		—		(4,891)
Balance, June 30, 2024	852,477	$	1	$	581,672	$	(600,630)	$	—	$	(18,957)
Stock-based compensation expense	—		—		556		—		—		556
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	2,292		—		—		—		—		—
Warrant amendment	—		—		31		—		—		31
Net loss	—		—		—		(4,939)		—		(4,939)
Balance, September 30, 2024	854,769	$	1	$	582,259	$	(605,569)	$	—	$	(23,309)


Balance, January 1, 2023	313,004	$	3	$	563,367	$	(547,772)	$	1	$	15,599
Stock-based compensation expense	—		—		806		—		—		806
Unrealized loss on marketable securities	—		—		—		—		(1)		(1)
Exercise of pre-funded warrants and related reclassification of warrant liability	49,215		1		1,568		—		—		1,569
Net loss	—		—		—		(7,819)		—		(7,819)
Balance, March 31, 2023	362,219	$	4	$	565,741	$	(555,591)	$	—	$	10,154
Stock-based compensation expense	—		—		702		—		—		702
Issuance of common stock, net of issuance costs	164,641		2		6,502		—		—		6,504
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	28		—		—		—		—		—
Exercise of pre-funded warrants and related reclassification of warrant liability	24,760		—		434		—		—		434
Net loss	—		—		—		(8,012)				(8,012)
Balance, June 30, 2023	551,648	$	6	$	573,379	$	(563,603)	$	—	$	9,782
Stock-based compensation expense	—		—		689		—		—		689
Issuance of common stock, net of issuance costs	40,360		—		1,008		—		—		1,008
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	2		—		—		—		—		—
Net loss	—		—		—		(7,930)		—		(7,930)
Balance, September 30, 2023	592,010	$	6	$	575,076	$	(571,533)	$	—	$	3,549

See accompanying notes to consolidated financial statements.

Table of Contents

TREVENA, INC.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Nine Months Ended
	September 30,
	2024		2023
Operating activities:
Net loss	$	(17,508)	$	(23,761)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		272		249
Stock-based compensation		1,825		2,197
Noncash interest expense on loan		717		1,004
Change in fair value of warrant liability		(4,624)		(2,385)
Change in right-of-use asset		475		411
Changes in operating assets and liabilities:
Prepaid expenses and other assets		1,239		(1,454)
Inventories		—		6
Operating lease liabilities		(738)		(656)
Accounts payable, accrued expenses and other liabilities		(2,764)		(2,661)
Net cash used in operating activities		(21,106)		(27,050)
Investing activities:
Purchases of property and equipment		—		(20)
Net cash used in investing activities		—		(20)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs		—		7,513
Proceeds from exercise of pre-funded warrants		—		2
Finance lease payments		(8)		(8)
Proceeds from debt		1,683		14,775
Net cash provided by financing activities		1,675		22,282
Net decrease in cash, cash equivalents and restricted cash		(19,431)		(4,788)
Cash, cash equivalents and restricted cash—beginning of period		33,515		40,280
Cash, cash equivalents and restricted cash—end of period	$	14,084	$	35,492
Supplemental disclosure of cash flow information:
Cash paid for interest	$	—	$	801
Reclassification of warrant liability upon exercise of pre-funded warrants	$	—	$	2,001

See accompanying notes to consolidated financial statements.

Table of Contents

TREVENA, INC.

Notes to Unaudited Consolidated Financial Statements

September 30, 2024

1. Organization and Description of the Business

Trevena, Inc., or 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 commercialization and research and development, including nonclinical studies and clinical trials. The Company has never been profitable. In late 2017, the Company submitted a new drug application, or NDA, for OLINVYK® (OLINVYK) injection, or OLINVYK, to the United States Food and Drug Administration, or the FDA. In August 2020, the FDA approved the NDA for OLINVYK and the Company initiated commercial launch of OLINVYK in the first quarter of 2021. While OLINVYK remains available for purchase by customers, we have substantially eliminated commercial support for the product to preserve capital as we explore strategic alternatives.

