InVivo Therapeutics (NVIVQ) 10-Q 5 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 30, 2015
Document and Entity Information
Entity Registrant Name	INVIVO THERAPEUTICS HOLDINGS CORP.
Entity Central Index Key	1,292,519
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		27,004,281
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 25,114	$ 13,459
Restricted cash	361	422
Prepaid expenses and other current assets	397	1,072
Total current assets	25,872	14,953
Property, equipment and leasehold improvements, net	1,261	1,605
Other assets	124	135
Total assets	27,257	16,693
Current liabilities:
Accounts payable	953	569
Loan payable-current portion	259	320
Note payable-current portion		18
Derivative warrant liability	7,722	7,224
Accrued expenses	1,409	1,044
Total current liabilities	10,343	9,175
Loan payable	1,600	1,600
Total liabilities	$ 11,943	$ 10,775
Commitments and Contingencies
Stockholders' equity:
Common stock, $0.00001 par value, authorized 50,000,000 shares; issued and outstanding 26,011,852 and 23,453,000 shares at March 31, 2015 and December 31, 2014, respectively.	$ 1	$ 1
Additional paid-in capital	141,841	106,172
Accumulated deficit	(126,528)	(100,255)
Total stockholders' equity	15,314	5,918
Total liabilities and stockholders' equity	$ 27,257	$ 16,693

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Apr. 08, 2015	Dec. 31, 2014
Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001	$ 0.00001
Common stock, authorized	50,000,000		50,000,000
Common stock, issued	26,856,177		23,453,000
Common stock, outstanding	26,011,852		23,453,000

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Operating expenses:
Research and development	$ 2,546	$ 3,051	$ 4,849	$ 6,293
General and administrative	3,214	1,688	6,422	3,517
Total operating expenses	5,760	4,739	11,271	9,810
Operating loss	(5,760)	(4,739)	(11,271)	(9,810)
Other income (expense):
Interest income	2	1	3	2
Interest expense	(32)	(35)	(66)	(68)
Derivatives gain (loss)	(4,653)	1,127	(14,940)	1,127
Other income (expense), net	(4,683)	1,093	(15,003)	1,061
Net loss	$ (10,443)	$ (3,646)	$ (26,273)	$ (8,749)
Net loss per share, basic (in dollars per share)	$ (0.39)	$ (0.17)	$ (1.02)	$ (0.45)
Net loss per share, diluted (in dollars per share)	$ (0.39)	$ (0.17)	$ (1.02)	$ (0.45)
Weighted average number of common shares outstanding, basic (in shares)	26,508,170	21,821,355	25,713,438	19,561,455
Weighted average number of common shares outstanding, diluted (in shares)	26,508,170	21,821,355	25,713,438	19,561,455

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (26,273)	$ (8,749)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	352	378
Non-cash derivatives (gain) loss	14,940	(1,127)
Common stock issued to 401(k) plan	105	84
Common stock issued for services		282
Share-based compensation expense	2,241	1,596
Changes in operating assets and liabilities:
Restricted cash	61	231
Prepaid expenses	675	(358)
Other assets	3	2
Accounts payable	384	(307)
Accrued expenses	365	123
Net cash used in operating activities	(7,147)	(7,845)
Cash flows from investing activities:
Purchases of property and equipment		(5)
Net cash used in investing activities		(5)
Cash flows from financing activities:
Proceeds from exercise of stock options	978	130
Repayment of loan payable, net	(61)
Repayment of note payable	(18)	(37)
Proceeds from exercise of warrants	6,865
Principal payments on capital lease obligation		(3)
Proceeds from issuance of common stock	11,038	14,630
Net cash provided by financing activities	18,802	14,720
Increase (decrease) in cash and cash equivalents	11,655	6,870
Cash and cash equivalents at beginning of period	13,459	13,980
Cash and cash equivalents at end of period	25,114
Supplemental disclosure of cash flow information and non-cash transactions:
Cash paid for interest	64	65
Fair value of warrants issued in connection with underwriting agreement		$ 6,848
Reclassification of derivative warrant liability to additional paid-in capital	$ 14,442

