ANTARES PHARMA, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

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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 five sections.

•Company Overview
•Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Policies and Use of Estimates
•Off-Balance Sheet Arrangements

Our MD&A should be read in conjunction with the consolidated financial
statements and related footnotes included in Item 8 of Part II of this Annual
Report on Form 10-K and risk factors identified in Item 1A of Part I of this
Annual Report on Form 10-K. Some of the statements included below are considered
forward-looking statements. See the discussion regarding forward-looking
statements preceding Item 1 of Part I of this Annual Report on Form 10-K.

The terms "Antares," "we," "our," "us" or the "Company" in this Annual Report on
Form 10-K, unless the context otherwise requires, refer to Antares Pharma, Inc.
and its wholly owned subsidiaries.

Company presentation

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.

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® going forward. We also entered into a license agreement with Otter
granting them a worldwide, exclusive, royalty-free, fully paid-up, irrevocable,
transferable license with the right to sublicense to certain patents relating to
the OTREXUP® product that may relate to other products we produce.
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In October 2020, we entered into an exclusive license agreement (the "NOCDURNA®
License Agreement") with Ferring for the marketed product
NOCDURNA® (desmopressin acetate) in the United States, which is indicated for
the treatment of nocturia due to nocturnal polyuria ("NP") in adults who awaken
at least two times per night to urinate. We began detailing NOCDURNA® with a
soft launch in the fourth quarter of 2020 and are currently executing a
reintroduction of the product 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 tentative approval from the FDA in December 2020 and
will be eligible for final approval and marketing in the U.S. upon expiration of
the exclusivity period previously granted to Clarus for JATENZO® on March 27,
2022. On February 3, 2022, we announced the FDA's acceptance of our NDA
resubmission for TLANDO® with a target action date set for March 28, 2022. We
continue to prepare for the launch of TLANDO® in 2022 pending final FDA approval
after the expiration of JATENZO®'s exclusivity period. 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 will be responsible for the manufacturing and commercialization of
TLANDO®.

The TLANDO® License Agreement also grants 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 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.

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 in November 2020, 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 and 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.
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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 had 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 for the treatment of acute adrenal
insufficiency, known as adrenal crisis, in adults and adolescents, 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.

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.

COVID-19[female[feminine

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 lead 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.
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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 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 "Part I - Item 1A. Risk Factors - We face
uncertainty and risks related to the outbreak of the novel coronavirus disease,
COVID-19, which could significantly disrupt our operations and may materially
and adversely impact our business and financial conditions."

Operating results

The following is a discussion and analysis of our financial results, cash flows,
and liquidity and capital resources for the years ended December 31, 2021 and
2020. A discussion of changes in our financial results, cash flow comparison and
liquidity and capital resources for the years ended December 31, 2020 and 2019
has been omitted from this Form 10-K but may be found in Item 7 of Part II of
our Annual Report on Form 10-K for the year ended December 31, 2020, filed with
the SEC on March 2, 2021.

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:

                                             Years Ended December 31,                        Increased / (Decreased)
(in thousands)                              2021                     2020                   $                      %
Proprietary product sales, net      $      80,016               $    62,878          $      17,138                   27.3  %
Partnered product sales                    46,651                    50,956                 (4,305)                  (8.4) %
Total product revenue, net                126,667                   113,834                 12,833                   11.3  %
Licensing and development revenue          19,623                    14,466                  5,157                   35.6  %
Royalties                                  37,692                    21,299                 16,393                   77.0  %
Total revenue, net                  $     183,982               $   149,599          $      34,383                   23.0  %


Product Revenue, Net

Net revenue from product sales increased 11.3% primarily due to increased sales
of our proprietary products XYOSTED® and NOCDURNA® and partnered sales of
OTREXUP® to Otter subsequent to sale of the product line, partially offset by a
reduction in sumatriptan sales to Teva and sales of Makena® subcutaneous
auto-injectors to Covis.