Since its inception, the Company has incurred losses and negative cash flows from operations. At September 30, 2024, the Company had an accumulated deficit of $605.6 million. The Company’s net loss was $17.5 million and $23.8 million for the nine months ended September 30, 2024 and 2023 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, or ASC 205-40, 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, 2024 is not sufficient to fund operations for one year after the date of this filing and therefore management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s plans to mitigate this risk include raising additional capital through equity or debt financings, or through strategic transactions, including collaborations. Management’s plans may also include the deferral of certain operating expenses unless and until additional capital is received. However, 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. As a result, management concluded that such plans do not alleviate the substantial doubt. If the Company is unable to raise sufficient additional capital, consummate a strategic transaction or defer sufficient operating expenses, the Company may be compelled to reduce the scope of its operations and planned capital expenditures, or to wind down operations.

2. Summary of Significant Accounting Policies

Reverse Stock Split

On August 13, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation to effect a 1-for-25 reverse stock split pursuant to which each 25 shares of the Company’s issued and outstanding common stock immediately prior to the effective time, which was 12:01 am ET on August 13, 2024, were combined into one share of the Company’s common stock. Fractional shares were not issued and stockholders who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split received an amount in cash equal to $5.13 per share for such fractional interests.

All of the share and per share amounts discussed in the accompanying consolidated financial statements have been adjusted to reflect the effect of this reverse split.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. 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 Updates, or ASUs, of the FASB. The Company’s functional currency is the U.S. dollar.

Table of Contents

The consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s consolidated balance sheets as of September 30, 2024, its results of operations and its comprehensive loss for the nine months ended September 30, 2024 and 2023, its consolidated statements of stockholders’ equity for the period from January 1, 2024 to September 30, 2024 and for the period January 1, 2023 to September 30, 2023, and its consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023. 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, 2023. 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, 2024 and 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

Principles of Consolidation

In connection with the royalty-based financing agreement disclosed in Note 5, the Company established three wholly owned subsidiaries, Trevena Royalty Corporation (which was later converted to a limited liability company, Trevena Royalty, LLC), Trevena SPV1 LLC and Trevena SPV2 LLC to facilitate the financing. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of September 30, 2024. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management used significant estimates in the following areas, among others: stock-based compensation expense, the determination of the fair value of stock-based awards, the fair value of common stock warrants, the accounting for research and development costs, accrued expenses, the recoverability of the Company’s net deferred tax assets and related valuation allowance, and the amortization of debt expenses. The financial data and other information disclosed in these notes are not necessarily indicative of the results to be expected for any future year or period. The Company bases its estimates on historical experience and also on assumptions that it believes are reasonable, however, actual results could significantly differ from those results.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, accounts payable, and accrued expenses approximate their fair values, given their short-term nature. Additionally, the Company believes the carrying value of the loan payable approximates its fair value as the interest rate is reflective of the rate the Company could obtain on debt with similar terms and conditions. Certain of the Company’s common stock warrants are carried at fair value, as disclosed in Note 3.

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. See Note 3 for additional information.

Product Revenue

Product revenue is recognized at the point in time when our performance obligations with our customers have been satisfied. At contract inception, we determine if the contract is within the scope of ASC Topic 606 and then evaluate the contract using the following five steps: (i) identify the contract with the customer; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue at the point in time when the Company satisfies a performance obligation.

OLINVYK is sold to wholesalers in the US (collectively, “customers”). These customers subsequently resell OLINVYK generally to hospitals, ambulatory surgical centers and other purchasers of OLINVYK. We recognize revenue from OLINVYK sales at the point customers obtain control of the product, which generally occurs upon delivery.

Table of Contents

Revenue is recorded at the transaction price, which is the amount of consideration we expect to receive in exchange for transferring products to a customer. We determine the transaction price based on fixed consideration in our contractual agreements, which includes estimates of variable consideration which are more fully described below. The transaction price is allocated entirely to the performance obligation to provide pharmaceutical products. In determining the transaction price, a significant financing component does not exist since the timing from when we deliver product to when the customers pay for the product is less than one year and the customers do not pay for product in advance of the transfer of the product.

