false2022Q1000101616912-31.500010161692022-01-012022-03-3100010161692022-05-05xbrli:shares00010161692022-03-31iso4217:USD00010161692021-12-31iso4217:USDxbrli:shares0001016169us-gaap:ProductMember2022-01-012022-03-310001016169us-gaap:ProductMember2021-01-012021-03-310001016169atrs:LicensingAndDevelopmentRevenueMember2022-01-012022-03-310001016169atrs:LicensingAndDevelopmentRevenueMember2021-01-012021-03-310001016169us-gaap:RoyaltyMember2022-01-012022-03-310001016169us-gaap:RoyaltyMember2021-01-012021-03-3100010161692021-01-012021-03-310001016169atrs:CostOfDevelopmentRevenueMember2022-01-012022-03-310001016169atrs:CostOfDevelopmentRevenueMember2021-01-012021-03-310001016169us-gaap:CommonStockMember2021-12-310001016169us-gaap:AdditionalPaidInCapitalMember2021-12-310001016169us-gaap:RetainedEarningsMember2021-12-310001016169us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001016169us-gaap:CommonStockMember2022-01-012022-03-310001016169us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001016169us-gaap:RetainedEarningsMember2022-01-012022-03-310001016169us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001016169us-gaap:CommonStockMember2022-03-310001016169us-gaap:AdditionalPaidInCapitalMember2022-03-310001016169us-gaap:RetainedEarningsMember2022-03-310001016169us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001016169us-gaap:CommonStockMember2020-12-310001016169us-gaap:AdditionalPaidInCapitalMember2020-12-310001016169us-gaap:RetainedEarningsMember2020-12-310001016169us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-3100010161692020-12-310001016169us-gaap:CommonStockMember2021-01-012021-03-310001016169us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001016169us-gaap:RetainedEarningsMember2021-01-012021-03-310001016169us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001016169us-gaap:CommonStockMember2021-03-310001016169us-gaap:AdditionalPaidInCapitalMember2021-03-310001016169us-gaap:RetainedEarningsMember2021-03-310001016169us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100010161692021-03-310001016169us-gaap:FairValueInputsLevel1Member2022-03-310001016169us-gaap:FairValueInputsLevel1Member2021-12-310001016169srt:MinimumMemberatrs:ComputerEquipmentAndSoftwareMember2022-01-012022-03-310001016169atrs:ComputerEquipmentAndSoftwareMembersrt:MaximumMember2022-01-012022-03-310001016169atrs:FurnitureFixturesAndOfficeEquipmentMembersrt:MinimumMember2022-01-012022-03-310001016169atrs:FurnitureFixturesAndOfficeEquipmentMembersrt:MaximumMember2022-01-012022-03-310001016169srt:MinimumMemberatrs:ProductionMoldsToolingAndEquipmentMember2022-01-012022-03-310001016169atrs:ProductionMoldsToolingAndEquipmentMembersrt:MaximumMember2022-01-012022-03-310001016169srt:MinimumMember2022-01-012022-03-310001016169srt:MaximumMember2022-01-012022-03-3100010161692022-04-012022-03-310001016169atrs:ProductionMoldsToolingAndEquipmentMember2022-03-310001016169atrs:ProductionMoldsToolingAndEquipmentMember2021-12-310001016169us-gaap:LeaseholdImprovementsMember2022-03-310001016169us-gaap:LeaseholdImprovementsMember2021-12-310001016169atrs:FurnitureFixturesAndOfficeEquipmentMember2022-03-310001016169atrs:FurnitureFixturesAndOfficeEquipmentMember2021-12-310001016169atrs:ComputerEquipmentAndSoftwareMember2022-03-310001016169atrs:ComputerEquipmentAndSoftwareMember2021-12-310001016169atrs:ConstructionAndToolingInProcessMember2022-03-310001016169atrs:ConstructionAndToolingInProcessMember2021-12-310001016169atrs:HerculesCapitalIncMemberatrs:TermLoanMember2017-06-060001016169atrs:TermLoanTrancheOneMemberatrs:HerculesCapitalIncMember2017-06-060001016169us-gaap:PrimeRateMemberatrs:HerculesCapitalIncMemberatrs:TermLoanMember2017-06-062017-06-06xbrli:pure0001016169atrs:HerculesCapitalIncMemberatrs:TermLoanMember2021-03-310001016169atrs:HerculesCapitalIncMemberatrs:FirstAmendmentMemberatrs:TermLoanMember2019-06-260001016169atrs:HerculesCapitalIncMemberatrs:TermLoanTrancheTwoMemberatrs:FirstAmendmentMember2019-06-262019-06-260001016169atrs:HerculesCapitalIncMembersrt:MinimumMemberatrs:FirstAmendmentMemberatrs:TermLoanTrancheThreeMember2019-06-260001016169atrs:HerculesCapitalIncMemberatrs:FirstAmendmentMemberatrs:TermLoanTrancheThreeMembersrt:MaximumMember2019-06-260001016169atrs:TermLoanTrancheOneMemberatrs:HerculesCapitalIncMember2019-06-262019-06-260001016169atrs:HerculesCapitalIncMemberatrs:TermLoanTrancheTwoMember2019-06-262019-06-260001016169atrs:HerculesCapitalIncMembersrt:MinimumMemberatrs:TermLoanMember2019-06-262019-06-260001016169atrs:HerculesCapitalIncMembersrt:MaximumMemberatrs:TermLoanMember2019-06-262019-06-260001016169atrs:HerculesCapitalIncMemberatrs:TermLoanMember2021-06-012021-06-300001016169atrs:HerculesCapitalIncMemberatrs:TermLoanMember2021-09-012021-09-300001016169atrs:HerculesCapitalIncMemberatrs:TermLoanMember2021-11-010001016169atrs:HerculesCapitalIncMemberatrs:TermLoanMember2021-11-012021-11-010001016169atrs:CreditAgreementMember2021-11-010001016169us-gaap:SecuredDebtMemberatrs:CreditAgreementMember2021-11-010001016169us-gaap:RevolvingCreditFacilityMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2021-11-010001016169us-gaap:LetterOfCreditMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2021-11-010001016169us-gaap:BridgeLoanMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2021-11-010001016169us-gaap:SecuredDebtMemberatrs:HerculesCapitalIncMemberatrs:TermLoanMember2021-11-012021-11-010001016169us-gaap:SecuredDebtMemberatrs:CreditAgreementMember2022-03-310001016169us-gaap:SecuredDebtMemberatrs:CreditAgreementMember2021-12-310001016169us-gaap:RevolvingCreditFacilityMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2021-12-310001016169us-gaap:RevolvingCreditFacilityMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2022-03-310001016169us-gaap:LetterOfCreditMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2022-03-310001016169us-gaap:BridgeLoanMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2022-03-310001016169us-gaap:LetterOfCreditMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2021-12-310001016169us-gaap:BridgeLoanMemberatrs:CreditAgreementMemberus-gaap:LineOfCreditMember2021-12-310001016169us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberatrs:CreditAgreementMember2021-01-012021-12-310001016169us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberatrs:CreditAgreementMember2022-01-012022-03-310001016169us-gaap:RevolvingCreditFacilityMemberatrs:CreditAgreementMembersrt:MaximumMember2021-01-012021-12-310001016169us-gaap:RevolvingCreditFacilityMemberatrs:CreditAgreementMembersrt:MaximumMember2022-01-012022-03-310001016169atrs:CreditAgreementMember2022-01-012022-03-310001016169us-gaap:RevolvingCreditFacilityMemberatrs:CreditAgreementMember2022-01-012022-03-310001016169srt:MinimumMemberatrs:CreditAgreementMemberus-gaap:FederalFundsEffectiveSwapRateMember2022-01-012022-03-310001016169us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMemberatrs:CreditAgreementMember2022-01-012022-03-310001016169atrs:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-03-310001016169us-gaap:BaseRateMemberatrs:CreditAgreementMember2022-01-012022-03-310001016169atrs:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310001016169atrs:CreditAgreementMember2022-03-3100010161692021-06-300001016169us-gaap:PerformanceSharesMember2021-12-310001016169us-gaap:RestrictedStockUnitsRSUMember2021-12-310001016169us-gaap:PerformanceSharesMember2022-01-012022-03-310001016169us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001016169us-gaap:PerformanceSharesMember2022-03-310001016169us-gaap:RestrictedStockUnitsRSUMember2022-03-310001016169atrs:EmployeesTaxObligationsMember2022-01-012022-03-310001016169atrs:EmployeesTaxObligationsMember2021-01-012021-03-310001016169srt:DirectorMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001016169srt:DirectorMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001016169us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001016169us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001016169us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001016169us-gaap:PerformanceSharesMember2021-01-012021-03-310001016169us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberatrs:OTREXUPAssetsMember2021-12-310001016169us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberatrs:OTREXUPAssetsMember2021-12-012021-12-3100010161692021-01-012021-12-310001016169atrs:ProprietaryProductMemberus-gaap:SalesMember2022-01-012022-03-310001016169atrs:ProprietaryProductMemberus-gaap:SalesMember2021-01-012021-03-310001016169atrs:PartneredProductMemberus-gaap:SalesMember2022-01-012022-03-310001016169atrs:PartneredProductMemberus-gaap:SalesMember2021-01-012021-03-310001016169us-gaap:SalesMember2022-01-012022-03-310001016169us-gaap:SalesMember2021-01-012021-03-310001016169atrs:LicensingAndDevelopmentRevenueMember2022-01-012022-03-310001016169atrs:LicensingAndDevelopmentRevenueMember2021-01-012021-03-310001016169atrs:RoyaltiesRevenueMember2022-01-012022-03-310001016169atrs:RoyaltiesRevenueMember2021-01-012021-03-310001016169country:US2022-01-012022-03-310001016169country:US2021-01-012021-03-310001016169srt:EuropeMember2022-01-012022-03-310001016169srt:EuropeMember2021-01-012021-03-310001016169atrs:TevaMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001016169atrs:TevaMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310001016169atrs:McKessonCorporationMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001016169atrs:McKessonCorporationMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310001016169us-gaap:SalesRevenueNetMemberatrs:CardinalHealthMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001016169us-gaap:SalesRevenueNetMemberatrs:CardinalHealthMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310001016169us-gaap:SalesRevenueNetMemberatrs:AmerisourceBergenCorporationMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310001016169atrs:LicenseAgreementMemberatrs:LipocineIncMember2021-10-012021-10-310001016169atrs:LipocineIncMember2021-10-012021-10-31atrs:installment0001016169us-gaap:SubsequentEventMemberatrs:LicenseAgreementMemberatrs:LipocineIncMember2022-04-012022-04-300001016169us-gaap:SubsequentEventMemberatrs:LipocineIncMember2022-04-012022-04-300001016169us-gaap:SubsequentEventMemberatrs:HalozymeTherapeuticsIncMember2022-04-120001016169us-gaap:SubsequentEventMember2022-04-272022-05-06atrs:numberOfComplaint

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 March 31, 2022


☐			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: 001-32302

ANTARES PHARMA, INC.

(Exact name of registrant as specified in its charter)


Delaware						41-1350192
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


100 Princeton South, Suite 300, Ewing, NJ						08628
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (609) 359-3020

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ATRS

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non–accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of May 5, 2022, the registrant had 170,852,427 shares of common stock outstanding at $0.01 par value per share.

ANTARES PHARMA, INC.