Sales of our proprietary products are presented net of estimated product returns
and sales allowances. The OTREXUP® product line was sold to Otter in December
2021 with a supply agreement executed simultaneously; therefore, all revenue
generated prior to the date of sale is included in proprietary product sales and
all revenue generated subsequent to the date of sale is included in partnered
products sales. The increase in propriety product sales of 27.3% was primarily
attributable to continued growth in prescriptions and sales of XYOSTED®, which
we launched for commercial sale in 2018, and sales of NOCDURNA®, which we
in-licensed and began detailing in the fourth quarter of 2020, partially offset
by a reduction in sales of OTREXUP® due to the sale of the product line to Otter
in December 2021. We attribute this growth to successful marketing and launch
strategies, achieving and maintaining targeted reimbursement coverage, and our
ability to leverage our virtual sales capabilities to support the continued
growth despite any potential softening or impact due to the global Pandemic in
2021 and 2020.
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We also manufacture and sell devices, components and fully assembled packaged
product to our partners Teva, Covis and Otter. Partnered product sales decreased
by 8.4% due to a decrease in sumatriptan sales to Teva, lower production and
sales volumes of Makena® to Covis and a decrease in shipments of epinephrine
auto injectors to Teva, partially offset by revenue generated from production of
OTREXUP® for Otter and higher teriparatide sales 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 development
activities or develop new products on their behalf. Fluctuations in our
licensing and development revenue are generally attributable to the development
timelines of our various partnered development projects, the timing of which is
often controlled by our partner, and the timing of achievement of certain
milestones.

Licensing and development revenue increased 35.6% primarily due to additional development and maintenance activities with Teva to support the replacement of molds and tooling related to commercial production of the autoinjector of epinephrine and continued development activities under other ongoing joint development projects, partially offset by lower development activities with Pfizer.

Royalty fee

Royalties are earned in connection with licenses granted to our partners under
license and development arrangements. Royalties are generally based upon a
percentage of our partners' net sales of the partnered product. Royalty revenue
increased 77.0% primarily due to an increase in royalties from Teva on its net
sales of generic EpiPens®.

Cost of Revenue

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

                                                        Years Ended December 31,                       Increased / (Decreased)
(in thousands)                                        2021                      2020                   $                     %
Cost of product sales                           $     54,418                $   53,960          $        458                   0.8  %
Cost of development revenue                           13,863                     9,140                 4,723                  51.7  %
Total cost of revenue                           $     68,281                $   63,100          $      5,181                   8.2  %
% of revenue                                            37.1   %                  42.2  %


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. The year-over-year increase
in cost of development revenue is attributable to and relatively consistent with
the growth in development revenue from partnered development activities.

Research and development costs

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 research and development
activities.

                                                    Years Ended December 31,                    Increased / (Decreased)
(in thousands)                                      2021                 2020                   $                     %
Research and development                      $      14,502          $   10,121          $      4,381                  43.3  %


R&D expenses increased 43.3% primarily due to our ongoing internal development
programs including ATRS-1902 and ATRS-1901, along with higher employee
compensation expense. Overall, R&D expense fluctuates based on phases of
development and timing of clinical studies, including internal and external
development costs incurred. As discussed above, we further advanced our
ATRS-1902 development program with positive result from a Phase 1 clinical study
for adrenal crisis rescue in January 2022 and were granted Fast Track
designation by the FDA. The results support the advancement of our ATRS-1902
development program to a pivotal clinical study which we anticipate starting in
the second quarter of 2022.
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Selling, general and administrative expenses

                                             Years Ended December 31,                    Increased / (Decreased)
(in thousands)                               2021                 2020                   $                     %