Variable Consideration

The Company includes an estimate of variable consideration in its transaction price at the time of sale when control of the product transfers to the customer. Variable consideration includes distributor chargebacks, prompt payment (cash) discounts, distribution service fees and product returns.

The Company assesses whether or not an estimate of its variable consideration is constrained and has determined that the constraint does not apply, since it is probable that a significant reversal in the amount of cumulative revenue will not occur in the future when the uncertainty associated with the variable consideration is subsequently resolved. The Company’s estimates for variable consideration are adjusted as required at each reporting period for specific known developments that may result in a change in the amount of total consideration it expects to receive.

Distributor Chargebacks

When a product that is subject to a contractual price agreement is sold to a third party, the difference between the price paid to the Company by the wholesaler and the price under the specific contract is charged back to the Company by the wholesaler. Utilizing this information, the Company estimates a chargeback percentage for each product and records an allowance for chargebacks as a reduction to revenue when the Company records sales of the products. We reduce the chargeback allowance when a chargeback request from a wholesaler is processed. Reserves for distributor chargebacks are included in accounts receivable, net on the consolidated balance sheet.

Prompt Payment (Cash) Discounts

The Company provides customers with prompt payment discounts which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period. The Company’s prompt payment discount reserves are based on actual net sales and contractual discount rates. Reserves for prompt payment discounts are included in accounts receivable, net on the consolidated balance sheet.

Distribution Service Fees

The Company pays distribution service fees to its customers based on a fixed percentage of the product price. These fees are not in exchange for a distinct good or service and therefore are recognized as a reduction of the transaction price. The Company reserves for these fees based on actual net sales, contractual fee rates negotiated with the customer and the mix of the products in the distribution channel that remain subject to fees. Reserves for distribution service fees are included in accounts receivable, net on the consolidated balance sheet.

Product Returns

Generally, the Company’s customers have the right to return any unopened product during the eighteen (18) month period beginning six (6) months prior to the labeled expiration date and ending twelve (12) months after the labeled expiration date. The Company does not currently rely on industry data in its analysis of returns reserve. As the Company sold OLINVYK and established historical sales over a longer period of time (i.e., two to three years), the Company placed more reliance on historical purchasing, demand and return patterns of its customers when evaluating its reserves for product returns. OLINVYK has a forty-eight (48) month shelf life.

The Company recognizes the amount of expected returns as a refund liability, representing the obligation to return the customer’s consideration. Since the returns primarily consist of expired and short dated products that will not be resold, the Company does not record a return asset for the right to recover the goods returned by the customer at the

Table of Contents

time of the initial sale (when recognition of revenue is deferred due to the anticipated return). Accrued product return estimates are recorded in accrued expenses and other current liabilities on the consolidated balance sheet.

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.

The following table presents fair value of the Company’s cash, cash equivalents, restricted cash and warrant liability as of September 30, 2024 and December 31, 2023 (in thousands):



	September 30,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Unobservable Inputs
Description:	2024		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	2,364	$	2,364	$	—	$	—
Money Market Funds		11,098		11,098		—		—
Restricted Cash		622		622		—		—
Total assets measured and recorded at fair value	$	14,084	$	14,084	$	—	$	—
Liabilities:
Warrant Liability		851		—		—		851
Total liabilities measured and recorded at fair value	$	851	$	—	$	—	$	851

Table of Contents



	December 31,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Unobservable Inputs
Description:	2023		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	3,159	$	3,159	$	—	$	—
Money Market Funds		29,816		29,816		—		—
Restricted Cash		540		540		—		—
Total assets measured and recorded at fair value	$	33,515	$	33,515	$	—	$	—
Liabilities:
Warrant Liability		5,475		—		—		5,475
Total liabilities measured and recorded at fair value	$	5,475	$	—	$	—	$	5,475

(1)

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

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, 2024.

