Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 10, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | HUMANIGEN, INC | |
Entity Central Index Key | 1,293,310 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
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 | 14,986,712 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,095 | $ 2,906 |
Prepaid expenses and other current assets | 1,213 | 1,643 |
Total current assets | 2,308 | 4,549 |
Property and equipment, net | 30 | 68 |
Restricted cash | 101 | 101 |
Other assets | 128 | |
Total assets | 2,567 | 4,718 |
Current liabilities: | ||
Accounts payable | 4,177 | 4,072 |
Accrued expenses | 2,990 | 736 |
Term loans payable | 15,656 | 3,016 |
Total current liabilities | 22,823 | 7,824 |
Notes payable to vendors | 1,322 | 1,273 |
Total liabilities | 24,145 | 9,097 |
Stockholders' deficit: | ||
Common stock, $0.001 par value: 85,000,000 shares authorized at September 30, 2017 and December 31, 2016; 14,986,712 and 14,977,397 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 15 | 15 |
Additional paid-in capital | 237,904 | 236,216 |
Accumulated deficit | (259,497) | (240,610) |
Total stockholders' deficit | (21,578) | (4,379) |
Total liabilities and stockholders' deficit | $ 2,567 | $ 4,718 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 85,000,000 | 85,000,000 |
Common stock, shares issued | 14,986,712 | 14,977,397 |
Common stock, shares outstanding | 14,986,712 | 14,977,397 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating expenses: | ||||
Research and development | $ 3,807 | $ 1,741 | $ 10,328 | $ 7,805 |
General and administrative | 1,993 | 2,453 | 5,987 | 6,169 |
Total operating expenses | 5,800 | 4,194 | 16,315 | 13,974 |
Loss from operations | (5,800) | (4,194) | (16,315) | (13,974) |
Other expense: | ||||
Interest expense | (1,269) | (30) | (2,245) | (76) |
Other income (expense), net | (14) | 128 | (38) | 128 |
Reorganization items, net | (102) | (427) | (289) | (8,039) |
Net loss | (7,185) | (4,523) | (18,887) | (21,961) |
Other comprehensive income | ||||
Comprehensive loss | $ (7,185) | $ (4,523) | $ (18,887) | $ (21,961) |
Basic and diluted net loss per common share | $ (0.48) | $ (0.30) | $ (1.26) | $ (2.76) |
Weighted average common shares outstanding used to calculate basic and diluted net loss per common share | 14,981,346 | 14,879,519 | 14,978,728 | 7,950,826 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities: | ||
Net loss | $ (18,887) | $ (21,961) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 38 | 81 |
Gain on lease termination | (227) | |
Noncash interest expense | 2,226 | 46 |
Reorganization items related to debtor-in-possession financing | 1,627 | |
Stock based compensation expense | 1,773 | 317 |
Issuance of common stock for services | 12 | |
Issuance of warrants in connection with acquisition of licenses | 272 | |
Change in fair value of warrants issued in connection with acquisition of licenses | (97) | |
Issuance of common stock to officer and directors | 1,452 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 303 | 428 |
Accounts payable | 327 | 3,537 |
Accrued Expenses | 2,253 | (367) |
Liabilities subject to compromise | (259) | (3,153) |
Net cash used in operating activities | (12,311) | (17,948) |
Investing activities: | ||
Changes in restricted cash | 92 | |
Net cash provided by investing activities | 92 | |
Financing activities: | ||
Net proceeds from issuance of common stock | 10,132 | |
Net proceeds from term loan | 10,500 | |
Net proceeds from convertible notes payable | 2,198 | |
Net cash provided by financing activities | 10,500 | 12,330 |
Net increase (decrease) in cash and cash equivalents | (1,811) | (5,526) |
Cash and cash equivalents, beginning of period | 2,906 | 8,431 |
Cash and cash equivalents, end of period | 1,095 | 2,905 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of notes payable and related accrued interest and fees to common stock | 3,387 | |
Change in fair value of warrants issued in connection with acquisition of licenses | (97) | |
Issuance of common stock for services | 12 | |
Issuance of warrants in connection with acquisition of licenses | 272 | |
Issuance of common stock to officer and directors | 1,452 | |
Issuance of notes payable to vendors | $ 1,212 |
Nature of Operations
Nature of Operations | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Description of the Business The Company was incorporated on March 15, 2000 in California and reincorporated as a Delaware corporation in September 2001 under the name KaloBios Pharmaceuticals, Inc. The Company completed its initial public offering in January 2013. Effective August 7, 2017, the Company changed its legal name to Humanigen, Inc. The Company has undergone a significant transformation since December 2015. As a result of challenges facing it at the time, on December 29, 2015, the Company filed a voluntary petition for bankruptcy protection under Chapter 11 of Title 11 of the U.S. Bankruptcy Code. On June 30, 2016, the Company’s Second Amended Plan of Reorganization, dated May 9, 2016, as amended (the “Plan”), became effective and the Company emerged from its Chapter 11 bankruptcy proceedings. Refer to Note 2 for additional details regarding the Company’s bankruptcy proceedings. From the time of its emergence from bankruptcy to August 29, 2017, the Company’s focus was on its However, on August 29, 2017, the FDA announced it had granted accelerated and conditional approval of a benznidazole therapy manufactured by Chemo Research, S.L. (“Chemo”) for the treatment of Chagas disease and had awarded that manufacturer a neglected of benznidazole Since the FDA’s August 29, 2017 announcement, the Company has shifted its primary focus toward developing its proprietary monoclonal antibody portfolio, which comprises lenzilumab (formerly known as KB003) and ifabotuzumab (formerly known as KB004), for use in addressing significant unmet needs in oncology. Both of these product candidates are in the early stage of development and will require substantial time, expenses, clinical development, testing, and regulatory approval prior to commercialization. Furthermore, neither of these product candidates has advanced into a pivotal registration Lenzilumab is currently being developed for the treatment of chronic myelomonocytic leukemia (“CMML”), a rare hematologic cancer with high unmet medical need. The Company has enrolled a total of nine patients in the 200, 400 and 600 mg dose cohorts in its CMML trial, and is currently evaluating subjects in the highest dose cohort of 600 mg for continuing accrual. The Company plans to review preliminary safety and efficacy results and anticipates completion of the ad hoc interim analysis in the first half of 2018. Additionally, the Company is exploring lenzilumab’s potential to neutralize circulating Granulocyte-Macrophage Colony-Stimulating Factor (GM-CSF) which could lead to developing it as a possible treatment for a range of conditions including juvenile myelomonocytic leukemia (“JMML”) and the toxicities and adverse events associated with chimeric antigen receptor T-cell (“CAR-T”) therapy. Ifabotuzumab development has begun Liquidity and Going Concern The Company has incurred significant losses since its inception in March 2000 and had an accumulated deficit of $259.5 million as of September 30, 2017. The Company has financed its operations primarily through the sale of equity securities, debt financings, interest income earned on cash and cash equivalents, grants and the payments received under its agreements with Novartis Pharma AG and Sanofi Pasteur S.A. (“Sanofi”). To The Condensed Consolidated Financial Statements for the three months ended September 30, 2017 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. The ability of the Company to meet its total liabilities of $24.1 million at September 30, 2017 and to continue as a going concern is dependent upon the availability of future funding. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. See Note 12 – “Subsequent Events.” Review of Strategic Alternatives The Company is currently evaluating a full range of strategic alternatives to address or respond to the Company’s lack of liquidity in order to repay its outstanding term loans (See Note 7 – “Debt and Equity Financing”) and other obligations. The Company has been discussing and continues to discuss with its Term Loan Lenders alternative transactions that might result in the satisfaction, extension or modification of the Company’s obligations including conversion of the Term Loans into equity in the Company, which may occur at a significant discount to the current market price and be dilutive to the ownership interests of existing stockholders. If the Company is able to successfully reach agreement with its Term Loan Lenders and is also the review of strategic alternatives could result in among other things, If the Company is unable to reach a satisfactory agreement with its Term Loan Lenders on any alternative transactions, the Company may be forced to file for a second bankruptcy. Delisting of Common Stock On January 13, 2016, the Company’s common stock was suspended from the Nasdaq Global Market and began trading on the over-the-counter market under the KBIOQ symbol. On January 26, 2016, NASDAQ filed a Form 25 with the Securities and Exchange Commission to complete the delisting of the common stock, and the delisting was effective on February 5, 2016. On June 30, 2016, upon emergence from bankruptcy, the ticker symbol for the trading of the Company’s common stock on the over-the-counter market reverted back to KBIO. On June 26, 2017 the Company’s common stock began trading on the OTCQB Venture Market under the same ticker symbol. On August 7, 2017, following the effectiveness of our previously reported name change, the Company’s common stock began trading on the OTCQB Venture Market under the new ticker symbol “HGEN”. Basis of Presentation The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and on a basis consistent with the annual consolidated financial statements and include all adjustments necessary for the presentation of the Company’s condensed consolidated financial position, results of operations and cash flows for the periods presented. The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared on a basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The December 31, 2016 Condensed Consolidated Balance Sheet was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP. These interim financial results are not necessarily indicative of the results to be expected for the year ending December 31, 2017, or for any other future annual or interim period. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s 2016 Annual Report on Form 10-K (the “2016 Annual Report”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The Company believes judgment is involved in determining the valuation of the financing derivative, the fair value-based measurement of stock-based compensation, accruals and warrant valuations. The Company evaluates its estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Condensed Consolidated Financial Statements. |
Chapter 11 Filing
Chapter 11 Filing | 9 Months Ended |
Sep. 30, 2017 | |
Financial Statement Presentation While in Chapter 11 [Abstract] | |
Chapter 11 Filing | 2. Chapter 11 Filing On December 29, 2015, the Company filed a voluntary petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The filing was made in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) (Case No. 15-12628 (LSS)). In connection with financing efforts related to the Company’s bankruptcy proceedings, on April 1, 2016, the Company entered into a Debtor-in-Possession Credit and Security Agreement (the “Credit Agreement”) with a group of lenders (the “DIP Lenders”), pursuant to which the Company received $3 million in funds for working capital, bankruptcy-related costs, costs related to its plan of reorganization, payment of certain fees to the DIP Lenders and other costs associated with the ordinary course of business. Funds received under the Credit Agreement bore interest at a rate of 12% and were due and payable upon the Effective Date of the Plan, as defined below. Payment due under the Credit Agreement was convertible into shares of the Company’s common stock, with share amounts subject to calculation as provided in the Credit Agreement. On April 1, 2016, the Company also entered into a Securities Purchase Agreement (the “SPA”) with the DIP Lenders. The SPA provided for the sale of the Company’s common stock, with share amounts subject to calculation as provided in the SPA, in respect of exit financing in the amount of $11,000,000 to be received upon the Effective Date of the Plan, as defined below. Plan of Reorganization On May 9, 2016, the Company filed with the Bankruptcy Court the Plan and related amended disclosure statement pursuant to Chapter 11 of the Bankruptcy Code. On June 16, 2016, the Bankruptcy Court entered an order confirming the Plan. The Plan became effective on June 30, 2016 (the “Effective Date”) and the Company emerged from its Chapter 11 bankruptcy proceedings. In connection with such emergence, the Company consummated the transactions and other items described below. · Pursuant to the Plan and the SPA and in repayment of its obligations under the Credit Agreement, the Company issued an aggregate of 9,497,515 shares of its common stock to the DIP Lenders. · The Company became obligated to issue 327,608 shares of common stock to the plaintiffs in litigation related to the Company’s 2015 private financing transaction in accordance with the settlement stipulation discussed below. The Company recorded an obligation in stockholders’ equity to issue the related shares and recorded the related expense of approximately $1.5 million as of December 31, 2015. As of September 30, 2017, all of the shares of common stock related to this settlement stipulation had been issued. · The Company reserved 300,000 shares of common stock for issuance to the plaintiffs in class action litigation related to the events surrounding the Company’s former Chairman and Chief Executive Officer. The Company recorded an obligation in stockholders’ equity to issue the related shares and recorded the related expense of approximately $1.3 million as of December 31, 2015. As of September 30, 2017, all of the shares related to this settlement stipulation had been issued. · The Company became obligated to issue 3,750 shares of common stock to a former director in satisfaction of claims against the Company. The Company recorded an obligation in stockholders’ equity to issue the related shares and recorded the related expense of approximately $16,000 as of December 31, 2015. As of September 30, 2017, all of the shares related to this settlement stipulation had been issued. · The Company reserved for issuance shares of common stock in an amount as yet to be determined in connection with the settlement of certain other claims and interests as set forth in the Plan. As of September 30, 2017, management does not believe the issuance of additional common stock for any such claims is probable. As such, no accrual has been made in the Condensed Consolidated Financial Statements. · The Company issued promissory notes in an aggregate principal amount of approximately $1.2 million to certain vendors in accordance with the Plan. The notes are unsecured, bear interest at 10% per annum and are due and payable in full, including principal and accrued interest, on June 30, 2019. As of September 30, 2017 the Company has accrued $148,000 of interest expense related to these promissory notes. · The Company issued an aggregate of 323,155 shares of common stock to Cameron Durrant, Ronald Barliant, and David Moradi pursuant to an order by the Bankruptcy Court approving a one-time equity award for the Company’s Chief Executive Officer and two other directors. For the year ended December 31, 2016, the Company recorded a charge of $1,451,000 representing the fair value of the shares issued and classified $700,000 and $751,000 as Reorganization items, net and General and administrative expenses, respectively. Bankruptcy Claims Administration On February 29, 2016, the Company filed its schedules of assets and liabilities and statement of financial affairs (the “Schedules”) with the Bankruptcy Court. The Bankruptcy Court entered an order setting April 1, 2016 as the deadline for filing proofs of claim for creditors other than governmental units and June 27, 2016 as the bar date for filing proofs of claim by governmental units (together, the “Bar Date”). The Bar Date is the date by which proofs of claims against the Company relating to the period prior to the commencement of the Company's Chapter 11 case were required to be filed if such claims were not listed in liquidated, non-contingent and undisputed amounts in the Schedules, or if the claimant disagrees with the amount, characterization or classification of its claim as reflected in the Schedules. Claims that are subject to the Bar Date and that were not filed on or prior to the Bar Date are barred from participating in any distribution that may be made under the Plan. As of the Effective Date, approximately 195 proofs of claim were outstanding (including claims that were previously identified on the Schedules) totaling approximately $32 million. Prior to the Bar Date, certain investors filed a class action claim in the amount of $20 million in connection with events surrounding the Company’s former Chairman and Chief Executive Officer. On June 15, 2016, a settlement stipulation related to the class action suit was approved under order of the Bankruptcy Court. The settlement stipulation required the Company to issue 300,000 shares of