Apollo Endosurgery (APEN) 10-Q 9 May 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	9-May-14
Document and Entity Information	'	'
Entity Registrant Name	'LPATH, INC	'
Entity Central Index Key	'0001251769	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Current Reporting Status	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	15,588,848
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q1	'

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current Assets:	'	'
Cash and cash equivalents	$16,111,256	$11,851,639
Accounts receivable	2,704,293	1,310,037
Prepaid expenses and other current assets	445,569	292,477
Total current assets	19,261,118	13,454,153
Equipment and leasehold improvements, net	279,507	211,362
Patents, net	2,012,563	1,926,868
Deposits and other assets	77,350	77,350
Total assets	21,630,538	15,669,733
Current Liabilities:	'	'
Accounts payable	2,564,683	2,025,799
Accrued compensation	331,661	693,022
Accrued expenses	595,912	291,358
Deferred contract revenue, current portion	374,000	498,000
Deferred rent, short-term portion	26,406	24,008
Total current liabilities	3,892,662	3,532,187
Deferred rent, long-term portion	62,172	69,373
Warrants	2,300,000	2,100,000
Total liabilities	6,254,834	5,701,560
Stockholders' Equity:	'	'
Common stock - $.001 par value; 100,000,000 shares authorized; 15,309,183 and 13,387,914 issued and outstanding at March 31, 2014 and December 31, 2013, respectively	15,309	13,388
Additional paid-in capital	68,139,142	59,432,943
Accumulated deficit	-52,778,747	-49,478,158
Total stockholders' equity	15,375,704	9,968,173
Total liabilities and stockholders' equity	$21,630,538	$15,669,733

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Condensed Consolidated Balance Sheets	'	'
Common stock, par value (in dollars per share)	$0.00	$0.00
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	15,309,183	13,387,914
Common stock, shares outstanding	15,309,183	13,387,914

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Operations (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:	'	'
Grant and royalty revenue	$116,099	$224,220
Research and development revenue under collaborative agreements	1,603,277	887,590
Total revenues	1,719,376	1,111,810
Expenses:	'	'
Research and development	3,663,008	1,584,684
General and administrative	1,156,957	1,003,855
Total expenses	4,819,965	2,588,539
Loss from operations	-3,100,589	-1,476,729
Other income (expense), net	'	27,022
Change in fair value of warrants	-200,000	200,000
Total other income (expense), net	-200,000	227,022
Net loss	($3,300,589)	($1,249,707)
Basic and diluted net loss per share (in dollars per share)	($0.23)	($0.09)
Weighted-average shares outstanding used in the calculation (in shares)	14,511,710	13,401,821

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:	'	'
Net loss	($3,300,589)	($1,249,707)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Stock-based compensation expense	317,801	193,886
Change in fair value of warrants	200,000	-200,000
Depreciation and amortization	35,916	42,034
Changes in operating assets and liabilities:	'	'
Accounts receivable	-1,394,256	5,734
Prepaid expenses and other current assets	-153,092	90,808
Accounts payable and accrued expenses	501,966	-1,964,821
Deferred contract revenue	-124,000	-887,590
Other	-4,803	-29,497
Net cash used in operating activities	-3,921,057	-3,999,153
Cash flows from investing activities:	'	'
Equipment and leasehold improvement expenditures	-91,248	-11,050
Patent expenditures	-98,508	-73,972
Net cash used in investing activities	-189,756	-85,022
Cash flows from financing activities:	'	'
Proceeds from sale of common stock and warrants, net	8,440,807	'
Proceeds from options and warrants exercised	250	1,450
Payment for restricted stock tax liability on net settlement	-70,627	'
Net cash provided by financing activities	8,370,430	1,450
Net (decrease) increase in cash and cash equivalents	4,259,617	-4,082,725
Cash and cash equivalents at beginning of period	11,851,639	24,621,083
Cash and cash equivalents at end of period	16,111,256	20,538,358
Cash paid during the year for:	'	'
Income taxes	1,600	1,600
Supplemental disclosure of non-cash investing and financing activities:	'	'
Change in fair value of warrant liability	$200,000	($200,000)