December 2023 Equity Offering and Warrant Issuance

The common stock warrants issued in connection with the Company’s private placement and warrant exercise transactions in December 2023 (collectively, the “December 2023 Offering”) were classified as liabilities at the time of issuance due to certain cash settlement adjustment features that were not deemed to be indexed to the Company’s stock. The warrant liability is remeasured each reporting period with the change in fair value recorded to other income (expense) in the consolidated statement of operations and comprehensive loss until the warrants are exercised, expired, reclassified or otherwise settled. The fair value of the warrant liability was determined using Level 3 inputs and was estimated using a Black-Scholes Option Pricing Model.

The assumptions used to estimate the fair value were as follows:



	September 30, 2024			December 31, 2023
Expected term of warrants (in years)		4.6			5.3
Risk-free interest rate		3.6	%		3.8	%
Expected volatility		123.48	%		128.26	%
Dividend yield		—	%		—	%

The following is a roll forward of the December 2023 Offering common stock warrant liability (in thousands):


	Warrant Liability
Balance, December 31, 2023	$	5,475
Change in fair value		(4,624)
Balance, September 30, 2024	$	851

Table of Contents

Warrants

As of September 30, 2024, the Company had the following common stock warrants outstanding:



	Classification	Warrants	Exercise Price	Expiration Date
December 2023 Offering Warrants	Liability	345,946	$ 17.50	4/19/2029
R-Bridge warrants	Equity	8,000	$ 7.00	7/3/2029
Other warrants	Equity	154	$ 2,259.00 - 6,637.00	12/23/2025 - 3/31/2027
		354,100

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. 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.

Inventory consists of the following (in thousands):


	September 30, 2024		December 31, 2023
Finished goods	$	1,156	$	3,101
Inventory Valuation Adjustment		(1,156)		(3,101)
Total Inventories	$	-	$	-

As of September 30, 2024 and December 31, 2023, the Company fully reserved finished goods to account for slow moving or obsolete inventory due to uncertainty of commercial activities and future expected OLINVYK sales. Subsequent disposals of product nearing product expiration and shipments of OLINVYK to customers result in a reduction to finished goods and a corresponding reduction to the inventory reserve. During the three months ended September 30, 2024, the Company disposed of $1.9 million of inventory nearing product expiration. For the nine months ended September 30, 2024, there were $17,000 of shipments to customers.

5. Loans Payable

In April 2022, the Company, through its wholly owned subsidiary, Trevena SPV2 LLC (“SPV2”), entered into a royalty-based loan agreement (as amended, the “Loan Agreement”) with R-Bridge, pursuant to which the Company was eligible to receive up to $40.0 million in term loan borrowings (the “Royalty Financing”). Term loan borrowings under the Royalty Financing were to be advanced in three tranches. The first tranche of $15.0 million was advanced in April 2022. The second tranche of $10.0 million was to become available upon achievement of either a commercial or financing milestone as set forth in the Loan Agreement. The third tranche of $15.0 million became available upon the first commercial sale of OLINVYK in China which occurred in August 2023, and the Company elected to receive such proceeds.

Table of Contents

The following table summarizes the impact of the Loan Agreement on the Company’s consolidated balance sheet as follows (in thousands):


	September 30,
	2024
Principal and accreted interest	$	34,546
Unamortized debt discount		(1,672)
Carrying Value	$	32,874
Current portion of loans payable, net		(902)
Loans payable, net	$	31,972

The term loans mature on the earlier of (i) the fifteen (15) year anniversary of the closing date in March 2022 and (ii) the date on which the license agreement with Nhwa expires. Repayment of any borrowings and related interest will be made quarterly beginning June 30, 2022. Repayment will be in the form of (i) a 4.0% royalty payment on the Company’s net sales of OLINVYK in the United States and (ii) proceeds from royalties from the Company’s license agreement with Nhwa. As a result of Nhwa obtaining Chinese approval of OLINVYK in May 2023, royalties from net sales of OLINVYK in the United States are capped at $10.0 million in accordance with the Loan Agreement. Upon a change in control or in the event the Company elects to repay any outstanding borrowings prior to their contractual maturity, SPV2 is required to pay a control premium equal to the greater of (i) principal and interest and (ii) $10.0 million or $20.0 million depending on the timing in which the triggering event occurs as further provided in the Loan Agreement.

