Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 08, 2020 | Mar. 31, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Sonnet BioTherapeutics Holdings, Inc. | ||
Entity Central Index Key | 0001106838 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 5,713,094 | ||
Entity Common Stock, Shares Outstanding | 17,175,729 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Current assets: | ||
Cash | $ 7,349,903 | $ 35,653 |
Prepaid expenses and other current assets | 287,738 | 4,101 |
Total current assets | 7,637,641 | 39,754 |
Property and equipment, net | 67,889 | |
Operating lease right-of-use asset | 205,919 | |
Other assets | 82,959 | |
Total assets | 7,994,408 | 39,754 |
Current liabilities: | ||
Related-party notes | 21,184 | 217,380 |
Accounts payable | 2,057,559 | 1,842,996 |
Accrued expenses | 2,063,678 | 824,865 |
Operating lease liability | 82,060 | |
Deferred income | 500,000 | |
Total current liabilities | 4,724,481 | 2,885,241 |
Note payable | 124,878 | |
Operating lease liability | 125,132 | |
Total liabilities | 4,974,491 | 2,885,241 |
Commitments and contingencies (note 8) | ||
Stockholders' equity (deficit): | ||
Preferred stock; $0.0001 par value: 5,000,000 shares authorized. No shares issued or outstanding | ||
Common stock; $0.0001 par value: 125,000,000 shares authorized; 14,724,105 and 5,547,643 issued and outstanding at September 30, 2020 and 2019, respectively | 1,472 | 555 |
Additional paid-in capital | 39,723,702 | 9,594,100 |
Accumulated deficit | (36,705,257) | (12,440,142) |
Total stockholders' equity (deficit) | 3,019,917 | (2,845,487) |
Total liabilities and stockholders' equity (deficit) | $ 7,994,408 | $ 39,754 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 14,724,105 | 5,547,643 |
Common stock, shares outstanding | 14,724,105 | 5,547,643 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating expenses: | ||
Research and development | $ 9,877,555 | $ 2,199,297 |
Acquired in-process research and development | 6,826,495 | |
General and administrative | 7,533,722 | 2,509,041 |
Loss from operations | (24,237,772) | (4,708,338) |
Interest income (expense) | 20,677 | (162,873) |
Foreign exchange loss | (48,020) | |
Net loss | (24,265,115) | (4,871,211) |
Deemed dividend arising from warrant amendment | (41,338,934) | |
Net loss attributable to common stockholders | $ (65,604,049) | $ (4,871,211) |
Per share information: | ||
Net loss per share, basic and diluted | $ (6.96) | $ (0.91) |
Weighted average shares outstanding, basic and diluted | 9,420,484 | 5,348,195 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Sep. 30, 2018 | $ 502 | $ 5,177,153 | $ (7,568,931) | $ (2,391,276) |
Balance, shares at Sep. 30, 2018 | 5,020,030 | |||
Sale of common stock and warrants, net of issuance costs | $ 35 | 2,766,965 | 2,767,000 | |
Sale of common stock and warrants, net of issuance costs, shares | 346,759 | |||
Conversion of convertible promissory note into common stock | $ 13 | 999,987 | 1,000,000 | |
Conversion of convertible promissory note into common stock, shares | 133,216 | |||
Issuance of common stock to settle related-party notes | $ 3 | 219,997 | 220,000 | |
Issuance of common stock to settle related-party notes, shares | 29,307 | |||
Issuance of common stock for consulting services | $ 2 | 429,998 | 430,000 | |
Issuance of common stock for consulting services, shares | 18,331 | |||
Net loss | (4,871,211) | (4,871,211) | ||
Balance at Sep. 30, 2019 | $ 555 | 9,594,100 | (12,440,142) | (2,845,487) |
Balance, shares at Sep. 30, 2019 | 5,547,643 | |||
Sale of common stock and warrants, net of issuance costs | $ 233 | 19,069,797 | 19,070,030 | |
Sale of common stock and warrants, net of issuance costs, shares | 2,338,435 | |||
Issuance of common stock to settle related-party notes | $ 1 | 199,999 | 200,000 | |
Issuance of common stock to settle related-party notes, shares | 8,526 | |||
Issuance of common stock to affect the Relief acquisition | $ 76 | 6,700,052 | 6,700,128 | |
Issuance of common stock to affect the Relief acquisition, shares | 757,933 | |||
Issuance of common stock and payment made in connection with Merger (Note 3) | $ 55 | (6,000,055) | (6,000,000) | |
Issuance of common stock and payment made in connection with Merger (Note 3), shares | 547,639 | |||
Warrant exercises | $ 552 | 9,789,754 | 9,790,306 | |
Warrant exercises, shares | 5,523,929 | |||
Share-based compensation | 370,055 | 370,055 | ||
Net loss | (24,265,115) | (24,265,115) | ||
Balance at Sep. 30, 2020 | $ 1,472 | $ 39,723,702 | $ (36,705,257) | $ 3,019,917 |
Balance, shares at Sep. 30, 2020 | 14,724,105 |
Consolidated Statements Cash Fl
Consolidated Statements Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (24,265,115) | $ (4,871,211) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Acquired in-process research and development | 6,826,495 | |
Depreciation | 8,294 | |
Amortization of operating lease right-of-use asset | 50,019 | |
Share-based compensation | 370,055 | |
Common stock issued for consulting services | 430,000 | |
Amortization of debt discount related to beneficial conversion feature | 86,233 | |
Change in operating assets and liabilities: | ||
Prepaid expenses and other current assets | (254,326) | (4,101) |
Other assets | (82,959) | |
Accounts payable | 168,806 | 1,389,567 |
Accrued expenses and other liabilities | 1,112,698 | 743,807 |
Operating lease liability | (48,746) | |
Deferred income | 500,000 | |
Net cash used in operating activities | (15,614,779) | (2,225,705) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (76,183) | |
Net cash used in investing activities | (76,183) | |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock and warrants, net of issuance costs | 19,070,030 | 2,782,000 |
Proceeds from the exercise of warrants, net of issuance costs | 9,790,306 | |
Payment to affect the Merger | (6,000,000) | |
Proceeds from the receipt of loan | 124,878 | |
Payment of principal of convertible promissory notes | (390,000) | |
Proceeds received from related-party notes | 114,539 | 338,493 |
Repayments of related-party notes | (110,735) | (474,554) |
Cash received in the Relief acquisition | 16,194 | |
Net cash provided by financing activities | 23,005,212 | 2,255,939 |
Net increase in cash | 7,314,250 | 30,234 |
Cash, beginning of year | 35,653 | 5,419 |
Cash, end of year | 7,349,903 | 35,653 |
Supplemental operating cash flow information: | ||
Cash paid for interest | 99,890 | |
Supplemental disclosure of non-cash investing and financing activities: | ||
Issuance of common stock for Relief acquisition | 6,700,128 | |
Right of use asset and liability recorded upon adoption of ASC 842 | 255,938 | |
Conversion of convertible promissory note into common stock | 1,000,000 | |
Issuance of common stock to settle related-party notes | 200,000 | 220,000 |