BASIS_FOR_PRESENTATION

BASIS FOR PRESENTATION	3 Months Ended
	Mar. 31, 2014
BASIS FOR PRESENTATION	'
BASIS FOR PRESENTATION	'
	Note 1 — BASIS FOR PRESENTATION
	The unaudited condensed consolidated balance sheet of Lpath, Inc. (“Lpath” or “the company”) as of December 31, 2013 was derived from our audited financial statements, but does not contain all disclosures required by accounting principles generally accepted in the United States of America, and certain information and disclosures normally included have been condensed or omitted pursuant to the rules and regulations of the SEC.
	In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the three-month period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or for any future financial period. For further information, refer to the consolidated financial statements and notes included in the company’s annual report on Form 10-K for the year ended December 31, 2013.
	The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

RESEARCH_AND_DEVELOPMENT_COLLA

RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS	3 Months Ended
	Mar. 31, 2014
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS	'
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS	'
	Note 2 — RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS
	In 2010, Lpath entered into an agreement providing Pfizer Inc. (“Pfizer”) with an exclusive option for a worldwide license to develop and commercialize iSONEP™ (“the Pfizer Agreement”), Lpath’s lead monoclonal antibody product candidate that is being evaluated for the treatment of wet age-related macular degeneration (“wet AMD”) and other ocular disorders.
	Following completion of the clinical trial, Pfizer has the right to exercise its option for worldwide rights to iSONEP for an undisclosed option fee and, if Pfizer exercises its option, Lpath will be eligible to receive development, regulatory, and commercial milestone payments that could total up to $497.5 million.  In addition, Lpath will be entitled to receive tiered double-digit royalties based on sales of iSONEP. As part of the agreement, Lpath has granted to Pfizer a time-limited right of first refusal for ASONEP™, Lpath’s product candidate that is being evaluated for the treatment of cancer.
	The company recognized revenue under the Pfizer Agreement as follows:
		Three Months Ended
		March 31,
		2014		2013
	Cost reimbursements	$	1,479,277	$	—
	Amortization of development fees	124,000		887,590
		$	1,603,277	$	887,590

SHAREBASED_PAYMENTS

SHARE-BASED PAYMENTS	3 Months Ended
	Mar. 31, 2014
SHARE-BASED PAYMENTS	'
SHARE-BASED PAYMENTS	'
	Note 3 — SHARE-BASED PAYMENTS
	The company recognized share-based compensation expense as follows:
		Three Months Ended
		March 31,
		2014		2013
	Research and development	$	114,652	$	40,410
	General and administrative	203,149		153,476
	Total share-based compensation expense	$	317,801	$	193,886
	As of March 31, 2014, there was a total of $2.8 million in unrecognized compensation expense related to unvested stock-based compensation under the Lpath, Inc. Amended and Restated 2005 Equity Incentive Plan. That expense is expected to be recognized over a weighted-average period of 3.1 years. Because of its net operating loss carryforwards, the company did not realize any tax benefits for the tax deductions from share-based payment arrangements during the three months ended March 31, 2014 and 2013.

FAIR_VALUE_MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
	Mar. 31, 2014
FAIR VALUE MEASUREMENTS	'
FAIR VALUE MEASUREMENTS	'
	Note 4 — FAIR VALUE MEASUREMENTS
	Lpath has issued warrants, of which some are classified as equity and some as liabilities.  The warrants issued in March 2012 (and expiring in March 2017) provide that in the event of a fundamental transaction, as defined by the warrant agreement, the company may, under certain circumstances, be obligated to settle the March 2012 warrants for cash equal to the value of the warrants determined in accordance with the warrant agreement.  The company’s recurring fair value measurements at March 31, 2014 were as follows:
		Fair Value as of		Significant
		March 31, 2014		Unobservable
				Inputs
				(Level 3)
	Liabilities:
	Warrants expiring March 2017	$	2,300,000	$	2,300,000
	The company determined the fair value of the warrant liability for certain warrants, as applicable, using a Black-Scholes model. The model considered amounts and timing of future possible equity and warrant issuances and volatility of the company’s stock price equal to 100%, as specified in the underlying warrants.
	Recurring Level 3 Activity, Reconciliation, and Basis for Valuation
	The table below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3).
	Fair value measurements using significant unobservable inputs (Level 3):
	Liabilities:
	Warrant liability as of January 1, 2014	$	2,100,000
	Change in fair value of warrants	200,000
	Warrant liability as of March 31, 2014	$	2,300,000
	The company determined the fair value of the warrant liability for certain warrants, as applicable, using a Black-Scholes model. The model considered amounts and timing of future possible equity and warrant issuances and historical volatility of the company’s stock price.
	The terms of all outstanding warrants permit the company, upon exercise of the warrants, to settle the contract by the delivery of unregistered shares. During the three months ended March 31, 2014, 7,143 warrants expired.  As of March 31, 2014, there were 923,956 warrants outstanding with a weighted-average exercise price of $7.60 per share expiring through March 2017.