Selling, general and administrative expenses $73,857 $62,759

       $     11,098                  17.7  %


Selling, general and administrative expenses increased 17.7% primarily due to
higher sales and marketing costs associated with the relaunch of NOCDURNA®,
which we in-licensed and began detailing in the fourth quarter of 2020. The
increase is also attributable to higher sales and marketing costs associated
with XYOSTED®, which were down in 2020 due to the Pandemic as the various
restrictions and limitations imposed during the Pandemic led to decreased
spending that has returned to pre-Pandemic levels, along with higher employee
compensation. General and administrative expenses also increased primarily
driven by higher professional service fees, facility costs, insurance expense
and employee compensation costs to support the continued growth of the business.

gain on sale

In December 2021, we sold certain assets used in the operation of the OTREXUP®
product to 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.
The gain on sale of assets of $38.6 million represents the purchase price
adjusted for estimated changes in closing inventory to be transferred less net
book value of the assets sold and direct transaction costs.

Income tax expense (benefit)

                                             Years Ended December 31,                      Increased / (Decreased)
(in thousands)                             2021                     2020                   $                     %
Income tax provision (benefit)        $    15,982               $  (46,280)         $     62,262                 134.5  %
Effective tax rate                           25.7   %               (466.5) %


Income tax expense recorded for the year ended December 31, 2021 was driven by
the generation of income before income taxes of $62.3 million, resulting in an
effective tax rate of 25.7%. The effective tax rate is primarily driven by the
federal and state tax rates, along with discrete income tax items for
compensation expense. For the year ended December 31, 2020, we recorded an
income tax benefit of $46.3 million on pre-tax income of $9.9 million primarily
due to the release of our valuation allowance on our deferred tax assets which
favorably impacted our effective tax rate. As of December 31, 2020, we concluded
that, as a result of generating pre-tax earnings, utilization of net operating
loss carryovers and future projected pre-tax earnings, it is more likely than
not that its deferred taxes are realizable and may be utilized to offset future
tax liabilities. Excluding the release of our valuation allowance on our
deferred tax assets, the effective tax rate for the year ended December 31, 2020
would have been higher than the effective tax rate for the year ended December
31, 2021 primarily due to the impact of permanent tax items on a lower income
before income taxes.

Net earnings and earnings per common share

                                            Years Ended December 31,                    Increased / (Decreased)
(in thousands, except per share
amounts)                                    2021                 2020                   $                     %
Net income                            $      46,289          $   56,201          $     (9,912)                (17.6) %

Earnings per common share
Basic                                 $        0.27          $     0.34          $      (0.07)                (20.6) %
Diluted                               $        0.26          $     0.33          $      (0.07)                (21.2) %


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Cash and capital resources

As of December 31, 2021 we had cash and cash equivalents of $65.9 million. We
believe that the combination of our current cash and cash equivalents, along
with our 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 first quarter of 2023. We reported net
income and positive cash flows from operations for the years ended December 31,
2021 and 2020. We had an accumulated deficit as of December 31, 2021 of $176.3
million. Prior to 2020, we had not historically generated enough operating cash
flow to support our operations and funded our operations through equity
offerings and debt issuance.

If additional capital is needed to support our operations in the future, we may
need to raise additional funds through financing, such as drawing our current
credit facility, issuance of additional debt, equity or notes convertible into
our common stock. 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

As of December 31, 2020, we were party to a loan and security agreement, as
amended, with Hercules Capital, Inc. (the "Term Loan"). The amortizing Term Loan
was secured by substantially all of our assets, excluding intellectual property,
and accrued interest at a prime-based variable rate with a maximum of 9.5%,
which was 8.5% in 2021. In 2021, we made principal prepayments of $20.0 million
and paid a 1.0% prepayment fee. On November 1, 2021, we extinguished the Loan
Agreement with Hercules Capital, Inc. and repaid the outstanding $20.0 million
principal on the Term Loan, along with a 1.0% prepayment fee and the end of term
charge of $1.7 million. All remaining unamortized debt issuance costs associated
with the Term Loan were immediately amortized to interest expense.