common stock and submit a payment of $250,000 to the claimants. During the year ended December 31, 2016, the 300,000 shares were issued and the $250,000 payment was made. See Note 11 for additional information on this matter and settlement. Separately, a claim was filed by certain investors in the Company’s 2015 private financing transaction totaling approximately $6.9 million. On May 9, 2016, a settlement stipulation related to this suit was approved under order of the Bankruptcy Court. The settlement stipulation required the Company to issue 327,608 shares of common stock and submit a payment of $250,000 to an escrow account on behalf of the claimants. During the year ended December 31, 2016, the 327,608 shares were issued and the $250,000 payment was made. See Note 11 for additional information on this matter and settlement. As of June 30, 2016, the Company emerged from bankruptcy. The Company expects the amounts remaining in Liabilities subject to compromise as of the Effective Date to be paid in accordance with the Plan. Accordingly, as of September 30, 2017, Liabilities subject to compromise have been reduced to zero and reclassified according to their payment terms. In March 2016, the Company entered into a termination agreement (the “Lease Termination Agreement”) related to the lease of its prior facility in South San Francisco, California. The Lease Termination Agreement, approved by order of the Bankruptcy Court issued March 15, 2016, waived all damages related to early termination of the lease, relieved the Company of March rental expenses and set an effective termination date of March 31, 2016. In accordance with the termination of the lease, the Company wrote off remaining deferred rent liabilities of approximately $312,000 and disposed of certain leasehold improvements and furniture and fixtures with a net book value of approximately $85,000. The resulting gain of approximately $227,000 is included in Reorganization items, net, in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Loss for the nine months ended September 30, 2016. Concurrent with the termination of its prior lease, the Company entered into a lease agreement for a new office facility in Brisbane, California. The new lease commenced in April 2016 and was to expire in March 2017. On February 16, 2017, the Company amended the lease to extend the term of the lease for an additional period of eighteen months such that the lease will expire on September 30, 2018. The reconciliation of certain proofs of claim filed against the Company in the Bankruptcy Case, including certain General Unsecured Claims, Convenience Class Claims and Other Subordinated Claims, is ongoing. As a result of its examination of the claims, the Company may ask the Bankruptcy Court to disallow, reduce, reclassify or otherwise adjudicate certain claims the Company believes are subject to objection or otherwise improper. Under the terms of the Plan, the Company had until December 27, 2016 to file additional objections to disputed claims, subject to the Company’s right to seek an extension of this deadline from the Bankruptcy Court. By Order, dated February 6, 2017, the Bankruptcy Court extended the claims objection deadline to June 26, 2017. By Order dated July 10, 2017, the Bankruptcy Court extended the claims objection deadline to September 25, 2017. By Order dated October 23 As of September 30, 2017, approximately $731,000 in claims remained subject to review and reconciliation by the Company. The Company may file objections to these claims after it completes the reconciliation process. As of September 30, 2017, the Company has recorded $28,000 and $31,000 related to these claims in Accounts payable and Notes payable to vendors, respectively, which represents management’s best estimate of claims to be allowed by the Bankruptcy Court. Although the Bankruptcy Case remains open, other than with respect to certain matters relating to the implementation of the Plan, the administration of certain claims, or over which the Bankruptcy Court may have otherwise retained jurisdiction, the Company is no longer operating under the direct supervision of the Bankruptcy Court. The Company anticipates that the Bankruptcy Case will be closed following the completion of the claims reconciliation process. Bankruptcy Related Financing Arrangements On April 1, 2016, the Company entered into the Credit Agreement with Black Horse Capital Master Fund Ltd., as administrative agent and lender (“BHCMF” or “Agent”), Black Horse Capital LP, as a lender (“BHC”), Cheval Holdings, Ltd., as a lender (“Cheval”) and Nomis Bay LTD, as a lender (“Nomis” and, together with BHCMF, BHC and Cheval, the “Lenders”). The Credit Agreement provided for a debtor-in-possession credit facility in the original principal amount of $3,000,000 (the “Term Loan”). The Credit Agreement provided that the Term Loan will be made by the Lenders at an original discount equal to $191,000 (the “Upfront Fee”) and required the payment by the Company to the Lenders of a commitment fee equal to $150,000 (the “Commitment Fee”). In accordance with the terms of the Credit Agreement, the Company used the proceeds of the Term Loan for working capital, bankruptcy-related costs, costs related to the Company’s plan of reorganization, the payment of certain fees and expenses owed to the Agent and the Lenders in connection with the Credit Agreement and other costs incurred in the ordinary course of business. Pursuant to the terms of the Credit Agreement, the Term Loan bore interest at a rate per annum equal to 12.00%. In accordance with the bidding procedures order entered by the Bankruptcy Court, the Term Loan and the SPA were together subject to competing, higher and better offers. In connection with the Company’s obligations under the Credit Agreement, the Company executed in favor of the Agent an Intellectual Property Security Agreement, dated as of April 1, 2016 (the “IP Security Agreement”). Under the terms of the IP Security Agreement, the Company pledged all of its intellectual property to the Agent for the ratable benefit of the Lenders, as collateral for its obligations under the Credit Agreement. The Credit Agreement provided that the outstanding principal balance of the Term Loan, plus accrued and unpaid interest, plus the Upfront Fee, plus the Commitment Fee and all other non-contingent obligations would mature on the earlier of an event of default under the Credit Agreement or the effective date of the Company’s plan of reorganization. The Maturity Date was deemed to occur simultaneously with the Effective Date and, accordingly, on June 30, 2016, 2,350,480 shares of common stock were issued to the Lenders in repayment of the Company’s debt obligations under the Credit Agreement, including 201,436 shares to BHC, 470,096 shares to BHCMF, 503,708 shares to Cheval, 940,192 shares to Nomis and 235,048 shares to Cortleigh Limited (“Cortleigh”). Pursuant to the terms of the Credit Agreement, the Company also paid $406,000 to BHC in payment of its fees and expenses and $285,000 to Nomis in payment of its fees and expenses. The Company records discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the fair value of the underlying common stock at the commitment date of the note transaction exceeding the effective conversion price embedded in the note. The Company evaluated the Credit Agreement for beneficial conversion features and calculated a value of approximately $484,000, all of which was expensed as of the Effective Date. In conjunction with the Credit Agreement, during the year ended December 31, 2016, the Company incurred the following expenses which were charged to Reorganization items, net in 2016: Nine Months ended (in thousands) September 30, 2016 Upfront fee $ 191 Commitment fee 150 Beneficial conversion feature 484 Legal fees 802 Total Credit Agreement expense $ 1,627 On April 1, 2016, the Company also entered into the SPA with the Lenders. The SPA provided for the sale to the Lenders on the closing date of an aggregate of 5,885,000 shares of common stock, subject to adjustment as provided in the SPA, in respect of exit financing in the amount of $11,000,000 (the “Exit Financing”) plus an exit financing commitment fee of $770,000 payable by the Company to the Lenders, plus payment to the Lenders of their fees and expenses incurred in connection with the Exit Financing and the SPA. Nomis subsequently assigned twenty percent (20%) of its interest in the shares of common stock to be purchased by Nomis under the SPA and the Credit Agreement to Cortleigh (collectively with the Lenders, the “Purchasers”). The consummation of the transactions contemplated by the SPA were contingent on, among other things, the funding of the Term Loan, the approval of the Bankruptcy Court of the Company’s plan of reorganization, and the simultaneous closing of the Company’s transaction with Savant. In