COMMON_STOCK

COMMON STOCK	3 Months Ended
	Mar. 31, 2014
COMMON STOCK	'
COMMON STOCK	'
	Note 5 — COMMON STOCK
	On March 18, 2014, Lpath cancelled its at-the-market issuance sales agreement with MLV & Co. LLC (“MLV”) and JMP Securities LLC and entered into a new at-the-market issuance sales agreement with MLV (the “MLV Agreement”). Pursuant to the MLV Agreement, the company may issue and sell shares of its common stock having an aggregate offering price of up to $23 million from time to time, at the company’s option, through MLV. Sales of common stock through MLV, if any, will be made by any method that is deemed an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers’ transactions at market prices, in block transactions or as otherwise agreed by the Lpath and MLV. Subject to the terms and conditions of the MLV Agreement, MLV will use commercially reasonable efforts to sell the common stock based upon the company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). Lpath is not obligated to make any sales of its common stock under the MLV Agreement. Any shares sold will be sold pursuant to the company’s effective shelf registration statement on Form S-3. The company will pay MLV a commission of up to 3.0% of the gross proceeds. The MLV Agreement will terminate upon the earlier of the sale of all common stock subject to the MLV Agreement or termination of the MLV Agreement by the company or MLV. During the quarter ended March 31, 2014, the company sold 1,865,488 shares at sales prices ranging from $4.30 to $5.16 per share, resulting in $8,441,000 in net proceeds. From April 1, 2014 to May 9, 2014, the company sold 268,840 shares at sales prices ranging from $4.25 to $4.76 per share, resulting in $1.2 million in net proceeds.

EARNINGS_PER_SHARE

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2014
EARNINGS PER SHARE	'
EARNINGS PER SHARE	'
	Note 6 — EARNINGS PER SHARE
	Anti-dilutive common stock equivalents were excluded from the calculation of diluted loss per share as follows:
		Three Months Ended
		March 31,
		2014	2013
	Stock options	807,901	364,463
	Warrants	923,956	1,261,874
	Restricted stock units	654,784	545,552
	Total	2,386,641	2,171,889

RESEARCH_AND_DEVELOPMENT_COLLA1

RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS (Tables)	3 Months Ended
	Mar. 31, 2014
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS	'
Schedule of recognized revenue under the Pfizer agreement	'
		Three Months Ended
		March 31,
		2014		2013
	Cost reimbursements	$	1,479,277	$	—
	Amortization of development fees	124,000		887,590
		$	1,603,277	$	887,590

SHAREBASED_PAYMENTS_Tables

SHARE-BASED PAYMENTS (Tables)	3 Months Ended
	Mar. 31, 2014
SHARE-BASED PAYMENTS	'
Schedule of recognized share-based compensation expense	'
		Three Months Ended
		March 31,
		2014		2013
	Research and development	$	114,652	$	40,410
	General and administrative	203,149		153,476
	Total share-based compensation expense	$	317,801	$	193,886

FAIR_VALUE_MEASUREMENTS_Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Mar. 31, 2014
FAIR VALUE MEASUREMENTS	'
Schedule of recurring fair value measurements	'
		Fair Value as of			Significant
		March 31, 2014			Unobservable
					Inputs
					(Level 3)
	Liabilities:
	Warrants expiring March 2017		$	2,300,000		$	2,300,000
Schedule of fair value measurements using significant unobservable inputs (Level 3)	'
	Liabilities:
	Warrant liability as of January 1, 2014		$	2,100,000
	Change in fair value of warrants		200,000
	Warrant liability as of March 31, 2014		$	2,300,000