NATURE OF OPERATIONS, BASIS OF

NATURE OF OPERATIONS, BASIS OF PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS	6 Months Ended
	Jun. 30, 2015
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS	1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS Business InVivo Therapeutics Holdings Corp. was incorporated on April 2, 2003, and on October 26, 2010, acquired the business of InVivo Therapeutics Corporation, which was incorporated on November 28, 2005, and continued the existing business operations of InVivo Therapeutics Corporation as a wholly-owned subsidiary of InVivo Therapeutics Holdings Corp. Unless otherwise noted herein, the “Company” or “InVivo” refers to InVivo Therapeutics Holdings Corp. and its wholly-owned subsidiary on a consolidated basis. The Company is a research and clinical-stage biomaterials and biotechnology company with a focus on the treatment of spinal cord injuries. Its proprietary technologies incorporate intellectual property licensed under the Company’s exclusive, world-wide license from the Boston Children’s Hospital and the Massachusetts Institute of Technology, as well as intellectual property that has been developed internally in collaboration with its advisors and partners. Since its inception, InVivo has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) consistent with those applied in, and should be read in conjunction with, the Company’s audited financial statements and related footnotes for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on March 11, 2015. The unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of June 30, 2015 and its results of operations and cash flows for the interim period presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements as allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. Reverse Stock Split On April 8, 2015, the Company effected a reverse stock split of its common stock, par value $0.00001 per share, at a ratio of 1-for-4. As a result of the reverse stock split, (i) every four shares of the issued and outstanding common stock were automatically converted into one newly issued and outstanding share of common stock, without any change in the par value per share; (ii) the number of shares of common stock into which each outstanding warrant or option to purchase common stock is exercisable was proportionally decreased, and (iii) the number of shares of authorized shares of common stock outstanding was proportionally decreased. Shares of common stock underlying outstanding stock options and other equity instruments convertible into common stock were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. Unless otherwise indicated, all of the Company’s historical share and per share information related to issued and outstanding common stock and outstanding options and warrants exercisable for common stock in these financial statements have been adjusted, on a retroactive basis, to reflect this 1-for-4 reverse stock split. Recently Issued Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 is intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This new guidance is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the financial statements. In January 2015, FASB issued ASU 2015-01 “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”. This ASU removes the concept of an extraordinary item. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS	6 Months Ended
	Jun. 30, 2015
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS	2. CASH AND CASH EQUIVALENTS As of June 30, 2015, the Company held $25,114 in cash and cash equivalents. From time to time, the Company may have cash balances in financial institutions in excess of insurance limits. The Company has never experienced any losses related to these balances. The Company’s cash equivalents are held in money market funds. Cash and cash equivalents consisted of the following (in thousands): June 30, 2015 December 31, 2014 Cash $ ) $ Money market fund Total cash and cash equivalents $ $

RESTRICTED CASH

RESTRICTED CASH	6 Months Ended
	Jun. 30, 2015
RESTRICTED CASH
RESTRICTED CASH	3. RESTRICTED CASH (in thousands) Restricted cash for the six months ended June 30, 2015 was $361 and represented $50 of security deposits related to the Company’s credit card account and a $311 cash account securing a standby letter of credit in favor of a landlord (see Note 5).

FAIR VALUE OF ASSETS AND LIABIL

FAIR VALUE OF ASSETS AND LIABILITIES	6 Months Ended
	Jun. 30, 2015
FAIR VALUE OF ASSETS AND LIABILITIES
FAIR VALUE OF ASSETS AND LIABILITIES	4. FAIR VALUE OF ASSETS AND LIABILITIES The Company groups its assets and liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 — Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 — Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The Company uses valuation methods and assumptions that consider, among other factors, the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands): At June 30, 2015 Level 1 Level 2 Level 3 Fair Value Liabilities: Derivative warrant liability $ — $ $ — $ At December 31, 2014 Level 1 Level 2 Level 3 Fair Value Liabilities: Derivative warrant liability $ — $ $ — $

