Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 11, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | LPATH, INC | ||
Entity Central Index Key | 1251769 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $58,339,000 | ||
Entity Common Stock, Shares Outstanding | 19,321,256 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ||
Cash and cash equivalents | $17,282,325 | $11,851,639 |
Accounts receivable | 727,178 | 1,310,037 |
Prepaid expenses and other current assets | 413,260 | 292,477 |
Total current assets | 18,422,763 | 13,454,153 |
Equipment and leasehold improvements, net | 221,148 | 211,362 |
Patents, net | 2,236,909 | 1,926,868 |
Deposits and other assets | 77,350 | 77,350 |
Total assets | 20,958,170 | 15,669,733 |
Current Liabilities: | ||
Accounts payable | 2,865,165 | 2,025,799 |
Accrued compensation | 848,583 | 693,022 |
Accrued expenses | 383,623 | 291,358 |
Deferred contract revenue | 125,000 | 498,000 |
Deferred rent, short-term portion | 33,744 | 24,008 |
Total current liabilities | 4,256,115 | 3,532,187 |
Deferred rent, long-term portion | 35,629 | 69,373 |
Warrants | 850,000 | 2,100,000 |
Total liabilities | 5,141,744 | 5,701,560 |
Stockholders' Equity: | ||
Common stock - $.001 par value; 100,000,000 authorized; 19,224,708 and 13,387,914 shares issued and outstanding at December 31, 2014 and 2013, respectively | 19,225 | 13,388 |
Additional paid-in capital | 81,830,410 | 59,432,943 |
Accumulated deficit | -66,033,209 | -49,478,158 |
Total stockholders' equity | 15,816,426 | 9,968,173 |
Total liabilities and stockholders' equity | $20,958,170 | $15,669,733 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 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 | 19,224,708 | 13,387,914 |
Common stock, shares outstanding | 19,224,708 | 13,387,914 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues: | ||
Grant and royalty revenue | $631,840 | $1,484,039 |
Research and development revenue under collaborative agreements | 4,448,623 | 6,502,723 |
Total revenues | 5,080,463 | 7,986,762 |
Expenses: | ||
Research and development | 18,126,701 | 11,343,448 |
General and administrative | 4,758,831 | 4,234,613 |
Total expenses | 22,885,532 | 15,578,061 |
Loss from operations | -17,805,069 | -7,591,299 |
Other income (expense), net | 18 | 26,608 |
Change in fair value of warrants | 1,250,000 | 1,000,000 |
Total other income (expense), net | 1,250,018 | 1,026,608 |
Net loss | ($16,555,051) | ($6,564,691) |
Basic and diluted net loss per share (in dollars per share) | ($1) | ($0.49) |
Weighted-average shares outstanding used in the calculation (in shares) | 16,555,654 | 13,438,542 |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Stockholders' Equity (USD $) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2012 | $13,099 | $57,845,088 | ($42,913,467) | $14,944,720 |
Balance (in shares) at Dec. 31, 2012 | 13,099,319 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Common stock issued for cash, net of issuance costs | 214 | 802,381 | 802,595 | |
Common stock issued for cash, net of issuance costs (in shares) | 213,700 | |||
Stock options exercised | 31 | 15,809 | 15,840 | |
Stock options exercised (in shares) | 31,197 | |||
Stock-based compensation | 44 | 769,665 | 769,709 | |
Stock-based compensation (in shares) | 43,698 | |||
Net loss | -6,564,691 | -6,564,691 | ||
Balance at Dec. 31, 2013 | 13,388 | 59,432,943 | -49,478,158 | 9,968,173 |
Balance (in shares) at Dec. 31, 2013 | 13,387,914 | 13,387,914 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Common stock issued for cash, net of issuance costs | 5,767 | 21,231,675 | 21,237,442 | |
Common stock issued for cash, net of issuance costs (in shares) | 5,766,875 | |||
Stock options exercised | 1 | 249 | 250 | |
Stock options exercised (in shares) | 715 | |||
Stock-based compensation | 69 | 1,165,543 | 1,165,612 | |
Stock-based compensation (in shares) | 69,204 | |||
Net loss | -16,555,051 | -16,555,051 | ||
Balance at Dec. 31, 2014 | $19,225 | $81,830,410 | ($66,033,209) | $15,816,426 |
Balance (in shares) at Dec. 31, 2014 | 19,224,708 | 19,224,708 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($16,555,051) | ($6,564,691) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 1,236,274 | 837,275 |
Change in fair value of warrants | -1,250,000 | -1,000,000 |
Depreciation and amortization | 216,088 | 196,224 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 582,859 | -1,076,243 |
Prepaid expenses and other current assets | -120,783 | 15,430 |
Accounts payable and accrued expenses | 1,101,210 | -179,362 |
Deferred contract revenue | -373,000 | -5,336,623 |
Other | -24,008 | -41,157 |
Net cash used in operating activities | -15,186,411 | -13,149,147 |
Cash flows from investing activities: | ||
Equipment and leasehold improvement expenditures | -105,611 | -44,669 |
Patent expenditures | -430,304 | -346,386 |
Net cash used in investing activities | -535,915 | -391,055 |
Cash flows from financing activities: | ||
Proceeds from sale of common stock and warrants, net | 21,237,442 | 802,595 |
Proceeds from options and warrants exercised | 250 | 15,840 |
Payment for restricted stock tax liability on net settlement | -84,680 | -47,677 |
Net cash provided by financing activities | 21,153,012 | 770,758 |
Net increase (decrease) in cash and cash equivalents | 5,430,686 | -12,769,444 |
Cash and cash equivalents at beginning of period | 11,851,639 | 24,621,083 |
Cash and cash equivalents at end of period | 17,282,325 | 11,851,639 |
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 | ($1,250,000) | ($1,000,000) |
THE_COMPANY_AND_A_SUMMARY_OF_I
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | ||||||
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | ||||||
Note 1—THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | ||||||
Organization and Business | ||||||
Lpath, Inc. (“Lpath,” “we,” or “the company”) is a biotechnology company focused on the discovery and development of lipidomic-based therapeutic antibodies, an emerging field of medical science that targets bioactive signaling lipids to treat a wide range of human diseases. We have three product candidates that are currently in clinical development, and one in pre-clinical evaluation. | ||||||
On July 17, 2014, Lpath changed its state of incorporation from the State of Nevada to the State of Delaware (the “Reincorporation”) pursuant to a plan of conversion, dated July 17, 2014 (the “Plan of Conversion”). The Reincorporation was accomplished by the filing of (i) articles of conversion with the Secretary of State of the State of Nevada, and (ii) a certificate of conversion and a certificate of incorporation with the Secretary of State of the State of Delaware. Pursuant to the Plan of Conversion, Lpath also adopted new bylaws. The Reincorporation did not affect any of the company’s material contracts with any third parties, and the company’s rights and obligations under such material contractual arrangements continue to be rights and obligations of the company after the Reincorporation. The Reincorporation did not result in any change in headquarters, business, jobs, management, location of any of the offices or facilities, number of employees, assets, liabilities or net worth (other than as a result of the costs incident to the Reincorporation) of Lpath. | ||||||
Basis of Presentation | ||||||
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of Lpath, Inc. and its wholly-owned subsidiary, Lpath Therapeutics Inc. All significant intercompany balances and transactions have been eliminated in consolidation. | ||||||
Estimates | ||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from those estimates. | ||||||
Cash and Cash Equivalents | ||||||
Cash and cash equivalents consist of cash deposits, money market deposits, and certificates of deposit. | ||||||
Concentration of Credit Risk | ||||||
Financial instruments that potentially subject the company to a significant concentration of credit risk consist of cash and cash equivalents. The company maintains its cash balances with one major commercial bank in non-interest bearing accounts. Accounts at FDIC-insured institutions are insured by the FDIC up to $250,000. | ||||||
The company invests its excess cash in money market mutual funds and in certificates of deposit of federally insured financial institutions. The company has established guidelines relative to diversification of its cash investments and their maturities that are intended to secure safety and liquidity. To date, the company has not experienced any impairment losses on its cash equivalents. The company has not experienced any losses on its deposits of cash and cash equivalents, short-term and long-term investments. | ||||||
The company’s accounts receivable are derived from entities located in the United States. The company performs ongoing credit evaluation of its debtors, does not require collateral, and maintains allowances for potential credit losses on customer accounts when deemed necessary. To date, there have been no such losses and the company has not recorded an allowance for doubtful accounts. | ||||||
Equipment and Leasehold Improvements | ||||||
Equipment and leasehold improvements are recorded at cost. Equipment depreciation is computed using the straight-line method over the estimated useful asset lives, which range from three to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remainder of the lease term. Repairs and maintenance are charged to expense as incurred. | ||||||
Patents | ||||||
Legal and filing costs directly associated with obtaining patents are capitalized. Upon issuance of a patent, amortization is computed using the straight-line method over the estimated remaining useful life of the patent. | ||||||
Long-lived Assets | ||||||
The company accounts for the impairment and disposition of long-lived assets for events or changes in circumstances which indicate that their carrying value may not be recoverable. The company recorded charges for impairments of patents totaling $61,314 and $68,309 in 2014 and 2013, respectively. | ||||||
Deferred Rent | ||||||
Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement is recorded as deferred rent. Lease incentives, including tenant improvement allowances, are also recorded as deferred rent and amortized on a straight-line basis over the lease term. | ||||||