In April 2022, the Company placed $2.0 million into an interest reserve account in connection with the Loan Agreement. Payments of interest under the Loan Agreement are made quarterly from the royalty on the Company’s net sales of OLINVYK in the United States and proceeds from royalties from the Company’s license agreement with Nhwa. On each interest payment date, if the royalty payments received do not equal the total interest due for the respective quarter, the interest payment due will be paid from the interest reserve account. The interest reserve account was classified as restricted cash on the Company’s balance sheet at December 31, 2022. During the second quarter of 2023, the Company agreed to transfer the remaining funds, approximately $1.0 million, to R-Bridge to prepay future interest payments. As of December 31, 2023, the prepaid interest had been reduced to $0.0 through interest expense incurred under the Loan Agreement.

Repayments of all borrowings, interest and other related payments, under the Loan Agreement are secured by substantially all of the assets associated with the license agreement with Nhwa, the Chinese intellectual property related to OLINVYK, and deposit accounts established to hold amounts received on account for repayment of the borrowings and related interest under the Loan Agreement. The Loan Agreement contains certain customary affirmative and negative covenants and contains customary defined events of default, upon which any outstanding principal and unpaid interest shall be due on demand. At September 30, 2024, there were no events of default pursuant to the Loan Agreement and the Company was in compliance with all covenants. Interest expense is imputed based on the estimated loan repayment period, which takes into consideration estimated future revenue in the United States and China. Changes in estimates are recognized prospectively and may have a material impact on liability balance.

In connection with the first tranche borrowings in April 2022, the Company issued a warrant to R-Bridge to purchase 8,000 shares of the Company’s common stock at an initial exercise price of $512.50 per share and will be exercisable for a period of three years from the date of issuance. In July 2024, these warrants were amended to reduce the exercise price to $7.00 and extend the exercise period to five years from the date of the Amendment (as defined below). The Company concluded the warrants were a freestanding equity-classified instrument to which the proceeds from the first tranche was allocated across the debt and warrant on a relative fair value basis. In addition, the Company incurred lender fees and third-party costs of $0.5 million each and were netted against the proceeds allocated to the debt and warrant. Fees netted against debt proceeds represent a debt discount and are amortized into interest expense using the effective interest method.

In July 2024, the Company amended the Loan Agreement (the “Amendment”) with respect to the second tranche for $10.0 million. In connection with the Amendment, the Company received a $2.0 million payment from R-Bridge and is eligible to receive an additional $8.0 million based upon achievement of certain US partnering and US commercial milestones for OLINVYK. In connection with the Amendment, (i) the ownership of certain OLINVYK Chinese IP that had been previously pledged to R-Bridge under the Royalty Financing was transferred to R-Bridge, (ii)

Table of Contents

warrants that had been previously issued to R-Bridge as part of the Royalty Financing were amended to reduce the exercise price and to extend the exercise period to five years from the date of the Amendment, (iii) the existing cap on US royalty payable to R-Bridge was increased from $10.0 million to $12.0 million (with no minimum or fixed payments), and (iv) R-Bridge agreed to forgive $10.0 million that was outstanding to them prior to the Amendment. This $10.0 million forgiveness was determined to be a troubled debt restructuring and therefore no gain will be recognized by the Company for accounting purposes.

The Company does not expect its existing balance of cash and cash equivalents as of September 30, 2024 to be sufficient to fund operations for one year after the date of this filing, and management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. In consideration of the foregoing, the Amendment was determined to be a troubled debt restructuring. In connection with this analysis, R-Bridge was deemed to have granted a concession as the calculated effective borrowing rate after the Amendment was lower than immediately prior to the Amendment. As a result, no gain was recognized for the concession since the Amendment is being accounted for on a prospective basis. Additionally, the estimated payments from future royalties are less than the carrying value of the Royalty Financing. Therefore, no interest expense will be recognized prospectively until such time as the estimated royalty payments are greater than the carrying value of the Royalty Financing. Third-party costs related to the Amendment of $0.1 million were expensed as incurred.

During the nine months ended September 30, 2024, the Company recognized interest expense of $1.0 million.