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2015
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	5. COMMITMENTS AND CONTINGENCIES Operating Lease Commitment (in thousands) On November 29, 2011 and as amended on September 17, 2012, the Company entered into a commercial lease for 26,150 square feet of office, laboratory and manufacturing space in Cambridge, Massachusetts (as subsequently amended, the “Cambridge Lease”). The term of the Cambridge Lease is for six years and three months, with one five-year extension option. The Cambridge Lease also requires a standby letter of credit in the amount of $311 (see Note 3). The Cambridge Lease contains certain rent escalation clauses. The Company recognizes rent expense on a straight-line basis over the term of the Cambridge Lease and records the difference between the amount charged to expense and the rent paid as a deferred rent liability. As of June 30, 2015, the amount of deferred rent liability is $438 and is included in accrued expenses. Pursuant to the terms of the Company’s non-cancelable lease agreements in effect at June 30, 2015, the future minimum rent commitments are as follows (in thousands): Year Ended December 31, 2015 2016 2017 2018 Total $ Total rent expense for the six months ended June 30, 2015 and 2014, including month-to-month leases, was $549 and $574, respectively. Total rent expense for each of the three month periods ended June 30, 2015 and 2014, including month-to-month leases, was $287 and $287, respectively. On September 4, 2013, the Company entered into a settlement agreement with the landlord of the Cambridge Lease, which resulted in the receipt of approximately $286 in prepaid rent as consideration for the settlement of litigation. The settlement has been included in deferred rent payable, and the benefit will be amortized through rent expense over the term of the Cambridge Lease. Litigation Lawsuit with Former Employee In November 2013, the Company filed a lawsuit against Francis Reynolds, its former Chairman, Chief Executive Officer and Chief Financial Officer, in Middlesex Superior Court, Middlesex County, Massachusetts ( InVivo Therapeutics Holdings Corp. v. Reynolds, Civil Action No. 13-5004 ). The complaint alleges breaches of fiduciary duties, breach of contract, conversion, misappropriation of corporate assets, unjust enrichment, corporate waste, and seeks monetary damages and an accounting. The lawsuit involves approximately $500,000 worth of personal and/or exorbitant expenses that the Company alleges Mr. Reynolds inappropriately caused it to pay while he was serving as the Company’s Chief Executive Officer, Chief Financial Officer, President and Chairman of the Board of Directors. On December 6, 2013, Mr. Reynolds answered the complaint, and filed counterclaims against the Company and the Board of Directors. The counterclaims allege two counts of breach of contract, two counts of breach of the covenant of good faith and fair-dealing, and tortious interference with a contract, and seek monetary damages and a declaratory judgment. The counterclaims involve Mr. Reynolds’s allegations that the Company and the Board interfered with the performance of his duties under the terms of his employment agreement, and that Mr. Reynolds was entitled to additional shares upon the exercise of certain stock options. On January 9, 2014, the Company, along with the directors named in the counterclaims, filed its answer. The parties are currently conducting pre-trial discovery. No judgments or rulings are pending at this stage. Shareholder Matters and Investigations On July 31, 2014, a putative securities class action lawsuit was filed in the United States District Court for the District of Massachusetts, naming the Company and Mr. Reynolds, as defendants (the “Securities Class Action”). The lawsuit alleges violations of the Securities Exchange Act of 1934 in connection with allegedly false and misleading statements related to the timing and completion of the clinical study of the Company’s Neuro-Spinal Scaffold. The plaintiff seeks class certification for purchasers of the Company’s common stock during the period from April 5, 2013 through August 26, 2013 and unspecified damages. On April 3, 2015, the United States District Court for the District of Massachusetts dismissed the plaintiff’s claim with prejudice. Plaintiff filed a notice of appeal of this decision on May 4, 2015. A mandatory mediation conference is being scheduled . On January 23, 2015, Shawn Luger, a purported shareholder of the Company, sent the Company a letter demanding that the Board take action to remedy purported breaches of fiduciary duties allegedly related to the claimed false and misleading statements that were the subject of the Securities Class Action (the “Shareholder Demand”). The Board has completed its investigation of the matters raised in the Shareholder Demand and voted unanimously not to pursue any litigation against any current or former director, officer or employee of the Company with respect to the matters set forth in the Shareholder Demand. In addition to the Shareholder Demand, the Company has received investigation subpoenas from the Boston Regional Office of the Securities and Exchange Commission and the Massachusetts Securities Division of the Secretary of the Commonwealth of Massachusetts requesting corporate documents also concerning, among other topics, the allegations raised Securities Class Action and the Shareholder Demand. The Company is cooperating with these investigations.

ACCRUED EXPENSES

ACCRUED EXPENSES	6 Months Ended
	Jun. 30, 2015
ACCRUED EXPENSES
ACCRUED EXPENSES	6. ACCRUED EXPENSES Accrued expenses consisted of the following (in thousands) June 30, 2015 December 31, 2014 Accrued bonus $ $ — Accrued legal Accrued payroll Deferred rent payable Accrued vacation Other accrued expenses Total accrued expenses $ $

NOTE PAYABLE

NOTE PAYABLE	6 Months Ended
	Jun. 30, 2015
NOTE PAYABLE
NOTE PAYABLE	7. NOTE PAYABLE (in thousands) In May 2013, the Company entered into a contract for the purchase of an Enterprise Resource Planning (“ERP”) system for $150. The total cost for the ERP system, including interest, was $159, with an implicit interest rate of approximately 6%. Pursuant to the terms of the non-cancelable purchase agreement the total cost of the ERP system was paid in full during the three months ended March 31, 2015. In the third quarter of 2013, the Company abandoned the implementation of the ERP system. As such, the ERP system cost of $150 was fully expensed in 2013. The Company reserves the right to implement the ERP system at a future date.

LOAN PAYABLE

LOAN PAYABLE	6 Months Ended
	Jun. 30, 2015
LOAN PAYABLE
LOAN PAYABLE	8. LOAN PAYABLE (in thousands) In October 2012, the Company entered into a loan agreement with the Massachusetts Development Finance Agency (“MassDev”). The loan agreement provided the Company with a $2,000 line of credit from the Massachusetts Emerging Technology Fund, with $200 designated to be used for working capital purposes and the remainder to be used for the purchase of capital equipment. The annual interest rate is fixed at 6.5% with interest-only payments for the first thirty months, commencing on November 1, 2012, and then equal interest and principal payments over the next fifty-four months, with the final maturity on October 5, 2019. Equal monthly principal payments of approximately $41 became due commencing on May 1, 2015. Therefore, for the years ending December 31, 2015, 2016, 2017, 2018 and 2019, principal payments of $250, $396, $423, $451 and $400, respectively, will be due. In October 2012, the Company issued MassDev a warrant for the purchase of 9,037 shares of its common stock. The warrant has a seven-year term and is exercisable at $6.64 per share. The fair value of the warrant was determined to be $32 and was recorded as a deferred financing cost and is being amortized to interest expense over a seven-year period commencing in October 2012. Amortization of the deferred financing cost for the six months ended June 30, 2015 was $2 and is included in interest expense in the Company’s consolidated statements of operations. The equipment line of credit is secured by substantially all the assets of the Company, excluding intellectual property. Interest expense related to this loan for the six months ended June 30, 2015 and 2014 was $62 and $63, respectively. Interest expense related to this loan for each of the three month periods ended June 30, 2015 and 2014 was $31 and $32, respectively.