Quarterly Report on Form 10-Q

For the Three Months Ended March 31, 2022

TABLE OF CONTENTS



PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements	2
		Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (unaudited)	2
		Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (unaudited)	3
		Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2022 and 2021 (unaudited)	4
		Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and 2021 (unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)	6
		Notes to Condensed Consolidated Financial Statements (unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
	Item 4.	Controls and Procedures	30
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	32
	Item 1A.	Risk Factors	32
	Item 6.	Exhibits	35
SIGNATURES			36

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ANTARES PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(UNAUDITED)


	March 31, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	61,715	$	65,913
Short-term investments	498		1,245
Accounts receivable, net	58,131		56,697
Other receivables	26,006		26,311
Inventories, net	11,591		11,544
Contract assets	9,142		8,030
Prepaid expenses and other current assets	4,502		4,532
Total current assets	171,585		174,272
Deferred tax assets, net	33,860		33,043
Property and equipment, net	25,727		26,015
Operating lease right-of-use assets	4,499		3,774
Intangibles, net	17,690		17,879
Goodwill	1,095		1,095
Other long-term assets	1,202		1,427
Total assets	$	255,658	$	257,505

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	19,878	$	17,056
Accrued expenses and other liabilities	30,216		35,043
Current maturities of long-term debt, net	1,500		1,500
Operating lease liabilities, current	1,035		904
Deferred revenue	3,100		4,427
Total current liabilities	55,729		58,930
Long-term debt, less current maturities	17,891		18,241
Operating lease liabilities, long-term	5,063		4,576
Deferred revenue, long-term	1,207		—
Total liabilities	79,890		81,747
Commitments and contingencies (Note 11)
Stockholders’ Equity
Preferred Stock: $0.01 par; 3,000 shares authorized, none outstanding	—		—
Common Stock: $0.01 par; 300,000 shares authorized; 170,580 and 170,042 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1,706		1,701
Additional paid-in capital	353,406		351,079
Accumulated deficit	(178,658)		(176,337)
Accumulated other comprehensive loss	(686)		(685)
Total stockholders' equity	175,768		175,758
Total liabilities and stockholders’ equity	$	255,658	$	257,505

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(UNAUDITED)


	Three Months Ended March 31,
	2022		2021
Revenue
Product sales, net	$	32,103	$	29,135
Licensing and development revenue	4,191		4,984
Royalties	5,263		7,964
Total revenue, net	41,557		42,083
Operating expenses
Cost of product sales	15,648		12,498
Cost of development revenue	3,119		3,947
Research and development	5,008		2,640
Selling, general and administrative	20,602		17,607
Total operating expenses	44,377		36,692
Operating income (loss)	(2,820)		5,391
Other income (expense)
Interest expense	(174)		(962)
Other income (expense), net	(144)		(46)
Total other expense, net	(318)		(1,008)
Income (loss) before income taxes	(3,138)		4,383
Income tax expense (benefit)	(817)		590
Net income (loss)	$	(2,321)	$	3,793

Earnings (loss) per common share
Basic	$	(0.01)	$	0.02
Diluted	$	(0.01)	$	0.02

Weighted average common shares outstanding
Basic	170,104		167,822
Diluted	170,104		174,908

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(UNAUDITED)


	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	(2,321)	$	3,793
Foreign currency translation adjustment	(1)		(10)
Comprehensive income (loss)	$	(2,322)	$	3,783

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(UNAUDITED)












	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2021	170,072	$	1,701	$	351,079	$	(176,337)	$	(685)	$	175,758
Common stock issued under equity compensation plan, net of shares withheld for taxes	165	2		(523)		—		—		(521)
Exercise of options	343	3		910		—		—		913
Stock-based compensation	—	—		1,940		—		—		1,940
Net income (loss)	—	—		—		(2,321)		—		(2,321)
Other comprehensive income (loss)	—	—		—		—		(1)		(1)
Balance, March 31, 2022	170,580	$	1,706	$	353,406	$	(178,658)	$	(686)	$	175,768












	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2020	166,836	$	1,668	$	340,756	$	(222,626)	$	(683)	$	119,115
Common stock issued under equity compensation plan, net of shares withheld for taxes	417	4		(1,623)		—		—		(1,619)
Exercise of options	1,545	16		3,325		—		—		3,341
Stock-based compensation	—	—		1,605		—		—		1,605
Net income (loss)	—	—		—		3,793		—		3,793
Other comprehensive income (loss)	—	—		—		—		(10)		(10)
Balance, March 31, 2021	168,798	$	1,688	$	344,063	$	(218,833)	$	(693)	$	126,225

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.

ANTARES PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(UNAUDITED)


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities
Net income (loss)	$	(2,321)	$	3,793
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred taxes	(817)		590
Stock-based compensation	1,940		1,605
Depreciation and amortization	931		894
Changes in inventory reserve	549		40
Other	276		126
Changes in operating assets and liabilities:
Accounts receivable	(1,434)		(731)
Inventories, net	(596)		(1,438)
Contract assets	(1,112)		(2,820)
Prepaid expenses and other assets	30		650
Accounts payable	2,655		502
Accrued expenses and other liabilities	(4,862)		1,136
Deferred revenue	(120)		(2,369)
Net cash provided by (used in) operating activities	(4,881)		1,978
Cash Flows from Investing Activities
Purchases of property and equipment	(81)		(1,184)
Proceeds from maturities of investment securities	996		—
Purchases of investment securities	(249)		—
Net cash provided by (used in) investing activities	666		(1,184)
Cash Flows from Financing Activities
Principal payments on long-term debt	(375)		—
Proceeds from exercise of stock options	913		3,341
Taxes paid related to net share settlement of equity awards	(521)		(1,619)
Net cash provided by (used in) financing activities	17		1,722
Effect of exchange rate changes on cash and cash equivalents	—		(1)
Increase (decrease) in cash and cash equivalents	(4,198)		2,515
Cash and cash equivalents
Beginning of period	65,913		53,137
End of period	$	61,715	$	55,652
Supplemental disclosure of cash flow information
Cash paid for interest	$	148	$	850
Cash paid for income taxes	$	—	$	98
Supplemental disclosure of non-cash investing activities
Purchases of property and equipment recorded in accounts payable and accrued expenses	$	632	$	1,779

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Note 1. Description of Business

Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is a specialty pharmaceutical company focused primarily on the development and commercialization of pharmaceutical products and technologies in targeted therapeutic areas. We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using our advanced drug delivery systems that are designed to provide commercial or functional advantages, such as improved safety and efficacy, convenience, improved tolerability, and enhanced patient comfort and adherence. We also seek product opportunities that complement and leverage our commercial platform. We have a portfolio of proprietary and partnered commercial products and ongoing product development programs in various stages of development. We have formed partnership arrangements with several different industry leading pharmaceutical companies.

Our marketed proprietary products include:

•XYOSTED® (testosterone enanthate) injection, indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone, and the first and only subcutaneous testosterone enanthate product for once-weekly, at-home self-administration to be approved by the U.S. Food and Drug Administration (“FDA”);

•NOCDURNA® (desmopressin acetate), marketed in the United States (“U.S.”). for the treatment of nocturia due to nocturnal polyuria (“NP”) in adults who awaken at least two times per night to urinate; and

•TLANDO® (testosterone undecanoate), an oral treatment for testosterone replacement therapy (“TRT”) indicated for conditions associated with a deficiency or absence of endogenous testosterone, or hypogonadism in adult males, approved by the FDA on March 28, 2022 with commercial launch expected in the second quarter of 2022.

We are also party to various partnered product development and supply arrangements:

•We developed and are the exclusive supplier of devices for Teva Pharmaceutical Industries, Ltd’s (“Teva”) Epinephrine Injection USP products, the generic equivalent of EpiPen® and EpiPen® Jr., indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients;

•Through our commercialization partner Teva, we sell Sumatriptan Injection USP, a generic equivalent to the Imitrex® STATdose Pen®, in the U.S. indicated for the acute treatment of migraine headaches and cluster headaches in adults;

•In collaboration with AMAG Pharmaceuticals, Inc. (“AMAG”), acquired by Covis Group S.a.r.l. (“CG”) (collectively CG and AMAG are herein after referred to as “Covis”) in November 2020, we developed a subcutaneous auto injector and are the exclusive supplier of devices and the final assembled and packaged commercial product of Makena® (hydroxyprogesterone caproate injection) subcutaneous auto injector, which is a ready-to-administer treatment indicated to reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered at least one preterm baby in the past;

•We are the exclusive supplier of devices and the final assembled and packaged commercial product of OTREXUP® (methotrexate) injection, indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis, which we developed and sold to Otter Pharmaceuticals, LLC (a subsidiary of Assertio Holdings, Inc., together with Assertio Holdings, Inc., as guarantor, individually and collectively referred to as “Otter”) in December 2021 as discussed in Note 7; and

•We developed and are the exclusive supplier of devices for Teva’s generic equivalent of Forsteo® (Teriparatide Injection) which is approved and currently sold by Teva in various countries outside the U.S.

Additionally, we are developing other devices in collaboration with various pharmaceutical partners and advancing other internal research and development programs.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, which include the accounts of Antares Pharma, Inc. and its two wholly-owned foreign subsidiaries, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission's Regulation S-X. Accordingly, all of the information and footnotes required by GAAP for complete financial statements is not included. All intercompany accounts and transactions have been eliminated in consolidation. We believe all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited condensed consolidated financial statements and unaudited condensed footnote disclosures thereto should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits at commercial banks and highly liquid investments with an original maturity of three months or less. Cash equivalents, consisting of investments in money market funds and bank certificate of deposits, are remeasured and reported at fair value each reporting period based on quoted market prices, which is a Level 1 input within the three-level valuation hierarchy for disclosure of fair value measurements, and totaled $26,631 and $26,889 as of March 31, 2022 and December 31, 2021, respectively.

Investments

From time to time, we also invest in bank certificates of deposit that are classified as held-to-maturity because of our intent and ability to hold securities to maturity. Investments with original maturities greater than three months but less than one year are classified as short-term investments on the Condensed Consolidated Balance Sheets. The investment securities are carried at their amortized cost and fair value is determined by quoted market prices for identical or similar securities. The carrying value of our short-term investments as of March 31, 2022 and December 31, 2021 approximate fair value.

Inventories

Inventories are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis. Certain components of our products are provided by a limited number of vendors, and our production, assembly, warehousing and distribution operations are outsourced to third-party suppliers where substantially all of our inventory is located. Disruption of supply from key vendors or third-party suppliers may have a material adverse impact on our operations and financial results.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over an asset’s estimated useful life as follows:


			Useful Life
Computer equipment and software			3-5 years
Furniture, fixtures and office equipment			5-7 years
Production molds, tooling and equipment			3-10 years
Leasehold improvements			Lesser of useful life or lease term

Expenditures, including interest costs, for assets under construction and internal use software that are not yet ready for their intended use are capitalized and will be depreciated based on the above guidelines when placed in service. Costs associated with repairs and maintenance are expenses as incurred.

Revenue Recognition

We generate revenue from proprietary and partnered product sales, license and development activities and royalty arrangements. Revenue is recognized when or as we transfer control of the promised goods or services to the customer at the transaction price, which is the amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

At inception of each contract, we identify the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determine the transaction price including any variable consideration, allocate the transaction price to the distinct performance obligations and determine whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We reassess our reserves for variable consideration at each reporting date and make adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known.

We have elected to recognize the cost for freight and shipping activities as a fulfillment cost. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying goods are transferred to the customer. The related shipping and freight charges incurred are included in cost of product sales in the Consolidated Statements of Operations.

Proprietary Product Sales

We sell our proprietary commercial products primarily to wholesale and specialty distributors. Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs.

The determination of certain reserves and sales allowances requires us to make a number of judgements and estimates to reflect our best estimate of the transaction price and the amount of consideration to which we believe we would be ultimately entitled to receive. The expected value is determined based on unit sales data, contractual terms with customers and third-party payers, historical and estimated future percentage of rebates incurred on sales, historical and future insurance plan billings, any new or anticipated changes in programs or regulations that would impact the amount of the actual rebates, customer purchasing patterns, product expiration dates and levels of inventory in the distribution channel. Reserves for prompt payment discounts are recorded as a reduction in accounts receivable in the Condensed Consolidated Balance Sheets. Reserves for returns, distributor fees, rebates and customer co-pay support programs are included within current liabilities in the Condensed Consolidated Balance Sheets.