The accounting for the Loan Agreement requires the Company to make certain estimates and assumptions, particularly about future royalties under the license agreement with Nhwa and sales of OLINVYK in the United States and China. Such estimates and assumptions are utilized in determining the expected repayment term, amortization period of the debt discount, accretion of interest expense and classification between current and long-term portions of amounts outstanding. The Company amortizes the debt discount into interest expense over the expected term of the arrangement using the interest method based on projected cash flows. Similarly, the Company classifies as current debt for the Loan Agreement, amounts that are expected to be repaid during the succeeding twelve months after the reporting period end. However, the repayment of amounts due under the Loan Agreement is variable because the cash flows to be utilized for periodic payments is a function of amounts received by the Company with respect to the royalties and net product sales.

Accordingly, the estimates of the magnitude and timing of amounts to be available for debt service are subject to significant variability and thus, subject to significant uncertainty. Therefore, these estimates and assumptions are likely to change, which may result in future adjustments to the portion of the debt that is classified as a current liability, the amortization of debt discount and the accretion of interest expense. Other amounts that may become due and payable under the Loan Agreement, including amounts shared between the parties with respect to cash flows received in excess of pre-defined thresholds, are recognized as additional interest expense when they become probable and estimable. The amount of principal to be repaid in each of the five succeeding years is not fixed and determinable.

6. Stockholders’ (Deficit) Equity

Equity Offerings

Under its Amended and Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”), the Company was authorized to issue up to 200,000,000 shares of common stock as of September 30, 2024. The Company also was authorized to issue up to 5,000,000 shares of preferred stock as of September 30, 2024. 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.

December 2023 Equity Offering and Warrant Issuance

On December 28, 2023, the Company and a single investor entered into a securities purchase agreement whereby the Company issued 111,196 pre-funded warrants (the “Pre-Funded Warrants”) with an initial exercise price of $0.025 per share for $17.50 per Pre-Funded Warrant, which are exercisable immediately and do not expire. In addition, the investor received 111,196 common stock warrants with an initial exercise price of $17.50 per share, which were exercisable through April 19, 2029. As of September 30, 2024, all Pre-Funded Warrants have been exercised in full.

Table of Contents

Concurrent with the execution of the securities purchase agreement above, the Company and the investor entered into an inducement agreement whereby the Company agreed to reduce the exercise price of 117,375 warrants (the “Existing Warrants”) held by the investor from prior equity offerings. The weighted average exercise price of the Existing Warrants was $83.75 per share and was reduced to $17.50 per share in exchange for the investor agreeing to immediately exercise the Existing Warrants. Of the Existing Warrants exercised, 49,375 were held in abeyance for the benefit of the holder due to certain beneficial ownership limitations and these shares were subsequently issued to the investor on June 26, 2024. In addition to reducing the exercise price, the Company issued 234,750 common stock warrants (the “Inducement Warrants”) to the investor with an initial exercise price of $17.50 per share, which are exercisable through April 19, 2029. The fair value of the Inducement Warrants and the change in fair value of the Existing Warrants resulting from the reduction in the exercise price totaling $4.2 million was accounted for as equity issuance costs in the consolidated statement of operations.

The Company received $3.5 million in total, after deducting underwriter fees and other third-party costs, as a result of the sale of pre-funded warrants and exercise of the warrants as part of the inducement.

The warrants issued did not meet the requirements to be indexed to equity and equity classified and, as such, are classified as liabilities at fair value with changes in fair value recorded within other income (expense), net on the consolidated statements of operations and comprehensive loss.

Equity Incentive Plan

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


	Nine Months Ended September 30,
	2024		2023
Research and development	$	391	$	444
Selling, general and administrative		1,434		1,753
Total stock-based compensation	$	1,825	$	2,197

Stock Options

A summary of stock option activity and related information through September 30, 2024 follows:


	Options Outstanding
					Weighted
					Average
			Weighted		Remaining
			Average		Contractual
	Number of		Exercise		Term
	Shares		Price		(in years)
Balance, December 31, 2023	16,123		$	891.21	6.81
Granted	3,288			10.00
Exercised	—			—
Forfeited/Cancelled	(2,276)	`		938.30
Balance, September 30, 2024	17,135		$	715.86	6.58
Vested or expected to vest at September 30, 2024	17,135		$	715.86	6.58
Exercisable at September 30, 2024	12,654		$	947.24	5.59

The aggregate intrinsic value of options exercisable as of September 30, 2024, was zero, based on the difference between the Company’s closing stock price of $3.740 and the exercise price of each stock option.

