advance of performance are capitalized until services are provided or goods are delivered. Research and development expenses include: < the cost of acquiring and manufacturing preclinical and clinical trial materials and manufacturing costs related to commercial production and scale-up until a product is approved and initially available for commercial sale; < expenses incurred under agreements with contract research organizations ("CROs") as well as investigative sites and consultants that conduct our preclinical studies and clinical trials; < personnel-related expenses, which include salaries, benefits and stock-based compensation; < laboratory materials and supplies used to support our research activities; < outsourced product development services; < expenses relating to regulatory activities, including filing fees paid to regulatory agencies; and < allocated expenses for facility-related costs. Research and development activities are central to our business model. We expect to continue to incur significant research and development expenses as we advance our pipeline candidates and in particular plan and conduct clinical trials, prepare regulatory filings for our product candidates, and utilize internal resources to support these efforts. Our research and development costs have declined as compared to previous levels as a result of directing significant funding to our commercial activities, with the approval and launch of Gvoke and as we have concluded ongoing clinical programs and not yet initiated any new studies. Based on FDA interactions and expectations for a registrational program to support a mini-dose indication for Glucagon RTU in EIH, we submitted an IND in February 2022. We received FDA clearance in March 2022 and are actively planning to initiate a new phase 2 clinical program by the end of 2022 to further address the management of EIH in people with diabetes who use insulin. Our research and development expenses may vary significantly over time due to uncertainties relating to the timing and results of our clinical trials, feedback received from interactions with the FDA and the timing of regulatory approvals. Selling, general and administrative expenses Selling, general and administrative expenses consist principally of compensation and related personnel costs, marketing and selling expenses, professional fees and facility costs not otherwise included in cost of goods sold or research and development expenses. Our selling and marketing costs have increased significantly as we continue our marketing and selling efforts for Gvoke in the United States. We expect to continue to incur significant marketing and selling expenses in the near term related to the commercialization of Gvoke, Keveyis and Recorlev in the United States. As a public reporting company, we have incurred greater expenses, including increased payroll, legal and compliance, accounting, insurance and investor relations costs. We expect some of these costs to continue to increase in conjunction with our anticipated growth and complexity as a public reporting company. Other income (expense) Other income (expense) consists primarily of interest expense related to our convertible debt and Amended Loan Agreement, interest income earned on deposits and investments, and the change in fair value of our warrants. Income tax We have incurred operating losses since inception and therefore do not have any taxable income. As of December 31, 2021, we had $475.7 million in federal net operating loss carryforwards, $309.7 million of various state net operating loss carryforwards, $5.4 million in federal research and orphan drug credits that begin to expire in 2025, and $2.5 million of state research and development credits that will begin to expire in 2022. 80
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