Apollo Endosurgery (APEN) 10-Q 9 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 08, 2016
Document and Entity Information
Entity Registrant Name	LPATH, INC
Entity Central Index Key	1,251,769
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,374,025
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 4,664,170	$ 8,889,616
Accounts receivable	9,244	6,988
Prepaid expenses and other current assets	614,209	357,281
Total current assets	5,287,623	9,253,885
Equipment and leasehold improvements, net	105,990	149,271
Patents, net	1,599,003	2,132,129
Deposits and other assets	77,160	77,160
Total assets	7,069,776	11,612,445
Current Liabilities:
Accounts payable	462,693	294,010
Accrued compensation	246,072	546,578
Accrued expenses	75,766	204,237
Deferred rent	16,287	35,629
Total current liabilities	800,818	1,080,454
Total liabilities	800,818	1,080,454
Stockholders' Equity:
Common stock - $.001 par value; 100,000,000 shares authorized; 2,368,221 and 2,369,449 issued and outstanding at June 30, 2016 and December 31, 2015, respectively	2,368	2,369
Additional paid-in capital	86,916,854	86,573,137
Accumulated deficit	(80,650,264)	(76,043,515)
Total stockholders' equity	6,268,958	10,531,991
Total liabilities and stockholders' equity	$ 7,069,776	$ 11,612,445

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Condensed Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	2,368,221	2,369,449
Common stock, shares outstanding	2,368,221	2,369,449

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues:
Grant and royalty revenue	$ 9,243	$ 13,329	$ 18,851	$ 26,964
Research and development revenue under collaborative agreements		734,292		1,504,558
Total revenues	9,243	747,621	18,851	1,531,522
Expenses:
Research and development	935,620	2,916,637	1,927,530	5,672,125
General and administrative	1,734,561	1,101,676	2,698,070	2,152,419
Total expenses	2,670,181	4,018,313	4,625,600	7,824,544
Loss from operations	(2,660,938)	(3,270,692)	(4,606,749)	(6,293,022)
Other income, net		40		40
Change in fair value of warrants		600,000		850,000
Net loss	$ (2,660,938)	$ (2,670,652)	$ (4,606,749)	$ (5,442,982)
Basic and diluted net loss per share	$ (1.11)	$ (1.80)	$ (1.93)	$ (3.77)
Weighted-average shares outstanding used in the calculation	2,390,861	1,482,144	2,391,698	1,445,396

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ (4,606,749)	$ (5,442,982)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense	345,294	465,975
Change in fair value of warrants		(850,000)
Depreciation and amortization	672,278	142,398
Changes in operating assets and liabilities:
Accounts receivable	(2,256)	(4,767)
Prepaid expenses and other current assets	(256,928)	116,145
Accounts payable and accrued expenses	(260,294)	(1,440,947)
Deferred contract revenue		(125,000)
Other	(19,342)	(13,579)
Net cash used in operating activities	(4,127,997)	(7,152,757)
Cash flows from investing activities:
Equipment and leasehold improvement expenditures		(21,117)
Patent expenditures	(95,872)	(146,581)
Net cash used in investing activities	(95,872)	(167,698)
Cash flows from financing activities:
Proceeds from sale of common stock and warrants, net		1,845,821
Proceeds from options and warrants exercised		47,676
Payment for restricted stock tax liability on net settlement	(1,577)	(1,180)
Net cash (used in) provided by financing activities	(1,577)	1,892,317
Net (decrease) in cash and cash equivalents	(4,225,446)	(5,428,138)
Cash and cash equivalents at beginning of period	8,889,616	17,282,325
Cash and cash equivalents at end of period	4,664,170	11,854,187
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 warrants		$ (850,000)