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, 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 (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.

Total interest-bearing debt as of December 31, 2021 was $20.0 million and we had
$20.0 million of unused borrowing capacity on our Revolving Credit Facility,
which is expected to be used for ongoing working capital requirements and other
general corporate purposes as needed. 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,
remeasured quarterly. 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. At our election,
interest accrues at LIBOR plus the applicable margin ranging from 2.25% to
3.00%, which varies based on our Consolidated Total Leverage Ratio. The new
Credit Facilities, which replaced the previous Term Loan, are expected to
provide approximately $1.2 million in annual interest expense savings based on
an interest rate of approximately 2.60% (one-month LIBOR rate plus the
applicable margin of 2.50%) as of December 31, 2021.

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 December 31, 2021, we were in compliance with all
affirmative, negative and financial covenants.

See Note 8 to the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information about our funding arrangements.

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Cash flow comparisons

The following table summarizes our cash flows:

                                                         Years Ended December 31,
(in thousands)                                              2021            

2020

Total cash provided by (used in):
Operating activities                               $      36,619              $ 21,320
Investing activities                                      (3,852)                8,167
Financing activities                                     (19,990)                  447
Effect of exchange rate changes on cash                       (1)           

2

Increase (decrease) in cash and cash equivalents          12,776            

29,936

Cash and cash equivalents, beginning of period            53,137            

23 201

Cash and cash equivalents, end of period           $      65,913              $ 53,137


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 increase in our net income, excluding non-cash activity, and changes in
operating assets and liabilities due to timing of cash receipts and cash
disbursements, principally driven by depletion of inventory and an increase in
accrued liabilities, partially offset by an increase in accounts receivable and
deferred revenue.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2021 was
attributable to the purchase of TLANDO® intangible product rights for $11.3
million, capital expenditures of $6.7 million, an additional NOCDURNA®
intangible product rights contractual payment of $2.5 million and investment
security purchases of $1.2 million, partially offset by net proceeds of $17.8
from the sale of the OTREXUP® product line. Net cash provided by investing
activities for the year ended December 31, 2020 was attributable to $22.5
million proceeds from maturities of short-term investments, partially offset by
capital expenditures of $9.6 million primarily for our manufacturing facility
and the purchase of NOCDURNA® intangible product rights for $5.0 million.

Fundraising activities

Net cash used in financing activities for the year ended December 31, 2021
consisted of $40.0 million in principal payments on the extinguishment of our
Term Loan with Hercules Capital, Inc., $2.8 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, $2.1 million in prepayment fees
and an end of term charge on our Term Loan and $0.3 million in debt issuance
costs, partially offset by $20.0 million in proceeds from the issuance of our
new Term Loan Facility with Wells Fargo and $5.2 million in proceeds received
from exercises of stock options. Net cash provided by financing activities for
the year ended December 31, 2020 included $1.8 million in proceeds from the
exercise of stock options, partially offset by $1.4 million paid to taxing
authorities in connection with net-share settled stock-based awards for which we
withheld shares equivalent to the value of the employees' tax obligation for the
applicable income and other employment taxes.
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Contractual obligations

From December 31, 2021our contractual obligations are as follows:

                                                               Payments Due by Period
                                                       Less than       1 - 3         3 - 5       More than
(in thousands)                            Total         1 year         years         years        5 years
Long-term debt obligations 1            $ 20,000      $   1,500      $ 18,500      $     -      $        -
Interest payable on long-term debt 2       1,350            512           838            -               -
Unused revolving line of credit fee 3        201             71           130            -               -
Operating lease obligations 4              8,012          1,334         1,731        1,354           3,593
Purchase commitments 5                    31,312         31,312             -            -               -
Total                                   $ 60,875      $  34,729      $ 21,199      $ 1,354      $    3,593


1  Long-term debt includes principal installment payments on our Term Loan.
Refer to Note 8 to the Consolidated Financial Statements included in Item 8 of
Part II of this Annual Report on Form 10-K for additional information regarding
our financing arrangements.