Common stock issuance costs in accrued expenses | $ 15,000 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | 1. Organization and description of business Description of business Sonnet BioTherapeutics, Inc. (“Sonnet”) was incorporated as a New Jersey corporation on April 6, 2015. Sonnet is a clinical stage, oncology-focused biotechnology company with a proprietary platform for innovating biologic medicines of single- or bi-specific action. Known as FHAB™ (Fully Human Albumin Binding), the technology utilizes a fully human single chain antibody fragment (scFv) that binds to and “hitch-hikes” on human serum albumin (HSA) for transport to target tissues. Sonnet’s pipeline of therapeutic compounds for oncology indications of high unmet medical need includes lead candidate, SON-080, a fully human version of low dose Interleukin-6 (IL-6) that has successfully completed Phase I clinical trials and will advance to a pilot efficacy study in patients with chemotherapy-induced peripheral neuropathy (CIPN) during 2021. Merger with Chanticleer On April 1, 2020, Sonnet completed its merger (the “Merger”) with publicly-held Chanticleer Holdings, Inc. (“Chanticleer”) in accordance with the terms of the Plan of Merger dated October 10, 2019, as amended by amendment no. 1 on February 7, 2020 (the “Merger Agreement”). Immediately prior to the Merger, Chanticleer spun-off its restaurant operations to a spin-off entity and no assets or liabilities of the restaurant business remained after the spin-off. After the Merger, Chanticleer changed its name to Sonnet Biotherapeutics Holdings, Inc. (“Sonnet Holdings” or the “Company”) and is focused on advancing Sonnet’s pipeline of oncology candidates and the strategic expansion of Sonnet’s technology platform into other human disease. Under the terms of the Merger Agreement, the Company issued shares of common stock to Sonnet’s stockholders. Sonnet Holdings assumed all outstanding and unexercised Chanticleer warrants which were converted into warrants to purchase common stock of Sonnet Holdings. In addition, Sonnet paid Chanticleer $6.0 million as a condition of close and issued warrants to the spin-off entity. For accounting purposes, Sonnet is considered the acquiring company and the Merger has been accounted for as a reverse acquisition and recapitalization with Sonnet being treated as the accounting acquirer. As such, the financial information prior to the Merger relate solely to Sonnet. Subsequent to the Merger, the consolidated financial statements relate to the consolidated entities of the Company. See Note 3 for additional discussion of the Merger. Acquisition of Relief In August 2019, the Company executed a Share Exchange Agreement with Relief Therapeutics Holdings SA (“Relief Holdings”), to acquire the outstanding shares of Relief Therapeutics SA (“Relief”), a wholly owned subsidiary of Relief Holdings, in order to further develop Relief’s asset, atexakin alfa, together with its proprietary experimental drugs. The acquisition of Relief was completed on April 1, 2020. See Note 4 for further discussion of the acquisition. Global pandemic - Covid-19 On March 10, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic. There is significant uncertainty as to the likely effects of this disease which may, among other things, materially impact the Company’s planned clinical trials. This pandemic or outbreak could result in difficulty securing clinical trial site locations, clinical research organizations (“CROs”), and/or trial monitors and other critical vendors and consultants supporting the trial. In addition, outbreaks or the perception of an outbreak near a clinical trial site location could impact the Company’s ability to enroll patients. These situations, or others associated with Covid-19, could cause delays in the Company’s clinical trial plans and could increase expected costs, all of which could have a material adverse effect on the Company’s business and its financial condition. At the current time, the Company is unable to quantify the potential effects of this pandemic on its future operations. Liquidity The Company has incurred recurring losses and negative cash flows from operations activities since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates. The Company believes its cash of $7.3 million at September 30, 2020 will fund the Company’s projected operations into March 2021. Substantial additional financing will be needed by the Company to fund its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company entered into a common stock purchase agreement with GEM Global Yield Fund LLC SCS (“GEM”) on August 6, 2019, as amended on September 25, 2019 and January 31, 2020, (the “GEM Agreement”). Pursuant to the GEM Agreement, GEM agreed to purchase up to $20.0 million (“Aggregate Limit”) of the Company’s common stock over a three-year period commencing on the date the original agreement was executed; provided that during any period when the Company’s public float is less than $75.0 million, the Aggregate Limit will instead be equal to one-third of the amount of the Company’s public float over any consecutive 12-month period. No common stock has been issued to date under the GEM Agreement. The Company plans to secure additional capital in the future through equity or debt financings, partnerships, collaborations, or other sources to carry out the Company’s planned development activities. If additional capital is not available when required, the Company may need to delay or curtail its operations until such funding is received. Various internal and external factors will affect whether and when the Company’s product candidates become approved for marketing and successful commercialization. The regulatory approval and market acceptance of the Company’s products candidates, length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the approval process will materially affect the Company’s financial condition and future operations. Operations since inception have consisted primarily of organizing the Company, securing financing, developing its technologies through performing research and development and conducting preclinical studies. The Company faces risks associated with companies whose products are in development. These risks include the need for additional financing to complete its research and development, achieving its research and development objectives, defending its intellectual property rights, recruiting and retaining skilled personnel, and dependence on key members of management. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies a. Basis of presentation and principles of consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. b. Use of estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in these consolidated financial statements include the accrual of research and development expenses. Estimates and assumptions are periodically reviewed in-light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from management’s estimates. c. Reverse stock-split On March 18, 2020 the Company’s board of directors and stockholders adopted and approved the amendment and restatement of the Company’s Certificate of Incorporation to affect a one-for-twenty-six reverse stock split of the Company’s common stock. The split took effect on April, 1, 2020. The accompanying consolidated financial statements including share and per share information have been retroactively adjusted to reflect the reverse stock-split. d. Fair value of financial instruments Management believes that the carrying amounts of the Company’s financial instruments, including accounts payable, approximate fair value due to the short-term nature of those instruments. The carrying amounts of the Company’s capital lease obligations approximate their fair value based on interest rates available on similar borrowings. Due to the related-party relationships of the Company’s debt (Note 6), it is impractical to determine the fair value of the debt. e. Property and equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset. Expenditures for repairs and maintenance that do not extend the estimated useful life or improve an asset are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of assets disposed of are removed from the accounts, and any resulting gain or loss is included in the statement of operations. f. Impairment of long-lived assets The Company reviews long-lived assets, such as property and equipment for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, than an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. There were no impairment charges recorded during the fiscal years ended September 30, 2020 and 2019. g. Research and development expense Research and development expenses include all direct and indirect costs associated with the development of the Company’s biopharmaceutical products. These expenses include personnel costs, consulting fees, and payments to third parties for research, development, and manufacturing services. These costs are charged to expense as incurred. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payment to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record a prepaid expense or accrued liability relating to these costs. Upfront milestone payments made to third parties who perform research and development services on the Company’s behalf are expensed as services are rendered. Contingent development or regulatory milestone payment are recognized upon the related resolution of such contingencies. h. Foreign currency Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the U.S. dollar are included in operations in the period in which the transaction occurs and reported within the foreign currency gain (loss) line item in the consolidated statements of operations. i. Share-based compensation The Company measures equity classified share-based awards granted to employees and nonemployees based on the estimated fair value on the date of grant and recognizes compensation expense of those awards over the requisite service period, which is the vesting period of the respective award. The Company accounts for forfeitures as they occur. For share-based awards with service-based vesting conditions, the Company recognizes compensation expense on a straight-line basis over the service period. The Company classifies share-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. j. Income taxes The Company uses the asset-and-liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return if such a position is more likely than not to be sustained. k. Net loss per share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period (and potential shares of common stock that are exercisable for little or no consideration). Included in basic weighted-average number of shares of common stock outstanding during the year ended September 30, 2020 are the Series B warrants and certain warrants issued to the spin-off entity with exercise prices of $0.0001 and $0.01 per share, respectively. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities such as common stock warrants and stock options which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding as they would be anti-dilutive: September 30, 2020 Warrants 105,812 Legacy Chanticleer warrants 20,180 Series C warrants 11,329,461 Unvested restricted stock 653,845 12,109,298 No anti-dilutive shares existed at September 30, 2019. l. Recent accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The standard was effective for the Company beginning October 1, 2019. See Note 7 for further discussion of adoption of ASU 2016-02. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurements, which changes the fair value measurement disclosure requirements of ASC 820. The goal of the ASU is to improve the effectiveness of ASC 820’s disclosure requirements. The standard is applicable to public business entities for fiscal years beginning after December 15, 2019, and interim periods within those years. The Company is currently evaluating the potential impact of the adoption of this standard on its related disclosures. |
Merger with Chanticleer
Merger with Chanticleer | 12 Months Ended |
Sep. 30, 2020 | |
Merger With Chanticleer | |
Merger with Chanticleer | 3. Merger with Chanticleer As described in Note 1, Sonnet merged with Chanticleer on April 1, 2020. The Merger was accounted for as a reverse recapitalization with Sonnet as the accounting acquirer. Chanticleer had no assets, liabilities or operations at the time of the Merger. Legacy Chanticleer shareholders were issued 547,639 shares of common stock and 20,210 warrants with exercise prices ranging from $58.50 to 1,820.00 per share. The Merger consideration paid by Sonnet to Chanticleer included $6.0 million of cash and issuance of 186,161 warrants. The Company reflected the $6.0 million cash paid to Chanticleer as a decrease to additional paid-in capital. |
Relief Acquisition
Relief Acquisition | 12 Months Ended |
Sep. 30, 2020 | |
Relief Acquisition | |
Relief Acquisition | 4. Relief Acquisition In August 2019, the Company executed a Share Exchange Agreement with Relief Holdings, in which the Company agreed to acquire the outstanding shares of Relief. The Company issued 757,933 shares of common stock upon closing of the transaction on April 1, 2020. For accounting purposes, the Company determined that the acquisition of Relief did not meet the definition of a business and was accounted for as an asset acquisition since substantially all of the fair value of the assets acquired was concentrated in a single identified intangible asset, its atexakin alfa. The acquisition consideration and assets acquired and liabilities assumed are as follows: Fair value of common stock issued: $ 6,700,128 Assets acquired: Cash $ 16,194 Prepaid expenses and other current assets 29,311 In-process research and development 6,826,495 Total assets acquired 6,872,000 Liabilities assumed: Accounts payable 45,757 Accrued expenses 126,115 Total liabilities assumed 171,872 Total net assets acquired $ 6,700,128 The Company expensed the acquired in-process research and development as of the acquisition date since further development and regulatory approval are required. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 5. Accrued expenses Accrued expenses consisted of the following: September 30, 2020 2019 Professional fees $ 902,100 $ 221,459 Compensation and benefits 642,419 166,951 Other 519,159 436,455 $ 2,063,678 $ 824,865 |
Debt
Debt | 12 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt Related-party notes During the years ended September 30, 2020 and 2019, the Company issued unsecured notes payable to various related parties resulting in cash proceeds of $0.1 million and $0.3 million, respectively. These notes are payable on demand and payments of $0.1 million and $0.5 million were made during the years ended September 30, 2020 and 2019, respectively. The interest on these notes was de minimis during each of those years. In October 2019 and December 2018, the Company issued 8,526 and 29,307 shares of common stock to settle $0.2 million and $0.2 million of related party notes, respectively. PPP Loan On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act includes a provision for a Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) and further amended by the Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”), which was enacted on June 5, 2020. In May 2020, the Company received a PPP Loan of $0.1 million. The application for these funds required the Company to certify in good faith that current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. The Company was also required to certify that the loan funds would be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments. The PPP Loan has a two-year term and bears interest at a rate of 1.0% per year. Under the terms of the CARES Act, the Company can apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness, if any, will be determined, subject to limitations, based on the use of loan proceeds for payroll costs, rent and utility costs and provided that only a portion of the use of proceeds are for non-payroll costs. The unforgiven portion of the PPP Loan may be repaid by the Company at any time prior to maturity with no prepayment penalty. While the Company believes that its use of the loan proceeds will meet the conditions for forgiveness of the PPP Loan, at this time there can be no assurance that the Company will obtain forgiveness of the loan in whole or in part. Loan recipients may elect an eight week or 24 week forgiveness period and the repayment period begins on the date which the amount of forgiveness is determined. In the event that a loan recipient has not applied for forgiveness within 10 months of the end of its covered forgiveness period, the loan recipient must begin making principal and interest payments on that date. As of September 30, 2020, the full amount of the PPP Loan is classified as a note payable within the Company’s consolidated balance sheets. |