addition, the closing of the transactions under the SPA were contingent upon the board of directors of the Company, upon the effectiveness of the confirmed plan of reorganization, consisting of (i) one director to be designated by Nomis; (ii) one director to be jointly designated by BHC, BHCF, and Cheval; (iii) the Chief Executive Officer of the Company to be designated jointly and unanimously by the Lenders; and (iv) two independent directors to be designated jointly and unanimously by the Lenders. The issuance of the shares contemplated by the SPA was consummated on the Effective Date, and the Company issued to the Purchasers an aggregate of 7,147,035 shares of common stock for an aggregate purchase price of $11,000,000, including 612,501 shares to BHC, 1,429,407 shares to BHCMF, 1,531,610 shares to Cheval, 2,858,814 shares to Nomis and 714,703 shares to Cortleigh. Pursuant to the terms of the SPA, the Company paid $427,000 to BHC in payment of its fees and expenses and $304,000 to Nomis in payment of its fees and expenses. Under the terms of the SPA, the Company was required to use commercially reasonable efforts to cause a registration statement registering the resale by the Purchasers of the shares issuable under the SPA to be declared effective by the SEC no later than December 27, 2016. The Company was obligated to keep the registration statement effective until all of the shares issued pursuant to the SPA are eligible for resale by the Purchasers without volume restrictions under an exemption from registration under the Securities Act. If the registration statement has not been declared effective by December 27, 2016 and any of the shares issued pursuant to the SPA are not eligible to be sold under Rule 144, then during each subsequent thirty day period (or portion thereof) until the registration statement is declared effective, the Company agrees to issue additional shares of common stock to the Purchasers in an amount equivalent to 10.0% of the shares originally purchased under the SPA that are then held by the Purchasers. On October 28, 2016, the SPA was amended to require the Company to file a registration statement by January 10, 2017 with effectiveness to be no later than March 31, 2017. On December 19, 2016, the SPA was amended again to require the Company to file a registration statement by March 17, 2017 with effectiveness to be no later than June 20, 2017. The Company timely filed a registration statement on Form S-1 on March 17, 2017. On June 20, 2017 the SPA was amended again to require the Company to obtain effectiveness of the registration statement no later than July 30, 2017. On July 14, 2017, the registration statement was declared effective by the SEC. Governance Arrangements On the Effective Date, the Company and Martin Shkreli, the Company’s former Chief Executive Officer, former Chairman and former controlling stockholder, entered into a Corporate Governance Agreement (the “Governance Agreement”), which provides for certain terms and conditions regarding the acquisition, disposition, holding and voting of securities of the Company by Mr. Shkreli. The Governance Agreement applies to all common stock owned by Mr. Shkreli or affiliates he controls. Under the terms of the Governance Agreement, for 180 days following the Effective Date, Mr. Shkreli could not sell his shares of common stock at a price per share that was less than the greater of (x) $2.50 and (y) a 10% discount to the prior two week volume-weighted average price (the “Market Discount Price”). In addition, for 180 days following the 61st day after the Effective Date, the Company had a right to purchase any or all of Mr. Shkreli’s shares at a purchase price per share equal to the Market Discount Price. For a limited time, the Company also had a right of first refusal to purchase shares that Mr. Shkreli proposed to sell. Mr. Shkreli was also prohibited from transferring any shares to his affiliates or associates unless such transferee agreed to be subject to the terms of the Governance Agreement. Transfers of shares by Mr. Shkreli not made in compliance with the Governance Agreement would be null and void. Under the terms of the Governance Agreement, Mr. Shkreli has no right to nominate directors to the Board of Directors of the Company (the “Board”) and agreed in connection with any stockholder vote to vote his shares in proportion to the votes of the Company’s public stockholders. The Governance Agreement also prohibits Mr. Shkreli or his affiliates for a period of 24 months after the date of the Governance Agreement, from, among other things: · purchasing any stock or assets of the Company; · participating in any proposal for any merger, tender offer or other business combination, or similar extraordinary transaction involving the Company or any of its subsidiaries; · seeking to control or influence the management, the Company’s Board or the policies of the Company; or · submitting any proposal to be considered by the stockholders of the Company. In addition, any material transaction between Mr. Shkreli or his associates and the Company, or relating to the Governance Agreement, cannot be taken without the prior approval of the Company’s Board. The Governance Agreement provides for a mutual release between the Company and Mr. Shkreli of all claims and liabilities existing as of the date of execution. On August 25 and August 26, 2016, Mr. Shkreli sold all of his shares of the Company to third party investors in private transactions. Board Changes On the Effective Date, in accordance with the Plan, Cameron Durrant, current Chief Executive Officer of the Company, as joint designee of BHCMF, BHC and Cheval (collectively, the "Black Horse Entities") and Nomis, continued as a director, Ronald Barliant, a then-current member of the Board, continued as a director as the designee of the Black Horse Entities, Dale Chappell became a director as a designee of Nomis, and Timothy Morris and Ezra Friedberg became directors as joint designees of the Black Horse Entities and Nomis. On November 9, 2017, Dale Chappell and Ezra Friedberg resigned from the Board, effective immediately. Financial Reporting in Reorganization The Company applied Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, Reorganizations As of December 31, 2015, the Company had approximately $5.4 million recorded as Liabilities subject to compromise. In conjunction with the Company’s exit from bankruptcy, the Company reclassified remaining Liabilities subject to compromise as of June 30, 2016 totaling approximately $2.8 million, $0.8 million and $1.2 million to Accounts payable, Accrued expenses and Notes payable to vendors, respectively. For the year ended December 31, 2016, the Company paid approximately $3.4 million related to Liabilities subject to compromise, issued $1.2 million in promissory notes to vendors and wrote off approximately $0.3 million in deferred rent liabilities related to its lease termination and reversed approximately $0.1 million in accrued expenses related to a claim that has been denied by the court, which as discussed above, were previously included in Liabilities subject to compromise. For the nine months ended September 30, 2017, the Company wrote off approximately $0.2 million in claims that had been reduced or for which a settlement had been reached at a lower amount than what had been previously accrued and also paid approximately $0.1 million in claims. As of September 30, 2017, approximately $0.1 million and $1.3 million remain in Accounts payable and Notes payable to vendors, respectively. Remaining amounts will be paid based on terms of the Plan. For the three months ended September 30, 2017 and 2016, Reorganization items, net consisted of the following charges: Three months ended Three months ended (in thousands) September 30, 2017 September 30, 2016 Legal fees $ 97 $ 224 Professional fees 5 203 Total reorganization items, net $ 102 $ 427 Cash payments for reorganization items totaled $190,000 and $1,824,000 for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, Reorganization items, net consisted of the following charges: Nine months ended Nine months ended (in thousands) September 30, 2017 September 30, 2016 Legal fees $ 263 $ 4,780 Professional fees 26 1,159 Debtor-in-possession financing costs - 1,143 Beneficial conversion on debtor-in-possession financing - 484 Fair value of shares issued to officer and directors for service in bankruptcy - 700 Gain on lease termination - (227 ) Total reorganization items, net $ 289 $ 8,039 Cash payments for reorganization items totaled $834,000 and $4,052,000 for the nine months ended September 30, 2017 and 2016, respectively. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2016 Annual Report. |
Potentially Dilutive Securities
Potentially Dilutive Securities | 9 Months Ended |
Sep. 30, 2017 | |
Potentially Dilutive Securities | |