Stock-based Compensation Expense | ||||||
Compensation expense is measured based on the fair value of the award at the grant date, including estimated forfeitures, and is adjusted to reflect actual forfeitures and the outcomes of certain conditions. Compensation issued to non-employees is remeasured quarterly and income or expense is recognized during their vesting terms. | ||||||
Revenue Recognition | ||||||
Lpath has and may in the future enter into collaborations where we receive non-refundable up-front payments. Generally, these payments secure licenses to Lpath drug candidates. Non-refundable payments are recognized as revenue when the company has a contractual right to receive such payment, the contract price is fixed or determinable, the collection of the resulting receivable is reasonably assured, and the company has no further performance obligations under the license agreement. Multiple-element arrangements, such as license and development arrangements, are analyzed to determine whether the deliverables, which often include a license together with performance obligations such as research and development responsibilities and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. The company recognizes up-front license payments as revenue upon delivery of the license only if the license has stand-alone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations would then be accounted for separately as performed. If the license is considered to either (i) not have stand-alone value or (ii) have stand-alone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting, and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed. | ||||||
If the company is involved in a steering committee as part of a multiple-element arrangement that is accounted for as a single unit of accounting, the company assesses whether its involvement constitutes a performance obligation or a right to participate. Steering committee services that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the company expects to complete its aggregate performance obligations. | ||||||
When the company receives reimbursement for research costs under collaborative agreements, such reimbursements are recognized as revenue as the underlying costs are incurred. | ||||||
Whenever the company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue will be recognized using either a relative performance or straight-line method. The company recognizes revenue using the relative performance method provided that the company can reasonably estimate the level of effort required to complete its performance obligations under an arrangement and such performance obligations are provided on a best-efforts basis. Revenue recognized is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the relative performance method, as of each reporting period. | ||||||
If the company cannot reasonably estimate the level of effort required to complete its performance obligations under an arrangement, the performance obligations are provided on a best-efforts basis and the company can reasonably estimate when the performance obligation ceases or the remaining obligations become inconsequential and perfunctory, then the total payments under the arrangement, excluding royalties and payments contingent upon achievement of substantive milestones, would be recognized as revenue on a straight-line basis over the period the company expects to complete its performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line basis, as of the period ending date. | ||||||
If the company cannot reasonably estimate when its performance obligation either ceases or becomes inconsequential and perfunctory, then revenue is deferred until the company can reasonably estimate when the performance obligation ceases or becomes inconsequential. Revenue is then recognized over the remaining estimated period of performance. | ||||||
Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the company is expected to complete its performance obligations under an arrangement. | ||||||
Collaboration agreements may also contain substantive milestone payments. Substantive milestone payments are considered to be performance bonuses that are recognized upon achievement of the milestone only if all of the following conditions are met: | ||||||
· | the milestone payments are non-refundable; | |||||
· | achievement of the milestone involves a degree of risk and was not reasonably assured at the inception of the arrangement; | |||||
· | substantive company effort is involved in achieving the milestone; | |||||
· | the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with achievement of the milestone; and | |||||
· | a reasonable amount of time passes between the up-front license payment and the first milestone payment as well as between each subsequent milestone payment. | |||||
Determination as to whether a payment meets the aforementioned conditions involves management’s judgment. If any of these conditions are not met, the resulting payment would not be considered a substantive milestone and, therefore, the resulting payment would be considered part of the consideration for the single unit of accounting and would be recognized as revenue, as such performance obligations are performed under either the relative performance or straight-line methods, as applicable, and in accordance with these policies as described above. | ||||||
Grant Revenue. Lpath recognizes grant revenue as the related research expenses are incurred, up to contractual limits. | ||||||
Royalty Revenue. Lpath recognizes royalty revenue from licensed products when earned in accordance with the terms of the license agreements. The licensee’s net sales figures used for calculating royalties include deductions for costs of unsaleable returns, cash discounts, freight, postage, and insurance. | ||||||
Research and Development | ||||||
Research and development costs are charged to expense when incurred. | ||||||
Employee Benefit Plan | ||||||
The company has a 401(k) defined contribution plan that provides benefits for most employees. An employee is eligible to participate in this plan after one month of service. The plan provides for full vesting of benefits over five years. Company contributions to the plan are made at the discretion of the Board of Directors and aggregated $108,534 and $118,383 in 2014 and 2013, respectively. | ||||||
Income Taxes | ||||||
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. | ||||||
A net deferred tax asset related primarily to federal and state net operating loss and research and development credit carryforwards has been fully reserved due to uncertainties regarding Lpath’s ability to realize these tax benefits in future periods. Consequently, no income tax benefit has been recorded for the years ended December 31, 2014 and 2013. | ||||||
Lpath periodically evaluates its tax positions to determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities. Lpath has not incurred any interest or penalties as of December 31, 2014 with respect to income tax matters. Lpath does not expect that there will be unrecognized tax benefits of a significant nature that will increase or decrease within 12 months of the reporting date. | ||||||
Comprehensive Income (Loss) | ||||||
Comprehensive income (loss) is comprised of net loss and certain changes in equity that are excluded from net loss. At December 31, 2014 and 2013, Lpath had no reportable differences between net loss and comprehensive loss. | ||||||
Per Share Data | ||||||
Basic net income (loss) per common share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common and common dilutive equivalent shares, such as stock options, restricted stock units, restricted stock awards, warrants, and convertible securities outstanding during the period. | ||||||
Anti-dilutive common stock equivalents were excluded from the calculation of diluted income (loss) per share as follows: | ||||||
Years Ended | ||||||
December 31, | ||||||
2014 | 2013 | |||||
Stock options | 740,954 | 334,981 | ||||
Warrants | 4,587,359 | 931,099 | ||||
Restricted stock units | 641,834 | 721,788 | ||||
Total | 5,970,147 | 1,987,868 | ||||
RESEARCH_AND_DEVELOPMENT_COLLA
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS | ||||||||
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS | ||||||||
Note 2—RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT | ||||||||
In 2010, Lpath entered into an agreement providing Pfizer Inc. with an exclusive option for a worldwide license to develop and commercialize iSONEP™, 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. As a result of a clinical hold and the requirement to manufacture new drug substance during 2012, the projected costs to complete the iSONEP trials increased significantly and Pfizer requested the Company to consider potential alternatives to reduce the increased costs of the iSONEP trials. On December 5, 2012, the Company and Pfizer amended the agreement to, among other things, reflect the parties’ agreement to discontinue the PEDigree trial and to focus on the Nexus trial. The parties modified the protocol for the Nexus trial to include certain wet AMD patients with PED in the Nexus trial. In addition, the Company can elect to conduct the PEDigree trial at any time at its cost. Under the terms of the amended agreement, the parties will continue to pursue and share the cost of the iSONEP trials, including any costs associated with discontinuing the PEDigree trial. In October 2013, Lpath announced that it had received notice from Pfizer that Pfizer is currently seeking to divest certain ophthalmology research and development assets, including Pfizer’s exclusive option under the Pfizer Agreement. Lpath presented offers to Pfizer to reacquire these rights. However, in December 2013, Pfizer informed Lpath that its offers were not competitive with other offers. Acquisition of Pfizer’s rights and obligations under the terms of the Pfizer Agreement by a third party would not affect the terms of the Pfizer Agreement, as the existing rights and obligations currently held by Pfizer will be assumed by the third party or remain with Pfizer based on the terms of the agreement between Pfizer and the third party. Since December 2013, Pfizer has maintained its position that it is continuing a process to divest certain of its ophthalmology research and development assets, including its rights and obligations under the Pfizer Agreement. Nevertheless, Lpath believes that Pfizer may now be waiting until they receive the results of the Nexus trial before completing or stopping its process, given that Lpath is closer to the completion of the Nexus trial.Under the terms of the agreement, as amended, Pfizer provided Lpath with an up-front option payment of $14 million and agreed to share the cost of the planned clinical trials, including any costs associated with discontinuing the PEDigree trial. Pfizer paid the up-front payment in January 2011. Following completion of the Nexus study, 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, as amended, 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. Lpath recognized revenues as follows: | ||||||||