Leases
Leases | 12 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | 7. Leases The Company adopted ASC 842 - Leases In December 2019, the Company entered a 36-month lease for office space in Princeton, New Jersey, which commenced February 1, 2020. At that time, the Company terminated its existing month-to-month leases for office space. The components of lease expense for the year ended September 30, 2020 are as follows: Lease expense Operating lease expense $ 68,108 Short-term lease expense 57,756 Total lease cost $ 125,864 At September 30, 2020, the weighted-average remaining lease term was 2.3 years and the weighted average discount rate was 12%. Cash flow information related to operating leases for the year ended September 30, 2020 is as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 66,834 Future minimum lease payments under non-cancellable leases at September 30, 2020 are as follows: Fiscal year 2021 $ 101,516 2022 103,440 2023 34,695 Total undiscounted lease payments 239,651 Less: imputed interest (32,459 ) Total lease liabilities $ 207,192 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and contingencies Legal Proceedings From time to time, the Company is a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of its business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s financial position, results of operations, or cash flows. License Agreements The Company has entered into a Discovery Collaboration Agreement (the “Collaboration Agreement”) with XOMA (US) LLC (“XOMA”), pursuant to which XOMA granted to Sonnet a non-exclusive, non-transferrable license and/or right to use certain materials, technologies and related information related to discovery, optimization and development of antibodies and related proteins and to develop and commercialize products thereunder. Sonnet is obligated to make contingent milestone payments to XOMA totaling $3.8 million on a product-by-product basis upon the achievement of certain development and approval milestones related to a product. Sonnet has also agreed to pay XOMA low single-digit royalties on net sales of products sold by Sonnet. Royalties on each product are payable on a country-by-country basis until the later of (i) a specified period of time after the first commercial sale, and (ii) the date of expiration of the last valid claim in the last-to-expire of the issued patents covered by the Collaboration Agreement. The Company has entered into a License Agreement (the “ARES License Agreement”) with Ares Trading, a wholly-owned subsidiary of Merck KGaA (“ARES”). Under the terms of the ARES License Agreement, ARES has granted the Company a sublicensable, exclusive, worldwide, royalty-bearing license on proprietary patents to research, develop, use and commercialize products using atexakin alfa (“Atexakin”), a low dose formulation of human interleukin-6 in peripheral neuropathies and vascular complications. Pursuant to the ARES License Agreement, the Company will pay ARES high single-digit royalties on net sales of products sold by the Company. Royalties are payable on a product-by-product and country-by-country basis until the later of (i) a specified period of time after the first commercial sale in such country, and (ii) the last date on which such product is covered by a valid claim in such country. Employment Agreements The Company has entered into employment contracts with its officers and certain employees that provide for severance and continuation of benefits in the event of termination of employment either by the Company without cause or by the employee for good reason, both as defined in the contract. In addition, in the event of termination of employment following a change in control, as defined, either by the Company without cause or by the employee for good reason, any unvested portion of the employee’s initial stock option grant becomes immediately vested. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity (Deficit) | 9. Stockholders’ Equity (Deficit) Common stock Prior to the Merger, the Company sold 186,075 shares of common stock and issued warrants to purchase 93,026 shares of common stock with an exercise price of $29.32 per share for net proceeds of $4.1 million. In addition, the Company issued 8,526 shares of common stock and warrants to purchase 4,262 upon conversion of outstanding promissory notes with an outstanding principal balance of $0.2 million at the time of conversion. Upon consummation of the Merger, the Company issued 547,639 common shares and 206,371 warrants to legacy Chanticleer shareholders. The warrants are to purchase shares of common stock with exercise prices ranging from $0.01 per share to $1,820 per share and a weighted average exercise price of $26.60 per share. In April 2020, the Company sold 1,699,232 shares of common stock to new investors for net proceeds of $15.0 million in a private placement. The new investors also received 3,300,066 Series A warrants with an exercise price of $5.3976 and 2,247,726 Series B warrants with an exercise price of $0.0001. An advisor for the private placement was issued 453,128 shares of common stock. The Company issued 757,933 shares to acquire the nets assets of Relief (see Note 4). Warrant Amendments and Exercise In August 2020, the Company agreed to reduce the exercise price of the Series A warrants from $5.3976 to $3.19 per share in order to induce warrant holders to exercise their warrants for cash. In addition, each warrant holder agreed not to purchase any shares of common stock, other than pursuant to exercises of the Series A warrants, until such time that no Series A warrants are held by such holder. In August 2020, the Series A warrant holders exercised all of the 3,300,066 Series A warrants resulting in net proceeds of $9.8 million. Upon exercise of the Series A warrants, the Series A holders received an aggregate of 11,329,461 Series C warrants. The Series C warrants have an exercise price of $3.19 per share and are exercisable six months from the date of issuance and will expire on October 16, 2025. In connection with the amendment to the Series A warrants, the Series B warrant agreements were modified such that they no longer provide for resets to the number of shares of common stock underlying the Series B warrants and the Series B warrant holders were issued an additional 2,284,800 Series B warrants with an exercise price of $0.0001 per warrant. In July 2020, the Series B warrant holders exercised 2,223,863 warrants resulting in proceeds of $223. As a result of the warrant amendments that occurred in August 2020, the Company recognized a deemed dividend of $41.3 million which reflects the fair value, as determined by a Black-Scholes option-pricing model, of the consideration given as an inducement for the investors to exercise the warrants. This deemed dividend is recorded in the Company’s statement of operations as an increase to the net loss attributable to common stockholders for purposes of computing net loss per share, basic and diluted. Common stock Warrants As of September 30, 2020, the following equity-classified warrants and related terms were outstanding: Warrants Outstanding Exercise Price Expiration Date Warrants 105,812 $ 29.32 October 1, 2022 - March 10, 2023 Chanticleer warrants 186,161 $ 0.01 April 1, 2025 Chanticleer warrants 20,180 $ 58.50 - $1,820 October 1, 2020 - December 17, 2028 Series B warrants 2,308,663 $ 0.0001 April 16, 2025 Series C warrants 