COMMON STOCK

COMMON STOCK	6 Months Ended
	Jun. 30, 2015
COMMON STOCK.
COMMON STOCK	9. COMMON STOCK The Company has authorized 50,000,000 shares of common stock, $0.00001 par value per share, of which 26,856,177 shares were issued and outstanding as of June 30, 2015 and 23,453,000 shares were issued and outstanding as of December 31, 2014. During the six months ended June 30, 2015, the Company issued an aggregate of 188,745 shares of common stock upon the exercise of stock options, including stock options to purchase 44,921 shares of common stock exercised through cashless exercise provisions resulting in the issuance of 13,695 shares of common stock and stock options to purchase 175,050 shares of common stock exercised for cash, providing cash proceeds of $978. During the six months ended June 30, 2015, the Company issued an aggregate of 1,205,225 shares of common stock upon the exercise of warrants, including warrants to purchase 18,946 shares of common stock exercised through cashless exercise provisions resulting in the issuance of 11,368 shares of common stock and warrants to purchase 1,193,857 shares of common stock exercised for cash, providing net cash proceeds of $6,865. During the six months ended June 30, 2015, the Company issued an aggregate of 7,694 shares of common stock with a fair value of $105 to the Company’s 401(k) plan as matching contributions. In January 2015, the Company closed a registered direct offering of an aggregate of 2 million shares of common stock, resulting in net proceeds of $11,038. The Company’s common stock began trading on The Nasdaq Capital Market under the symbol “NVIV” on April 17, 2015. As part of the adjustment to reflect the 1-for-4 reverse stock split on April 8, 2015, 1,514 shares were issued to account for the fractional roundup of shareholders.

STOCK OPTIONS

STOCK OPTIONS	6 Months Ended
	Jun. 30, 2015
STOCK OPTIONS
STOCK OPTIONS	10. STOCK OPTIONS In 2007, the Company adopted the 2007 Employee, Director and Consultant Stock Plan (the “2007 Plan”). Pursuant to the 2007 Plan, the Company’s Board of Directors (or committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options to the Company’s employees, officers, directors, consultants and advisors. As of June 30, 2015, there were options to purchase an aggregate of 368,159 shares of common stock outstanding under the 2007 Plan and no shares available for future grants under the 2007 Plan. On October 26, 2010, the Company’s Board of Directors adopted the 2010 Equity Incentive Plan, which was subsequently approved by the Company’s shareholders (the “2010 Plan”). The 2010 Plan provided for grants of incentive stock options to employees and nonqualified stock options and restricted common stock to employees, consultants and non-employee directors of the Company. The Company’s shareholders approved subsequent amendments in 2012 and 2013 to increase the number of shares available for issuance under the 2010 Plan. In 2015, the Company’s Board of Directors adopted the 2015 Equity Incentive Plan, which was subsequently approved by the Company’s shareholders on June 16, 2015 (the “2015 Plan,” and together with the 2007 Plan and 2010 Plan, the “Plans”). The 2015 Plan replaced the 2010 Plan, and no further grants will be made under the 2010 Plan. The 2015 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted common stock to employees, consultants and non-employee directors of the Company. The total number of shares approved for grants under the 2015 Plan is 4,322,355 shares, consisting of 4,000,000 shares plus 322,355 shares that remained available for grant under the 2010 Plan. As of June 30, 2015, the number of shares authorized for issuance under the 2015 Plan was 4,322,355 shares. As of June 30, 2015, there were options to purchase an aggregate of 2,105,258 shares of common stock outstanding under the 2010 Plan and no shares under the 2015 Plan. Options issued under the Plans are exercisable for up to 10 years from the date of issuance. The Company’s Employee Stock Purchas Plan (ESPP) was adopted by the board of directors and approved by the Company’s shareholders on June 16,2015. The plan allows employees to buy company stock twice a year through after tax payroll deductions at a discount from market. The company has authorized 187,500 shares for this program Commencing on the first day of fiscal 2016 and on the first day of each fiscal year thereafter during the term of the ESPP, the number of shares of common stock shall be increased by the lesser of (i) 1% of our outstanding shares of common stock on such date, (ii) 50,000 shares or (iii) a lesser amount determined by the Board. In no event shall the aggregate number of shares reserved for issuance during the term of the ESPP exceed 1,250,000 shares . Share-based compensation (in thousands) For stock options issued and outstanding for the six months ended June 30, 2015 and 2014, the Company recorded non-cash, stock-based compensation expense of approximately $2,241 and $1,596, respectively, net of forfeitures. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercises and employee terminations within the valuation model. The expected term of options granted under the Plans, all of which qualify as “plain vanilla,” is based on the average of the contractual term (10 years) and the vesting period (generally, 48 months). For non-employee options, the expected term is the contractual term. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. The assumptions used principally in determining the fair value of options granted were as follows: June 30, 2015 Risk-free interest rate % Expected dividend yield % Expected term (in years) Expected volatility % A summary of option activity as of June 30, 2015 and changes for the period then ended are presented below (in thousands, except per share data): Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value Outstanding at December 31, 2014 $ Granted $ Forfeited ) $ Exercised ) $ Outstanding at June 30, 2015 $ $ Vested at June 30, 2015 $ $ The weighted average grant-date fair value of options granted during the six months ended June 30, 2015 was $10.64 per share. The total fair value of options that vested for the six months ended June 30, 2015 was approximately $2,907. As of June 30, 2015, there was $5,613 of total unrecognized compensation expense related to non-vested share-based option compensation arrangements. The unrecognized compensation expense is estimated to be recognized over a period of 2.55 years at June 30, 2015.