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 stock.

Table of Contents

The per-share weighted-average grant date fair value of the options granted to employees and directors during the nine months ended September 30, 2024 and 2023 was estimated at $8.24 and $20.50 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:


	September 30,
	2024		2023
Expected term of options (in years)	5.5		5.7
Risk-free interest rate	4.2	%	3.9	%
Expected volatility	118.5	%	110.3	%
Dividend yield	—	%	—	%

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 nine months ended September 30, 2024:



		Weighted
		Average
	Number of	Grant Date
	Awards	Fair Value
Non-vested at December 31, 2023	64,101	$	51.28
Granted	—		—
Vested	(4,373)		106.24
Forfeited/Cancelled	(10,473)		43.61
Non-vested at September 30, 2024	49,255	$	48.04

For the nine months ended September 30, 2024, the Company recorded $1.2 million in stock-based compensation expense related to RSUs, which is reflected in the consolidated statements of operations and comprehensive loss.

As of September 30, 2024, there was $1.3 million of total unrecognized compensation expense related to unvested RSUs that will be recognized over the weighted average remaining period of 1.99 years.

Shares Available for Future Grant

At September 30, 2024, the Company has the following shares available to be granted under its equity incentive plans:


		Inducement
	2023 Plan	Plan
Available at December 31, 2023	10,257	480
Authorized	—	—
Granted	(3,288)	—
Shares withheld for taxes not issued	1,280	—
Forfeited/Cancelled	12,749	—
Available at September 30, 2024	20,998	480

Table of Contents

Shares Reserved for Future Issuance

At September 30, 2024, the Company has reserved the following shares of common stock for issuance:


Stock options outstanding under 2013 Plan		9,417
Stock options outstanding under 2023 Plan		7,398
Restricted stock units outstanding under 2013 Plan		49,255
Stock options outstanding under Inducement Plan		320
Warrants outstanding		354,100
Total shares of common stock reserved for future issuance		420,490

7. 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. (“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. On August 3, 2023, Vanguard exercised its second option to extend its sublease term. The Company and Vanguard agreed to further extend the sublease through May 2028. With the current extension to May 2028, Vanguard’s sublease is coterminous with the Company’s master lease term. 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) $1.00 less in month 14 through 109 of the sublease, and (iii) in month 110 through 116 of the sublease, $16.50 less than the base rent payable by us under our 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 consolidated statements of operations and comprehensive loss as other income (expense).

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


	September 30, 2024		December 31, 2023
Operating leases:
Operating lease right-of-use assets	$	3,190	$	3,665
Other current lease liabilities		1,092		1,002
Operating lease liabilities		3,588		4,417
Total operating lease liabilities	$	4,680	$	5,419

Finance leases:
Property and equipment, at cost	$	29	$	29
Accumulated depreciation		(21)		(13)
Property and equipment, net		8		16
Other current lease liabilities		10		10
Other long-term liabilities		—		7
Total finance lease liabilities	$	10	$	17

Table of Contents

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Operating lease costs:
Operating lease expense	$	361	$	351	$	1,100	$	1,097
Other income		(342)		(357)		(1,062)		(1,054)
Total operating lease costs	$	19	$	(6)	$	38	$	43

Finance lease costs:
Amortization of right-of-use assets		2		2		7		7
Interest on lease liabilities		—		—		—		—
Total finance lease costs	$	2	$	2	$	7	$	7

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


	Nine Months Ended
	September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(276)	$	(288)
Financing cash flows from finance leases		(8)		(8)

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

Operating Leases

Financing Leases

2024 (October 1 - December 31)