11,329,461 $ 3.19 October 16, 2025 13,950,277 |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | 10. Share-Based Compensation In April 2020, the Company adopted the 2020 Omnibus Equity Incentive Plan (the “Plan”). The total number of shares authorized under the Plan as of September 30, 2020 was 653,846, all of which have been granted as of September 30, 2020. The Plan increases the amount of shares issuable under the Plan by four percent of the outstanding shares of common stock at each January 1, each year. The Plan permits the granting of share-based awards, including stock options, restricted stock units and awards, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the Plan. The terms of the awards are determined by the Company’s Board of Directors. Restricted Stock Units In July of 2020, 653,846 restricted stock units (“RSUs”) were granted, 50% of which vest on April 2, 2021 and the remaining 50% vest on April 2, 2022. Any unvested RSUs will be forfeited upon termination of services. The fair value of an RSU is equal to the fair market value of the Company’s common stock on the date of grant. RSU expense is amortized straight-line over the vesting period. The Company recorded share-based compensation expense associated with the RSUs in its accompanying statements of operations. Year Ended September 30, 2020 Research and development $ 105,694 General and administrative 264,361 $ 370,055 The following table summarizes RSU activity under the Plan: RSU Weighted Average Grant Date Fair Value Unvested balance at September 30, 2019 — $ — Granted 653,845 3.63 Unvested balance at September 30, 2020 653,845 $ 3.63 |
Licensing Letter of Intent
Licensing Letter of Intent | 12 Months Ended |
Sep. 30, 2020 | |
Licensing Letter Of Intent | |
Licensing Letter of Intent | 11. Licensing Letter of Intent In August 2020, the Company executed a letter of intent to negotiate an agreement to license its SON-081 and SON-080 assets, both low-dose formulations of Interleukin 6, for diabetic peripheral neuropathy and chemotherapy-induced peripheral neuropathy to New Life Therapeutics Pte. Ltd. (“New Life”) of Singapore. The licensed territory would include the Association of Southeast Asian Nations (ASEAN) countries of Singapore, Malaysia, Indonesia, Thailand, The Philippines, Cambodia, Brunei, Vietnam, Myanmar and Lao PDR. The Company received a $500,000 non-refundable payment in connection with the execution of the letter of intent from New Life, which is recorded as deferred income as of September 30, 2020 on the consolidated balance sheet. The letter of intent outlines an agreement that could provide the Company total up to $40.0 million in milestone payments and a royalty of 30% on commercial sales. The letter of intent is non-binding and there is no assurance that the Company will be able to execute a definitive agreement with New Life on the terms set forth in the letter of intent or at all. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes As of September 30, 2020, the Company has $24.5 million, $24.5 million, and $1.5 million of Federal, New Jersey, and Foreign net operating losses, respectively, that will begin to expire in 2035, 2035, and 2027, respectively. As of September 30, 2020, the Company has Federal and New Jersey research and development tax credit carryforwards of $0.7 million and $0.5 million available to reduce future tax liabilities, which will begin to expire in 2035 and 2030, respectively. Realization of the deferred tax asset is contingent on future taxable income and based upon the level of historical losses, management has concluded that the deferred tax asset does not meet the more-likely-than-not threshold for realizability. Accordingly, a full valuation allowance continues to be recorded against the Company’s deferred tax assets as of September 30, 2020 and 2019. The valuation allowance increased by $4.9 million and $1.4 million during the years ended September 30, 2020 and 2019, respectively. Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carryforwards may be subject to annual limitations, against taxable income in future periods, which could substantially limit the eventual utilization of such carryforwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficial ownership and therefore no determination has been made whether the net operating loss carryforward is subject to any Internal Revenue Code Section 382 limitation. To the extent there is a limitation, there would be a reduction in the deferred tax assets with an offsetting reduction in the valuation allowance. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more-likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties accrued on any unrecognized tax benefits within the provision for income taxes in its consolidated statements of operations. No unrecognized tax benefits have been recorded. The tax effects of the temporary differences that gave rise to deferred taxes were as follows: As of September 30, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 7,108,066 $ 3,441,745 Research and development credit carryforward 1,263,451 294,707 Share-based compensation 104,023 — Lease liability 58,242 — Accruals and other 207,612 — Gross deferred tax assets 8,741,394 3,736,452 Less: valuation allowance (8,683,047 ) (3,736,452 ) 58,347 — Deferred tax liability Property and equipment (463 ) — Right-of-use asset (57,884 ) — Net deferred tax assets $ — $ — The Company recorded no income tax expense or benefit for the years ended September 30, 2020 and 2019. A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements is as follows: Year Ended September 30, 2020 2019 U.S. federal statutory rate (21.0 )% (21.0 )% State taxes, net of federal benefit (4.0 )% (7.2 )% Change in valuation allowance 20.4 % 28.6 % Research and development credit (4.0 )% — % Permanent differences 7.7 % — % Foreign tax rate differential 0.5 % — % Other 0.4 % (0.4 )% Effective income tax rate — % — % |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 13. Related-Party Transactions In fiscal 2020 and 2019, the Company entered into various debt agreements with several officers of the Company. The terms of the debt and related components are further described in more detail in Note 6. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events The Company has evaluated subsequent events from the balance sheet date through December 17, 2020, the date at which the consolidated financial statements were available to be issued, and there are no other items requiring disclosure except the following: Series B Warrant Exercises Through December 17, 2020, an aggregate of 2,266,290 Series B warrants were net shares settled, resulting in the issuance of 2,266,202 shares of common stock. As of December 17, 2020, 42,373 Series B warrants remain outstanding. Through December 17, 2020, all of the Chanticleer warrants to purchase 186,161 shares of common stock with an exercise price of $0.01 per share were net share settled, resulting in the issuance of 185,422 shares of common stock. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation and principles of consolidation | a. Basis of presentation and principles of consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | b. Use of estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in these consolidated financial statements include the accrual of research and development expenses. Estimates and assumptions are periodically reviewed in-light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from management’s estimates. |
Reverse stock-split | c. Reverse stock-split On March 18, 2020 the Company’s board of directors and stockholders adopted and approved the amendment and restatement of the Company’s Certificate of Incorporation to affect a one-for-twenty-six reverse stock split of the Company’s common stock. The split took effect on April, 1, 2020. The accompanying consolidated financial statements including share and per share information have been retroactively adjusted to reflect the reverse stock-split. |