Years Ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Cost reimbursements | $ | 4,075,623 | $ | 1,106,005 | ||||
Amortization of development fees | 373,000 | 5,336,622 | ||||||
Other | — | 60,096 | ||||||
$ | 4,448,623 | $ | 6,502,723 | |||||
COMPOSITION_OF_CERTAIN_FINANCI
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | ||||||||
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | ||||||||
Note 3—COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Equipment and leasehold improvements: | ||||||||
Office furniture and fixtures | $ | 9,435 | $ | 9,435 | ||||
Laboratory equipment | 593,027 | 520,160 | ||||||
Computer equipment and software | 142,118 | 152,884 | ||||||
Leasehold improvements | 24,902 | 24,902 | ||||||
769,482 | 707,381 | |||||||
Accumulated depreciation | (548,334 | ) | (496,019 | ) | ||||
Equipment, net | $ | 221,148 | $ | 211,362 | ||||
Patents: | ||||||||
Patents | $ | 2,467,547 | $ | 2,100,983 | ||||
Accumulated amortization | (230,638 | ) | (174,115 | ) | ||||
Patents, net | $ | 2,236,909 | $ | 1,926,868 | ||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
FAIR VALUE MEASUREMENTS | |||||
FAIR VALUE MEASUREMENTS | |||||
Note 4—FAIR VALUE MEASUREMENTS | |||||
The company measures fair value in accordance with the applicable accounting standards in the FASB Codification. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: | |||||
· | Level 1—unadjusted quoted prices in active markets for identical assets or liabilities that the company has the ability to access as of the measurement date. | ||||
· | Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability, or indirectly observable through corroboration with observable market data. | ||||
· | Level 3—unobservable inputs for the asset or liability are only used when there is little, if any, market activity for the asset or liability at the measurement date. | ||||
This hierarchy requires the company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. | |||||
Recurring Fair Value Estimates | |||||
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 fair value and significant unobservable inputs (level 3) of the March 2012 warrants were $850,000 as of December 31, 2014. | |||||
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, 2013 | $ | 3,100,000 | |||
Change in fair value of warrants | (1,000,000 | ) | |||
Warrant liability as of December 31, 2013 | 2,100,000 | ||||
Change in fair value of warrants | (1,250,000 | ) | |||
Warrant liability as of December 31, 2014 | $ | 850,000 | |||
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. | |||||
RESEARCH_AND_LICENSE_AGREEMENT
RESEARCH AND LICENSE AGREEMENTS | 12 Months Ended |
Dec. 31, 2014 | |
RESEARCH AND LICENSE AGREEMENTS | |
RESEARCH AND LICENSE AGREEMENTS | |
Note 5—RESEARCH AND LICENSE AGREEMENTS | |
In August 2006, Lpath and Lonza Biologics, PLC (“Lonza”) entered into two agreements, a License Agreement and a Research Evaluation Agreement. Both agreements grant Lpath the use of certain proprietary technology to assist in the development of monoclonal antibodies. Under the terms of the License Agreement an annual license fee of approximately £300,000 (approximately $467,000 at December 31, 2014) may accrue when Lpath utilizes the Lonza technology in the manufacture of drug substance to be used in clinical trials. The License Agreement further provides that payment of this license fee will be deferred until Lpath’s drug candidate utilizing that technology begins Phase 2 clinical trials. No annual license fees were due to Lonza in 2014 and 2013. | |
In August 2005, Lpath entered into a collaboration agreement (the “AERES Agreement”) with AERES Biomedical Limited (“AERES”) to “humanize” the company’s Sphingomab monoclonal antibody. Humanization under this agreement with AERES involves utilizing proprietary processes owned by AERES for the purpose of modifying Sphingomab antibodies originally contained in mice for potential human acceptance in a clinical trial. The humanized version of Sphingomab that was produced from the collaboration with AERES is called Sonepcizumab. In 2014, AERES’ rights and obligations pursuant to the AERES Agreement with Lpath were transferred to Medical Research Council Technology (“MRCT”) by means of a Deed of Novation, which obligates MRCT to perform and be bound by the terms of the AERES Agreement. No amounts were paid to AERES or MRCT during 2014 and 2013. Lpath could owe MRCT certain additional contingent amounts when drug candidates based on Sonepcizumab pass through the levels of the FDA drug review and approval process. MRCT will be entitled to a royalty, not to exceed 4%, on any revenues generated by the ultimate commercialization of any drug candidate based on Sonepcizumab. | |
In 2007, we entered into a collaboration agreement (the “DataMabs Agreement”) with DataMabs LLP (“DataMabs”) to assist us in humanizing the Lpathomab monoclonal antibody. The work performed by DataMabs was successfully completed in 2007, and we completed the humanization project in early 2008. In 2012, DataMabs’ rights and obligations pursuant to the DataMabs Agreement with Lpath were transferred to MRCT by means of a Deed of Novation, which obligates MRCT to perform and be bound by the terms of the DataMabs Agreement. No amounts were paid to MRCT during 2014 and 2013. As a result of submitting the IND for Lpathomab to the FDA in January 2015, pursuant to the terms of the DataMabs Agreement, Lpath will be obligated to pay MRCT a milestone payment of $37,500. We could owe certain additional contingent amounts to MRCT when and if Lpathomab passes through the various levels of the FDA drug-candidate-review and approval processes. MRCT will be entitled to a low single-digit royalty on any revenues generated by the ultimate commercialization of Lpathomab. | |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
Note 6—STOCKHOLDERS’ EQUITY | ||||||||||||
Common Stock | ||||||||||||
In August 2013, the company entered into an at-the-market issuance sales agreement (the “Sales Agreement”) with MLV & Co. LLC (“MLV”) and JMP Securities LLC (“JMP” together with MLV, the “Sales Agents”), pursuant to which the company was able to issue and sell shares of its common stock having an aggregate offering price of up to $20 million from time to time, at the company’s option, through the Sales Agents. Sales of common stock through the Sales Agents, if any, were to 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 company and the Sales Agents. Subject to the terms and conditions of the Sales Agreement, the Sales Agents was obligated to 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). The company was not obligated to make any sales of its common stock under the Sales Agreement. Any shares sold were sold pursuant to the company’s effective shelf registration statement on Form S-3. The company paid the Sales Agents a commission of up to 3.5% of the gross proceeds. In 2013, the company sold 213,700 shares at sales prices ranging from $4.25 to $5.13 per share, resulting in $803,000 in net proceeds. | ||||||||||||
In March 2014, the company terminated the August 2013 Sales Agreement and entered into an at-the-market issuance sales agreement with MLV & Co. (the “MLV Agreement”). Pursuant to the MLV Agreement, the company may from time to time, at the company’s option, issue and, through MLV, sell shares of its common stock having an aggregate offering price of up to $23 million (subject to limitations set by the SEC if the aggregate market-value of the company’s common stock held by non-affiliates remains below $75 million, which limitations reduce the amount that we may offer and sell during any 12-month period to a maximum of one-third of the market value of the common stock held by our non-affiliate stockholders) 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 year ended December 31, 2014, the company sold 2,161,833 shares at sales prices ranging from $3.50 to $5.16 per share, resulting in $9,730,000 in net proceeds. | ||||||||||||
In September 2014, Lpath sold 3,605,042 registered shares of common stock and warrants to purchase 3,605,042 unregistered shares of common stock in a direct offering at a purchase price of $3.475 per share-and-warrant-share combination. The warrants have an exercise price of $3.36 per underlying share, are immediately exercisable, and terminate on the five-year anniversary of issuance. Each warrant may be exercised using a cashless exercise procedure if the resale of the underlying shares are not covered by an effective registration statement. Net proceeds of this offering totaled $11,500,000 after deducting placement agent fees and other expenses of the offering. Maxim Group LLC (“Maxim”) acted as the exclusive placement agent for the offering. Maxim received a placement agent fee of $751,651 and an unregistered warrant to purchase 54,076 unregistered shares of common stock (the “Maxim Warrant”) as well as the reimbursement of fees and expenses up to $60,000. The Maxim Warrant has an exercise price of $3.36 per share, is immediately exercisable, and will terminate on August 23, 2018. | ||||||||||||
As part of the transaction, the company has agreed not to offer any variable-rate securities until October 23, 2015, provided, however, that the company can continue to make sales under its existing at-the-market vehicle after. | ||||||||||||
