Kadmon Holdings, Inc. (Exact Name of Registrant As Specified in Its Charter) ______
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ FORM 10-Q _______________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2017 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to . Commission File Number: 001-37841 Kadmon Holdings, Inc. (Exact name of registrant as specified in its charter) _______________________________ Delaware 27‑3576929 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 450 East 29th Street, New York, NY 10016 (Address of principal executive offices) (Zip Code.) (212) 308‑6000 (Registrant’s telephone number, including area code) _______________________________ 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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.: Smaller reporting Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ company ☐ Emerging growth company ☒ (Do not check if a smaller reporting 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 ☒ The number of shares of the registrant’s common stock outstanding as of August 3, 2017 was 51,846,521. Table of Contents Kadmon Holdings, Inc. Form 10-Q Table of Contents Page PART I – Financial Information Item 1 Consolidated financial statements: 5 Consolidated balance sheets as of June, 30, 2017 (unaudited) and December 31, 2016 5 Consolidated statements of operations for the three months and six months ended June 30, 2017 and 2016 (unaudited) 6 Consolidated statements of stockholders’ deficit for the six months ended June 30, 2017 (unaudited) 7 Consolidated statements of cash flows for the six months ended June 30, 2017 and 2016 (unaudited) 8 Notes to consolidated financial statements (unaudited) 9 Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3 Quantitative and Qualitative Disclosures About Market Risk 36 Item 4 Controls and Procedures 36 PART II – Other Information Item 1 Legal Proceedings 38 Item 1A Risk Factors 38 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 81 Item 3 Defaults Upon Senior Securities 82 Item 4 Mine Safety Disclosures 82 Item 5 Other Information 82 Item 6 Exhibits 82 Signatures 83 2 Table of Contents REFERENCES TO KADMON In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires: · references to the “Company,” “Kadmon,” “we,” “us” and “our” following the date of the Corporate Conversion (July 26, 2016) refer to Kadmon Holdings, Inc. and its consolidated subsidiaries; · references to the “Company,” “Kadmon,” “we,” “us” and “our” prior to the date of the Corporate Conversion refer to Kadmon Holdings, LLC and its consolidated subsidiaries; and · references to the “Corporate Conversion” or “corporate conversion” refer to all of the transactions related to the conversion of Kadmon Holdings, LLC into Kadmon Holdings, Inc., including the conversion of all of the outstanding membership units of Kadmon Holdings, LLC into shares of common stock of Kadmon Holdings, Inc. effected on July 26, 2016. See Note 1 to our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q “Organization—Corporate Conversion, Initial Public Offering and Debt Conversion” for more information. 3 Table of Contents FORWARD‑LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward‑looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward‑looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding future capital expenditures and debt service obligations, are forward‑looking statements. In some cases, you can identify forward‑looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward‑looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward‑looking statements. We believe that these factors include, but are not limited to, the following: · the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs; · our ability to advance product candidates into, and successfully complete, clinical trials; · our reliance on the success of our product candidates; · the timing or likelihood of regulatory filings and approvals; · our ability to expand our sales and marketing capabilities; · the commercialization of our product candidates, if approved; · the pricing and reimbursement of our product candidates, if approved; · the implementation of our business model, strategic plans for our business, product candidates and technology; · the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; · our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties; · cost associated with defending intellectual property infringement, product liability and other claims; · regulatory development in the United States, Europe and other jurisdictions; · estimates of our expenses, future revenues, capital requirements and our needs for additional financing; · the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements; · our ability to maintain and establish collaborations or obtain additional grant funding; · the rate and degree of market acceptance of our product candidates; · developments relating to our competitors and our industry, including competing therapies; · our ability to effectively manage our anticipated growth; · our ability to attract and retain qualified employees and key personnel; · our ability to achieve cost savings and benefits from our efforts to streamline our operations and to not harm our business with such efforts; · our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act (JOBS Act); · statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and share performance; · litigation, including costs associated with prosecuting or defending pending or threatened claims and any adverse outcomes or settlements not covered by insurance; · our expected use of cash and cash equivalents and other sources of liquidity; · the future trading price of the shares of our common stock and impact of securities analysts’ reports on these prices; and · other risks and uncertainties, including those listed under the caption “Risk Factors.” The forward‑looking statements in this Quarterly Report on Form 10-Q are only predictions, and we may not actually achieve the plans, intentions or expectations included in our forward‑looking statements. We have based these forward‑looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Because forward‑looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward‑looking statements as predictions of future events. The events and circumstances reflected in our forward‑looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward‑looking statements. 4 Table of Contents Kadmon Holdings, Inc. Consolidated balance sheets