Fair value of financial instruments | d. Fair value of financial instruments Management believes that the carrying amounts of the Company’s financial instruments, including accounts payable, approximate fair value due to the short-term nature of those instruments. The carrying amounts of the Company’s capital lease obligations approximate their fair value based on interest rates available on similar borrowings. Due to the related-party relationships of the Company’s debt (Note 6), it is impractical to determine the fair value of the debt. |
Property and Equipment | e. Property and equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset. Expenditures for repairs and maintenance that do not extend the estimated useful life or improve an asset are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of assets disposed of are removed from the accounts, and any resulting gain or loss is included in the statement of operations. |
Impairment of long-lived assets | f. Impairment of long-lived assets The Company reviews long-lived assets, such as property and equipment for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, than an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. There were no impairment charges recorded during the fiscal years ended September 30, 2020 and 2019. |
Research and development expense | g. Research and development expense Research and development expenses include all direct and indirect costs associated with the development of the Company’s biopharmaceutical products. These expenses include personnel costs, consulting fees, and payments to third parties for research, development, and manufacturing services. These costs are charged to expense as incurred. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payment to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record a prepaid expense or accrued liability relating to these costs. Upfront milestone payments made to third parties who perform research and development services on the Company’s behalf are expensed as services are rendered. Contingent development or regulatory milestone payment are recognized upon the related resolution of such contingencies. |
Foreign currency | h. Foreign currency Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the U.S. dollar are included in operations in the period in which the transaction occurs and reported within the foreign currency gain (loss) line item in the consolidated statements of operations. |
Share-based compensation | i. Share-based compensation The Company measures equity classified share-based awards granted to employees and nonemployees based on the estimated fair value on the date of grant and recognizes compensation expense of those awards over the requisite service period, which is the vesting period of the respective award. The Company accounts for forfeitures as they occur. For share-based awards with service-based vesting conditions, the Company recognizes compensation expense on a straight-line basis over the service period. The Company classifies share-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. |
Income taxes | j. Income taxes The Company uses the asset-and-liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return if such a position is more likely than not to be sustained. |
Net Loss Per Share | k. Net loss per share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period (and potential shares of common stock that are exercisable for little or no consideration). Included in basic weighted-average number of shares of common stock outstanding during the year ended September 30, 2020 are the Series B warrants and certain warrants issued to the spin-off entity with exercise prices of $0.0001 and $0.01 per share, respectively. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities such as common stock warrants and stock options which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding as they would be anti-dilutive: September 30, 2020 Warrants 105,812 Legacy Chanticleer warrants 20,180 Series C warrants 11,329,461 Unvested restricted stock 653,845 12,109,298 No anti-dilutive shares existed at September 30, 2019. |
Recent Accounting Pronouncements | l. Recent accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The standard was effective for the Company beginning October 1, 2019. See Note 7 for further discussion of adoption of ASU 2016-02. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurements, which changes the fair value measurement disclosure requirements of ASC 820. The goal of the ASU is to improve the effectiveness of ASC 820’s disclosure requirements. The standard is applicable to public business entities for fiscal years beginning after December 15, 2019, and interim periods within those years. The Company is currently evaluating the potential impact of the adoption of this standard on its related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Potentially Dilutive Securities | The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding as they would be anti-dilutive: September 30, 2020 Warrants 105,812 Legacy Chanticleer warrants 20,180 Series C warrants 11,329,461 Unvested restricted stock 653,845 12,109,298 |
Relief Acquisition (Tables)
Relief Acquisition (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Relief Acquisition | |
Schedule of Assets and Liability Acquired | The acquisition consideration and assets acquired and liabilities assumed are as follows: Fair value of common stock issued: $ 6,700,128 Assets acquired: Cash $ 16,194 Prepaid expenses and other current assets 29,311 In-process research and development 6,826,495 Total assets acquired 6,872,000 Liabilities assumed: Accounts payable 45,757 Accrued expenses 126,115 Total liabilities assumed 171,872 Total net assets acquired $ 6,700,128 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following: September 30, 2020 2019 Professional fees $ 902,100 $ 221,459 Compensation and benefits 642,419 166,951 Other 519,159 436,455 $ 2,063,678 $ 824,865 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Lease Expenses | The components of lease expense for the year ended September 30, 2020 are as follows: Lease expense Operating lease expense $ 68,108 Short-term lease expense 57,756 Total lease cost $ 125,864 |
Schedule of Operating Lease | Cash flow information related to operating leases for the year ended September 30, 2020 is as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 66,834 |
Schedule of Future Minimum Lease Payments | Future minimum lease payments under non-cancellable leases at September 30, 2020 are as follows: Fiscal year 2021 $ 101,516 2022 103,440 2023 34,695 Total undiscounted lease payments 239,651 Less: imputed interest (32,459 ) Total lease liabilities $ 207,192 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Warrants Outstanding | As of September 30, 2020, the following equity-classified warrants and related terms were outstanding: Warrants Outstanding Exercise Price Expiration Date Warrants 105,812 $ 29.32 October 1, 2022 - March 10, 2023 Chanticleer warrants 186,161 $ 0.01 April 1, 2025 Chanticleer warrants 20,180 $ 58.50 - $1,820 October 1, 2020 - December 17, 2028 Series B warrants 2,308,663 $ 0.0001 April 16, 2025 Series C warrants 11,329,461 $ 3.19 October 16, 2025 13,950,277 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation Expense | The Company recorded share-based compensation expense associated with the RSUs in its accompanying statements of operations. Year Ended September 30, 2020 Research and development $ 105,694 General and administrative 264,361 $ 370,055 |