BASIS FOR PRESENTATION

BASIS FOR PRESENTATION	6 Months Ended
	Jun. 30, 2016
BASIS FOR PRESENTATION
BASIS FOR PRESENTATION	Note 1 — BASIS FOR PRESENTATION The unaudited condensed consolidated balance sheet of Lpath, Inc. (“Lpath” or “the company”) as of December 31, 2015 was derived from our audited financial statements, but does not contain all disclosures required by accounting principles generally accepted in the United States of America, and certain information and disclosures normally included have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the three-month period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any future financial period. For further information, refer to the consolidated financial statements and notes included in the company’s annual report on Form 10-K for the year ended December 31, 2015. The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reverse Stock Split On June 8, 2016, the company’s board of d irectors and the company’s stockholders approved a 1 -for-14 reverse split of the company’s issued and outstanding common stock. The reverse split was effective on June 10, 2016. Fractional shares created by the reverse stock split were rounded up to the nearest whole share. All issued and outstanding common stock, options exercisable for common stock, warrants exercisable for common stock, restricted stock units, and per share amounts contained in the company’s condensed consolidated financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented.

GOING CONCERN UNCERTAINTY

GOING CONCERN UNCERTAINTY	6 Months Ended
	Jun. 30, 2016
GOING CONCERN UNCERTAINTY
GOING CONCERN UNCERTAINTY	Note 2 – GOING CONCERN UNCERTAINTY The accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern. Lpath utilized cash in operations of $4.1 million during the six-months ended June 30, 2016 and $11.9 million during the year ended December 31, 2015. These conditions raise substantial doubt about the company’s ability to continue as a going concern. Management’s plans with regard to these matters are discussed below. The a ccompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As of June 30, 2016, the company had cash and cash equivalents totaling $4.7 million. The company may also receive limited additional funding from future awards of National Institutes of health (“ NIH ”) or the US Department of Defense ( “ DoD ” ) grants. Potential additional near term sources of cash may include the proceeds from the sale of Lpath common stock under the MLV agreement. As they are currently planned, however, the company does not believe that its existing cash resources will be sufficient to meet its operating plan for the full 12 month period after the date of this filing. To help extend the company’s operating window, the company has reduced its headcount and limited its research and product development activities . Based on its current plans and available resources, the company believe s it can maintain our current operations through the end of November 2016. The company estimate s that at Nov ember 30, 2016 the costs to wind-down its operations in an orderly manner would be approximately $2. 0 million. As a result, to continue to fund the company’s ongoing operations, including its drug discovery and development projects, beyond November 30, 2016, the company would need to secure significant additional capital. Moreover, its expenses may exceed its current plans and expectations, which would require the company to secure additional capital or wind-down its operations sooner than anticipated. The company’s board of d irectors has engaged a financial advisory firm to explore its r available strategic alternatives, including possible mergers and business combinations, a sale of part or all of its assets, collaboration and licensing arrangements and/or equity and debt financings. This strategic process is both active and ongoing, and includes a range of interactions with potential transaction counterparties. The company believe s it is in its stockholders’ best interests at this time to continue to pursue one or more of these transactions, or other strategic alternatives the company may identify in the near term. Although the company is actively pursuing its strategic alternatives, there is no assurance that it will be able to successfully negotiate and consummate a transaction on a timely basis, or at all. Further, the company’s expenses may exceed its current plans and expectations, which could require it to complete a transaction or wind-down its operations sooner than anticipated. Additionally, any transaction the company consummate s may offer limited value for its existing drug candidates and proprietary technology and may not enhance stockholder value or provide the expected benefits. If the company is unable to successfully complete a strategic transaction or secure additional capital on a timely basis and on terms that are acceptable to its stockholders, the company may be required to cease its operations altogether.