2  Calculated using the variable interest rate as of December 31, 2021 based on
LIBOR plus required spread on our Term Loan. Refer to Note 8 to the Consolidated
Financial Statements included in Item 8 of Part II of this Annual Report on Form
10-K for additional information regarding our financing arrangements.

3  Calculated using the commitment fee rate as of December 31, 2021 based on our
consolidated total leverage ratio assuming the entire revolving line of credit
remains undrawn for the duration of the agreement. Refer to Note 8 to the
Consolidated Financial Statements included in Item 8 of Part II of this Annual
Report on Form 10-K for additional information regarding our financing
arrangements.

4 Operating leases primarily relate to office space, as well as vehicles and equipment. Refer to Note 5 of the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information on leases.

5  Purchase commitments include open purchase orders with suppliers and
inventory to be purchased in accordance with the TLANDO® exclusive license
agreement entered into with Lipocine in October 2021. Refer to Note 6 to the
Consolidated Financial Statements included in Item 8 of Part II of this Annual
Report on Form 10-K for additional information on the agreement.

Off-balance sheet arrangements

From December 31, 2021we had no off-balance sheet arrangements, including arrangements with structured finance, special purpose or variable interest entities.

Significant Accounting Policies and Use of Estimates

The preceding discussion and analysis of our results of operations and financial
condition is based upon our Consolidated Financial Statements. Our Consolidated
Financial Statements have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), which require us to make estimates and
assumptions in certain circumstances that, giving due consideration to
materiality, affect the reported amounts of assets and liabilities, revenues and
expenses and related disclosures as of the date of the financial statements. We
regularly review our estimates and assumptions, which are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from our estimates, and
significant variances could materially impact our financial condition and
results of operations under different assumptions or conditions.

We believe that of our significant accounting policies, the following are
particularly important to the portrayal of our results of operations and
financial position and is subject to an inherent degree of uncertainty as it may
require the application of a higher level of subjectivity and judgment by us.
Our significant accounting policies are fully described in Note 2 to the
Consolidated Financial Statements included in Item 8 of Part II of this Annual
Report on Form 10-K.
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Revenue recognition (variable consideration)

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 our customers in an
amount that reflects the consideration to which we expect to be entitled to in
exchange for those goods or services.

We enter into contracts with partners that often contain multiple elements such
as licensing, development, manufacturing and commercialization components. These
arrangements are often complex, and we may receive various types of
consideration over the life of the arrangement, including: up-front fees,
reimbursements for research and development services, milestone payments,
payments on product shipments, margin sharing arrangements, license fees and
royalties.

In assessing our revenue arrangements, we must identify the contract, determine
the transaction price including an estimation of any variable consideration we
expect to receive in connection with the contract, identify the promises of
goods or services to the customer and each distinct performance obligation,
allocate the transaction price to each of the performance obligations, and
recognize revenue when or as the performance obligations are satisfied. Each of
these steps in the revenue recognition process requires management to make
judgements and/or estimates. The most significant judgements and estimates
involve the determination of variable consideration to be included in the
transaction price, such as the estimation of product returns and sales
allowances in connection with the sale of our proprietary products.

Variable consideration is recognized at an amount we believe is not subject to
significant reversal and is adjusted at each reporting period if the most likely
amount of expected consideration changes or becomes fixed. For example, we must
estimate future product returns and sales allowances at the time of sales to
distributors. The expected value is determined based on unit sales data,
customer purchasing patterns, product expiration dates and levels of inventory
in the distribution channel, contractual terms with customers and third-party
payers, historical and expected utilization rates, and any new or anticipated
changes in programs or regulations. We believe this provides a reasonable basis
for recognizing revenue, however, actual results could differ from estimates and
significant changes in estimates could impact our results of operations in
future periods.

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