Partnered Product Sales

We are party to several license, development, supply and distribution arrangements with pharmaceutical partners, under which we produce and are the exclusive supplier of certain products, devices and/or components. Revenue is recognized when or as control of the goods transfers to the customer as discussed below.

We are the exclusive supplier of the Makena® subcutaneous auto injector product to Covis and beginning in December 2021, the exclusive supplier of OTREXUP® to Otter. Because these products are custom manufactured for each customer with no alternative use and we have a contractual right to payment for performance completed to date, control is continuously transferred to the customer as the product is produced pursuant to firm purchase orders. Revenue is recognized over time using the output method based on the contractual selling price and number of units produced. The amount of revenue recognized in excess of the amount shipped/billed to the customer, if any, is recorded as contract assets in the Condensed Consolidated Balance Sheets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.

All other partnered product sales are recognized at the point in time in which control is transferred to the customer, which is typically upon shipment. Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no right of return. Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, such as volume-based pricing arrangements or profit sharing arrangements, if any. We recognize revenue, including the estimated variable consideration we expect to receive for contract margin on future commercial sales, upon shipment of the goods to our partner. The estimated variable consideration is recognized at an amount we believe is not subject to significant reversal based on historical experience and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Licensing and Development Revenue

We have entered into several license, development and supply arrangements with pharmaceutical partners under which we grant a license to our device technology and know-how and provide research and development services that often involve multiple performance obligations and highly customized deliverables. For such arrangements, we identify each of the promised goods and services within the contract and the distinct performance obligations at inception and allocate consideration to each performance obligation based on relative standalone selling price, which is generally determined based on the expected cost plus mark-up.

If the contract includes an enforceable right to payment for performance completed to date and performance obligations are satisfied over time, we recognize revenue over the development period using either the input or output method depending on which is most appropriate given the nature of the distinct deliverable. For other contracts that do not contain an enforceable right to payment for performance completed to date, revenue is recognized when control is transferred to the customer. Factors that may indicate that the transfer of control has occurred include the transfer of legal title, transfer of physical possession, the customer has obtained the significant risks and rewards of ownership of the assets and we have a present right to payment.

Our typical payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations. We record a contract liability for cash received in advance of performance, which is presented within deferred revenue and deferred revenue, long-term in the Condensed Consolidated Balance Sheets and recognized as revenue in the Consolidated Statements of Operations when the associated performance obligations have been satisfied. We recognized $1,670 in licensing and development revenue in connection with contract liabilities that were outstanding as of December 31, 2021 and satisfied during the three months ended March 31, 2022.

License fees and milestones received in exchange for the grant of a license to our functional intellectual property such as patented technology and know-how in connection with a partnered development arrangement are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is generally not distinct from the non-licensed goods or services to be provided under the contract. Milestone payments that are contingent upon the occurrence of future events are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal will not occur when the associated uncertainty is resolved.

Royalties

We earn royalties in connection with licenses granted under license and development arrangements with partners. Royalties are based upon a percentage of commercial sales of partnered products with rates ranging from mid-single digits to low double digits and are tiered based on levels of net sales. These sales-based royalties, for which the license was deemed the predominant element to which the royalties relate, are estimated and recognized in the period in which the partners’ commercial sales occur. The royalties are generally reported and payable to us within 45 to 60 days of the end of the period in which the commercial sales are made. We base our estimates of royalties earned on actual sales information from our partners when available or estimated prescription sales from external sources and estimated net selling price. If actual royalties received are different than amounts estimated, we would adjust the royalty revenue in the period in which the adjustment becomes known.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders and development contract deliverables for which work has not been completed or orders fulfilled and excludes potential purchase orders under ordering-type supply contracts with indefinite delivery or quantity. As of March 31, 2022, the aggregate value of remaining performance obligations, excluding contracts with an original expected length of one year or less, was $13,989. We expect to recognize revenue on the remaining performance obligations over the next three years, with the majority being recognized in the next twelve months.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Note 3. Inventories

Inventories consisted of the following:


	March 31, 2022		December 31, 2021
Raw material	$	325	$	325
Work in process	8,615		6,784
Finished goods	2,651		4,435
Total inventories, net	$	11,591	$	11,544

A reserve is recorded for potentially excess, dated or obsolete inventories based on an analysis of inventory on hand compared to forecasted future sales, which was $764 and $214 as of March 31, 2022 and December 31, 2021, respectively.

Note 4. Property and Equipment

Property and equipment, net consisted of the following:


	March 31, 2022		December 31, 2021
Production molds, tooling and equipment	$	22,113	$	22,069
Leasehold improvements	7,656		7,559
Furniture, fixtures and office equipment	912		907
Computer equipment and software	1,977		1,717
Construction and tooling in process	6,990		6,942
Total property and equipment	39,648		39,194
Less: Accumulated depreciation	(13,921)		(13,179)
Total property and equipment, net	$	25,727	$	26,015

Depreciation expense was $742 and $689 for the three months ended March 31, 2022 and 2021, respectively. We capitalized $0 and $17 interest costs associated with construction of property and equipment during the three months ended March 31, 2022 and 2021, respectively.

Note 5. Long-term Debt

Term Loan

On June 6, 2017, we entered into a loan and security agreement (the “Loan Agreement”) with Hercules Capital, Inc., for a term loan of up to $35,000 (the “Term Loan”), under which we initially borrowed $25,000 (“Tranche I”). the proceeds of which were used for working capital and general corporate purposes. The Term Loan was secured by substantially all of our assets, excluding intellectual property, and accrued interest at a calculated prime-based variable rate with a maximum of 9.50%. The interest rate in effect as of March 31, 2021 was 8.50%. Payments under the loan were interest-only until the first principal payment was due.

On June 26, 2019, we entered into a First Amendment (the “Amendment”) to the Loan Agreement, which increased the aggregate principal amount available under the Term Loan from $35,000 to $50,000 and extended the interest-only payment period of the Term Loan to August 1, 2021. Under the Amendment, the interest-only period could be further extended to August 1, 2022 if we achieved a certain loan extension milestone, requested such extension by July 31, 2021, and paid an extension fee equal to one half of one percent of the principal amount outstanding. Upon signing of the Amendment, an additional $15,000 (“Tranche II”) was funded to us. The Term Loan maturity date remained July 1, 2022; however, the Term Loan could be extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone. We were eligible, but not obligated, to request one or more additional advances of at least $5,000, not to exceed $10,000 in the aggregate (“Tranche III”). Our option to request additional advances expired on October 31, 2020.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

We were required to pay an end of term fee (“End of Term Charge”) equal to 4.25% of Tranche I and 3.95% of the borrowings under Tranche II, payable upon the earlier of July 1, 2022 or repayment of the Term Loan. The Loan Agreement also imposed a prepayment fee of 1.0% to 3.0% if any or all of the balance was prepaid prior to the maturity date.

In July 2021, having previously met the loan extension milestone, we requested that the interest-only period be extended to August 1, 2022 and the maturity date be extended to July 1, 2024 in accordance with the terms of the Amendment. Hercules Capital, Inc. granted the extension of the interest-only period and maturity date and waived the extension fee. In June and September 2021, we made principal prepayments of $15,000 and $5,000, respectively, and paid a 1.0% prepayment fee.

On November 1, 2021, we extinguished the Loan Agreement with Hercules Capital, Inc. and repaid the outstanding $20,000 principal on the Term Loan, along with the 1.0% prepayment fee of $200 and the End of Term Charge of $1,655. All remaining unamortized debt issuance costs associated with the Term Loan were immediately amortized to interest expense.

Credit Facilities

On November 1, 2021, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent for the lenders, (“Administrative Agent”) for credit facilities in an aggregate principal amount of up to $40,000 with a maturity date of November 1, 2024. The Credit Agreement provides for a $20,000 term loan facility (the “Term Loan Facility”) and a $20,000 revolving credit facility, $5,000 of which is available for the issuance of letters of credit and $1,000 of which is available for Swingline loans (the “Revolving Credit Facility”), (collectively the “Credit Facilities”), which are secured by substantially all of our assets. The Term Loan Facility was funded upon execution of the Credit Agreement with the proceeds used to repay our $20,000 Term Loan with Hercules Capital, Inc. and to pay fees and expenses incurred in connection with the early repayment. The Revolving Credit Facility remains available for future use and can be drawn upon for ongoing working capital requirements and other general corporate purposes as needed.

As of March 31, 2022 and December 31, 2021, we had $19,625 and $20,000 outstanding under our Term Loan Facility, respectively, with a carrying value of $19,391 and $19,741, respectively, which consisted of the principal balance outstanding, less unamortized debt issuance costs that are being amortized/accrued to interest expense over the term of the Term Loan Facility using the effective interest rate method. The fair value of our debt is estimated to approximate the carrying value based on our understanding of current market conditions and rates we could obtain for similar loans.

As of March 31, 2022 and December 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, including no outstanding letters of credit drawn from the Revolving Credit Facility or Swingline loans. Commitment fees are payable on the unused portion of the Revolving Credit Facility at rates between 0.30% and 0.45% based on our Consolidated Total Leverage Ratio, as defined in the Credit Agreement and below, remeasured quarterly. For the three months ended March 31, 2022, commitment fees incurred totaled $18.

As defined in the Credit Agreement governing the Term Loan Facility, principal payments of the outstanding term loans are due in consecutive quarterly installments on the last business day of each of March, June, September and December, commencing on March 31, 2022. A principal payment of $375 was made on March 31, 2022. The Credit Agreement also requires prepayment of the outstanding loans under the Term Loan Facility, subject to certain exceptions, with (a) 100% of the net cash proceeds of (i) any incurrence or issuance of certain debt, other than debt permitted under the Credit Agreement; (ii) issuance of equity other than that associated with employee compensation; and (iii) certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions. We may voluntarily prepay outstanding loans under the Term Facility at any time without premium or penalty. All obligations under the Term Facility are secured, subject to certain exceptions, by substantially all of our assets and the assets of our subsidiaries.

Borrowings made under the Credit Agreement bear interest at a rate per annum equal to either the Base Rate or LIBOR plus the Applicable Margin, as defined in the Credit Agreement. Swingline loans bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin. The Applicable Margin is based on the Consolidated Total Leverage Ratio, as defined in the Credit Agreement and below, remeasured quarterly. Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.0%. In the event of default, we no longer have the option to request LIBOR rate loans, Swingline Loans or Letters of Credit and all outstanding financial instruments will bear interest at a rate per annum of 2.0% in excess of the calculated interest rate.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

We have the option to select either the Base Rate or LIBOR as the rate of interest for the Term Loan and Revolving Credit Facilities, along with an interest period of either 1-month, 3-months or 6-months. Upon cessation of LIBOR on June 30, 2023, an appropriate benchmark replacement will be determined pursuant to the terms of the Credit Agreement. We have not yet evaluated the impact the cessation of LIBOR will have on our financial condition and results of operations. As of March 31, 2022, the Applicable Margin was 1.50% for Base Rate loans and 2.50% for LIBOR loans with a 1-month LIBOR selected as the rate of interest for the Term Loan Facility. The weighted average interest rate on the Term Loan Facility outstanding balance during the three months ended March 31, 2022 was approximately 2.65%.

Under the Credit Agreement, we are subject to customary affirmative and negative covenants, including, among others, restrictions on our ability to incur debt; create liens; make investments; merge, consolidate or dispose of assets or subsidiaries; enter into transactions with affiliates; modify accounting practices, our year end and organizational documents; pledge assets; revise nature of business; perform sale leasebacks; and enter into any restrictive agreements and customary events of default (including payment defaults, covenant defaults, change of control defaults and bankruptcy defaults). The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to consolidated earnings before income, taxes, depreciation and amortization (“Consolidated EBITDA”) (“Consolidated Total Leverage Ratio”), as defined in the Credit Agreement” and the ratio of consolidated senior secured indebtedness to Consolidated EBITDA (“Consolidated Senior Secured Leverage Ratio”), as well as the ratio of Adjusted EBITDA to consolidated fixed charges (“Consolidated Fixed Charge Coverage Ratio”), as defined in the Credit Agreement. These covenants restrict our ability to purchase outstanding shares of our common stock. As of March 31, 2022 and December 31, 2021, we were in compliance with all affirmative, negative and financial covenants.