EARNINGS_PER_SHARE_Tables

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2014
EARNINGS PER SHARE	'
Schedule of anti-dilutive common stock equivalents that were excluded from the calculation of diluted loss per share	'
		Three Months Ended
		March 31,
		2014	2013
	Stock options	807,901	364,463
	Warrants	923,956	1,261,874
	Restricted stock units	654,784	545,552
	Total	2,386,641	2,171,889

RESEARCH_AND_DEVELOPMENT_COLLA2

RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Research and development collaborative agreements	'	'
Total recognized revenue	$1,603,277	$887,590
Collaborative agreements | Pfizer Inc.	'	'
Research and development collaborative agreements	'	'
Cost reimbursements	1,479,277	'
Amortization of development fees	124,000	887,590
Total recognized revenue	1,603,277	887,590
Collaborative agreements | Pfizer Inc. | Maximum	'	'
Research and development collaborative agreements	'	'
Eligible milestone payment to be received, on exercise of option for worldwide rights to iSONEP by counterparty	$497,500,000	'

SHAREBASED_PAYMENTS_Details

SHARE-BASED PAYMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based compensation expense	'	'
Total share-based compensation expense	$317,801	$193,886
Unrecognized compensation expense related to unvested stock-based compensation	2,800,000	'
Weighted average period to recognize unrecognized stock-based compensation expense	'3 years 1 month 6 days	'
Research and development	'	'
Share-based compensation expense	'	'
Total share-based compensation expense	114,652	40,410
General and administrative	'	'
Share-based compensation expense	'	'
Total share-based compensation expense	$203,149	$153,476

FAIR_VALUE_MEASUREMENTS_Detail

FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Liabilities:	'
Volatility of stock price as specified in the underlying warrants (as a percent)	100.00%
Recurring | Fair Value | Warrants | March 2017	'
Liabilities:	'
Fair value of liabilities	2,300,000
Recurring | Significant Unobservable Inputs (Level 3) | Warrants | March 2017	'
Liabilities:	'
Fair value of liabilities	2,300,000

FAIR_VALUE_MEASUREMENTS_Detail1

FAIR VALUE MEASUREMENTS (Details 2) (Warrant liability, USD $)	3 Months Ended
	Mar. 31, 2014
Warrant liability	'
Liabilities:	'
Balance at the beginning of the period	$2,100,000
Change in fair value of warrants	200,000
Balance at the end of the period	$2,300,000
Number of warrants expired (in shares)	7,143
Number of warrants outstanding (in shares)	923,956
Weighted-average exercise price of warrant outstanding (in dollars per share)	$7.60

COMMON_STOCK_Details

COMMON STOCK (Details) (USD $)	3 Months Ended	1 Months Ended					0 Months Ended	3 Months Ended
	Mar. 31, 2014	9-May-14	Mar. 31, 2014	9-May-14	Mar. 31, 2014	9-May-14	Mar. 18, 2014	Mar. 31, 2014
		Subsequent events	Minimum	Minimum	Maximum	Maximum	MLV	MLV
				Subsequent events		Subsequent events	Maximum	Maximum
Aggregate offering price	'	'	'	'	'	'	$23,000,000	'
Commission payable as a percentage of gross proceeds	'	'	'	'	'	'	'	3.00%
Common stock, shares issued	1,865,488	268,840	'	'	'	'	'	'
Sales price (in dollars per share)	'	'	$4.30	$4.25	$5.16	$4.76	'	'
Gross proceeds	$8,441,000	$1,200,000	'	'	'	'	'	'

EARNINGS_PER_SHARE_Details

EARNINGS PER SHARE (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share	'	'
Anti-dilutive common stock equivalents (in shares)	2,386,641	2,171,889
Stock options	'	'
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share	'	'
Anti-dilutive common stock equivalents (in shares)	807,901	364,463
Warrants	'	'
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share	'	'
Anti-dilutive common stock equivalents (in shares)	923,956	1,261,874
Restricted stock units	'	'
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share	'	'
Anti-dilutive common stock equivalents (in shares)	654,784	545,552