Potentially Dilutive Securities | 4. Potentially Dilutive Securities The Company’s potential dilutive securities, which include stock options, restricted stock units and warrants, have been excluded from the computation of diluted net loss per common share as the effect of including those securities would be to reduce the net loss per common share and be antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in each period presented. The following outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share: As of September 30, 2017 2016 Options to purchase common stock 2,578,948 2,036,177 Restricted stock units — 3,750 Warrants to purchase common stock 356,193 331,193 2,935,141 2,371,060 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 5. Investments At September 30, 2017, the amortized cost and fair value of investments, with gross unrealized gains and losses, were as follows: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 101 $ — $ — $ 101 Total investments $ 101 $ — $ — $ 101 Reported as: Cash and cash equivalents $ — Restricted cash, long-term 101 Total investments $ 101 At December 31, 2016, the amortized cost and fair value of investments, with gross unrealized gains and losses, were as follows: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 101 $ — $ — $ 101 Total investments $ 101 $ — $ — $ 101 Reported as: Cash and cash equivalents $ — Restricted cash, long-term 101 Total investments $ 101 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 6. Fair Value of Financial Instruments Cash, accounts payable, term loans and accrued liabilities are carried at cost, which approximates fair value given their short-term nature. Marketable securities and cash equivalents are carried at fair value. The fair value of financial instruments reflects the amounts that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable, and the third is considered unobservable, as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs other than those included in Level 1 that are directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities 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 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company measures the fair value of financial assets and liabilities using the highest level of inputs that are reasonably available as of the measurement date. The following tables summarize the fair value of financial assets that are measured at fair value and the classification by level of input within the fair value hierarchy: Fair Value Measurements as of September 30, 2017 (in thousands) Level 1 Level 2 Level 3 Total Investments: Money market funds $ 101 $ — $ — $ 101 Total assets measured at fair value $ 101 $ — $ — $ 101 Fair Value Measurements as of December 31, 2016 (in thousands) Level 1 Level 2 Level 3 Total Investments: Money market funds $ 101 $ — $ — $ 101 Total assets measured at fair value $ 101 $ — $ — $ 101 |
Debt and Equity Financing
Debt and Equity Financing | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt and Equity Financing | 7. Debt and Equity Financing Notes Payable to Vendors On June 30, 2016, the Company issued promissory notes in an aggregate principal amount of approximately $1.2 million to certain claimants in accordance with the Plan. The notes are unsecured, bear interest at 10% per annum and are due and payable in full, including principal and accrued interest on June 30, 2019. As of September 30, 2017, the Company has accrued a total of $148,000 of interest expense related to these promissory notes in the December 2016 Term Loan On December 21, 2016, the Company entered into a Credit and Security Agreement (the “Term Loan Credit Agreement”) with BHCMF, as administrative agent and lender BHC, as a lender, Cheval, as a lender, and Nomis, as a lender (collectively, the “Term Loan Lenders”). The Term Loan Credit Agreement provides for a credit facility in the original principal amount of $3,315,000, provides an original discount equal to $265,000 (the “Upfront Fee”) and requires the payment by the Company to the Term Loan Lenders of a commitment fee equal to $153,000. In accordance with the terms of the Term Loan Credit Agreement, the Company used the proceeds of the term loan (the “December 2016 Term Loan”) for general working capital, the payment of certain fees and expenses owed to BHCMF and the Term Loan Lenders and other costs incurred in the ordinary course of business. Dr. Chappell, one of the Company’s former directors, is an affiliate of each of BHCMF, BHC and Cheval. The Term Loans (as defined below) bear interest at 9.00% and are subject to certain customary representations, warranties and covenants, as set forth in the Term Loan Credit Agreement. The outstanding principal balance of the Term Loans, plus accrued interest and fees, are due on the earlier of acceleration after an event of default under the Term Loan Credit Agreement, or October 31, 2017. However, to the extent the Company raises capital through any SEC-registered stock offering, 50% of such offering’s proceeds (net of costs) must be used to pay down the Term Loans. . On November 16, 2017, the Company obtained an additional short-term extension of the maturity of the Company’s obligations under the Term Loans. See Note 12 - “Subsequent Events” for further information. Upon the occurrence of any event of default set forth in the Term Loan Credit Agreement, BHCMF has the option of terminating the Term Loan Credit Agreement and declaring all of the Company’s obligations immediately payable. The occurrence of an event of default will cause the Term Loans to bear interest at a rate per annum equal to 14.00%. The Company’s obligations under the Term Loan Credit Agreement are secured by a first priority interest in all of the Company’s real and personal property, subject only to certain carve outs and permitted liens, as set forth in the agreement. The Company recorded the original principal amount of the December 2016 Term Loan reduced by the Upfront Fee and costs incurred in putting the loan in place for a net principal amount of $2,993,000. As of September 30, 2017, the Company has accrued a total of $662,000 of interest expense, consisting of $234,000 interest and loan cost accretion of $428,000 and has recorded such against the principal balance resulting in a loan balance of $3,655,000 in the March 2017 Term Loan On March 21, 2017, the Company entered into an amendment (the “Amendment”) to the Term Loan Credit Agreement to obtain an additional term loan (the “March 2017 Term Loan”) in the original principal amount of $5,978,000 less an upfront fee equal to $478,000 (the “Additional Upfront Fee”), and requires the payment by the Company to the Term Loan Lenders of a commitment fee equal to $275,000. In accordance with the terms of the Term Loan Credit Agreement, the Company used the proceeds from the additional loan for general working capital, the payment of certain fees and expenses owed to BHCMF and the Term Loan Lenders in connection with the Term Loan Credit Agreement and other costs incurred in the ordinary course of business. Aside from the increase in the principal amount extended, the Amendment did not modify any of the terms under the Term Loan Credit Agreement, all of which will be applicable to the March 2017 Term Loan extended to the Company by the Lenders. The Company recorded the original principal amount of the additional loan reduced by the Additional Upfront Fee and costs incurred in putting the March 2017 Term Loan in place for a net principal amount of $5,500,000. As of September 30, 2017, the Company has accrued a total of $938,000 of interest expense, consisting of $288,000 interest and loan cost accretion of $650,000 and has recorded such against the principal balance resulting in a loan balance of $6,438,000 in the July 2017 Term Loan On July 8, 2017, the Company entered into a second amendment (the “Second Amendment”) to the Term Loan Credit Agreement to obtain an additional term loan (the “July 2017 Term Loan” and, together with the December 2016 Term Loan and the March 2017 Term Loan, the “Term Loans”). The Second Amendment provides for additional loans that may be drawn by the Company on a bi-monthly basis from time to time (the “Grid Advances”) in an aggregate principal amount of up to $5,434,783, less an upfront fee equal to $435,000 and requires the payment at maturity by the Company to the Term Loan Lenders a commitment fee of $263,000. In accordance with the terms of the Term Loan Credit Agreement, the Company used the proceeds from the Grid Advances for general working capital, the payment of certain fees and expenses owed to the Agent and the Term Loan Lenders in connection with the Term Loan Credit Agreement and other costs incurred in the ordinary course of business. Aside from the increase in the principal amount extended, the Second Amendment did not modify any of the terms