Future principal payments under the Term Loan Facility are as follows:


	Future Principal Payments
Remainder of 2022	$	1,125
2023	1,500
2024	17,000
Total future principal payments	$	19,625

Note 6. Share-based Compensation

We have an Equity Compensation Plan (the “Plan”), which allows for grants in the form of incentive stock options, non-qualified stock options, stock units, stock awards, stock appreciation rights, and other stock-based awards. The Plan was amended and restated in June 2021 to increase the total number of shares available for grant under the Plan by 10,000 shares. We also have a long-term incentive program (“LTIP”), pursuant to which our senior executives have been awarded stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”).

Stock Options

Stock option activity under the Plan is as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2021	15,577	$	2.83
Granted	92	3.53
Exercised	(343)	2.66
Cancelled / Forfeited	(238)	3.56
Outstanding as of March 31, 2022	15,088	2.83		6.28	$	19,976
Exercisable as of March 31, 2022	10,292	$	2.45	5.17	$	16,998

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Long-term Incentive Program

PSU and RSU award activity under the Plan is as follows:


	Performance Stock Units			Restricted Stock Units
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2021	1,328	$	3.04	1,504	$	3.62
Incremental shares earned	8	2.92		—	—
Cancelled / Forfeited	(215)	2.93		—	—
Vested / Settled	(305)	3.04		—	—
Outstanding as of March 31, 2022	816	$	3.06	1,504	$	3.62

The LTIP awards that vested during the three months ended March 31, 2022 and 2021 were net-share settled such that we withheld shares with a value equivalent to the employees’ tax obligations for applicable income and other employment taxes, and remitted cash to the appropriate taxing authorities. We withheld 140 and 348 shares during the three months ended March 31, 2022 and 2021, respectively, to satisfy tax obligations, which was determined based on the fair value of the shares on their vesting date equal to our closing stock price on such date. We paid $521 and $1,619 during the three months ended March 31, 2022 and 2021, respectively, to taxing authorities for the employees’ tax obligations, which is reflected as a cash outflow from financing activities within the Condensed Consolidated Statements of Cash Flows. Net-share settlements have the effect of share repurchases as they reduce the number of shares that would have otherwise been issued as a result of the vesting.

Members of our Board of Directors also receive grants of RSUs that vest in full one year from the date of grant. Directors may elect to defer receipt of vested shares until retirement or separation from the Board. No shares were vested and deferred under this election during the three months ended March 31, 2022 and 2021.

Share-based Compensation Expense

Compensation costs incurred in connection with share-based awards are as follows:


	Three Months Ended March 31,
	2022		2021
Stock options	$	1,004	$	887
Restricted stock units	708		566
Performance stock units	228		152
Total share-based compensation expense	$	1,940	$	1,605

Note 7. Sale of Assets

In December 2021, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Otter Pharmaceuticals, LLC (a subsidiary of Assertio Holdings, Inc., together with Assertio Holdings, Inc., as guarantor, individually and collectively referred to as “Otter”) to sell certain worldwide assets used in the operation of the OTREXUP® product line for $44,021 of which we received $18,000 at closing and will receive the remaining $26,021 in installments over a one-year period. As of December 31, 2021, we recorded an increase to the purchase price for estimated changes in closing inventory to be transferred. The Asset Purchase Agreement included the transfer of OTREXUP® patents, trademark and intellectual property, product finished goods and sample inventory, and certain other contracts associated with the OTREXUP® product line. Subject to the terms of the OTREXUP® Asset Purchase Agreement, we generally retained ownership (and related liabilities) of assets not solely related to the OTREXUP® product line. We also agreed via the execution of a separate supply agreement to continue to manufacture and supply OTREXUP® and sample products to Otter at cost plus mark-up. Further, we entered into a license agreement with Otter pursuant to which we granted Otter a worldwide, exclusive, fully paid-up license to certain patents relating to OTREXUP® that may relate to our other products.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

We recorded the entire $38,591 gain on sale of assets in the Consolidated Statements of Operations for the year ended December 31, 2021 as all requirements of the agreement were determined to have been met and it was probable that a significant reversal of the gain would not occur. The gain included the purchase price of $44,021 adjusted for estimated changes in closing inventory to be transferred less the net book value of the assets sold and direct transaction costs. The remaining $26,311 purchase price to be received was classified as other receivables in the Consolidated Balance Sheets as of December 31, 2021, and we recognized $17,825 of net proceeds from the sale of assets in the Statements of Cash Flows for the year ended December 31, 2021. As of March 31, 2022, the receivable was reduced to $26,006 for payments to be made by Otter directly to our vendor for inventory purchased in the transaction.

Note 8. Revenue, Significant Customers and Concentration of Risk

We disaggregate our revenue by type of goods and services and customer location.


	Three Months Ended March 31,
	2022		2021
Types of Goods and Services
Proprietary product sales, net	$	17,276	$	18,732
Partnered product sales	14,827		10,403
Total product revenue, net	32,103		29,135
Licensing and development revenue	4,191		4,984
Royalties	5,263		7,964
Total revenue, net	$	41,557	$	42,083

Customer Location
U.S.	$	40,096	$	40,631
Europe	1,461		1,452
Total revenue, net	$	41,557	$	42,083

Customers from which we derived 10% or more of our total net revenue are as follows:


	Three Months Ended March 31,
	2022	2021
Teva	46%	43%
McKesson Corporation 1	13%	13%
Cardinal Health 1	11%	11%
AmerisourceBergen Corporation 1	<10%	13%

1 Revenue from sales to distributors, net of estimated sales returns and allowances based on shipments.

Note 9. Income Taxes

Our gross unrecognized tax benefits as of March 31, 2022 was $2,057 with no material changes during the three months then ended. There are no interest or penalties accrued in relation to unrecognized tax benefits. We will classify any future interest and penalties as a component of income tax expense. We are subject to federal and state examinations for the years 2018 and thereafter.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Note 10. Earnings (Loss) per Share

Basic earnings (loss) per common share is computed by dividing net income (loss) applicable to common stockholders by the daily weighted-average number of common shares outstanding for the applicable period. Diluted earnings (loss) per common share is computed in a similar manner, except that the weighted average number of shares outstanding is increased to reflect the potential dilution from the exercise or conversion of securities into common stock. Diluted earnings (loss) per share contemplates a complete conversion to common shares of all convertible instruments only if such instruments are dilutive in nature with respect to earnings (loss) per common share. The following table sets forth the computation for basic and diluted earnings (loss) per common share:


	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	(2,321)	$	3,793

Weighted average common shares outstanding	170,104		167,822
Dilutive effects of stock options and share-based awards issuable under equity compensation plans 1	—		7,086
Weighted average dilutive common shares outstanding	170,104		174,908

Earnings (loss) per common share
Basic	$	(0.01)	$	0.02
Diluted	$	(0.01)	$	0.02

Anti-dilutive common stock equivalents 2	3,178		471

1 For the three months ended March 31, 2022, 4,633 common stock equivalents of potentially dilutive common stock were excluded from the diluted earnings per share calculation due to the loss from continuing operations.

2 These common stock equivalents were outstanding for the period but were not included in the computation of diluted earnings (loss) per share for those periods as their inclusion would have had an anti-dilutive effect.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

Note 11. Commitments and Contingencies

Contingent Considerations

In October 2021, we entered into an exclusive license agreement (the “TLANDO® License Agreement”) with Lipocine for the product TLANDO® (testosterone undecanoate) in the U.S., a twice-daily oral formulation of testosterone for testosterone replacement therapy indicated for conditions associated with a deficiency or absence of endogenous testosterone, or hypogonadism in adult males. We paid Lipocine an upfront payment of $11,000 upon execution of agreement. Lipocine is eligible for additional milestone payments up to $10,000, minimum tiered royalty payments of $4,500 over the first three years after commercialization has occurred and commercial milestones up to $160,000 based on net sales of TLANDO® in the U.S. FDA approval was granted on March 28, 2022 with commercial launch expected in the second quarter of 2022. The additional milestone and commercial milestone payments are contingent on future events and will be accrued when they are both probable and estimable.

We also have the option to license and develop LPCN 1111 (TLANDO XR) in the U.S., a potential once daily oral testosterone product containing testosterone tridecanoate in development for the treatment of hypogonadism in adult males, for an additional $4,000 in license fees to be paid in two installments upon exercise of the option, if exercised. The option to license and develop LPCN 111 (TLANDO XR) will be accrued and expensed to research and development when and only if we decide to exercise our option. In April 2022, the TLANDO® License Agreement was amended and $500 of the $4,000 was paid to Lipocine to extend the deadline in which we have to exercise the option to license and develop TLANDO XR to June 30, 2022. No decision had been made as of March 31, 2022 to exercise the option; therefore, no accrual was recorded.

Pending Litigation

From time to time, we may be involved in various legal matters generally incidental to our business. Although the results of litigation and claims cannot be predicted with certainty, after discussion with legal counsel, we are not aware of any matters for which the likelihood of a loss is probable and reasonably estimable and which could have a material impact on our condensed consolidated financial condition, liquidity, or results of operations.

On October 23, 2017, Randy Smith filed a complaint in the District of New Jersey, captioned Randy Smith, Individually and on Behalf of All Others Similarly Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M. Powell (“Smith”), Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of persons who purchased or otherwise acquired Antares securities between December 21, 2016 and October 12, 2017, inclusive, asserting claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, against Antares, Robert F. Apple and Fred M. Powell. The Smith complaint contends that defendants made false and/or misleading statements and/or failed to disclose that: (i) Antares had provided insufficient data to the FDA in connection with the NDA for XYOSTED®; and (ii) accordingly, Antares had overstated the approval prospects for XYOSTED®. On July 27, 2018, the court entered an order appointing Serghei Lungu as lead plaintiff, Pomerantz LLP as lead counsel, and Lite DePalma Greenberg, LLC as liaison counsel for plaintiff. On August 3, 2018, the parties submitted a stipulation and proposed order, setting forth an agreed-upon schedule for responding to the complaint, which the court granted. Pursuant to that order, plaintiff filed a Consolidated Amended Class Action Complaint on October 9, 2018. On November 26, 2018, defendants filed a motion to dismiss. Plaintiff filed an opposition to the motion on January 10, 2019 and defendants filed a reply in support of their motion on February 25, 2019. On July 2, 2019, the court dismissed the complaint in its entirety without prejudice. On July 29, 2019, plaintiff filed a Consolidated Second Amended Class Action Complaint against the same parties alleging substantially similar claims. On September 12, 2019, defendants filed a motion to dismiss the Consolidated Second Amended Class Action Complaint. Plaintiffs’ opposition was filed on October 28, 2019 and defendants’ reply in support of their motion was filed on November 27, 2019. On April 28, 2020, the court dismissed the Consolidated Second Amended Class Action Complaint in its entirety. The court further ordered that plaintiff may file an amended complaint by May 29, 2020 and provide the court with a form of the amended complaint that indicates in what respect(s) it differs from the complaint which it proposes to amend. On May 29, 2020, plaintiff filed a Consolidated Third Amended Class Action Complaint and defendants filed a motion to dismiss on July 10, 2020. Briefing on defendants’ motion was complete on August 25, 2020. On February 26, 2021, the court granted defendants’ motion to dismiss with prejudice, and on March 29, 2021 the plaintiff filed a notice of appeal. On June 21, 2021, plaintiff-appellant filed his opening brief. Defendants-appellees’ response brief was filed on August 4, 2021 and plaintiff-appellant’s reply was filed on September 8, 2021. On January 25, 2022, the Third Circuit ruled in defendants’ favor affirming dismissal. Plaintiffs have not appealed to the U.S. Supreme Court, and the deadline for doing has passed.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

On January 12, 2018, a stockholder of the Company filed a derivative civil action, captioned Chiru Mackert, derivatively on behalf of Antares Pharma, Inc., v. Robert F. Apple, et al., in the Superior Court of New Jersey Chancery Division, Mercer County (Case No. C-000011-18). On January 17, 2018, another stockholder filed a derivative action in the same court, captioned Vikram Rao, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (Case No. C-000004-18). Both complaints name Robert F. Apple, Fred M. Powell, Thomas J. Garrity, Jacques Gonella, Anton Gueth, Leonard S. Jacob, Marvin Samson and Robert P. Roche, Jr. as defendants, and the Company as nominal defendant, and they assert claims for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets arising from the same facts underlying the Smith securities class action. The plaintiffs seek damages, corporate governance and internal procedure reforms and improvements, restitution, reasonable attorneys’ fees, experts’ fees, costs, and expenses. The parties have filed a stipulation and order consolidating the two actions and staying the proceedings pending the court’s decision on defendants’ motion to dismiss the Smith action; the motion to dismiss in Smith was granted on February 26, 2021 and a notice of appeal was filed on March 29, 2021. On January 25, 2022, the Third Circuit ruled in defendants’ favor affirming dismissal of the securities fraud class action. Plaintiffs have not appealed to the U.S. Supreme Court, and the deadline for doing so has passed.

