Business Overview, Basis of Presentation and Liquidity | 6 Months Ended |
Jun. 30, 2014 |
Business Overview, Basis of Presentation and Liquidity | ' |
Business Overview, Basis of Presentation and Liquidity | ' |
1. Business Overview, Basis of Presentation and Liquidity |
|
Business Overview |
|
Trovagene, Inc. (“Trovagene” or the “Company”) is focused on developing and commercializing its precision cancer monitoring technology, which can inform oncologists and guide treatment decisions by determining a tumor’s mutational status and enabling oncologists to track therapeutic response and resistance over time. |
|
The Company is in the process of expanding the body of clinical evidence supporting its urine-based cell-free DNA mutation tracking platform through collaborations with major cancer treatment centers and integrated healthcare networks. This year, Trovagene expects that the benefits of its precision cancer monitoring technology will become more apparent in terms of its clinical utility and impact on patient outcomes. The Company’s intellectual property estate protecting its technology includes methods of extracting, purifying, preparing, and detecting cell-free DNA and RNA mutations in both blood and urine. |
|
Basis of Presentation |
|
The accompanying unaudited condensed consolidated financial statements of Trovagene, which include its wholly owned subsidiaries Xenomics, Inc., a California corporation, Xenomics Europa Ltd, (an inactive subsidiary formed in the United Kingdom and liquidated) and Etherogen, Inc., a Delaware corporation, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated. Certain items in the comparable prior period’s financial statements have been reclassified to conform to the current period’s presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements as of December 31, 2013 and 2012 and for each of the three years ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2014. The accompanying condensed consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2014, and for all periods presented herein, have been made. The results of operations for the periods ended June 30, 2014 and 2013 are not necessarily indicative of the operating results for the full year. |
|
In June 2014, the Financial Accounting Standards Board (the FASB) issued an accounting standards update that removes the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to: (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2014, with an option for early adoption. The Company elected early adoption, and does not believe the adoption of the standard had a material impact on our financial position, results of operations or related financial statement disclosures. |
|
Liquidity |
|
Trovagene’s condensed consolidated financial statements as of June 30, 2014 have been prepared under the assumption that Trovagene will continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to generate additional revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Based on current plans the Company will be required to raise additional capital within the next twenty-four months to complete the development and commercialization of current product candidates and to continue to fund operations at its current projected cash expenditure levels. |
|
Cash used in operating activities was $5,452,145 and $3,364,625, for the six months ended June 30, 2014 and 2013, respectively. During the six months ended June 30, 2014 and 2013, the Company incurred a net loss of $4,266,887 and $6,380,787, respectively. |
|
To date, Trovagene’s sources of cash have been primarily related to financing activities, including the sale of debt and equity securities, debt borrowings and proceeds from exercise of warrants and options. During the six months ended June 30, 2014, cash provided by financing activities was $14,422,759 and resulted from debt borrowings, while in the same period of the prior year, $1,207,272 was provided by debt borrowings and the exercise of warrants. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that the Company can raise additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct its business. |
|
If the Company is unable to raise additional capital when required or on acceptable terms, it may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of its product candidates. The Company may also be required to: |
|
| · | | Seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; and |
|
| · | | Relinquish licenses or otherwise dispose of rights to technologies, product candidates or products that the Company would otherwise seek to develop or commercialize themselves, on unfavorable terms. |
|
The Company has approximately $33.6 million of cash and cash equivalents at July 31, 2014. |
|