WARRANTS

WARRANTS	6 Months Ended
	Jun. 30, 2015
WARRANTS.
WARRANTS	11. WARRANTS The following table presents information about warrants to purchase common stock issued and outstanding at June 30, 2015: Year Issued Classification Number of Warrants Exercise Price Date of Expiration 2010 Equity $ 10/26/2017 — 12/3/2017 2010 Equity $ 8/30/2017 — 12/3/2017 2011 Equity $ 6/17/2018 2011 Equity $ 12/21/2016 2012 Equity $ 10/5/2019 2014 Liability $ 5/9/2019 Total Weighted average exercise price $ Weighted average life in years

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS	6 Months Ended
	Jun. 30, 2015
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS	12. DERIVATIVE INSTRUMENTS The warrants issued in connection with the Company’s May 2014 public offering have anti-dilution protection provisions that allow for the reduction in the exercise price of the warrants if the Company subsequently issues equity securities, including common stock or any security convertible or exchangeable for shares of common stock, for no consideration or for consideration less than the exercise price of the warrants. Accordingly, these warrants are accounted for as derivative liabilities. The Company used the Black-Scholes option pricing model and assumptions that consider, among other factors, the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. Changes in fair value of the derivative financial instruments are recognized in the Company’s consolidated statement of operations as a derivative gain or loss. The warrant derivative gains (losses) are non-cash income (expenses); and for the six months ended June 30, 2015 and 2014 a gain (loss) of $(14,940) and $1,127, respectively, were included in other income (expense) in the Company’s consolidated statement of operations. June 30, 2015 Risk-free interest rate % Expected dividend yield % Expected term (in years) Expected volatility % The primary underlying risk exposure pertaining to the warrants is the change in fair value of the underlying Common Stock for each reporting period. Changes in the derivative warrant liability for the six months ended June 30 are as follows (in thousands): Six Months Ended June 30, 2015 2014 Balance at December 31, $ $ — Fair value of warrants issued — Reduction in derivative liability due to exercise and modification of warrants ) — Increase (decrease) in the fair value of warrants ) Balance at June 30, $ $

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2015
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	13. SUBSEQUENT EVENTS In July 2015, the Company entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which the Company may issue and sell from time to time shares of Common Stock having aggregate sales proceeds of up to $50 million through an “at the market” equity offering program under which Cowen acts as the Company’s sales agent. The Company is required to pay Cowen a commission of 3% of the gross proceeds from the sale of shares of Common Stock under the Sales Agreement.

CASH AND CASH EQUIVALENTS (Tabl

CASH AND CASH EQUIVALENTS (Tables)	6 Months Ended
	Jun. 30, 2015
CASH AND CASH EQUIVALENTS
Schedule of cash and cash equivalents	The Company’s cash equivalents are held in money market funds. Cash and cash equivalents consisted of the following (in thousands): June 30, 2015 December 31, 2014 Cash $ ) $ Money market fund Total cash and cash equivalents $ $

FAIR VALUE OF ASSETS AND LIAB20

FAIR VALUE OF ASSETS AND LIABILITIES (Tables)	6 Months Ended
	Jun. 30, 2015
FAIR VALUE OF ASSETS AND LIABILITIES
Summary of assets and liabilities measured at fair value on a recurring basis	Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands): At June 30, 2015 Level 1 Level 2 Level 3 Fair Value Liabilities: Derivative warrant liability $ — $ $ — $ At December 31, 2014 Level 1 Level 2 Level 3 Fair Value Liabilities: Derivative warrant liability $ — $ $ — $

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Jun. 30, 2015
COMMITMENTS AND CONTINGENCIES
Future minimum rent commitments	Pursuant to the terms of the Company’s non-cancelable lease agreements in effect at June 30, 2015, the future minimum rent commitments are as follows (in thousands): Year Ended December 31, 2015 2016 2017 2018 Total $

ACCRUED EXPENSES (Tables)