On January 17, 2018, a stockholder of the Company filed a derivative civil action, captioned Robert Clark, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (“Clark”) (Case No. 3:18-cv-00703-MAS-DEA), against Robert F. Apple, Thomas J. Garrity, Jacques Gonella, Leonard S. Jacob, Marvin Samson, Anton G. Gueth and Robert P. Roche, Jr. as defendants, and the Company as a nominal defendant. The action was filed in the U.S. District Court for the District of New Jersey and asserts claims for breach of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and a violation of Section 14(a) of the Securities Exchange Act of 1934. This complaint relates to the same facts underlying the Smith securities class action and the other derivative actions. The plaintiff in Clark seeks damages, corporate governance and internal procedure reforms and improvements, reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. The parties have filed a stipulation and order staying the action pending the court’s decision on defendants’ motion to dismiss the Smith action; the motion to dismiss in Smith was granted on February 26, 2021 and a notice of appeal was filed on March 29, 2021. After the expiration of all appeals related to the Smith dismissal, the parties shall submit a proposed order regarding the derivative action. On January 25, 2022, the Third Circuit ruled in defendants’ favor affirming dismissal of the securities fraud class action. Plaintiffs have not appealed to the U.S. Supreme Court, and the deadline for doing so has passed.

See Note 12 for further discussion regarding ligation related to the Merger Agreement, as defined there.

Note 12. Subsequent Events

Merger Agreement

On April 12, 2022, we entered into the Agreement and Plan of Merger (the “Merger Agreement”) with Halozyme Therapeutics, Inc., a Delaware corporation (“Halozyme”) and Atlas Merger Sub, Inc., a Delaware corporation (“Atlas”), a wholly owned subsidiary of Halozyme. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Atlas commenced a cash tender offer (the “Offer”) on April 26, 2022 to acquire all of the outstanding shares of common stock of Antares, $0.01 par value per share (the “Shares”), at a purchase price of $5.60 per share in cash (the “Offer Price”), without interest and subject to any withholding of taxes required by applicable legal requirements. Following the completion of the Offer and satisfaction or waiver of certain conditions set forth in the Merger Agreement, Atlas will merge with and into Antares, with Antares surviving as a wholly owned subsidiary of Halozyme (the “Merger”), and each Share issued and outstanding immediately prior to the effective time of the Merger (other than Shares (a) held by the Company, Halozyme, any other direct or indirect wholly owned subsidiary of Halozyme (other than Atlas) or by stockholders of the Company who have properly exercised and perfected their statutory rights of appraisal under Delaware law or (b) irrevocably accepted for purchase in the Offer) will be converted into the right to receive an amount in cash equal to the Offer Price, without interest and subject to any withholding of taxes required by applicable legal requirements.

The obligation of Atlas to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including (1) that the number of Shares validly tendered in accordance with the terms of the Offer and not validly withdrawn, considered together with all other Shares otherwise beneficially owned by Halozyme or any of its wholly owned subsidiaries (including Atlas) (but excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been received, as defined by Section 251(h)(6) of the Delaware General Corporation Law (the “DGCL”)), would represent one more than 50% of the total number of Shares outstanding at the time of the expiration of the Offer, (2) the expiration or termination of the applicable waiting period (or any extension thereof) under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the “HSR Act”), as amended, and (3) and those other conditions set forth in the Merger Agreement.

Table of Contents

ANTARES PHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share amounts)

The acquisition is expected to close in the first half of 2022.

Legal Proceedings

Between April 27, 2022 and May 6, 2022, seven complaints were filed in federal court by purported stockholders of the Company regarding the transactions contemplated by the Merger Agreement alleging violations of federal securities laws. The first complaint was filed on April 27, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Southern District of New York, captioned Shiva Stein v. Antares Pharma, Inc., et al., Case No. 1:22-cv-03426 (the “Stein Complaint”). The second complaint was filed on April 30, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Eastern District of New York, captioned Joe Berry v. Antares Pharma, Inc., et al., Case No. 1:22-cv-02483. The third complaint was filed on May 3, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Southern District of New York, captioned Joseph Ochoa v. Antares Pharma, Inc., et al., Case No. 1:22-cv-03550 (the “Ochoa Complaint”). The fourth complaint was filed on May 4, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Eastern District of New York, captioned Denise Redfield v. Antares Pharma, Inc., et al., Case No. 1:22-cv-02550. The fifth complaint was filed on May 5, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the District of Delaware, captioned Jordan Wilson v. Antares Pharma, Inc., et al., Case No. 1:22-cv-00604. The sixth complaint was also filed on May 5, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Eastern District of Pennsylvania, captioned Matthew Hopkins v. Antares Pharma, Inc., et al., Case No. 2:22-cv-01751. The seventh complaint was filed on May 6, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Southern District of New York, captioned Richard Lawrence v. Antares Pharma, Inc., et al., Case No. 1:22-cv-03693 (the “Lawrence Complaint”).

The plaintiffs generally contend that the Solicitation/Recommendation Statement on Schedule 14D-9, filed on April 26, 2022, contains alleged material misstatements or omissions regarding the transactions contemplated by the Merger Agreement. Each of the complaints, other than the Lawrence Complaint, allege violations of Section 14(d) of the Exchange Act, and all of the complaints allege violations of Section 14(e) of the Exchange Act and Rule 14d-9 thereunder against all defendants and violations of Section 20(a) of the Exchange Act against the individual defendants. Each of the complaints seek injunctive relief preventing the consummation of the Transactions, an award of plaintiff’s expenses including attorneys’ fees and expenses and such other relief the court may deem just and proper. Each of the complaints, other than the Ochoa Complaint, also seek rescissory damages or rescission to the extent the transactions contemplated by the Merger Agreement are consummated. Additionally, the Stein Complaint, the Ochoa Complaint and the Lawrence Complaint seek an accounting of damages. We believe the claims asserted in each of the complaints are without merit.

Table of Contents

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in six sections.

•Forward-Looking Statements

•Company Overview

•Results of Operations

•Liquidity and Capital Resources

•Critical Accounting Policies and Use of Estimates

•Off-Balance Sheet Arrangements

Our MD&A, the purpose of which is to provide investors and others with information that we believe to be necessary for understanding our financial condition, changes in financial condition and results of operations, should be read in conjunction with the condensed consolidated financial statements and related condensed footnotes included in Item 1 of Part I of this Quarterly Report on Form 10-Q. The terms “Antares,” “we,” “our,” “us” or the “Company” in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refer to Antares Pharma, Inc. and its wholly owned subsidiaries.

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are subject to risks and uncertainties. Undue reliance should not be placed on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” “may,” “continue” or other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property, our commercial operations and product development. In particular, these forward-looking statements include, among others, statements about:

•our expectations about the ongoing COVID-19 pandemic (the “Pandemic”) and any potential disruption or impact to our operations, financial position or cash flows;

•our expectations regarding the continued commercialization of XYOSTED® (testosterone enanthate) injection and the continued growth in prescriptions and revenues related thereto;

•our expectations regarding the commercialization of NOCDURNA® (desmopressin acetate) in the U.S. under a licensing agreement with Ferring International Center S.A. and its affiliates, (“Ferring”) and future sales and revenue from the same;

•our expectations regarding the manufacturing and commercialization of TLANDO® in the U.S. under a licensing agreement with Lipocine Inc. (“Lipocine”), and future sales and revenue from the same;

•our expectations regarding whether we will exercise the option for LPCN 1111 (“TLANDO XR”) and, if exercised, the future timing and success of the clinical development program for TLANDO XR and future FDA approval, market acceptance and revenue from the same;

•our expectations regarding future sales of OTREXUP® (methotrexate) injection to Otter Pharmaceuticals, LLC (a wholly owned subsidiary of Assertio Holdings, Inc., together with Assertio Holdings, Inc., as guarantor, individually and collectively referred to as “Otter”), as well as the ability of Otter to pay remaining installment payments of the purchase price;

•our expectations regarding the ability of our partner, Teva Pharmaceutical Industries, Ltd. (“Teva”), to continue to commercialize Epinephrine Injection USP, the generic equivalent version of EpiPen® (“generic epinephrine injection”), and any future revenue related thereto;

Table of Contents

•our expectations regarding the ability of Covis Group S.a.r.l. (“CG”), who acquired AMAG Pharmaceuticals, Inc. (“AMAG”) (collectively CG and AMAG are herein after referred to as “Covis”) in November 2020, to continue to commercialize Makena® (hydroxyprogesterone caproate injection) and our continued future sales to Covis and royalty revenue from the same, in light of the U.S. Food and Drug Administration’s (“FDA”) proposal to withdraw approval of Makena®, and the timing and outcome of any hearings and future regulatory actions by the FDA;

•our expectations regarding continued sales of Sumatriptan Injection USP to our partner, Teva, and Teva’s ability to distribute and sell Sumatriptan Injection USP;

•our expectations regarding continued product development with Teva of the teriparatide disposable pen injector, Teva’s ability to obtain FDA approval and AB-rating for the product, and if approved, Teva’s ability to successfully commercialize the teriparatide disposable pen injector product outside the U.S.;

•our expectations about the development of a rescue pen for an undisclosed drug with our partner Pfizer Inc. (“Pfizer”) and potential future regulatory approval and future revenue from the same;

•our expectations about our development activities with Idorsia Pharmaceuticals Ltd (“Idorsia”) and the timing and results of the Phase 3 clinical trial of the drug device combination product for selatogrel, a new chemical entity being developed for the treatment of a suspected acute myocardial infarction (“AMI”) in adult patients with a history of AMI, and the potential future FDA and global regulatory approval of the same;

•our expectations about the development of ATRS-1902 for adrenal crisis rescue, including the timing and results of clinical trials and our anticipated 505(b)(2) NDA filing with the FDA;

•our expectations about our other internal and external research and development projects, including but not limited to ATRS-1901 and ATRS-1903, the timing and results of clinical trials, and our anticipated continued reliance on third parties in conducting studies, trials and other research and development activities;

•our expectations about the timing and outcome of pending or potential claims and litigation, including without limitation, the pending securities class action and derivative actions;

•our anticipated continued reliance on contract manufacturers to manufacture, assemble and package our products;

•our anticipated continued reliance on third parties to provide certain services for our products including logistics, warehousing, distribution, invoicing, contract administration and chargeback processing;

•our sales and marketing plans;

•our expectations about our future revenues, our cash flows and our ability to support our operations and maintain profitability;

•our estimates and expectations regarding the sufficiency of our cash resources, anticipated capital requirements and our ability to obtain additional financing, if needed;

•uncertainties as to the timing of the completion of the cash tender offer (the “Offer”) by Atlas Merger Sub, Inc., a Delaware corporation (“Atlas”), a wholly owned subsidiary of Halozyme Therapeutics, Inc., a Delaware corporation (“Halozyme”), and the subsequent merger of Atlas with and into the Company, with the Company surviving as a wholly owned subsidiary of Halozyme;

•risks related to the satisfaction or waiver of the conditions to closing the proposed acquisition of the Company by Halozyme (including the failure to obtain necessary regulatory clearance) in the anticipated timeframe or at all;

•uncertainties as to how many of the Company’s stockholders will tender their shares of the Company’s common stock in the Offer and the possibility that the acquisition does not close;

•the possibility that competing offers may be made;

•risks related to the timing (including possible delays) and receipt of clearance or expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), as amended, in connection with the transaction with Halozyme;

•disruption from the transaction with Halozyme making it more difficult to maintain business and operational relationships;

Table of Contents

•significant transaction costs;

•the potential impact of new accounting pronouncements and tax legislation; and

•other statements regarding matters that are not historical facts or statements of current condition.