In October 2014, pursuant to the terms of a registration rights agreement the company entered into in connection with the direct offering discussed above, the company registered for resale 3,605,042 shares of common stock issuable upon exercise of the warrants issued in the direct offering discussed above. The shares were registered on Form S-3 and the registration statement was declared effective by the Securities and Exchange Commission on October 23, 2014. | ||||||||||||
Preferred Stock | ||||||||||||
Lpath is authorized to issue up to 15,000,000 shares of preferred stock, with a par value of $0.001 per share. As of December 31, 2014 and 2013, there were no preferred stock shares issued or outstanding. | ||||||||||||
Equity Incentive Plan | ||||||||||||
In November 2005, the company adopted the Lpath, Inc. 2005 Stock Option and Stock Purchase Plan, which permitted stock option grants to employees, outside consultants, and directors. In October 2007, Lpath’s stockholders approved the amendment of this plan which was concurrently renamed the Lpath, Inc. Amended and Restated 2005 Equity Incentive Plan (the “Plan”). There are 2,500,000 shares of common stock authorized for grant under the Plan. The Plan allows for grants of incentive stock options with exercise prices of at least 100% of the fair market value of Lpath’s common stock, nonqualified options with exercise prices of at least 85% of the fair market value of the company’s common stock, restricted stock, and restricted stock units. All stock options granted to date have a ten-year life and vest over zero to five years. Restricted stock units granted have a five-year life and vest over zero to four years, or upon the achievement of specified clinical trial milestones. As of December 31, 2014, a total of 527,073 shares of common stock were available for future grant under the Plan. | ||||||||||||
The following table presents stock-based compensation as included in the company’s consolidated statements of operations: | ||||||||||||
2014 | 2013 | |||||||||||
Stock-based compensation expense by type of award: | ||||||||||||
Stock options | $ | 507,271 | $ | — | ||||||||
Restricted stock units | 729,003 | 837,275 | ||||||||||
Total stock-based compensation expense | $ | 1,236,274 | $ | 837,275 | ||||||||
Effect of stock-based compensation expense on | ||||||||||||
Research and development | 466,517 | 314,185 | ||||||||||
General and administrative | 769,757 | 523,090 | ||||||||||
Total stock-based compensation expense | $ | 1,236,274 | 837,275 | |||||||||
Fair value is determined at the date of grant for employee options and restricted stock units, and at the date at which the grantee’s performance is complete for non-employee options and restricted stock units. Compensation cost is recognized over the vesting period based on the fair value of the options and restricted stock units. | ||||||||||||
Because of the company’s net operating losses for tax purposes, it did not realize any tax benefits for the tax deductions from share-based payment arrangements during the years ended December 31, 2014 and 2013. | ||||||||||||
Stock Options | ||||||||||||
As of December 31, 2014, there was $1,841,000 of total unrecognized compensation expense, net of estimated forfeitures, related to unvested options granted under the Plan. That expense is expected to be recognized over a weighted-average period of 3.1 years. | ||||||||||||
The company uses the Black-Scholes valuation model to estimate the fair value of stock options at the grant date. The Black-Scholes valuation model uses the option exercise price as well as estimates and assumptions related to the expected price volatility of the company’s stock, the rate of return on risk-free investments, the expected period during which the options will be outstanding, and the expected dividend yield for the company’s stock to estimate the fair value of a stock option on the grant date. | ||||||||||||
The weighted-average valuation assumptions were determined as follows: | ||||||||||||
· | Expected stock price volatility: The estimated expected volatility is based on a weighted-average calculation of a peer group and the company’s historical volatility. | |||||||||||
· | Risk-free interest rate: The company bases the risk-free interest rate on the interest rate payable on U.S. Treasury debt securities. | |||||||||||
· | Expected term of options: The expected term of options granted is derived using assumed exercise rates based on historical exercise patterns and represents the period of time that options granted are expected to be outstanding. | |||||||||||
· | Expected annual dividends: The estimate for annual dividends is zero because the company has not historically paid, and does not intend for the foreseeable future to pay, a dividend. | |||||||||||
A summary of the stock option activity under the plan as of December 31, 2014 and 2013, and changes during the years then ended, is presented below: | ||||||||||||
Number | Weighted | Weighted- | Aggregate | |||||||||
of Shares | Average | Average | Intrinsic | |||||||||
Exercise | Remaining | Value | ||||||||||
Price | Contractual | |||||||||||
Term (Years) | ||||||||||||
Outstanding at January 1, 2013 | 368,036 | $ | 3.86 | |||||||||
Granted | — | — | ||||||||||
Exercised | (31,197 | ) | 0.51 | |||||||||
Expired | (1,858 | ) | 5.87 | |||||||||
Forfeited | — | — | ||||||||||
Outstanding at December 31, 2013 | 334,981 | 4.16 | ||||||||||
Granted | 474,350 | 4.45 | ||||||||||
Exercised | (715 | ) | 0.35 | |||||||||
Expired | (4,287 | ) | 0.35 | |||||||||
Forfeited | (63,375 | ) | 4.45 | |||||||||
Outstanding at December 31, 2014 | 740,954 | 4.35 | 4.49 | $ | 237,622 | |||||||
Vested and exercisable at December 31, 2014 | 465,604 | $ | 4.28 | 1.75 | $ | 237,622 | ||||||
The aggregate intrinsic value in the table above represents the total intrinsic value which would have been received by the stock option holders had all option holders exercised their options as of that date. The aggregate intrinsic value is calculated as the difference between the fair market value of the company’s common stock on December 31, 2014 of $2.82 and the exercise price of stock options, multiplied by the number of shares subject to such stock options. | ||||||||||||
At December 31, 2014, the company had 157,825 stock options outstanding with strike prices below the company’s market price of $2.82 on that date, of which all were vested and exercisable. The total intrinsic value of options exercised during the years ended December 31, 2014 and 2013 was $3,000 and $117,000, respectively. Cash received from option exercises during the years ended December 31, 2014 and 2013 was $250 and $16,000, respectively. Upon stock option exercises, the company issues new shares of common stock. | ||||||||||||
Restricted Stock Units | ||||||||||||
As of December 31, 2014, there was $2,218,000 of total unrecognized stock-based compensation expense related to unvested restricted stock units granted under the Plan. The company expects to recognize that expense over a weighted-average period of 2.7 years. | ||||||||||||
The following table summarizes the restricted stock units activity of the company during 2014 and 2013: | ||||||||||||
Total | Weighted- | |||||||||||
Restricted | Average | |||||||||||
Stock Units | Grant Date | |||||||||||
Fair Value | ||||||||||||
Outstanding January 1, 2013 | 417,196 | $ | 7.1 | |||||||||
Granted | 389,714 | 4.96 | ||||||||||
Shares issued | (53,573 | ) | 11.68 | |||||||||
Forfeited | (31,549 | ) | 5.66 | |||||||||
Outstanding December 31, 2013 | 721,788 | 5.66 | ||||||||||
Granted | 15,000 | 2.92 | ||||||||||
Shares issued | (81,829 | ) | 6.11 | |||||||||
Forfeited | (13,125 | ) | 4.97 | |||||||||
Outstanding December 31, 2014 | 641,834 | $ | 5.55 | |||||||||
Warrants | ||||||||||||
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 following warrants contained such provisions, and therefore, pursuant to the applicable criteria, they were not indexed to the company’s own stock: | ||||||||||||
Warrant Expiration Dates | Number of | Exercise | ||||||||||
Shares | Price per Share | |||||||||||
March 2017 | 29,750 | $ | 5.25 | |||||||||
March 2017 | 882,776 | $ | 7.70 | |||||||||
The warrant liability reflected on Lpath’s balance sheet is a consequence of current generally accepted accounting principles, arising from the implementation of ASC 815. The company believes there is no foreseeable circumstance under which Lpath can be required to make any cash payment to settle the warrant liability now carried on the consolidated balance sheet. | ||||||||||||
The following table summarizes Lpath warrants outstanding as of December 31, 2014: | ||||||||||||
Warrant Expiration Date | Number of | Exercise Price | ||||||||||
Shares | per Share | |||||||||||
December 10, 2015 | 5,715 | $ | 5.60 | |||||||||
March 9, 2017 | 29,750 | $ | 5.25 | |||||||||
March 9, 2017 | 882,776 | $ | 7.70 | |||||||||
May 30, 2017 | 6,000 | $ | 4.00 | |||||||||
September 15, 2017 | 4,000 | $ | 4.00 | |||||||||
September 25, 2019 | 3,605,042 | $ | 3.36 | |||||||||
September 26, 2019 | 54,076 | $ | 3.36 | |||||||||
Total: | 4,587,359 | |||||||||||
Weighted average: | $ | 4.21 | ||||||||||
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 2014, 3,669,118 warrants were granted, no warrants were exercised, and 12,858 warrants expired. No warrants were exercised in 2013 and 337,918 warrants expired. | ||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INCOME TAXES | ||||||||
INCOME TAXES | ||||||||
Note 7—INCOME TAXES | ||||||||
As of December 31, 2014, Lpath had federal and California net operating loss (“NOL”) carryforwards of approximately $72 million and $67 million, respectively, that will expire beginning in 2015 and continue expiring through 2034. Portions of these NOL carryforwards may be used to offset future taxable income, if any. | ||||||||
As of December 31, 2014, Lpath also has federal and California research and development tax credit carryforwards of $1,171,000 and $640,000, respectively, available to offset future taxes. The federal credits begin expiring in 2015, and the state credits do not expire. | ||||||||