ACCRUED EXPENSES (Tables)	6 Months Ended
	Jun. 30, 2015
ACCRUED EXPENSES
Summary of accrued expenses	Accrued expenses consisted of the following (in thousands): June 30, 2015 December 31, 2014 Accrued bonus $ $ — Accrued legal Accrued payroll Deferred rent payable Accrued vacation Other accrued expenses Total accrued expenses $ $

STOCK OPTIONS (Tables)

STOCK OPTIONS (Tables)	6 Months Ended
	Jun. 30, 2015
STOCK OPTIONS
Schedule of assumptions used principally in determining the fair value of options granted	June 30, 2015 Risk-free interest rate % Expected dividend yield % Expected term (in years) Expected volatility %
Summary of option activity	A summary of option activity as of June 30, 2015 and changes for the period then ended are presented below (in thousands, except per share data): Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value Outstanding at December 31, 2014 $ Granted $ Forfeited ) $ Exercised ) $ Outstanding at June 30, 2015 $ $ Vested at June 30, 2015 $ $

WARRANTS (Tables)

WARRANTS (Tables)	6 Months Ended
	Jun. 30, 2015
WARRANTS.
Schedule of information about warrants to purchase common stock issued and outstanding	The following table presents information about warrants to purchase common stock issued and outstanding at June 30, 2015: Year Issued Classification Number of Warrants Exercise Price Date of Expiration 2010 Equity $ 10/26/2017 — 12/3/2017 2010 Equity $ 8/30/2017 — 12/3/2017 2011 Equity $ 6/17/2018 2011 Equity $ 12/21/2016 2012 Equity $ 10/5/2019 2014 Liability $ 5/9/2019 Total Weighted average exercise price $ Weighted average life in years

DERIVATIVE INSTRUMENTS (Tables)

DERIVATIVE INSTRUMENTS (Tables)	6 Months Ended
	Jun. 30, 2015
DERIVATIVE INSTRUMENTS
Assumptions used in determining fair value of warrants	June 30, 2015 Risk-free interest rate % Expected dividend yield % Expected term (in years) Expected volatility %
Changes in derivative warrant liability	Changes in the derivative warrant liability for the six months ended June 30 are as follows (in thousands): Six Months Ended June 30, 2015 2014 Balance at December 31, $ $ — Fair value of warrants issued — Reduction in derivative liability due to exercise and modification of warrants ) — Increase (decrease) in the fair value of warrants ) Balance at June 30, $ $

NATURE OF OPERATIONS, BASIS O26

NATURE OF OPERATIONS, BASIS OF PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS (Details)	Apr. 08, 2015$ / shares	Jun. 30, 2015$ / shares	Dec. 31, 2014$ / shares
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001	$ 0.00001
Reverse stock split ratio	4

CASH AND CASH EQUIVALENTS (Deta

CASH AND CASH EQUIVALENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013
Cash and cash equivalents
Total cash and cash equivalents	$ 25,114	$ 13,459	$ 20,850	$ 13,980
Cash.
Cash and cash equivalents
Total cash and cash equivalents	(187)	269
Money market fund
Cash and cash equivalents
Total cash and cash equivalents	$ 25,301	$ 13,190

RESTRICTED CASH (Details)

RESTRICTED CASH (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Restricted cash
Restricted cash	$ 361	$ 422
Security deposit related to credit card account
Restricted cash
Restricted cash	50
Standby letter of credit in favor of a landlord
Restricted cash
Restricted cash	$ 311

FAIR VALUES OF ASSETS AND LIABI

FAIR VALUES OF ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Assets and liabilities measured at fair value on a recurring basis
Derivative warrant liability	$ 7,722	$ 7,224	$ 5,721
Recurring basis
Assets and liabilities measured at fair value on a recurring basis
Derivative warrant liability	7,722	7,224
Recurring basis | Level 2
Assets and liabilities measured at fair value on a recurring basis
Derivative warrant liability	$ 7,722	$ 7,224

COMMITMENTS AND CONTINGENCIES30

COMMITMENTS AND CONTINGENCIES (Details) - Cambridge Lease $ in Thousands	Nov. 29, 2011USD ($)ft²item	Jun. 30, 2015USD ($)
Commitments
Lease Space for Laboratory and office space (in square feet) | ft²	26,150
Term of commercial lease	6 years 3 months
Number of lease extension options | item	1
Term of lease extension option	5 years
Standby letter of credit	$ 311
Deferred rent liability		$ 438

COMMITMENTS AND CONTINGENCIES31

COMMITMENTS AND CONTINGENCIES (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 04, 2013
Future minimum rent commitments
2,015	$ 621		$ 621
2,016	1,263		1,263
2,017	1,289		1,289
2,018	1,092		1,092
Total	4,265		4,265
Commitments
Total rent expense	$ 287	$ 287	$ 549	$ 574
Amount of settlement agreement					$ 286

COMMITMENTS AND CONTINGENCIES32

COMMITMENTS AND CONTINGENCIES (Details 3)	Dec. 06, 2013claim	Nov. 30, 2013USD ($)
InVivo Therapeutics Holdings Corp. v. Reynolds
Litigation
Value of damages sought worth of personal and/or exorbitant expenses | $		$ 500,000
Reynolds counterclaim against InVivo Therapeutics Holdings Corp.
Litigation
Number of breach of contract claims	2
Number of breach of covenant of good faith and fair-dealing claims	2