These forward-looking statements are based on assumptions that we have made considering our industry experience as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this quarterly report, you should understand that these statements are not guarantees of performance results. Forward-looking statements involve known and unknown risks, uncertainties and assumptions, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. While 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 projections of the future about which we cannot be certain. Many factors may affect our ability to achieve our objectives, including:

•potential business interruptions and/or any financial or operational impact as a result of the Pandemic;

•delays in product introduction or unsuccessful marketing and commercialization efforts by us or our partners;

•interruptions in supply or an inability to adequately manage third party contract manufacturers to meet customer supply requirements;

•our inability to obtain or maintain adequate third-party payer coverage of marketed products;

•the timing and results of our or our partners’ research projects or clinical trials of product candidates in development;

•actions by the FDA or other regulatory agencies with respect to our products or product candidates of our partners;

•our inability to generate or sustain continued growth in product sales and royalties;

•the lack of market acceptance of our and our partners’ products and future revenues from these products;

•a decrease in business from our major customers and partners;

•our inability to compete successfully against new and existing competitors or to leverage our research and development capabilities or our marketing capabilities;

•our inability to establish and maintain commercial capabilities, our inability to effectively market our services or obtain and maintain arrangements with our customers, partners and manufacturers;

•our inability to attract and retain key personnel;

•changes or delays in the regulatory review and approval process;

•our inability to effectively protect our intellectual property;

•costs associated with future litigation and the outcome of such litigation; and

•adverse economic and political conditions.

The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses or to the general economy. Forward-looking statements speak only as of the date on which such statements are made. Actual results could differ materially from those currently anticipated as a result of a number of risk factors, including, but not limited to, the risks and uncertainties discussed in Item 1A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021 and Item 1A of Part II of this Quarterly Report on Form 10-Q.

New risks and uncertainties emerge from time to time, and it is impossible for us to predict these events or how they may affect us. Forward-looking statements are qualified by some or all of these risk factors; therefore, you should consider these forward-looking statements with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. We undertake no obligation to update or revise any forward-looking statements included in this quarterly report to reflect events or circumstances after the date on which such statement is made, except as required by law. In light of these risks and significant uncertainties, you should not regard the forward-looking statements in this annual report as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, if at all. You should carefully review the disclosures and the risk factors described in Item 1A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021, Item 1A of Part II of this Quarterly Report on Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission (“SEC”), including Current Reports on Form 8-K.

Table of Contents

Company Overview

Antares Pharma, Inc. is a specialty pharmaceutical company focused primarily on the development and commercialization of pharmaceutical products and technologies that address patient needs in targeted therapeutic areas. We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using our advanced drug delivery systems that are designed to provide commercial or functional advantages, such as improved safety and efficacy, convenience, improved tolerability, and enhanced patient comfort and adherence. We also seek product opportunities that complement and leverage our commercial platform. We have a portfolio of proprietary and partnered commercial products and ongoing product development programs in various stages of development. We have formed partnership arrangements with several different industry leading pharmaceutical companies.

We market and sell in the U.S. our proprietary product XYOSTED® (testosterone enanthate) injection indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone. XYOSTED® is the only FDA approved subcutaneous testosterone enanthate product for once-weekly, at-home self-administration.

We market and sell NOCDURNA® (desmopressin acetate) indicated for the treatment of nocturia due to nocturnal polyuria (“NP”) in adults who awaken at least two times per night to urinate in the U.S. under an exclusive license agreement entered into in October 2020 with Ferring. We began detailing NOCDURNA® with a soft launch in the fourth quarter of 2020 and executed a reintroduction of the product in 2021 through a comprehensive re-launch strategy to increase awareness and demand.

In October 2021, we entered into an exclusive license agreement (the “TLANDO® License Agreement”) with Lipocine for the product TLANDO® (testosterone undecanoate) in the U.S., a twice-daily oral formulation of testosterone for testosterone replacement therapy indicated for conditions associated with a deficiency or absence of endogenous testosterone, or hypogonadism in adult males. TLANDO® was granted FDA approval on March 28, 2022 with commercialization anticipated in the second quarter of 2022. Under the terms of the TLANDO® License Agreement, we paid Lipocine an upfront payment of $11.0 million. Lipocine is eligible for additional milestone payments up to $10.0 million and tiered royalty and commercial milestones based on net sales of TLANDO® in the U.S. We are responsible for the manufacturing and commercialization of TLANDO®.

The TLANDO® License Agreement also granted us the option to license and develop LPCN 1111 (TLANDO XR) in the U.S., a potential once daily oral testosterone product containing testosterone tridecanoate in development for the treatment of hypogonadism in adult males. If elected, upon exercise of the option, we will be required to pay an additional $4.0 million in license fees in two installments and will be responsible for additional development and commercial milestone payments as well as tiered royalties on net sales of TLANDO XR in the U.S. In addition, we will be responsible for completing the development program including the conduct of a Phase 3 clinical trial and applying for regulatory approval in the U.S. In April 2022, the TLANDO® License Agreement was amended (the “TLANDO® First Amendment”) and $0.5 million of the $4.0 million was paid to Lipocine to extend the deadline in which we have to exercise the option to license and develop TLANDO XR.

In December 2021, we sold certain assets used in the operation of the OTREXUP® product under an asset purchase agreement with Otter for $44.0 million, subject to finalization of changes in closing inventory to be transferred, with $18.0 million received at closing and an additional $26.0 million to be paid in installments over a one-year period. Prior to the asset sale, we marketed and sold OTREXUP® (methotrexate) injection, a subcutaneous methotrexate injection for once weekly self-administration with an easy-to-use, single dose, disposable auto injector, indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis, as a proprietary product in the U.S. In conjunction with the asset sale, we entered into a supply agreement with Otter to manufacture the VIBEX® auto-injection system device at cost plus mark-up. Otter is responsible for manufacturing, formulation and testing of methotrexate and the corresponding prefilled syringe for assembly with the device manufactured by us, along with the commercialization and distribution of OTREXUP®.

In collaboration with Teva, we developed a version of our VIBEX® auto injector for use in a generic epinephrine auto injector product that was approved by the FDA. Teva’s Epinephrine Injection USP is indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients and was approved as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to the branded products EpiPen® and EpiPen Jr® and therefore, subject to state law, substitutable at the pharmacy. We are the exclusive supplier of the device and Teva is responsible for commercialization and distribution of the finished product, for which we also receive royalties on Teva’s net sales.

Through our commercialization partner Teva, we sell Sumatriptan Injection USP indicated in the U.S. for the acute treatment of migraine and cluster headache in adults.

Table of Contents

We are the exclusive supplier of the device, a variation of our VIBEX® QuickShot® subcutaneous auto injector developed by us, for the progestin hormone drug Makena® (hydroxyprogesterone caproate injection), indicated to help reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered one preterm baby in the past. As the exclusive supplier, we perform final assembly and packaging of the commercial product and receive royalties on Covis’ net sales of the product. In October 2020, following an FDA advisory committee meeting, Covis received notice that the FDA is proposing to withdraw approval of Makena® (hydroxyprogesterone caproate injection). Covis formally requested a public hearing in response to the FDA’s proposal to withdraw its approval. In April 2022, the FDA granted Covis a virtual public hearing to be scheduled in September or October 2022. Covis has stated that it remains committed to working with the FDA to maintain patient access to Makena® as a treatment option to reduce pre-term birth.

We are also developing with Teva a multi-dose pen for a generic form of Forteo® (teriparatide rDNA origin injection) for the treatment of osteoporosis, and were developing another multi-dose pen for a generic form of BYETTA® (exenatide injection) for the treatment of type 2 diabetes. On February 25, 2022, Teva notified us that it was terminating the exenatide program and related agreement due to a lack of commercial viability. The termination is effective August 23, 2022. Teva continues to work through the U.S. regulatory process with the FDA for teriparatide using the ANDA pathway. In 2020, Teva launched Teriparatide Injection (“teriparatide”), the generic version of Eli Lilly’s branded product Forsteo® featuring the Antares multi-dose pen used platform in several countries outside the U.S. We are responsible for the manufacturing and supply of the multi-dose pen utilized in Teva’s generic teriparatide product under an exclusive development, license and supply agreement with Teva, the scope of which is worldwide.

In August 2018, we entered into a development agreement with Pfizer to develop a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot® auto injector and an undisclosed Pfizer drug. In 2021, we continued to work on this development program, and we expect to continue development of this product candidate.

In November 2019, we entered into a global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. The new chemical entity selatogrel is being developed for the treatment of a suspected AMI in adult patients with a history of AMI. Idorsia will pay for the development of the combination product and will be responsible for applying for and obtaining global regulatory approvals for the product. The parties intend to enter into a separate commercial license and supply agreement pursuant to which we will provide fully assembled and labelled product to Idorsia at cost plus mark-up. Idorsia will then be responsible for global commercialization of the product, pending FDA or foreign approval. We will be entitled to receive royalties on net sales of the commercial product. In June 2021, Idorsia announced it initiated its Phase 3 registration study to evaluate the efficacy and safety of self-administered subcutaneous selatogrel. The study will enroll approximately 14,000 patients who are at high risk of recurrent AMI, at approximately 250 sites in approximately 30 countries.

We are also committed to advancing our internal research and development programs and continue to invest in the development of our proprietary product pipeline. Our research and development efforts are focused primarily on leveraging our existing product and technology platforms by broadening their applications for use in other drug device combination products, as well as exploring new pharmaceutical products, technologies and drug delivery methods.

We have initiated development of a proprietary drug device combination product for the urology oncology market, identified as ATRS-1901, and have conducted formulation development work and non-clinical studies to help advance this program. In 2020, we received a response from the FDA regarding our pre-IND (Investigational New Drug) submission.

We have identified a program to develop a proprietary drug device combination product for the endocrinology market, an adrenal crisis pen, identified as ATRS-1902. The development program supports a proposed indication for the treatment of acute adrenal insufficiency, known as adrenal crisis, in adults and adolescents, using a novel proprietary auto-injector platform to deliver a liquid stable formulation of hydrocortisone. We conducted initial formulation work and developed a working prototype of a new device to support this program. We received a response from the FDA regarding our pre-IND submission and believe we have determined the regulatory and clinical path forward.