under the Term Loan Credit Agreement, all of which will be applicable to the Grid Advances extended to the Company by the Term Loan Lenders. As of September 30, 2017, the entire amount provided by the Second Amendment of $5,000,000 (net of an Upfront Fee of $435,000) of the July 2017 Term Loan has been received by the Company. Accordingly, as of September 30, 2017, the Company has received the entire amount available under the Term Loans totaling $14.7 million. As of September 30, 2017, the Company has accrued a total of $563,000 of interest expense, consisting of $91,000 interest and loan cost accretion of $472,000 and has recorded such against the principal balance resulting in a loan balance of $5,563,000 in the Committed Equity Financing Facility On August 24, 2017, the Company entered into a Common Stock Purchase Agreement, dated as of August 23, 2017 (the “ELOC Purchase Agreement”), with Aperture Healthcare Ventures Ltd. (“Aperture”) pursuant to which the Company may, subject to certain conditions Under the ELOC Purchase Agreement, the Company paid Aperture a document preparation fee of $15,000 by issuing to Aperture 9,315 shares of common stock (the “Fee Shares” and, together with the Put Shares, the “ELOC Shares”). On August 23, 2017, in connection with the ELOC Purchase Agreement, the Company entered into a Registration Rights Agreement (the "ELOC RRA") with Aperture, pursuant to which the Company granted to Aperture certain registration rights related to the ELOC Shares issuable in accordance with the ELOC Purchase Agreement. Under the ELOC RRA, the Company agreed to use its commercially reasonable efforts to prepare and file with the SEC one or more registration statements for the purpose of registering the resale of the maximum ELOC Shares issuable pursuant to the ELOC Purchase Agreement. The Company agreed to file the initial registration statement with the SEC within 90 days after the date of the ELOC Purchase Agreement and to use commercially reasonable efforts to cause that registration statement to be declared effective within 120 days of the date of the ELOC Purchase Agreement (180 days if the registration statement is reviewed by the SEC). The actual amount of funds that can be raised under the Aperture facility will depend on the number of shares sold under the ELOC Purchase Agreement and the market value of the Company’s common stock during the Pricing Period of each sale. The Company has not yet filed a registration statement under the ELOC RRA. Sales of common stock under the ELOC Purchase Agreement cannot commence until such registration statement is filed and declared effective by the SEC. There can be no assurance that the Company will use the Aperture facility to raise funds in the future. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Contractual Obligations and Commitments As of September 30, 2017, there were no material changes to the Company’s contractual obligations from those set forth in the 2016 Annual Report. Guarantees and Indemnifications The Company has certain agreements with service providers with which it does business that contain indemnification provisions pursuant to which the Company typically agrees to indemnify the party against certain types of third-party claims. The Company accrues for known indemnification issues when a loss is probable and can be reasonably estimated. The Company would also accrue for estimated incurred but unidentified indemnification issues based on historical activity. As the Company has not incurred any indemnification losses to date, there were no accruals for or expenses related to indemnification issues for any period presented. |
Share Based Compensation
Share Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Share Based Compensation | 9. Share Based Compensation 2012 Equity Incentive Plan Under the Company’s 2012 Equity Incentive Plan, the Company may grant shares, stock units, stock appreciation rights, performance cash awards and/or options to employees, directors, consultants, and other service providers. For options, the per share exercise price may not be less than the fair market value of a Company common share on the date of grant. Awards generally vest and become exercisable over three to four years and expire 10 years from the date of grant. Options generally become exercisable as they vest following the date of grant. On September 13, 2016, the Board approved an amendment to the Company’s 2012 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for issuance under the Plan by 3,000,000 shares and to increase the annual maximum aggregate number of shares subject to stock option awards that may be granted to any one person under the Plan from 125,000 to 1,100,000. A summary of stock option activity for the three and nine months ended September 30, 2017 under all of the Company’s options plans is as follows: Options Weighted Average Exercise Price Outstanding at December 31, 2016 1,835,835 $ 4.15 Granted 615,000 2.92 Exercised - - Cancelled (forfeited) (17,905 ) 3.29 Cancelled (expired) (87 ) 4.24 Outstanding at March 31, 2017 2,432,843 $ 3.85 Granted - - Exercised - - Cancelled (forfeited) (3,895 ) 3.20 Cancelled (expired) - - Outstanding at June 30, 2017 2,428,948 $ 3.85 Granted 150,000 0.33 Exercised - - Cancelled (forfeited) - - Cancelled (expired) - - Outstanding at September 30, 2017 2,578,948 $ 3.65 The weighted average fair value of options granted during the three and nine months ended September 30, 2017 was $0.22 and $1.49 per share, respectively. The Company valued the options granted using the Black-Scholes options pricing model and the following weighted-average assumption terms for the nine months ended September 30, 2017: Nine months Ended September 30, 2017 Exercise price $ 2.41 Market value $ 2.41 Risk-free rate 1.78% to 2.09%% Expected term 5.0 to 6.0 years Expected volatility 83.2% to 87.9% Dividend yield - Stock-Based Compensation The Company recorded stock-based compensation expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss as follows: Three Months Nine Months Ended September 30, Ended September 30, (in thousands) 2017 2016 2017 2016 General and administrative $ 278 $ 273 $ 1,477 $ 275 Research and development 67 40 296 42 $ 345 $ 313 $ 1,773 $ 317 At September 30, 2017, the Company had $2.5 million of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to outstanding stock options that will be recognized over a weighted-average period of 1.9 years. |
Savant Arrangements
Savant Arrangements | 9 Months Ended |
Sep. 30, 2017 | |
Savant Arrangements | |
Savant Arrangements | 10. Savant Arrangements On February 29, 2016, the Company entered into a binding letter of intent (the “LOI”) with Savant Neglected Diseases, LLC (“Savant”). The LOI provided that the Company would acquire certain worldwide rights relating to benznidazole (the “Compound”) from Savant Compound The LOI provided that in consideration for the assets to be acquired, the Company would provide consideration to Savant, including: · $3,000,000 (the “Initial Payment”) payable as soon as practicable but in no event later than the Company emerging from its Chapter 11 bankruptcy pursuant to a plan of reorganization (the “Bankruptcy Exit”); · a five-year warrant from the date of the Bankruptcy Exit to purchase up to 200,000 shares of common stock at a per share price of $2.25, exercisable for 25% of the shares immediately and exercisable for the remaining shares upon reaching certain milestones related to regulatory approval of the Compound · certain additional payments to be further specified in the definitive agreements. On the Effective Date, as authorized by the Plan and the Confirmation Order, the Company and Savant entered into an Agreement for the Manufacture, Development and Commercialization of Benznidazole for Human Use (the “MDC Agreement”), pursuant to which the Company acquired certain worldwide rights relating to the Compound. The MDC Agreement consummates the transactions contemplated by the LOI. Under the terms of the MDC Agreement, the Company acquired certain regulatory and non-intellectual property assets relating to the Compound and any product containing the Compound and an exclusive license of certain intellectual property assets related to the Compound. Savant will retain the right to use the licensed intellectual property for veterinary uses. The MDC Agreement provides that the Company and Savant will jointly conduct research and development activities with respect to the Compound Compound Compound As required by the MDC Agreement, on the Effective Date, the Company made payments to Savant totaling $2,687,500, consisting of the remaining portion of the Initial Payment less the deposit in the amount of $2,500,000, an initial monthly Joint Development Program Cost payment of $87,500, and reimbursement of Savant’s legal fees capped at $100,000. The MDC Agreement provides