Under the provisions of Section 382 of the Internal Revenue Code, substantial changes in Lpath’s ownership limit the amount of net operating loss carryforwards and tax credit carryforwards that can be utilized annually in the future to offset taxable income. A valuation allowance has been established to reserve the potential benefits of these carryforwards in Lpath’s consolidated financial statements to reflect the uncertainty of future taxable income required to utilize available tax loss carryforwards and other deferred tax assets. | ||||||||
Significant components of the company’s deferred tax assets and liabilities are as follows: | ||||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Federal and state net operating loss carryforwards | $ | 30,935,000 | $ | 23,111,000 | ||||
Research and development credit carryforwards | 1,812,000 | 1,812,000 | ||||||
Stock-based compensation | 1,729,000 | 1,645,000 | ||||||
Deferred contract revenue | 54,000 | 213,000 | ||||||
Other, net | 149,000 | 200,000 | ||||||
34,679,000 | 26,981,000 | |||||||
Deferred tax liabilities: | ||||||||
State taxes | (2,459,000 | ) | (1,929,000 | ) | ||||
Patent costs | (958,000 | ) | (825,000 | ) | ||||
(3,417,000 | ) | (2,754,000 | ) | |||||
Total deferred tax assets | 31,262,000 | 24,227,000 | ||||||
Valuation allowance | (31,262,000 | ) | (24,227,000 | ) | ||||
Net deferred tax assets | $ | — | $ | — | ||||
Realization of the deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. | ||||||||
As a result of the company’s significant operating loss carryforwards and the corresponding valuation allowance, no income tax provision/benefit has been recorded as of December 31, 2014 and 2013. The provision for income taxes using the statutory federal income tax rate of 34% as compared to the company’s effective tax rate is summarized as follows: | ||||||||
2014 | 2013 | |||||||
Federal tax benefit at statutory rate | $ | 5,629,000 | $ | 2,232,000 | ||||
State tax benefit, net | 1,028,000 | 378,000 | ||||||
Change in fair value of warrants | 425,000 | 340,000 | ||||||
Research and development credits | — | 127,000 | ||||||
Employee stock-based compensation | (56,000 | ) | (366,000 | ) | ||||
Other permanent differences | 9,000 | 25,000 | ||||||
Decrease in valuation allowance | (7,035,000 | ) | (2,736,000 | ) | ||||
Provision for income taxes | $ | — | $ | — | ||||
OPERATING_LEASE
OPERATING LEASE | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
OPERATING LEASE | |||||||||||
OPERATING LEASE | |||||||||||
Note 8—OPERATING LEASE | |||||||||||
Lpath leases an 11,960 square foot laboratory and office facility in San Diego, California. The lease has an initial term of 64 months. Monthly lease payments are $27,445, with annual escalations of 3%. The lease grants the Company the right to extend the lease for an additional five-year term. | |||||||||||
Future minimum payments and sublease income under the company’s non-cancelable operating lease are set forth in the following table: | |||||||||||
Years ending December 31, | Lease | Sublease | Net Lease | ||||||||
Obligation | Income | Obligation | |||||||||
2015 | 334,279 | 11,652 | 322,627 | ||||||||
2016 | 286,075 | 9,710 | 276,365 | ||||||||
Total future minimum lease commitments | $ | 620,354 | $ | 21,362 | $ | 598,992 | |||||
Lpath’s rent expense totaled $385,000 and $366,000 for the years ended December 31, 2014 and 2013, respectively. Lpath’s sublease income amounted to $12,000 for the years ended December 31, 2014 and 2013. | |||||||||||
RELATEDPARTY_TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | |
Note 9—RELATED-PARTY TRANSACTIONS | |
Lpath subleases a portion of its facility to Western States Investment Corporation (“WSIC”), owned by one of Lpath’s largest stockholders. The terms of the sublease, in general, are the same as the terms of the company’s direct lease. In addition, certain Lpath employees provide investment oversight, accounting, and other administrative services to WSIC. Certain WSIC employees also provide services to Lpath. Lpath and WSIC reimburse each other for costs incurred on behalf of the other entity. Lpath’s sublease income amounted to $12,000 for the years ended December 31, 2014 and 2013. | |
During 2014 and 2013, WSIC billed Lpath $39,300 and $41,900, respectively, for administrative expenses. | |
As of December 31, 2014, WSIC owed Lpath $2,900 for facility expenses and Lpath owed WSIC $7,100 for services provided to Lpath. As of December 31, 2013, WSIC owed Lpath $2,900 for facility expenses and Lpath owed WSIC $9,400 for services provided to Lpath. | |
THE_COMPANY_AND_A_SUMMARY_OF_I1
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | ||||||
Organization and Business | ||||||
Organization and Business | ||||||
Lpath, Inc. (“Lpath,” “we,” or “the company”) is a biotechnology company focused on the discovery and development of lipidomic-based therapeutic antibodies, an emerging field of medical science that targets bioactive signaling lipids to treat a wide range of human diseases. We have three product candidates that are currently in clinical development, and one in pre-clinical evaluation. | ||||||
On July 17, 2014, Lpath changed its state of incorporation from the State of Nevada to the State of Delaware (the “Reincorporation”) pursuant to a plan of conversion, dated July 17, 2014 (the “Plan of Conversion”). The Reincorporation was accomplished by the filing of (i) articles of conversion with the Secretary of State of the State of Nevada, and (ii) a certificate of conversion and a certificate of incorporation with the Secretary of State of the State of Delaware. Pursuant to the Plan of Conversion, Lpath also adopted new bylaws. The Reincorporation did not affect any of the company’s material contracts with any third parties, and the company’s rights and obligations under such material contractual arrangements continue to be rights and obligations of the company after the Reincorporation. The Reincorporation did not result in any change in headquarters, business, jobs, management, location of any of the offices or facilities, number of employees, assets, liabilities or net worth (other than as a result of the costs incident to the Reincorporation) of Lpath. | ||||||
Basis of Presentation | ||||||
Basis of Presentation | ||||||
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of Lpath, Inc. and its wholly-owned subsidiary, Lpath Therapeutics Inc. All significant intercompany balances and transactions have been eliminated in consolidation. | ||||||
Estimates | ||||||
Estimates | ||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from those estimates. | ||||||
Cash and Cash Equivalents | ||||||
Cash and Cash Equivalents | ||||||
Cash and cash equivalents consist of cash deposits, money market deposits, and certificates of deposit. | ||||||
Concentration of Credit Risk | ||||||
Concentration of Credit Risk | ||||||
Financial instruments that potentially subject the company to a significant concentration of credit risk consist of cash and cash equivalents. The company maintains its cash balances with one major commercial bank in non-interest bearing accounts. Accounts at FDIC-insured institutions are insured by the FDIC up to $250,000. | ||||||
The company invests its excess cash in money market mutual funds and in certificates of deposit of federally insured financial institutions. The company has established guidelines relative to diversification of its cash investments and their maturities that are intended to secure safety and liquidity. To date, the company has not experienced any impairment losses on its cash equivalents. The company has not experienced any losses on its deposits of cash and cash equivalents, short-term and long-term investments. | ||||||
The company’s accounts receivable are derived from entities located in the United States. The company performs ongoing credit evaluation of its debtors, does not require collateral, and maintains allowances for potential credit losses on customer accounts when deemed necessary. To date, there have been no such losses and the company has not recorded an allowance for doubtful accounts. | ||||||
Equipment and Leasehold Improvements | ||||||
Equipment and Leasehold Improvements | ||||||
Equipment and leasehold improvements are recorded at cost. Equipment depreciation is computed using the straight-line method over the estimated useful asset lives, which range from three to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remainder of the lease term. Repairs and maintenance are charged to expense as incurred. | ||||||
Patents | ||||||
Patents | ||||||
Legal and filing costs directly associated with obtaining patents are capitalized. Upon issuance of a patent, amortization is computed using the straight-line method over the estimated remaining useful life of the patent. | ||||||
Long-lived Assets | ||||||
Long-lived Assets | ||||||
The company accounts for the impairment and disposition of long-lived assets for events or changes in circumstances which indicate that their carrying value may not be recoverable. The company recorded charges for impairments of patents totaling $61,314 and $68,309 in 2014 and 2013, respectively. | ||||||
Deferred Rent | ||||||
Deferred Rent | ||||||
Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement is recorded as deferred rent. Lease incentives, including tenant improvement allowances, are also recorded as deferred rent and amortized on a straight-line basis over the lease term. | ||||||
Stock-based Compensation Expense | ||||||
Stock-based Compensation Expense | ||||||
Compensation expense is measured based on the fair value of the award at the grant date, including estimated forfeitures, and is adjusted to reflect actual forfeitures and the outcomes of certain conditions. Compensation issued to non-employees is remeasured quarterly and income or expense is recognized during their vesting terms. | ||||||
Revenue Recognition | ||||||
Revenue Recognition | ||||||