RESEARCH AND DEVELOPMENT COLLAB

RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT	6 Months Ended
	Jun. 30, 2016
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS	Note 3 — RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS In 2010, Lpath entered into an agreement providing Pfizer Inc. (“Pfizer”) with an exclusive option for a worldwide license to develop and commercialize iSONEP™ (“the Pfizer Agreement”), Lpath’s lead monoclonal antibody product candidate that is being evaluated for the treatment of wet age-related macular degeneration (“wet AMD”) and other ocular disorders. On May 20, 2015, Lpath announced that its Phase 2 "Nexus" clinical trial evaluating iSONEP™ in patients with wet age-related macular degeneration (wet AMD) did not meet its primary or key secondary endpoints. Wet AMD patients who had not responded adequately to existing anti-vascular endothelial growth factor (VEGF) therapies including Lucentis®, Avastin® and Eylea® did not show any statistically significant improvement in visual acuity when treated with iSONEP as an adjunctive or monotherapy. On August 9, 2015, Pfizer’s option to obtain worldwide rights to iSONEP expired, unexercised, which resulted in the termination of the Pfizer Agreement. Consequently, all rights that Pfizer held in the iSONEP program have reverted to Lpath. Lpath has no plans for further development of iSONEP. As part of the agreement, Lpath 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. That right of first refusal expired on August 9, 2015, concurrently with the expiration of Pfizer’s option to acquire the license to iSONEP. Pfizer has no further obligations to fund clinical trial costs incurred after the expiration date of the Pfizer Agreement. The company recognized revenue under the Pfizer Agreement as follows: Six Months Ended Three Months Ended June 30, June 30, 2016 2015 2016 2015 Cost reimbursements $ - $ $ - $ Amortization of license and development fees - - $ - $ $ - $

SHARE-BASED PAYMENTS

SHARE-BASED PAYMENTS	6 Months Ended
	Jun. 30, 2016
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS	Note 4 — SHARE-BASED PAYMENTS The company recognized share-based compensation expense as follows: Six Months Ended Three Months Ended June 30, June 30, 2016 2015 2016 2015 Research and development $ $ $ $ General and administrative Total share-based compensation expense $ $ $ $ As of June 30, 2016, there was a total of $0.8 million in unrecognized compensation expense related to unvested share-based compensation under the Lpath, Inc. Amended and Restated 2005 Equity Incentive Plan. That expense is expected to be recognized over a weighted-average period of 2.2 years. Because of its net operating loss carryforwards, the company did not realize any tax benefits for the tax deductions from share-based payment arrangements during the three months ended June 30, 2016 and 2015.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Jun. 30, 2016
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	Note 5 — FAIR VALUE MEASUREMENTS Lpath has issued warrants, of which some are classified as equity and some as liabilities. The warrants issued in March 2012 (and expiring in March 2017) provide that in the event of a fundamental transaction, as defined by the warrant agreement, the company may, under certain circumstances, be obligated to settle the March 2012 warrants for cash equal to the value of the warrants determined in accordance with the warrant agreement. The company’s recurring fair value measurements at June 30, 2016 were as follows: Significant Unobservable Fair Value as of Inputs June 30, 2016 (Level 3) Liabilities: Warrants expiring March 2017 $ - $ - 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. The fair value of the warrants at June 30, 2016 was zero . There was no change in the fair value of the warrants during the three months ended June 30, 2016. The terms of all outstanding warrants permit the company, upon exercise of the warrants, to settle the contract by the delivery of unregistered shares. As of June 30, 2016 there were 327,575 warrants outstanding with a weighted-average exercise price of $58.94 per share expiring through September 2019.

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
	Jun. 30, 2016
EARNINGS PER SHARE
EARNINGS PER SHARE	Note 6 — EARNINGS PER SHARE Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Because the company reported a net loss for the six months ended June 30, 2016 and 2015, diluted net loss per common share is the same as basic net loss per common share for those periods. Anti-dilutive common stock equivalents excluded from the calculation of diluted loss per share were as follows: Six Months Ended June 30, 2016 2015 Stock options Warrants Restricted stock units Total

RESEARCH AND DEVELOPMENT COLL12

RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT (Tables)	6 Months Ended
	Jun. 30, 2016
RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENTS
Schedule of recognized revenue under the Pfizer Agreement	Six Months Ended Three Months Ended June 30, June 30, 2016 2015 2016 2015 Cost reimbursements $ - $ $ - $ Amortization of license and development fees - - $ - $ $ - $

SHARE-BASED PAYMENTS (Tables)