ACCRUED EXPENSES (Details)

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
ACCRUED EXPENSES
Accrued bonus	$ 563
Accrued legal	133	$ 360
Accrued payroll	35	49
Deferred rent payable	438	505
Accrued vacation	181	72
Other accrued expenses	59	58
Total accrued expenses	$ 1,409	$ 1,044

NOTE PAYABLE (Details)

NOTE PAYABLE (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	May. 31, 2013	Sep. 30, 2013	Dec. 31, 2014
Future minimum principal payments
2,014			$ 18
Note payable disclosures
ERP system fully expensed due to abandonment of implementation		$ 150
Note Payable.
Note payable
Contract price for the purchase of ERP system	$ 150
Total cost for ERP system including interest	$ 159
Implicit interest rate	6.00%

LOAN PAYABLE (Details)

LOAN PAYABLE (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Oct. 31, 2012	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Equipment Line of Credit
Loans Payable
Interest expense		$ 31	$ 32	$ 62	$ 63
MassDev
Loans Payable
Line of credit for the purchase of capital equipment	$ 2,000
Amortization of the deferred financing costs		$ 2		$ 2
Additional disclosure
Line of credit for working capital purpose	$ 200
Fixed interest rate (as a percent)		6.50%		6.50%
Period for charging equal interest and principal payments		54 months
Maturity date		Oct. 5, 2019
Amount of monthly principal payment		$ 41
Commencement date of monthly installments		May 1, 2015
Future Principal payment due : 2015		$ 250		$ 250
Future Principal payment due : 2016		396		396
Future Principal payment due : 2017		423		423
Future Principal payment due : 2018		451		451
Future Principal payment due : 2019		$ 400		$ 400
MassDev | Warrants
Loans Payable
Number of shares into which a warrant may be converted	9,037
Warrant period	7 years
Exercise price of warrant (in dollars per share)	$ 6.64
Additional disclosure
Approximate fair value of warrant	$ 32
Amortization period of deferred financing cost	7 years

COMMON STOCK (Details)

COMMON STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands	Apr. 08, 2015	Jan. 31, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Common stock, number of shares, par value and other disclosures
Common stock, authorized			50,000,000		50,000,000
Common stock, par value (in dollars per share)	$ 0.00001		$ 0.00001		$ 0.00001
Common stock, issued			26,856,177		23,453,000
Common stock, outstanding			26,011,852		23,453,000
Common stock disclosures
Proceeds from exercise of stock options			$ 978	$ 130
Proceeds from exercise of warrants			6,865
Issuance of common stock to 401(k) plan (in dollars)			$ 105
Stock Issued for reverse stock Splits	1,514
Common Stock
Common stock disclosures
Issuance of common stock upon exercise of stock options (in shares)			188,745
Issuance of stock options to purchase common stock (in shares)			44,921
Issuance of stock for services (in shares)			13,695
Issuance of stock (in shares)			175,050
Proceeds from exercise of stock options			$ 978
Issuance of common stock upon exercise of warrants (in shares)			1,205,225
Warrants to purchase through cashless exercise provisions (in shares)			18,946
Shares issued through cashless exercise provisions			11,368
Warrants to purchase exercise through cash (in shares)			1,193,857
Issuance of common stock to 401(k) plan (in shares)			7,694
Common Stock | Public offering
Common stock disclosures
Number of shares issued under underwritten public offering (in shares)		2,000,000
Net proceeds from issuance of equity (in dollars)		$ 11,038

STOCK OPTIONS (Details)

STOCK OPTIONS (Details) - USD ($)	Jun. 30, 2015	Jun. 16, 2015	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Stock option
Options available to purchase/Common Stock outstanding	2,473,417		2,473,417	2,473,417		2,606,737
Shares authorized for issuance	4,322,355		4,322,355	4,322,355
Exercisable period				6 years 29 days
Vesting period				6 years 2 months 11 days
Stock Options and Restricted Stock
Stock option
Stock-based compensation expense, net of forfeitures				$ 2,241,000	$ 1,596,000
Expected term of options granted	10 years
Vesting period				48 months
2007 Plan
Stock option
Options available to purchase/Common Stock outstanding	368,159		368,159	368,159
Shares available for future grants	0		0	0
2010 Plan
Stock option
Options available to purchase/Common Stock outstanding	2,105,258		2,105,258	2,105,258
Shares available for future grants	0		0	0
Shares authorized for issuance	322,355		322,355	322,355
Exercisable period			10 years
2015 plan
Stock option
Shares authorized for issuance	4,000,000		4,000,000	4,000,000
ESPP
Stock option
Shares authorized for employee stock purchase plan		$ 187,500
Maximum aggregate number of shares reserved for issuance during term of employee stock purchase plan		1,250,000

STOCK OPTIONS (Details 2)