Schedule of Restricted Stock Units Activity | The following table summarizes RSU activity under the Plan: RSU Weighted Average Grant Date Fair Value Unvested balance at September 30, 2019 — $ — Granted 653,845 3.63 Unvested balance at September 30, 2020 653,845 $ 3.63 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of the temporary differences that gave rise to deferred taxes were as follows: As of September 30, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 7,108,066 $ 3,441,745 Research and development credit carryforward 1,263,451 294,707 Share-based compensation 104,023 — Lease liability 58,242 — Accruals and other 207,612 — Gross deferred tax assets 8,741,394 3,736,452 Less: valuation allowance (8,683,047 ) (3,736,452 ) 58,347 — Deferred tax liability Property and equipment (463 ) — Right-of-use asset (57,884 ) — Net deferred tax assets $ — $ — |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements is as follows: Year Ended September 30, 2020 2019 U.S. federal statutory rate (21.0 )% (21.0 )% State taxes, net of federal benefit (4.0 )% (7.2 )% Change in valuation allowance 20.4 % 28.6 % Research and development credit (4.0 )% — % Permanent differences 7.7 % — % Foreign tax rate differential 0.5 % — % Other 0.4 % (0.4 )% Effective income tax rate — % — % |
Organization and Description _2
Organization and Description of Business (Details Narrative) - USD ($) | Aug. 06, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Cash | $ 7,349,903 | $ 35,653 | |
GEM Global Yield Fund LLC [Member] | |||
Aggregate Limit description | provided that during any period when the Company's public float is less than $75.0 million, the Aggregate Limit will instead be equal to one-third of the amount of the Company's public float over any consecutive 12-month period. | ||
GEM Global Yield Fund LLC [Member] | Maximum [Member] | |||
Cash received from issuance of common stock | $ 20,000,000 | ||
Merger Agreement [Member] | Spin-off Entity [Member] | |||
Warrants outstanding | $ 6,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Mar. 18, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Reverse stock split description | one-for-twenty-six reverse stock split | ||
Impairment charges | |||
Series B Warrant [Member] | |||
Basic weighted-average number of shares exercise price | $ 0.0001 | ||
Certain Warrants [Member] | |||
Basic weighted-average number of shares exercise price | $ 0.01 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) | 12 Months Ended |
Sep. 30, 2020shares | |
Total anti-dilutive weighted average shares | 12,109,298 |
Warrants [Member] | |
Total anti-dilutive weighted average shares | 105,812 |
Legacy Chanticleer Warrants [Member] | |
Total anti-dilutive weighted average shares | 20,180 |
Series C Warrants [Member] | |
Total anti-dilutive weighted average shares | 11,329,461 |
Unvested Restricted Stock [Member] | |
Total anti-dilutive weighted average shares | 653,845 |
Merger with Chanticleer (Detail
Merger with Chanticleer (Details Narrative) - USD ($) | Apr. 02, 2020 | Aug. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Number of common stock issued | 757,933 | |||
Warrants issued during the period | 20,210 | 93,026 | ||
Warrants exercise price | $ 29.32 | |||
Number of common stock issued, value | $ 19,070,030 | $ 2,767,000 | ||
Issuance of warrants | 186,161 | |||
Minimum [Member] | ||||
Warrants exercise price | $ 58.50 | |||
Maximum [Member] | ||||
Warrants exercise price | $ 1,820 | |||
Spin-off Entity [Member] | ||||
Decrease in additional paid-in capital | $ 6,000,000 | |||
Common Stock [Member] | ||||
Number of common stock issued | 547,639 | 2,338,435 | 346,759 | |
Number of common stock issued, value | $ 6,000,000 | $ 233 | $ 35 |
Relief Acquisition (Details Nar
Relief Acquisition (Details Narrative) | 1 Months Ended |
Aug. 31, 2019shares | |
Relief Acquisition | |
Number of common stock issued | 757,933 |
Relief Acquisition - Schedule o
Relief Acquisition - Schedule of Assets and Liability Acquired (Details) | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Relief Acquisition | |
Fair value of common stock issued: | $ 6,700,128 |
Cash | 16,194 |
Prepaid expenses and other current assets | 29,311 |
In-process research and development | 6,826,495 |
Total assets acquired | 6,872,000 |
Accounts payable | 45,757 |
Accrued expenses | 126,115 |
Total liabilities assumed | 171,872 |
Total net assets acquired | $ 6,700,128 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Payables and Accruals [Abstract] | ||
Professional fees | $ 902,100 | $ 221,459 |
Compensation and benefits | 642,419 | 166,951 |
Other | 519,159 | 436,455 |
Accrued Expenses | $ 2,063,678 | $ 824,865 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
May 31, 2020 | Oct. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | |
Proceeds received from related-party notes | $ 114,539 | $ 338,493 | |||
Repayments of related-party notes | 110,735 | 474,554 | |||
Issuance of common stock to settle related-party notes, shares | 8,526 | 29,307 | |||
Issuance of common stock to settle related-party notes | $ 200,000 | $ 220,000 | $ 200,000 | $ 220,000 | |
Paycheck Protection Program [Member] | |||||
Proceeds from Loans Payable | $ 100,000 | ||||
Debt instrument term | 2 years | ||||
Debt instrument, interest rate | 1.00% |
Leases (Details Narrative)
Leases (Details Narrative) | Sep. 30, 2020 |
Leases [Abstract] | |
Weighted-average remaining lease term | 2 years 3 months 19 days |
Weighted average discount rate | 12.00% |
Leases - Schedule of Lease Expe
Leases - Schedule of Lease Expenses (Details) | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Leases [Abstract] | |
Operating lease expense | $ 68,108 |
Short-term lease expense | 57,756 |
Total lease cost | $ 125,864 |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease (Details) | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Leases [Abstract] | |
Operating cash flows from operating leases | $ 66,834 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments (Details) | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 101,516 |
2022 | 103,440 |
2023 | 34,695 |
Total undiscounted lease payments | 239,651 |
Less: imputed interest | (32,459) |
Total lease liabilities | $ 207,192 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Discovery Collaboration Agreements [Member] | XOMA [Member] | |
Milestone payments | $ 3,800,000 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) (Details Narrative) - USD ($) | Apr. 02, 2020 | Aug. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Aug. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Stockholder's Equity [Line Items] | |||||||
Sale of stock, shares | 186,075 | ||||||
Purchase of warrants | 20,210 | 93,026 | |||||
Warrants exercise price | $ 29.32 | ||||||
Net proceeds of warrants | $ 4,100,000 | ||||||
Debt conversion of common stock shares | 8,526 | ||||||
Warrants to purchase conversion of promissory notes | 4,262 | ||||||
Debt conversion of common stock, value | $ 200,000 | ||||||
Number of shares issued | 757,933 | ||||||
Proceeds from exercise of warrants | $ 9,790,306 | ||||||
Deemed dividend | $ 41,300,000 | ||||||
Minimum [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | $ 58.50 | ||||||
Maximum [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | $ 1,820 | ||||||
Chanticleer Shareholders [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Purchase of warrants | 206,371 | ||||||
Weighted average exercise price per share | $ 26.60 | ||||||
Chanticleer Shareholders [Member] | Minimum [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | 0.01 | ||||||
Chanticleer Shareholders [Member] | Maximum [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | $ 1,820 | ||||||
Common Stock [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Issuance of common stock and payment made in connection with Merger, shares | 547,639 | ||||||