SHARE-BASED PAYMENTS (Tables)	6 Months Ended
	Jun. 30, 2016
SHARE-BASED PAYMENTS
Schedule of recognized share-based compensation expense	Six Months Ended Three Months Ended June 30, June 30, 2016 2015 2016 2015 Research and development $ $ $ $ General and administrative Total share-based compensation expense $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Jun. 30, 2016
FAIR VALUE MEASUREMENTS
Schedule of recurring fair value measurements	Significant Unobservable Fair Value as of Inputs June 30, 2016 (Level 3) Liabilities: Warrants expiring March 2017 $ - $ -

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2016
EARNINGS PER SHARE
Anti-dilutive common stock equivalents were excluded from the calculation of diluted loss per share as follows	Six Months Ended June 30, 2016 2015 Stock options Warrants Restricted stock units Total

BASIS FOR PRESENTATION (Details

BASIS FOR PRESENTATION (Details)	Jun. 08, 2016
Class A common stock
Reverse split ratio of Class A common stock	0.071

GOING CONCERN UNCERTAINTY (Deta

GOING CONCERN UNCERTAINTY (Details)	Nov. 30, 2016USD ($)	Jun. 30, 2016USD ($)item	Jun. 30, 2015USD ($)	Dec. 31, 2015USD ($)	Dec. 31, 2014USD ($)
Cash utilized in operating activities		$ 4,127,997	$ 7,152,757	$ 11,900,000
Cash		$ 4,664,170	$ 11,854,187	$ 8,889,616	$ 17,282,325
Period for which cash resources may be insufficient		12 months
Minimum number of business transactions being explored as strategic alternatives | item		1
Forecast
Estimated wind-down costs of operations	$ 2,000,000

RESEARCH AND DEVELOPMENT COLL18

RESEARCH AND DEVELOPMENT COLLABORATIVE AGREEMENT (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Research and development collaborative agreements
Total recognized revenue	$ 734,292	$ 1,504,558
Collaboration agreement | Pfizer Inc.
Research and development collaborative agreements
Cost reimbursements	671,792	1,379,558
Amortization of license and development fees	62,500	125,000
Total recognized revenue	$ 734,292	$ 1,504,558

SHARE-BASED PAYMENTS (Details)

SHARE-BASED PAYMENTS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based compensation expense
Total share-based compensation expense	$ 170,557	$ 214,916	$ 345,294	$ 465,975
Unrecognized compensation expense related to unvested share-based compensation	800,000		$ 800,000
Weighted average period to recognize unrecognized share-based compensation expense			2 years 2 months 12 days
Research and development
Share-based compensation expense
Total share-based compensation expense	65,399	91,051	$ 141,810	215,088
General and administrative
Share-based compensation expense
Total share-based compensation expense	$ 105,158	$ 123,865	$ 203,484	$ 250,887

FAIR VALUE MEASUREMENTS - Recur

FAIR VALUE MEASUREMENTS - Recurring Fair Value (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Liabilities:
Change in fair value of warrants		$ (600,000)		$ (850,000)
Warrants
Liabilities:
Volatility of stock price as specified in the underlying warrants (as a percent)			100.00%
Change in fair value of warrants	$ 0
Number of warrants outstanding (in shares)	327,575		327,575
Weighted-average exercise price of warrant outstanding (in dollars per share)	$ 58.94		$ 58.94
Warrants | Recurring | March 2017
Liabilities:
Fair value of liabilities	$ 0		$ 0
Warrants | Recurring | Significant Unobservable Inputs (Level 3) | March 2017
Liabilities:
Fair value of liabilities	$ 0		$ 0

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share
Anti-dilutive common stock equivalents (in shares)	485,414	474,903
Stock options
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share
Anti-dilutive common stock equivalents (in shares)	128,870	110,714
Warrants
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share
Anti-dilutive common stock equivalents (in shares)	327,575	327,955
Restricted stock units
Anti-dilutive securities excluded from the calculation of diluted income (loss) per share
Anti-dilutive common stock equivalents (in shares)	28,969	36,234