STOCK OPTIONS (Details 2) - 6 months ended Jun. 30, 2015	Total
Assumptions used principally in determining the fair value of options granted
Risk-free interest rate (as a percent)	1.72%
Expected dividend yield (as a percent)	0.00%
Expected term	6 years 29 days
Expected volatility (as a percent)	120.01%

STOCK OPTIONS (Details 3)

STOCK OPTIONS (Details 3) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands	Total
Summary of option activity - Shares
Outstanding at the beginning of year (in shares)	2,606,737
Granted (in shares)	146,249
Forfeited (in shares)	(59,599)
Exercised (in shares)	(219,970)
Outstanding at the end of period (in shares)	2,473,417
Vested at the end of period (in shares)	1,154,371
Summary of option activity - Weighted Average Exercise Price
Outstanding at the beginning of year (in dollars per shares)	$ 6.58
Granted (in dollars per shares)	12.51
Forfeited (in dollars per shares)	9.46
Exercised (in dollars per shares)	6.24
Outstanding at the end of period (in dollars per shares)	6.88
Vested at the end of period (in dollars per share)	$ 5.93
Option activity disclosures
Weighted Average Remaining Contractual Term - Outstanding	7 years 7 months
Weighted Average Remaining Contractual Term - Vested	6 years 2 months 11 days
Aggregate Intrinsic Value - Outstanding (in dollars)	$ 23,002
Aggregate Intrinsic Value - Vested (in dollars)	$ 11,825
Stock Option
Weighted average grant-date fair value of options granted	$ 10.64
Total fair value of options vested	$ 2,907
Total unrecognized compensation expense, related to non-vested share-based compensation arrangements	$ 5,613
Period for unrecognized compensation expense is estimated to be recognized	2 years 6 months 18 days

WARRANTS (Details)

WARRANTS (Details) - Jun. 30, 2015 - $ / shares	Total
Warrants to purchase common stock issued and outstanding
Number of Warrants	1,339,453
Weighted average exercise price	$ 5.71
Weighted average life in years	2 years 11 months 1 day
Equity | Derivative with Exercise Price One
Warrants to purchase common stock issued and outstanding
Warrants Issued Year	2,010
Number of Warrants	364,752
Warrant Exercise Price	$ 5.60
Equity | Derivative with Exercise Price One | Minimum
Warrants to purchase common stock issued and outstanding
Expiration date	Oct. 26, 2017
Equity | Derivative with Exercise Price Two
Warrants to purchase common stock issued and outstanding
Warrants Issued Year	2,010
Number of Warrants	322,543
Warrant Exercise Price	$ 4
Equity | Derivative with Exercise Price Two | Minimum
Warrants to purchase common stock issued and outstanding
Expiration date	Aug. 30, 2017
Equity | Derivative with Exercise Price Three
Warrants to purchase common stock issued and outstanding
Warrants Issued Year	2,011
Number of Warrants	4,017
Warrant Exercise Price	$ 5.60
Expiration date	Jun. 17, 2018
Equity | Derivative with Exercise Price Four
Warrants to purchase common stock issued and outstanding
Warrants Issued Year	2,011
Number of Warrants	85,785
Warrant Exercise Price	$ 12.24
Expiration date	Dec. 21, 2016
Equity | Derivative with Exercise Price Five
Warrants to purchase common stock issued and outstanding
Warrants Issued Year	2,012
Number of Warrants	6,054
Warrant Exercise Price	$ 6.64
Expiration date	Oct. 5, 2019
Equity | Derivative with Exercise Price Six
Warrants to purchase common stock issued and outstanding
Warrant Exercise Price	$ 5.75
Liability | Derivative with Exercise Price Six
Warrants to purchase common stock issued and outstanding
Warrants Issued Year	2,014
Number of Warrants	556,302
Expiration date	May 9, 2019

DERIVATIVE INSTRUMENTS (Details

DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
DERIVATIVE INSTRUMENTS
Derivatives gain (loss)	$ (4,653)	$ 1,127	$ (14,940)	$ 1,127

DERIVATIVE INSTRUMENTS (Detai42

DERIVATIVE INSTRUMENTS (Details 2) - 6 months ended Jun. 30, 2015	Total
Fair value of warrants
Risk-free interest rate (as a percent)	1.27%
Expected dividend yield (as a percent)	0.00%
Expected term (in years)	3 years 10 months 10 days
Expected volatility (as a percent)	115.31%

DERIVATIVE INSTRUMENTS (Detai43

DERIVATIVE INSTRUMENTS (Details 3) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Changes in derivative warrant liability
Balance at beginning of year	$ 7,224
Fair value of warrants issued		$ 6,848
Reduction in derivative liability due to exercise and modification of warrants	(14,442)
Increase (decrease) in fair value of warrants	14,490	(1,127)
Balance at end of period	$ 7,722	$ 5,721

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - Jul. 31, 2015 - Subsequent event $ in Millions	USD ($)
Subsequent Event
Aggregate proceeds from sale agreement of shares of common stock	$ 50
Percentage of Commission on the gross proceeds from sales agreement of shares of common stock	0.03