Stock issued during the period, acquisition | 757,933 | ||||||
Number of shares issued | 547,639 | 2,338,435 | 346,759 | ||||
Common Stock [Member] | Investors [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Sale of stock, shares | 1,699,232 | ||||||
Sale of stock | $ 15,000,000 | ||||||
Common Stock [Member] | Chanticleer Shareholders [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Issuance of common stock and payment made in connection with Merger, shares | 547,639 | ||||||
Series A Warrant [Member] | Investors [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Sale of stock, shares | 3,300,066 | ||||||
Warrants exercise price | $ 5.3976 | ||||||
Series B Warrant [Member] | Private Placement [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Number of shares issued | 453,128 | ||||||
Series B Warrant [Member] | Investors [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Sale of stock, shares | 2,247,726 | ||||||
Warrants exercise price | $ 0.0001 | ||||||
Series A Warrant [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Purchase of warrants | 11,329,461 | ||||||
Warrants exercised | 3,300,066 | ||||||
Proceeds from exercise of warrants | $ 9,800,000 | ||||||
Series A Warrant [Member] | Minimum [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | $ 3.19 | ||||||
Series A Warrant [Member] | Maximum [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | 5.3976 | ||||||
Series C Warrant [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Warrants exercise price | $ 3.19 | ||||||
Warrants expiration date | Oct. 16, 2025 | ||||||
Series B Warrant [Member] | |||||||
Stockholder's Equity [Line Items] | |||||||
Purchase of warrants | 2,284,800 | ||||||
Warrants exercise price | $ 0.0001 | ||||||
Warrants exercised | 2,223,863 | ||||||
Proceeds from exercise of warrants | $ 223 |
Stockholders' Equity (Deficit_3
Stockholders' Equity (Deficit) - Schedule of Warrants Outstanding (Details) | 12 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Warrant One [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants, outstanding | shares | 105,812 |
Exercise price | $ / shares | $ 29.32 |
Warrant One [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration date | Oct. 1, 2022 |
Warrant One [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration date | Mar. 10, 2023 |
Warrants [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants, outstanding | shares | 13,950,277 |
Chanticleer Warrants Issued As Consideration [Member] | Warrants [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants, outstanding | shares | 186,161 |
Exercise price | $ / shares | $ 0.01 |
Expiration date | Apr. 1, 2025 |
Chanticleer Warrants [Member] | Warrants [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants, outstanding | shares | 20,180 |
Exercise price, lower limit | $ / shares | $ 58.50 |
Exercise price, upper limit | $ / shares | $ 1,820 |
Chanticleer Warrants [Member] | Warrants [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration date | Oct. 1, 2020 |
Chanticleer Warrants [Member] | Warrants [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration date | Dec. 17, 2028 |
Series B Warrants [Member] | Warrants [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants, outstanding | shares | 2,308,663 |
Exercise price | $ / shares | $ 0.0001 |
Expiration date | Apr. 16, 2025 |
Series C Warrants [Member] | Warrants [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants, outstanding | shares | 11,329,461 |
Exercise price | $ / shares | $ 3.19 |
Expiration date | Oct. 16, 2025 |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) - 2020 Omnibus Equity Incentive Plan [Member] - shares | Jul. 02, 2020 | Apr. 30, 2020 |
Total number of shares authorized | 653,846 | |
Restricted Stock Units (RSUs) [Member] | ||
Stock issued during the period, restricted stock units | 653,846 | |
Restricted stock units and vesting rights, description | In July of 2020, 653,846 restricted stock units ("RSUs") were granted, 50% of which vest on April 2, 2021 and the remaining 50% vest on April 2, 2022. |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Share-based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based compensation | $ 370,055 | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based compensation | 370,055 | |
Restricted Stock Units (RSUs) [Member] | Research and Development [Member] | ||
Share-based compensation | 105,694 | |
Restricted Stock Units (RSUs) [Member] | General and Administrative [Member] | ||
Share-based compensation | $ 264,361 |
Share-Based Compensation - Sc_2
Share-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] | 12 Months Ended |
Sep. 30, 2020$ / sharesshares | |
RSU Unvested beginning balance | shares | |
RSU Granted | shares | 653,845 |
RSU Unvested ending balance | shares | 653,845 |
Weighted Average Grant Date Fair Value Unvested beginning balance | $ / shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 3.63 |
Weighted Average Grant Date Fair Value Unvested ending balance | $ / shares | $ 3.63 |
Licensing Letter of Intent (Det
Licensing Letter of Intent (Details Narrative) | Aug. 04, 2020USD ($) |
Licensing Letter Of Intent | |
Payment of non refundable upon execution | $ 500,000 |
Payment for milestone | $ 40,000,000 |
Royalty percentage | 30.00% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Research and development tax credit carryforwards | $ 1,263,451 | $ 294,707 |
Valuation allowance | 4,900,000 | 1,400,000 |
Income tax expense (benefit) | ||
Federal [Member] | ||
Operating loss carryovers | $ 24,500,000 | |
Operating loss carryforwards expiration period | 2035 | |
Research and development tax credit carryforwards | $ 700,000 | |
Tax credit carryforwards for reduce future tax liabilities period, description | 2035 | |
New Jersey [Member] | ||
Operating loss carryovers | $ 24,500,000 | |
Operating loss carryforwards expiration period | 2035 | |
Research and development tax credit carryforwards | $ 500,000 | |
Tax credit carryforwards for reduce future tax liabilities period, description | 2030 | |
Foreign [Member] | ||
Operating loss carryovers | $ 15,000,000 | |
Operating loss carryforwards expiration period | 2027 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 7,108,066 | $ 3,441,745 |
Research and development credit carryforward | 1,263,451 | 294,707 |
Share-based compensation | 104,023 | |
Lease liability | 58,242 | |
Accruals and other | 207,612 | |
Gross deferred tax assets | 8,741,394 | 3,736,452 |
Less: valuation allowance | (8,683,047) | (3,736,452) |
Net deferred tax assets | 58,347 | |
Property and equipment | (463) | |
Right-of-use asset | (57,884) | |
Net deferred tax assets |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory rate | (21.00%) | (21.00%) |
State taxes, net of federal benefit | (4.00%) | (7.20%) |
Change in valuation allowance | 20.40% | 28.60% |
Research and development credit | (4.00%) | 0.00% |
Permanent differences | 7.70% | 0.00% |
Foreign tax rate differential | 0.50% | 0.00% |
Other | 0.40% | (0.40%) |
Effective income tax rate | 0.00% | 0.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - $ / shares | 1 Months Ended | 3 Months Ended | ||
Aug. 31, 2019 | Dec. 17, 2020 | Sep. 30, 2020 | Apr. 02, 2020 | |
Number of common stock issued | 757,933 | |||
Warrants outstanding | 93,026 | 20,210 | ||
Warrants exercise price | $ 29.32 | |||
Subsequent Event [Member] | Series B Warrants [Member] | ||||
Number of warrants shares to be settled | 2,266,290 | |||
Number of common stock issued | 2,266,202 | |||
Warrants outstanding | 42,373 | |||
Subsequent Event [Member] | Chanticleer Warrants [Member] | ||||
Number of common stock issued | 185,422 | |||
Warrants to purchase common stock | 186,161 | |||
Warrants exercise price | $ 0.01 |