Lpath has and may in the future enter into collaborations where we receive non-refundable up-front payments. Generally, these payments secure licenses to Lpath drug candidates. Non-refundable payments are recognized as revenue when the company has a contractual right to receive such payment, the contract price is fixed or determinable, the collection of the resulting receivable is reasonably assured, and the company has no further performance obligations under the license agreement. Multiple-element arrangements, such as license and development arrangements, are analyzed to determine whether the deliverables, which often include a license together with performance obligations such as research and development responsibilities and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. The company recognizes up-front license payments as revenue upon delivery of the license only if the license has stand-alone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations would then be accounted for separately as performed. If the license is considered to either (i) not have stand-alone value or (ii) have stand-alone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting, and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed. | ||||||
If the company is involved in a steering committee as part of a multiple-element arrangement that is accounted for as a single unit of accounting, the company assesses whether its involvement constitutes a performance obligation or a right to participate. Steering committee services that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the company expects to complete its aggregate performance obligations. | ||||||
When the company receives reimbursement for research costs under collaborative agreements, such reimbursements are recognized as revenue as the underlying costs are incurred. | ||||||
Whenever the company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue will be recognized using either a relative performance or straight-line method. The company recognizes revenue using the relative performance method provided that the company can reasonably estimate the level of effort required to complete its performance obligations under an arrangement and such performance obligations are provided on a best-efforts basis. Revenue recognized is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the relative performance method, as of each reporting period. | ||||||
If the company cannot reasonably estimate the level of effort required to complete its performance obligations under an arrangement, the performance obligations are provided on a best-efforts basis and the company can reasonably estimate when the performance obligation ceases or the remaining obligations become inconsequential and perfunctory, then the total payments under the arrangement, excluding royalties and payments contingent upon achievement of substantive milestones, would be recognized as revenue on a straight-line basis over the period the company expects to complete its performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line basis, as of the period ending date. | ||||||
If the company cannot reasonably estimate when its performance obligation either ceases or becomes inconsequential and perfunctory, then revenue is deferred until the company can reasonably estimate when the performance obligation ceases or becomes inconsequential. Revenue is then recognized over the remaining estimated period of performance. | ||||||
Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the company is expected to complete its performance obligations under an arrangement. | ||||||
Collaboration agreements may also contain substantive milestone payments. Substantive milestone payments are considered to be performance bonuses that are recognized upon achievement of the milestone only if all of the following conditions are met: | ||||||
· | the milestone payments are non-refundable; | |||||
· | achievement of the milestone involves a degree of risk and was not reasonably assured at the inception of the arrangement; | |||||
· | substantive company effort is involved in achieving the milestone; | |||||
· | the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with achievement of the milestone; and | |||||
· | a reasonable amount of time passes between the up-front license payment and the first milestone payment as well as between each subsequent milestone payment. | |||||
Determination as to whether a payment meets the aforementioned conditions involves management’s judgment. If any of these conditions are not met, the resulting payment would not be considered a substantive milestone and, therefore, the resulting payment would be considered part of the consideration for the single unit of accounting and would be recognized as revenue, as such performance obligations are performed under either the relative performance or straight-line methods, as applicable, and in accordance with these policies as described above. | ||||||
Grant Revenue | ||||||
Grant Revenue. Lpath recognizes grant revenue as the related research expenses are incurred, up to contractual limits. | ||||||
Royalty Revenue | ||||||
Royalty Revenue. Lpath recognizes royalty revenue from licensed products when earned in accordance with the terms of the license agreements. The licensee’s net sales figures used for calculating royalties include deductions for costs of unsaleable returns, cash discounts, freight, postage, and insurance. | ||||||
Research and Development | ||||||
Research and Development | ||||||
Research and development costs are charged to expense when incurred. | ||||||
Employee Benefit Plan | ||||||
Employee Benefit Plan | ||||||
The company has a 401(k) defined contribution plan that provides benefits for most employees. An employee is eligible to participate in this plan after one month of service. The plan provides for full vesting of benefits over five years. Company contributions to the plan are made at the discretion of the Board of Directors and aggregated $108,534 and $118,383 in 2014 and 2013, respectively. | ||||||
Income Taxes | ||||||
Income Taxes | ||||||
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. | ||||||
A net deferred tax asset related primarily to federal and state net operating loss and research and development credit carryforwards has been fully reserved due to uncertainties regarding Lpath’s ability to realize these tax benefits in future periods. Consequently, no income tax benefit has been recorded for the years ended December 31, 2014 and 2013. | ||||||
Lpath periodically evaluates its tax positions to determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities. Lpath has not incurred any interest or penalties as of December 31, 2014 with respect to income tax matters. Lpath does not expect that there will be unrecognized tax benefits of a significant nature that will increase or decrease within 12 months of the reporting date. | ||||||
Comprehensive Income (Loss) | ||||||
Comprehensive Income (Loss) | ||||||
Comprehensive income (loss) is comprised of net loss and certain changes in equity that are excluded from net loss. At December 31, 2014 and 2013, Lpath had no reportable differences between net loss and comprehensive loss. | ||||||
Per Share Data | ||||||
Per Share Data | ||||||
Basic net income (loss) per common share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common and common dilutive equivalent shares, such as stock options, restricted stock units, restricted stock awards, warrants, and convertible securities outstanding during the period. | ||||||
Anti-dilutive common stock equivalents were excluded from the calculation of diluted income (loss) per share as follows: | ||||||
Years Ended | ||||||
December 31, | ||||||
2014 | 2013 | |||||
Stock options | 740,954 | 334,981 | ||||
Warrants | 4,587,359 | 931,099 | ||||
Restricted stock units | 641,834 | 721,788 | ||||
Total | 5,970,147 | 1,987,868 | ||||
THE_COMPANY_AND_A_SUMMARY_OF_I2
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | ||||||
Schedule of anti-dilutive common stock equivalents that were excluded from the calculation of diluted loss per share | Years Ended | |||||
December 31, | ||||||
2014 | 2013 | |||||
Stock options | 740,954 | 334,981 | ||||
Warrants | 4,587,359 | 931,099 | ||||
Restricted stock units | 641,834 | 721,788 | ||||
Total | 5,970,147 | 1,987,868 | ||||
RESEARCH_AND_DEVELOPMENT_COLLA1
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS | ||||||||
Schedule of recognized revenue under research and development collaborative agreements | Years Ended | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Cost reimbursements | $ | 4,075,623 | $ | 1,106,005 | ||||
Amortization of development fees | 373,000 | 5,336,622 | ||||||
Other | — | 60,096 | ||||||
$ | 4,448,623 | $ | 6,502,723 | |||||
COMPOSITION_OF_CERTAIN_FINANCI1
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | ||||||||
Schedule of composition of certain financial statement captions | December 31, | |||||||
2014 | 2013 | |||||||
Equipment and leasehold improvements: | ||||||||
Office furniture and fixtures | $ | 9,435 | $ | 9,435 | ||||
Laboratory equipment | 593,027 | 520,160 | ||||||
Computer equipment and software | 142,118 | 152,884 | ||||||
Leasehold improvements | 24,902 | 24,902 | ||||||
769,482 | 707,381 | |||||||
Accumulated depreciation | (548,334 | ) | (496,019 | ) | ||||
Equipment, net | $ | 221,148 | $ | 211,362 | ||||
Patents: | ||||||||
Patents | $ | 2,467,547 | $ | 2,100,983 | ||||
Accumulated amortization | (230,638 | ) | (174,115 | ) | ||||
Patents, net | $ | 2,236,909 | $ | 1,926,868 | ||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
FAIR VALUE MEASUREMENTS | |||||
Schedule of fair value measurements using significant unobservable inputs (Level 3) | Liabilities: | ||||
Warrant liability as of January 1, 2013 | $ | 3,100,000 | |||
Change in fair value of warrants | (1,000,000 | ) | |||
Warrant liability as of December 31, 2013 | 2,100,000 | ||||
Change in fair value of warrants | (1,250,000 | ) | |||
Warrant liability as of December 31, 2014 | $ | 850,000 | |||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
Schedule of recognized share-based compensation expense | 2014 | 2013 | ||||||||||
Stock-based compensation expense by type of award: | ||||||||||||
Stock options | $ | 507,271 | $ | — | ||||||||
Restricted stock units | 729,003 | 837,275 | ||||||||||
Total stock-based compensation expense | $ | 1,236,274 | $ | 837,275 | ||||||||
Effect of stock-based compensation expense on | ||||||||||||