In July 2021, the FDA accepted our IND for ATRS-1902 enabling us to initiate our Phase 1 clinical study. In January 2022, we announced the positive results from the Phase 1 clinical study and were granted Fast Track designation by the FDA. The positive results support the advancement of our ATRS-1902 development program to a pivotal clinical study using our Vai™ novel proprietary rescue pen platform to deliver a liquid stable formulation of hydrocortisone. We anticipate starting this pivotal clinical study in the second quarter of 2022 and expect to submit a 505(b)(2) NDA with the FDA by the end of 2022 pending the success of the pivotal clinical study.

Table of Contents

We have initiated development of a proprietary drug device combination product utilizing our rescue pen technology for a rare immunology disorder, identified as ATRS-1903. Formulation development work has been conducted and we anticipate progressing this towards initial clinical testing to evaluate PK and tolerability in human subjects.

Merger Agreement

On April 12, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which Halozyme and Atlas will acquire all of the outstanding common stock of Antares Pharma, Inc. for $5.60 per share in cash (the “Offer Price”), without interest and subject to any withholding of taxes required by applicable legal requirements. Under the terms of the Merger Agreement, Halozyme commenced an Offer to acquire all of the outstanding shares of Antares on April 26, 2022. The closing of the Offer will be subject to certain conditions, including the tender of shares representing at least a majority of the total number of Antares outstanding shares of common stock, the expiration or termination of the HSR waiting period, and other customary closing conditions. Following the successful completion of the Offer, Halozyme will acquire all remaining shares not tendered in the tender offer through a second-step merger at the same price. The acquisition is expected to close in the first half of 2022.

COVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in China, and has since spread worldwide, including every state in the U.S. On March 11, 2020, the World Health Organization declared the outbreak a Pandemic and on March 13, 2020, the U.S. declared a national emergency with respect to the outbreak. The Pandemic has impacted global economic activity and led to disruptions in supply chain, labor shortages, business closures, travel restrictions and other health, safety and social distancing requirements.

We have taken several measures to actively manage and help minimize the impact of the ongoing Pandemic on our business. We have implemented safety measures and protocols to protect the health and safety of our employees and comply with governmental and public health guidelines while working to ensure the sustainability of our business operations and continuity of product supply. We continue to monitor the situation, including COVID-19 variants, and potential effects on our business, suppliers, partners and workforce.

We have implemented a hybrid work environment with the ability to shift remote as necessary to limit the number of individuals in our facilities to those necessary for essential functions such as research, development, manufacturing and supply. While our field-based team has resumed in-person interaction with fewer restrictions, we believe we are also well-positioned with our virtual capabilities to continue to engage healthcare professionals and patients through the ongoing Pandemic and beyond. Although, we have not experienced significant delays or disruption in our development programs or significant demand reductions for our partnered products due to the Pandemic, we continue to monitor the situation, including COVID-19 variants, for potential effects on our or our partners’ clinical trials or delays or disruptions in activities with the FDA.

Although, we have taken measures to help minimize the potential impact of the Pandemic on our business, given the fluidity of the Pandemic and other macroeconomic factors, we are unable to estimate the impact the Pandemic has had on our operations or cash flows as of the date of this filing. We also believe there continues to be uncertainty around the timing and duration of any potential future disruptions due to the COVID-19 variants and the magnitude of any potential impact. As a result, we are unable to estimate the potential impact on future operations or cash flows as of the date of this filing. For more information on these risks see Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

Results of Operations

The following is an analysis and discussion of our operations for the three months ended March 31, 2022 as compared to the same period in 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022.

Table of Contents

Revenue, Net

We generate revenue from proprietary and partnered product sales, license and development activities and royalty arrangements. The following table provides details about the components and drivers of our overall revenue growth:


(in thousands)	Three Months Ended March 31,				Increased / (Decreased)
	2022		2021		$		%
Proprietary product sales, net	$	17,276	$	18,732	$	(1,456)	(7.8)	%
Partnered product sales	14,827		10,403		4,424		42.5	%
Total product revenue, net	32,103		29,135		2,968		10.2	%
Licensing and development revenue	4,191		4,984		(793)		(15.9)	%
Royalties	5,263		7,964		(2,701)		(33.9)	%
Total revenue, net	$	41,557	$	42,083	$	(526)	(1.2)	%

Product Revenue, Net

Net revenue from product sales for the three months ended March 31, 2022 increased 10.2% over the same period in the prior year primarily driven by higher shipments of sumatriptan, epinephrine and teriparatide auto injectors to Teva and an increase in XYOSTED® proprietary product sales. The overall increase was partially offset by a reduction in OTREXUP® proprietary sales due to the sale of the OTREXUP® product line to Otter in December 2021.

Sales of our proprietary products XYOSTED® and NOCDURNA® (and OTREXUP® during the three months ended March 31, 2021) are presented net of estimated product returns and sales allowances. FDA approval was granted on March 28, 2022 to commercialize TLANDO® with no sales transacted in the three months ended March 31, 2022 prior to timing of the approval. The decreases in proprietary product sales of 7.8% for the three months ended March 31, 2022 was primarily attributable to a reduction in OTREXUP® proprietary sales due to the sale of the OTREXUP® product line to Otter in December 2021 which is now commercialized by Otter, partially offset by continued growth in prescriptions and sales of XYOSTED® and NOCDURNA®.

We also manufacture and sell devices, components and fully assembled and packaged product to our partners. Partnered product sales increased 42.5% for the three months ended March 31, 2022 primarily due to higher shipments of sumatriptan, epinephrine and teriparatide auto injectors to Teva.

Licensing and Development Revenue

Licensing and development revenues include license fees received from partners for the right to use our intellectual property and amounts earned in joint development arrangements with partners under which we perform joint development activities or develop new products on their behalf. Licensing and development revenue decreased 15.9% for the three months ended March 31, 2022 primarily as a result of fluctuations in timing of the various stages and phases of development activities, along with a decline in development activities with Pfizer.

Royalties

Royalty revenue decreased 33.9% for the three months ended March 31, 2022, principally driven by a reduction in royalties from Teva on its net sales of generic EpiPens®, partially offset by higher royalties from Covis on its net sales of Makena®.

Table of Contents

Cost of Revenue

The following table summarizes our cost of product sales and development revenue:


(in thousands)	Three Months Ended March 31,				Increased / (Decreased)
	2022		2021		$		%
Cost of product sales	$	15,648	$	12,498	$	3,150	25.2	%
Cost of development revenue	3,119		3,947		(828)		(21.0)	%
Total cost of revenue	$	18,767	$	16,445	$	2,322	14.1	%

Fluctuations in cost of product sales is generally a function of the product revenue mix. Proprietary products generally have a lower cost of sales as a percentage of revenue than partnered product sales. Accordingly, as partner sales increased and proprietary sales decreased in the comparative period, the relative total cost of product sales for the three months ended March 31, 2022 increased.

Cost of development revenue decreased 21.0% for the three months ended March 31, 2022 primarily due to, and consistent with, the quarter over quarter decline in development revenue from partnered development activities as shown in the revenue table above.

Research and Development Expenses

Research and development (“R&D”) expenses consist of external costs for clinical studies and analysis activities, formulation development, engineering design work and prototype development, FDA application fees, personnel costs and other general operating expenses associated with our R&D activities.


(in thousands)	Three Months Ended March 31,				Increased / (Decreased)
	2022		2021		$		%
Research and development	$	5,008	$	2,640	$	2,368	89.7	%

R&D expenses increased 89.7% for the three months ended March 31, 2022 primarily due to higher employee compensation expense, increased clinical development activities for our ongoing internal development programs including, but not limited to, ATRS-1901 and ATRS-1902, and higher fees for professional services. Overall, R&D expense fluctuates based on phases of development and timing of clinical studies, including internal and external development costs incurred.

Selling, General and Administrative Expenses


(in thousands)	Three Months Ended March 31,				Increased / (Decreased)
	2022		2021		$		%
Selling, general and administrative	$	20,602	$	17,607	$	2,995	17.0	%

Selling, general and administrative expenses increased 17.0% for the three months ended March 31, 2022 primarily driven by increased sales and marketing activities for XYOSTED® and NOCDURNA® and higher employee compensation expense due to the hiring of additional sales force and pre-launch costs in preparation for the launch of TLANDO® in the second quarter of 2022, partially offset by the elimination of sales and marketing costs related to the OTREXUP® product line which was sold to Otter in December 2021. General and administrative expenses also increased primarily due to higher employee compensation expense and legal fees.

Table of Contents

Income Tax Expense (Benefit)


(in thousands)	Three Months Ended March 31,						Increased / (Decreased)
	2022			2021			$		%
Income tax expense (benefit)	$	(817)		$	590		$	(1,407)	(238.5)	%
Effective tax rate	26.0		%	13.5		%

An income tax benefit was recorded in the three months ended March 31, 2022 due to the recognition of a $3.1 million loss before income taxes. The effective tax rate for the three months ended March 31, 2022 is primarily driven by the federal and state tax rates, along with discrete income tax items for compensation expense in connection with stock option exercises and vesting of performance stock units during the first quarter of 2022, which favorably impacted the effective tax rate by 1.1%. Income tax expense recorded for the three months ended March 31, 2021 was driven by the generation of income before income taxes of $4.4 million. The effective income tax rate for the three months ended March 31, 2021 reflects a net discrete income tax benefit related to share-based compensation expense in connection with stock option exercises and vesting of performance stock units during the first quarter of 2021, which favorably impacted the effective tax rate by 12.5%.

Net Income (Loss) and Earnings (Loss) Per Common Share


(in thousands, except per share amounts)	Three Months Ended March 31,				Increased / (Decreased)
	2022		2021		$		%
Net income (loss)	$	(2,321)	$	3,793	$	(6,114)	(161.2)	%
Earnings (loss) per common share
Basic	$	(0.01)	$	0.02	$	(0.03)	(150.0)	%
Dilutive	$	(0.01)	$	0.02	$	(0.03)	(150.0)	%

Liquidity and Capital Resources

As of March 31, 2022, we had cash and cash equivalents of $61.7 million. Our principal liquidity needs are to fund our product manufacturing costs, research and development activities, sales and marketing and other general operating expenses, as well as capital expenditures and debt service. We believe that the combination of our current cash and cash equivalents, projected product sales, development revenue and royalties will provide us with sufficient funds to meet our obligations, including debt maturities, and support operations through at least the next twelve months from the date of this report. We had an accumulated deficit as of March 31, 2022 of $178.7 million.

If additional capital is needed to support our operations in the future, we may need to raise additional funds through financing, such as drawing on our current credit facility or issuance of additional debt. However, we may be unable to obtain such financing, or obtain it on favorable terms, in which case we may be required to curtail development of new products, limit expansion of operations or accept financing terms that are not as attractive as we may desire.

Long-term Debt Financing

On November 1, 2021, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent for the lenders, (“Administrative Agent”) for credit facilities in an aggregate principal amount of up to $40.0 million with a maturity date of November 1, 2024. The Credit Agreement consists of a $20.0 million term loan facility (the “Term Loan Facility”) and a $20.0 million revolving credit facility, $5.0 million of which is available for the issuance of letters of credit and $1.0 million of which is available for swingline loans (the “Revolving Credit Facility”), (collectively the “Credit Facilities”), which are secured by substantially all of our assets. The Term Loan Facility was funded upon execution of the Credit Agreement with the proceeds used to repay our $20.0 million Term Loan with Hercules Capital, Inc. and to pay fees and expenses incurred in connection with the early repayment.

Table of Contents

The Revolving Credit Facility remains available for future use and is expected to be used for ongoing working capital requirements and other general corporate purposes as needed. Payments under the Term Loan Facility are due in consecutive quarterly installments on the last business day of each of March, June, September and December, commencing on March 31, 2022. Interest accrues at either the base rate or LIBOR plus the applicable margin, which varies based on our consolidated total leverage ratio and will initially be 1.50% for base rate loans and 2.50% for LIBOR loans. The transaction is expected to provide approximately $1.2 million in annual interest expense savings based on an interest rate of 2.59% (one-month LIBOR rate plus the applicable margin of 2.50%) as of November 1, 2021.

As of March 31, 2022 and December 31, 2021, we had $19.6 million and $20.0 million outstanding under our Term Loan Facility with a $0.4 million principal payment made on March 31, 2022, and the Revolving Credit Facility remains available for future use. The weighted average interest rate on the Term Loan Facility outstanding balance during the three months ended March 31, 2022 was approximately 2.65%.

Cash Flow Comparison

The following table summarizes our cash flows from total operations:


	Three Months Ended March 31,
(in thousands)	2022		2021
Total cash provided by (used in):
Operating activities	$	(4,881)	$	1,978
Investing activities	666		(1,184)
Financing activities	17		1,722
Effect of exchange rate changes on cash	—		(1)
Increase (decrease) in cash and cash equivalents	(4,198)		2,515
Cash and cash equivalents, beginning of period	65,913		53,137
Cash and cash equivalents, end of period	$	61,715	$	55,652

Operating Activities

Operating cash inflows are generated primarily from net product sales, license and development fees and royalties. Operating cash outflows consist principally of expenditures for manufacturing costs, personnel costs, general and administrative expenses, research and development activities, and sales and marketing costs. Fluctuations in cash from operating activities are primarily a result of the timing of cash receipts and disbursements.

The change in the net cash from operating activities was primarily a result of the decrease in our net income to a net loss, excluding non-cash activity, and changes in operating assets and liabilities due to timing of cash receipts and cash disbursements, principally driven by a reduction in accrued liabilities, partially offset by an increase in accounts payable, slight decline in deferred revenue and a reduction in contract assets.

Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2022 consisted of proceeds from maturities of investment securities of $1.0 million, partially offset by purchases of investment securities of $0.2 million and capital expenditures of $0.1 million. Net cash used in investing activities for the three months ended March 31, 2021 was primarily for capital expenditures related to our manufacturing facility.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2022 consisted of $0.5 million paid to taxing authorities in connection with net-share settled share-based awards for which we withheld shares equivalent to the value of the employee's tax obligation for the applicable income and other employment taxes and $0.4 million in principal payments on our Term Loan, offset by $0.9 million in proceeds received from exercises of stock options. Net cash provided by financing activities for the three months ended March 31, 2021 included $3.3 million in proceeds from the exercise of stock options, partially offset by $1.6 million paid to taxing authorities in connection with net-share settled stock-based awards.

Table of Contents

Critical Accounting Estimates

The preceding discussion and analysis of our results of operations and financial condition is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and various other factors that we believe are reasonable under the circumstances. Actual results could differ from these estimates, and significant variances could materially impact our financial condition and results of operations.

There have been no material changes to the critical accounting estimates we believe to be most critical to understanding our results of operations and financial condition which are fully described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

We are exposed to foreign exchange rate fluctuations of the Swiss Franc to the U.S. dollar as the financial position and operating results of our subsidiaries in Switzerland are translated into U.S. dollars for consolidation. Our exposure to foreign exchange rate also arises from transferring funds to our Swiss subsidiaries in Swiss Francs. In addition, we have exposure to exchange rate fluctuations between the Euro and the U.S. dollar for some of our transactions. We do not currently use derivative financial instruments to hedge against exchange rate risk. The effect of foreign exchange rate fluctuations on our financial results for the three months ended March 31, 2022 was not material. In addition, a hypothetical 10% appreciation or depreciation in foreign currencies against the U.S. dollar, assuming all other variables held constant, would not have a material impact on our financial position or operating results for the three months ended March 31, 2022.

Interest Rate Risk

We are directly exposed to changes in market interest rates on our long-term debt as our secured floating rate credit facility requires interest payments to be calculated at a floating rate tied in part to LIBOR or, if LIBOR is no longer available, at a replacement rate as defined within the Credit Facility Agreement. As a result, changes in the floating interest rate can affect our operating results and liquidity. As of March 31, 2022, we had floating interest rate debt of $19.6 million outstanding carrying a floating interest rate of approximately 2.73% (one-month LIBOR rate plus the applicable margin of 2.50%). A hypothetical increase of 1 percentage point in floating interest rate, assuming principal payments in accordance with the Credit Facility Agreement and all other variables held constant, would result in $0.2 million increase in future annual interest expense.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. The evaluation was performed to determine whether our disclosure controls and procedures have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.

Internal Control over Financial Reporting

There were no material changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Table of Contents

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information set forth under “Note 11. Commitments and Contingencies – Pending Litigation” and “Note 12. Subsequent Events – Legal Proceedings” to our condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Although the results of actual, pending or threatened legal proceedings and litigation cannot be predicted with certainty, we do not believe that there is a reasonable possibility that the final outcome of these matters will have a material adverse effect on our business or financial results. Regardless of the final outcome, litigation could have an adverse impact on us because of defense or settlement costs, diversion of management resources, harm to our reputation and brand, and other factors.

Item 1A. RISK FACTORS

In addition to the information contained in this report, you should carefully consider the risk factors discussed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition or future results. The information below includes additional risk factors relating to the definitive merger agreement entered into with Halozyme Therapeutics, Inc. (“Halozyme”). The risks described below and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results in future periods.

Risks Related to the Pending Transaction with Halozyme

We may not complete the pending transaction with Halozyme within the time frame we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations.

On April 12, 2022, we entered into the Merger Agreement with Halozyme and Atlas. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Atlas commenced the Offer on April 26, 2022 to acquire all of the Shares at the Offer Price without interest and subject to any withholding of taxes required by applicable legal requirements. The Merger will take place following the completion of the Offer and the satisfaction or waiver of certain conditions set forth in the Merger Agreement, and each Share issued and outstanding immediately prior to the effective time of the Merger (other than Shares (a) held by the Company, Halozyme, any other direct or indirect wholly owned subsidiary of Halozyme (other than Atlas) or by stockholders of the Company who have properly exercised and perfected their statutory rights of appraisal under Delaware law or (b) irrevocably accepted for purchase in the Offer) will be converted into the right to receive an amount in cash equal to the Offer Price, without interest and subject to any withholding of taxes required by applicable legal requirements.

The obligation of Atlas to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including (1) that the number of Shares validly tendered in accordance with the terms of the Offer and not validly withdrawn, considered together with all other Shares otherwise beneficially owned by Halozyme or any of its wholly owned subsidiaries (including Atlas) (but excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been received, as defined by the DGCL), would represent one more than 50% of the total number of Shares outstanding at the time of the expiration of the Offer, (2) the expiration or termination of the applicable waiting period (or any extension thereof) under the HSR Act and (3) and those other conditions set forth in the Merger Agreement. As a result, we cannot assure you that the transaction with Halozyme will be completed, or that, if completed, it will be exactly on the terms set forth in the Merger Agreement or within the expected time frame.

If the transaction is not completed within the expected time frame or at all, we may be subject to a number of material risks. The price of our common stock may decline to the extent that current market prices of our common stock reflects a market assumption that the transaction will be completed. We could be required to pay Halozyme a termination fee of $33 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. The failure to complete the transaction also may result in negative publicity and negatively affect our relationship with our stockholders, employees, customers, regulators and other business partners. We may also be required to devote significant time and resources to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement.

Table of Contents

The pendency of the transaction with Halozyme could adversely affect, or disrupt, our business, financial results and/or operations.

Our efforts to complete the transaction could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operation and our business. Uncertainty as to whether the transaction will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the transaction is pending because employees may experience uncertainty about their roles following consummation of the transaction. A substantial amount of our management’s and employees’ attention is being directed toward the completion of the transaction and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and our relationship with customers, vendors, partners and manufacturers. For example, vendors, manufacturers, partners and other counterparties may defer decisions concerning working with us, or seek to change existing business relationships with us. Changes to or termination of existing business relationships could adversely affect our results of operations and financial condition, as well as the market price of our common stock. The adverse effects of the pendency of the transaction could be exacerbated by any delays in completion of the transaction or termination of the Merger Agreement.

While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger Agreement is in effect, we are subject to customary restrictions on our business activities, generally requiring us to conduct our business in the ordinary course, consistent with past practice, and subjecting us to a variety of specified limitations absent Halozyme’s prior consent. These limitations include, among other things, restrictions on our ability to enter into or amend certain contracts, take specified actions with respect to the compensation of certain employees, acquire or dispose of material assets, make certain investments, repurchase or issue securities, pay dividends, make certain capital expenditures, take certain actions relating to intellectual property, amend our organizational documents and incur certain indebtedness. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and may as a result materially and adversely affect our business, results of operations and financial condition.

In certain instances, the Merger Agreement requires us to pay a termination fee to Halozyme, which could require us to use available cash that would have otherwise been available for general corporate purposes.

Under the terms of the Merger Agreement, we may be required to pay Halozyme a termination fee of $33 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement, including, but not limited to, a change in the recommendation of our Board of Directors or a termination of the Merger Agreement by us to enter into an agreement for a “Superior Offer,” as defined in the Merger Agreement. If the Merger Agreement is terminated under such circumstances, we may be required to pay the termination fee under the Merger Agreement which may require us to use available cash that would have otherwise been available for general corporate purposes and other uses. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business operations and financial condition, which in turn would materially and adversely affect the price of our common stock.

Litigation against us and members of our Board of Directors arising out of our acquisition by Halozyme may delay or prevent the proposed transaction.

As described in Note 12 “Subsequent Events” to our condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, seven complaints have been filed by alleged stockholders of the Company against the Company and each of the members of our Board of Directors, purportedly in relation to the alleged omission of material facts related to the Merger from the Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) that was filed with the SEC by the Company in connection with the proposed Merger on April 26, 2022, in alleged violations of Section 14(e), 14(d) and 20(a) of the Securities Exchange Act of 1934. Plaintiffs seek, among other remedies, to enjoin the closing of the Merger or, in the event that the Merger is consummated, recover damages, costs and fees. Also, if the Company’s insurance provider were to deny coverage under the existing insurance policies covering such actions or should such policies fail to cover the costs of defending the lawsuits, we may incur substantial costs.

We are not able to estimate any possible loss from this litigation at this time. It is possible that additional lawsuits may be filed in connection with the proposed Merger.

Table of Contents

We have incurred, and will continue to incur, direct and indirect costs as a result of the pending transaction with Halozyme.

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the pending transaction. We must pay substantially all of these costs and expenses whether or not the transaction is completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses.

Table of Contents

Item 6. EXHIBITS

(a) Exhibit Index


Exhibit No.						Description
2.1						Agreement and Plan of Merger, dated as of April 12, 2022, by and among Halozyme Therapeutics, Inc., Atlas Merger Sub, Inc., and Antares Pharma, Inc. (filed as Exhibit 2.1 to the Company’s Form 8-K filed April 13, 2022 and incorporated herein by reference).
3.1						Amendment to the Company’s Amended and Restated By-laws, dated April 12, 2022 (filed as Exhibit 3 .1 to the Company’s Form 8-K filed April 13, 2022 and incorporated herein by reference).
31.1						Certificate of the Chief Executive Officer of Antares Pharma, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2						Certificate of the Chief Financial Officer of Antares Pharma, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1						Certificate of the Chief Executive Officer of Antares Pharma, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2						Certificate of the Chief Financial Officer of Antares Pharma, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS						XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) (filed herewith).
101.SCH						Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF						Inline XBRL Taxonomy Extension Definition Document (filed herewith).
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104						Cover Page Interactive Data File (the cover page interactive data does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) (filed herewith).

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ANTARES PHARMA, INC.
		(Registrant)

Date:	May 10, 2022	/s/ Robert F. Apple
		Robert F. Apple
		President and Chief Executive Officer
		(Principal Executive Officer)

Date:	May 10, 2022	/s/ Fred M. Powell
		Fred M. Powell
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

ANTARES PHARMA, INC. 10-Q