Research and development | 466,517 | 314,185 | ||||||||||
General and administrative | 769,757 | 523,090 | ||||||||||
Total stock-based compensation expense | $ | 1,236,274 | 837,275 | |||||||||
Summary of stock option activity under the plan and changes during the years then ended | Number | Weighted | Weighted- | Aggregate | ||||||||
of Shares | Average | Average | Intrinsic | |||||||||
Exercise | Remaining | Value | ||||||||||
Price | Contractual | |||||||||||
Term (Years) | ||||||||||||
Outstanding at January 1, 2013 | 368,036 | $ | 3.86 | |||||||||
Granted | — | — | ||||||||||
Exercised | (31,197 | ) | 0.51 | |||||||||
Expired | (1,858 | ) | 5.87 | |||||||||
Forfeited | — | — | ||||||||||
Outstanding at December 31, 2013 | 334,981 | 4.16 | ||||||||||
Granted | 474,350 | 4.45 | ||||||||||
Exercised | (715 | ) | 0.35 | |||||||||
Expired | (4,287 | ) | 0.35 | |||||||||
Forfeited | (63,375 | ) | 4.45 | |||||||||
Outstanding at December 31, 2014 | 740,954 | 4.35 | 4.49 | $ | 237,622 | |||||||
Vested and exercisable at December 31, 2014 | 465,604 | $ | 4.28 | 1.75 | $ | 237,622 | ||||||
Summary of restricted stock units activity | Total | Weighted- | ||||||||||
Restricted | Average | |||||||||||
Stock Units | Grant Date | |||||||||||
Fair Value | ||||||||||||
Outstanding January 1, 2013 | 417,196 | $ | 7.1 | |||||||||
Granted | 389,714 | 4.96 | ||||||||||
Shares issued | (53,573 | ) | 11.68 | |||||||||
Forfeited | (31,549 | ) | 5.66 | |||||||||
Outstanding December 31, 2013 | 721,788 | 5.66 | ||||||||||
Granted | 15,000 | 2.92 | ||||||||||
Shares issued | (81,829 | ) | 6.11 | |||||||||
Forfeited | (13,125 | ) | 4.97 | |||||||||
Outstanding December 31, 2014 | 641,834 | $ | 5.55 | |||||||||
Summary of warrants outstanding not indexed to the company's own stock | Warrant Expiration Dates | Number of | Exercise | |||||||||
Shares | Price per Share | |||||||||||
March 2017 | 29,750 | $ | 5.25 | |||||||||
March 2017 | 882,776 | $ | 7.70 | |||||||||
Summary of warrants outstanding | Warrant Expiration Date | Number of | Exercise Price | |||||||||
Shares | per Share | |||||||||||
December 10, 2015 | 5,715 | $ | 5.60 | |||||||||
March 9, 2017 | 29,750 | $ | 5.25 | |||||||||
March 9, 2017 | 882,776 | $ | 7.70 | |||||||||
May 30, 2017 | 6,000 | $ | 4.00 | |||||||||
September 15, 2017 | 4,000 | $ | 4.00 | |||||||||
September 25, 2019 | 3,605,042 | $ | 3.36 | |||||||||
September 26, 2019 | 54,076 | $ | 3.36 | |||||||||
Total: | 4,587,359 | |||||||||||
Weighted average: | $ | 4.21 | ||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INCOME TAXES | ||||||||
Schedule of significant components of the company's deferred tax assets and liabilities | 2014 | 2013 | ||||||
Deferred tax assets: | ||||||||
Federal and state net operating loss carryforwards | $ | 30,935,000 | $ | 23,111,000 | ||||
Research and development credit carryforwards | 1,812,000 | 1,812,000 | ||||||
Stock-based compensation | 1,729,000 | 1,645,000 | ||||||
Deferred contract revenue | 54,000 | 213,000 | ||||||
Other, net | 149,000 | 200,000 | ||||||
34,679,000 | 26,981,000 | |||||||
Deferred tax liabilities: | ||||||||
State taxes | (2,459,000 | ) | (1,929,000 | ) | ||||
Patent costs | (958,000 | ) | (825,000 | ) | ||||
(3,417,000 | ) | (2,754,000 | ) | |||||
Total deferred tax assets | 31,262,000 | 24,227,000 | ||||||
Valuation allowance | (31,262,000 | ) | (24,227,000 | ) | ||||
Net deferred tax assets | $ | — | $ | — | ||||
Summary of reconciliation of the provision for income taxes using the statutory federal income tax rate and the effective tax rate | 2014 | 2013 | ||||||
Federal tax benefit at statutory rate | $ | 5,629,000 | $ | 2,232,000 | ||||
State tax benefit, net | 1,028,000 | 378,000 | ||||||
Change in fair value of warrants | 425,000 | 340,000 | ||||||
Research and development credits | — | 127,000 | ||||||
Employee stock-based compensation | (56,000 | ) | (366,000 | ) | ||||
Other permanent differences | 9,000 | 25,000 | ||||||
Decrease in valuation allowance | (7,035,000 | ) | (2,736,000 | ) | ||||
Provision for income taxes | $ | — | $ | — | ||||
OPERATING_LEASE_Tables
OPERATING LEASE (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
OPERATING LEASE | |||||||||||
Schedule of future minimum payments and sublease income | Years ending December 31, | Lease | Sublease | Net Lease | |||||||
Obligation | Income | Obligation | |||||||||
2015 | 334,279 | 11,652 | 322,627 | ||||||||
2016 | 286,075 | 9,710 | 276,365 | ||||||||
Total future minimum lease commitments | $ | 620,354 | $ | 21,362 | $ | 598,992 | |||||
THE_COMPANY_AND_A_SUMMARY_OF_I3
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
Organization and Business | ||
Number of product candidates in clinical development | 3 | |
Number of product candidates in pre-clinical evaluation | 1 | |
Concentration of Credit Risk | ||
Number of major commercial banks where cash balances are maintained in non-interest bearing accounts | 1 | |
Federal insurance limit on deposit accounts | $250,000 | |
Long-lived Assets | ||
Charges for impairments of patents | 61,314 | 68,309 |
Employee Benefit Plan | ||
Requisite service period for employees to be eligible to participate in the plan | 1 month | |
Vesting period | 5 years | |
Contributions to the 401(k) plan made at the discretion of the board of directors | $108,534 | $118,383 |
Minimum | Equipment | ||
Equipment and Leasehold Improvements | ||
Estimated useful assets lives | 3 years | |
Maximum | Equipment | ||
Equipment and Leasehold Improvements | ||
Estimated useful assets lives | 5 years |
THE_COMPANY_AND_A_SUMMARY_OF_I4
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES | ||
Income tax benefit | $0 | $0 |
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share | ||
Anti-dilutive common stock equivalents (in shares) | 5,970,147 | 1,987,868 |
Stock options | ||
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share | ||
Anti-dilutive common stock equivalents (in shares) | 740,954 | 334,981 |
Warrants | ||
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share | ||
Anti-dilutive common stock equivalents (in shares) | 4,587,359 | 931,099 |
Restricted stock unit | ||
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share | ||
Anti-dilutive common stock equivalents (in shares) | 641,834 | 721,788 |
RESEARCH_AND_DEVELOPMENT_COLLA2
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT (Details) (USD $) | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2011 | Dec. 31, 2014 | Dec. 31, 2013 | |
Research and development collaborative agreements | |||
Total recognized revenue | $4,448,623 | $6,502,723 | |
Collaboration agreement | Pfizer Inc. | |||
Research and development collaborative agreements | |||
Up-front payment made by counterparty | 14,000,000 | ||
Cost reimbursements | 4,075,623 | 1,106,005 | |
Amortization of development fees | 373,000 | 5,336,622 | |
Other | 60,096 | ||
Total recognized revenue | 4,448,623 | 6,502,723 | |
Collaboration agreement | 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 |
COMPOSITION_OF_CERTAIN_FINANCI2
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | $769,482 | $707,381 |
Accumulated depreciation | -548,334 | -496,019 |
Equipment, net | 221,148 | 211,362 |
Patents: | ||
Patents | 2,467,547 | 2,100,983 |
Accumulated amortization | -230,638 | -174,115 |
Patents, net | 2,236,909 | 1,926,868 |
Office furniture and fixtures | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 9,435 | 9,435 |
Laboratory equipment | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 593,027 | 520,160 |
Computer equipment and software | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 142,118 | 152,884 |
Leasehold improvements | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | $24,902 | $24,902 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (Recurring, Significant Unobservable Inputs (Level 3), Warrants, March 2017, USD $) | Dec. 31, 2014 |
Recurring | Significant Unobservable Inputs (Level 3) | Warrants | March 2017 | |
Liabilities: | |
Fair value of liabilities | $850,000 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (Warrants, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Warrants | ||
Liabilities: | ||
Balance at the beginning of the period | $2,100,000 | $3,100,000 |
Change in fair value of warrants | -1,250,000 | -1,000,000 |
Balance at the end of the period | $850,000 | $2,100,000 |
Volatility of stock price as specified in the underlying warrants (as a percent) | 100.00% |
RESEARCH_AND_LICENSE_AGREEMENT1
RESEARCH AND LICENSE AGREEMENTS (Details) | 1 Months Ended | 12 Months Ended | ||||||
Jan. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Data Mabs Agreement | Lonza | Lonza | Lonza | Lonza | AERES | AERES | AERES | |
USD ($) | item | License agreement | License agreement | License agreement | Collaboration agreement | Collaboration agreement | Collaboration agreement | |
USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | Maximum | |||
Research and license agreements | ||||||||
Number of agreements | 2 | |||||||
Annual license fees | $467,000 | € 300,000 | ||||||
Accrued license fees | 0 | 0 | ||||||
Accrued license fee paid | 0 | 0 | ||||||
Percentage of royalty | 4.00% | |||||||
Milestone payment | $37,500 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||||
Oct. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Aug. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Aggregate offering price | $23,000,000 | $20,000,000 | ||||
Aggregate offering price | 75,000,000 | |||||
Maximum market value of stock that may be sold in a 12 month period | 33.00% | |||||
Commission payable as a percentage of gross proceeds | 3.00% | 3.50% | ||||
Common stock, shares issued | 2,161,833 | 213,700 | ||||
Sales price (in dollars per share) | $3.48 | |||||
Net proceeds | 9,730,000 | 803,000 | ||||
Shares issued to purchase registered shares | 3,605,042 | |||||
Shares issued to purchase unregistered shares | 3,605,042 | |||||
Share Price | $3.48 | |||||
Exercise price per share (in dollars per share) | $3.36 | |||||
Aggregate gross proceeds from units issued | 11,500,000 | |||||
Warrants to purchase common stock | 54,076 | |||||
Reimbursement of fees and expenses | 60,000 | |||||
Shares and warrants registered for resale | 3,605,042 | |||||
Placement agent fees and other offering expenses | $751,651 | |||||
Preferred Stock | ||||||
Preferred stock, shares authorized | 15,000,000 | |||||
Preferred stock, par value (in dollars per share) | $0.00 | |||||
Preferred stock, shares issued | 0 | 0 | ||||
Preferred stock, shares outstanding | 0 | 0 | ||||
Minimum | ||||||
Sales price (in dollars per share) | $3.50 | $4.25 | ||||
Share Price | $3.50 | $4.25 | ||||
Maximum | ||||||
Sales price (in dollars per share) | $5.16 | $5.13 | ||||
Share Price | $5.16 | $5.13 | ||||
Warrants | ||||||
Exercise price per share (in dollars per share) | $3.36 | |||||
Expiration period of warrants | 5 years |
STOCKHOLDERS_EQUITY_Details_2
STOCKHOLDERS' EQUITY (Details 2) | 1 Months Ended | |
Oct. 31, 2007 | Dec. 31, 2014 | |
Common Stock | ||
Stockholders' equity | ||
Number of shares authorized | 2,500,000 | |
Stock available for future grant (in shares) | 527,073 | |
Stock options | ||
Stockholders' equity | ||
Expiration term | 10 years | |
Stock options | Minimum | ||
Stockholders' equity | ||
Vesting period | 0 years | |
Stock options | Maximum | ||
Stockholders' equity | ||
Vesting period | 5 years | |
Incentive stock options | Minimum | ||
Stockholders' equity | ||
Exercise price of common stock as a percentage of fair market value | 100.00% | |
Nonqualified options | Minimum | ||
Stockholders' equity | ||
Exercise price of common stock as a percentage of fair market value | 85.00% | |
Restricted stock units | ||
Stockholders' equity | ||
Expiration term | 5 years | |
Restricted stock units | Minimum | ||
Stockholders' equity | ||
Vesting period | 0 years | |
Restricted stock units | Maximum | ||
Stockholders' equity | ||
Vesting period | 4 years |
STOCKHOLDERS_EQUITY_Details_3
STOCKHOLDERS' EQUITY (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based compensation expense | ||
Total share-based compensation expense | $1,236,274 | $837,275 |
Research and developments | ||
Share-based compensation expense | ||
Total share-based compensation expense | 466,517 | 314,185 |
General and administrative | ||
Share-based compensation expense | ||
Total share-based compensation expense | 769,757 | 523,090 |
Restricted stock units | ||
Share-based compensation expense | ||
Total share-based compensation expense | 729,003 | 837,275 |
Stock options | ||
Share-based compensation expense | ||
Total share-based compensation expense | $507,271 |
STOCKHOLDERS_EQUITY_Details_4
STOCKHOLDERS' EQUITY (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | |
Additional disclosures | |||
Fair market value of common stock (in dollars per share) | $3.48 | ||
Cash received from option exercises | $250 | $15,840 | |
Stock options | |||
Stockholders' equity | |||
Unrecognized compensation expense | 1,841,000 | ||
Weighted-average valuation assumptions | |||
Estimated annual dividends | 0 | ||
Number of Shares | |||
Outstanding at the beginning of the period (in shares) | 334,981 | 368,036 | |
Granted | 474,350 | ||
Exercised (in shares) | -715 | -31,197 | |
Expired (in shares) | -4,287 | -1,858 | |
Forfeited (in shares) | -63,375 | ||
Outstanding at the end of the period (in shares) | 740,954 | 334,981 | |
Vested and exercisable at the end of the period (in shares) | 465,604 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $4.16 | $3.86 | |
Granted | $4.45 | ||
Exercised (in dollars per share) | $0.35 | $0.51 | |
Expired (in dollars per share) | $0.35 | $5.87 | |
Forfeited (in dollars per share) | $4.45 | ||
Outstanding at the end of the period (in dollars per share) | $4.35 | $4.16 | |
Vested and exercisable at the end of the period (in dollars per share) | $4.28 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding at the end of the period | 4 years 5 months 27 days | ||
Vested and exercisable at the end of the period | 1 year 9 months | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period (in dollars) | 237,622 | ||
Vested and exercisable at the end of the period (in dollars) | 237,622 | ||
Additional disclosures | |||
Fair market value of common stock (in dollars per share) | $2.82 | ||
Vested and exercisable options with strike price below market price outstanding (in shares) | 157,825 | ||
Total intrinsic value of options exercised (in dollars) | 3,000 | 117,000 | |
Cash received from option exercises | 250 | 16,000 | |
Restricted Stock Units | |||
Weighted average period to recognize unrecognized stock-based compensation expense | 3 years 1 month 6 days | ||
Restricted stock units | |||
Restricted Stock Units | |||
Total unrecognized stock-based compensation expense | $2,218,000 | ||
Weighted average period to recognize unrecognized stock-based compensation expense | 2 years 8 months 12 days | ||
Total Restricted Stock Units | |||
Outstanding at the beginning of the period (in shares) | 721,788 | 417,196 | |
Granted (in shares) | 15,000 | 389,714 | |
Shares issued | -81,829 | -53,573 | |
Forfeited (in shares) | -13,125 | -31,549 | |
Outstanding at the end of the period (in shares) | 641,834 | 721,788 | |
Weighted Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $5.66 | $7.10 | |
Granted (in dollars per share) | $2.92 | $4.96 | |
Shares issued (in dollars per share) | $6.11 | $11.68 | |
Forfeited (in dollars per share) | $4.97 | $5.66 | |
Outstanding at the end of the period (in dollars per share) | $5.55 | $5.66 |
STOCKHOLDERS_EQUITY_Details_5
STOCKHOLDERS' EQUITY (Details 5) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stockholder's equity | ||
Number of Shares | 3,669,118 | |
Exercise price per share (in dollars per share) | $3.36 | |
Warrants | ||
Stockholder's equity | ||
Number of Shares | 4,587,359 | |
Exercise price per share (in dollars per share) | $3.36 | |
Number of warrants exercised (in shares) | 0 | 0 |
Number of warrants expired (in shares) | 12,858 | 337,918 |
Warrants | Weighted average | ||
Stockholder's equity | ||
Exercise price per share (in dollars per share) | $4.21 | |
Warrants | March 2017 | ||
Stockholder's equity | ||
Number of Shares not indexed to entity's own stock | 29,750 | |
Exercise price per share not indexed to entity's own stock (in dollars per share) | 5.25 | |
Warrants | March 2017 | ||
Stockholder's equity | ||
Number of Shares not indexed to entity's own stock | 882,776 | |
Exercise price per share not indexed to entity's own stock (in dollars per share) | 7.7 | |
Warrants | December 10, 2015 | ||
Stockholder's equity | ||
Number of Shares | 5,715 | |
Exercise price per share (in dollars per share) | $5.60 | |
Warrants | March 9, 2017 | ||
Stockholder's equity | ||
Number of Shares | 29,750 | |
Exercise price per share (in dollars per share) | $5.25 | |
Warrants | March 9, 2017 | ||
Stockholder's equity | ||
Number of Shares | 882,776 | |
Exercise price per share (in dollars per share) | $7.70 | |
Warrants | May 30, 2017 | ||
Stockholder's equity | ||
Number of Shares | 6,000 | |
Exercise price per share (in dollars per share) | $4 | |
Warrants | September 15, 2017 | ||
Stockholder's equity | ||
Number of Shares | 4,000 | |
Exercise price per share (in dollars per share) | $4 | |
Warrants | September 25, 2019 | ||
Stockholder's equity | ||
Number of Shares | 3,605,042 | |
Exercise price per share (in dollars per share) | $3.36 | |
Warrants | September 26, 2019 | ||
Stockholder's equity | ||
Number of Shares | 54,076 | |
Exercise price per share (in dollars per share) | $3.36 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Federal | |
Net operating loss (NOL) carryforwards | |
Net operating loss (NOL) carryforwards | $72 |
California | |
Net operating loss (NOL) carryforwards | |
Net operating loss (NOL) carryforwards | $67 |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (Research and development, USD $) | Dec. 31, 2014 |
Federal | |
Tax credit carryforwards | |
Tax credit carryforwards | $1,171,000 |
California | |
Tax credit carryforwards | |
Tax credit carryforwards | $640,000 |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred tax assets: | ||
Federal and state net operating loss carryforwards | $30,935,000 | $23,111,000 |
Research and development credit carryforwards | 1,812,000 | 1,812,000 |
Stock-based compensation | 1,729,000 | 1,645,000 |
Deferred contract revenue | 54,000 | 213,000 |
Other, net | 149,000 | 200,000 |
Deferred tax assets | 34,679,000 | 26,981,000 |
Deferred tax liabilities: | ||
State taxes | -2,459,000 | -1,929,000 |
Patent costs | -958,000 | -825,000 |
Deferred tax liabilities | -3,417,000 | -2,754,000 |
Total deferred tax assets | 31,262,000 | 24,227,000 |
Valuation allowance | -31,262,000 | -24,227,000 |
Statutory federal income tax rate | ||
Statutory federal income tax rate (as a percent) | 34.00% | |
Reconciliation of effective tax rate | ||
Federal tax benefit at statutory rate | 5,629,000 | 2,232,000 |
State tax benefit, net | 1,028,000 | 378,000 |
Change in fair value of warrants | 425,000 | 340,000 |
Research and development credits | 127,000 | |
Employee stock-based compensation | -56,000 | -366,000 |
Other permanent differences | 9,000 | 25,000 |
Decrease in valuation allowance | ($7,035,000) | ($2,736,000) |
OPERATING_LEASE_Details
OPERATING LEASE (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
OPERATING LEASE | ||
Area of laboratory and office facility in San Diego, California (in square foot) | 11,960 | |
Initial term of lease | 64 months | |
Monthly lease payments | $27,445 | |
Percentage of annual escalations | 3.00% | |
Additional extended lease term | 5 years | |
Lease Obligation | ||
2015 | 334,279 | |
2016 | 286,075 | |
Total future minimum lease commitments | 620,354 | |
Sublease Income | ||
2015 | 11,652 | |
2016 | 9,710 | |
Total future minimum lease commitments | 21,362 | |
Net Lease Obligation | ||
2015 | 322,627 | |
2016 | 276,365 | |
Total future minimum lease commitments | 598,992 | |
Total rent expenses | 385,000 | 366,000 |
Sublease income | $12,000 | $12,000 |
RELATEDPARTY_TRANSACTIONS_Deta
RELATED-PARTY TRANSACTIONS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Related-party transactions | ||
Sublease income | $12,000 | $12,000 |
WSIC | ||
Related-party transactions | ||
Sublease income | 12,000 | 12,000 |
Administrative expenses | 39,300 | 41,900 |
Amount due for facility expenses | 2,900 | 2,900 |
Amount due for services received | $7,100 | $9,400 |