for milestone payments, including payments related to U.S. and foreign regulatory submissions of up to $21 million and certain other contingent payments. Additionally, the Company will pay Savant royalties in the mid-teens on net sales of any benznidazole product on a product-by-product and country-by-country basis, which royalty will be reduced to the high single digits in the United States if a priority review voucher is not granted subsequent to regulatory approval of any benznidazole product. The MDC Agreement also provides that Savant is entitled to a portion of the amount the Company receives upon the sale, if any, of a PRV relating to the Compound In addition, on the Effective Date the Company and Savant also entered into a Security Agreement (the “Security Agreement”), pursuant to which the Company granted Savant a continuing senior security interest in the assets and rights acquired by the Company pursuant to the MDC Agreement and certain future assets developed from those acquired assets. On the Effective Date, the Company issued to Savant a five year warrant (the “Warrant”) to purchase 200,000 shares of the Company’s Common Stock, at an exercise price of $2.25 per share, subject to adjustment. The Warrant is exercisable for 25% of the shares immediately and exercisable for the remaining shares upon reaching certain regulatory related milestones. In addition, pursuant to the MDC Agreement, the Company has granted Savant certain “piggyback” registration rights for the shares issuable under the Warrant. The Company determined the fair value of the Warrant to be approximately $670,000. During the course of 2016, the Company reevaluated the performance conditions and expected vesting of the Warrant at the end of each quarter and recorded expense of approximately $361,000 during the year ended December 31, 2016 in Research and development expenses. The Company reevaluated the performance conditions and expected vesting of the Warrant as of September 30, 2017 and recorded a reduction in expense of approximately $59,000 during the three months ended September 30, 2017 and a reduction of expense of approximately $97,000 during the nine months ended September 30, 2017 due to a decline in the fair value, which reduction is included in Research and development expenses in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Loss. Specifically, as a result of the FDA granting accelerated and conditional approval of a benznidazole therapy manufactured by Chemo Chemo Before a compound receives regulatory approval, the Company records upfront and milestone payments made to third parties under licensing arrangements as expense. Upfront payments are recorded when incurred and milestone payments are recorded when the specific milestone has been achieved. The Company determined that the acquisition of the Compound should be treated as a purchase of in-process research and development. Accordingly, during the year ended December 31, 2016, the Company recorded $3,250,000, which includes an additional $250,000 payment made in 2015 to Savant, as a Research and development expense. In addition, during the year ended December 31, 2016, the Company recorded $262,500 in connection with the Joint Development Program and recorded $100,000 in legal fee reimbursement as a Research and development expense. On May 26, 2017, the Company submitted its benznidazole IND to FDA which became effective on June 26, 2017. The Company recorded expense of $1,000,000 during the three months ended June 30, 2017 as a Research and development expense related to the milestone achievement associated with the IND being declared effective. On July 10, 2017 FDA notified the Company that it granted Orphan Drug Designation to benznidazole for the treatment of Chagas disease. The Company recorded an expense of $1,000,000 during the three months ended September 30, 2017 as a Research and development expense related to the milestone achievement associated with Orphan Drug Designation. In July 2017, the Company commenced litigation against Savant alleging that Savant breached the MDC Agreement and seeking a declaratory judgement. Savant has asserted counterclaims for breaches of contract under the MDC Agreement and the Security Agreement. The dispute primarily concerns the Company’s right under the MDC Agreement to offset certain costs incurred by the Company in excess of the agreed upon budget against payments due Savant. The aggregate cost overages as of September 30, 2017 that the Company asserts are Savant’s responsibility total approximately $3.4 million, net of a $500,000 deductible. The Company asserts that it is entitled to offset $2 million in milestone payments due Savant against the cost overages, such that as of June 30, 2017, Savant owed the Company approximately $1.4 million. As of September 30, 2017, Savant owed the Company approximately $2.1 million in cost overages. Such cost overages have been charged to Research and development expense as incurred. Recovery of such cost overages, if any, will be recorded as a reduction of Research and development expense in the period received. See Part II, Item 1 of this Form 10-Q for more information about this pending matter. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2017 | |
Litigation Settlement [Abstract] | |
Litigation | 11. Litigation Bankruptcy Proceeding The Company filed for protection under Chapter 11 of Title 11 of the United States Bankruptcy Code on December 29, 2015. See Note 2 for additional information related to the bankruptcy. Securities Class Action Litigation On December 18, 2015, a putative class action lawsuit (captioned Li v. KaloBios Pharmaceuticals, Inc. et al. , 5:15-cv-05841-EJD) United States District Court for the Northern District of California (the “Class Action Court”), alleging violations of the federal securities laws by the Company, Herb Cross and Martin Shkreli, the Company’s former Chairman and Chief Executive Officer. On December 23, 2015, a putative class action lawsuit was filed against the Company in the Class Action Court (captioned Sciabacucchi v. KaloBios Pharmaceuticals, Inc. et al. , 3:15-cv-05992-CRB), similarly alleging violations of the federal securities laws by the Company and Mr. Shkreli. On December 31, 2015, a putative class action lawsuit was filed against the Company in the Class Action Court (captioned Isensee v. KaloBios Pharmaceuticals, Inc. et al. , Case No. 15-cv-06331-EJD) also alleging violation of the federal securities laws by the Company, a former officer and Mr. Shkreli. On April 18, 2016, an amended complaint was filed in the Isensee suit, adding Herb Cross and Ronald Martell as defendants. On April 28, 2016, the Class Action Court consolidated these cases (the “Securities Class Action Litigation”) and appointed certain plaintiffs as the lead plaintiffs. The lead plaintiffs in the Securities Class Action Litigation were seeking damages of $20.0 million on behalf of all the affected members of the class represented in the Securities Class Action Litigation, (the “Securities Class Action Members”). On June 15, 2016, a settlement stipulation (the “Securities Class Action Settlement”), was approved by the Bankruptcy Court. The Securities Class Action Settlement required the Company to issue 300,000 shares of common stock and submit a payment of $250,000 to the Securities Class Action Members and advance insurance proceeds of $1.25 million to the Securities Class Action Members (collectively, the consideration is the “Securities Class Action Settlement Consideration”). On January 20, 2017, the Class Action Court preliminarily approved the Securities Class Action Settlement and on June 22, 2017, the Class Action Court issued its final approval order. The Securities Class Action Settlement provides that any Securities Class Action Member is entitled to share in the Securities Class Action Settlement Consideration. The Securities Class Action Settlement provides for releases and related injunctions to be granted for the benefit of, among others, the Company, Ronald Martell, Herb Cross and all of the Company’s past, present and future directors, officers and employees, excluding Mr. Shkreli. The Company’s agreement to the Securities Class Action Settlement was not in any way an admission of the Company’s wrongdoing or liability. During the year ended December 31, 2016, the 300,000 shares were issued and the $250,000 payment was made. PIPE Litigation On January 7, 2016, certain investors (the “PIPE Claimants”), commenced an adversary proceeding (captioned Gregory Rea, et al. v. KaloBios Pharmaceuticals, Inc. , Adv. Pro. No. 16-50001 (LSS)) in the Bankruptcy Court against the Company alleging implied trust theories, breach of contract, fraud and violations of the federal securities laws in connection with the PIPE Claimants’ purchase of the Company’s common stock in the Private Placement (the “PIPE Litigation”). The PIPE Claimants also raised certain other objections to the Company’s bankruptcy proceeding. The PIPE Claimants sought an aggregate total of approximately $6.9 million in damages. On May 9, 2016, the Bankruptcy Court entered an order approving a settlement stipulation between the Company and the PIPE Claimants (the “Settlement Stipulation”). Under the Settlement Stipulation, in connection with the effectiveness of the Plan, and per the terms of the Settlement Stipulation, the Company became obligated to issue 327,608 shares to the PIPE Claimants and make a payment of $250,000 to the PIPE Claimants for the purpose of satisfying expenses related to the PIPE Litigation. During the year ended December 31, 2016, the 327,608 shares were issued and the $250,000 payment was made. Claim by Marek Biestek Marek Biestek was a director of the Company who, while not a plaintiff in the above described PIPE Litigation, filed a proof of claim alleging damages from the PIPE transaction and filed an objection to the confirmation of the Plan. To resolve his objection to the Plan and his proof of claim, the Company settled with him individually by issuing him 3,750 additional shares of common stock. Mr. Biestek, as a former director of the Company, was excluded from the Securities Class Action Members and therefore received nothing from the Securities Class Action Litigation. As of December 31, 2015, the Company recorded an obligation in stockholders’ equity to issue the shares related to the above claims totaling approximately $2.8 million and recorded the cash liability of $500,000 in Liabilities subject to compromise. During the year ended December 31, 2016, all of the above claims were satisfied and shares issued. Savant Litigation See Note 10 – “Savant Arrangements” and Part II, Item 1 of this Form 10-Q for information about litigation between the Company and Savant that was instituted in July 2017. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events Vendor Negotiations In October 2017, the Company reached agreement with certain vendors which reduced trade payables by $2.0 million, which includes $1.1 million reclassified to a long-term liability, as it is based on future revenue. The gain of $900,000, will be recognized in the Consolidated Statement of Operations and Comprehensive Loss for the three months ended December 31, 2017 as Other Income. Term Loans The outstanding principal balance of $14.7 million under the Term Loans, plus accrued interest and fees, became due on October 31, 2017. See Note 7 – “Debt and Equity Financing” for further information about the Term Loans. As of October 31, 2017, the aggregate amount of the Company’s obligations under the Term Loan Credit Agreement, including accrued interest and fees, approximated $16.1 million. The Company does not have access to sufficient funds to repay the outstanding obligations under the Term Loan Credit Agreement. Accordingly, On November 16, 2017, the Company obtained an additional short-term extension of the maturity of the Company’s obligations under the Term Loans. The extension agreed with the Term Loan Lenders extends the maturity date of the Company’s obligations under the Term Loan Credit Agreement to the earlier of (i) December 1, 2017, or (ii) the date that the Company consummates one or more alternative transactions with the Term Loan Lenders. s The Company has been discussing and continues to discuss with its Term Loan Lenders alternative transactions that might result in the satisfaction, extension or modification of the Company’s obligations including conversion of the Term Loans into equity in the Company, which may occur significant to and be dilutive to the ownership interests of existing stockholders If the Company is unable to reach a satisfactory agreement with the Term Loan Lenders on any alternative transaction, Departure of Directors On November 9, 2017, Dale Chappell and Ezra Friedberg resigned from the Board, effective immediately. Dr. Chappell is an affiliate of BHCMF, BHC and Cheval , each of which is a Term Loan Lender under the Term Loan Credit Agreement. |
Chapter 11 Filing (Tables)
Chapter 11 Filing (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Chapter 11 Filing Tables | |
Schedule of Credit Agreement Items | In conjunction with the Credit Agreement, during the year ended December 31, 2016, the Company incurred the following expenses which were charged to Reorganization items, net in 2016: Nine Months ended (in thousands) September 30, 2016 Upfront fee $ 191 Commitment fee 150 Beneficial conversion feature 484 Legal fees 802 Total Credit Agreement expense $ 1,627 |
Schedule of Reorganization Items, Net | For the three months ended September 30, 2017 and 2016, Reorganization items, net consisted of the following charges: Three months ended Three months ended (in thousands) September 30, 2017 September 30, 2016 Legal fees $ 97 $ 224 Professional fees 5 203 Total reorganization items, net $ 102 $ 427 Cash payments for reorganization items totaled $190,000 and $1,824,000 for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, Reorganization items, net consisted of the following charges: Nine months ended Nine months ended (in thousands) September 30, 2017 September 30, 2016 Legal fees $ 263 $ 4,780 Professional fees 26 1,159 Debtor-in-possession financing costs - 1,143 Beneficial conversion on debtor-in-possession financing - 484 Fair value of shares issued to officer and directors for service in bankruptcy - 700 Gain on lease termination - (227 ) Total reorganization items, net $ 289 $ 8,039 |
Potentially Dilutive Securiti19
Potentially Dilutive Securities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Potentially Dilutive Securities Tables | |
Potentially Dilutive Securities Excluded From Computation of Diluted Net Loss Per Common Share | The following outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share: As of September 30, 2017 2016 Options to purchase common stock 2,578,948 2,036,177 Restricted stock units — 3,750 Warrants to purchase common stock 356,193 331,193 2,935,141 2,371,060 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of amortized cost and fair value of investments, with gross unrealized gains and losses | At September 30, 2017, the amortized cost and fair value of investments, with gross unrealized gains and losses, were as follows: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 101 $ — $ — $ 101 Total investments $ 101 $ — $ — $ 101 Reported as: Cash and cash equivalents $ — Restricted cash, long-term 101 Total investments $ 101 At December 31, 2016, the amortized cost and fair value of investments, with gross unrealized gains and losses, were as follows: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 101 $ — $ — $ 101 Total investments $ 101 $ — $ — $ 101 Reported as: Cash and cash equivalents $ — Restricted cash, long-term 101 Total investments $ 101 |
Fair Value of Financial Instr21
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities measured at fair value and classification by level of input | The following tables summarize the fair value of financial assets that are measured at fair value and the classification by level of input within the fair value hierarchy: Fair Value Measurements as of September 30, 2017 (in thousands) Level 1 Level 2 Level 3 Total Investments: Money market funds $ 101 $ — $ — $ 101 Total assets measured at fair value $ 101 $ — $ — $ 101 Fair Value Measurements as of December 31, 2016 (in thousands) Level 1 Level 2 Level 3 Total Investments: Money market funds $ 101 $ — $ — $ 101 Total assets measured at fair value $ 101 $ — $ — $ 101 |
Share Based Compensation (Table
Share Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Summary of stock option activity | A summary of stock option activity for the three and nine months ended September 30, 2017 under all of the Company’s options plans is as follows: Options Weighted Average Exercise Price Outstanding at December 31, 2016 1,835,835 $ 4.15 Granted 615,000 2.92 Exercised - - Cancelled (forfeited) (17,905 ) 3.29 Cancelled (expired) (87 ) 4.24 Outstanding at March 31, 2017 2,432,843 $ 3.85 Granted - - Exercised - - Cancelled (forfeited) (3,895 ) 3.20 Cancelled (expired) - - Outstanding at June 30, 2017 2,428,948 $ 3.85 Granted 150,000 0.33 Exercised - - Cancelled (forfeited) - - Cancelled (expired) - - Outstanding at September 30, 2017 2,578,948 $ 3.65 |
Schedule of fair value-based measurement of stock options granted under the entity's stock plans estimated using Black-Scholes model | The Company valued the options granted using the Black-Scholes options pricing model and the following weighted-average assumption terms for the nine months ended September 30, 2017: Nine months Ended September 30, 2017 Exercise price $ 2.41 Market value $ 2.41 Risk-free rate 1.78% to 2.09%% Expected term 5.0 to 6.0 years Expected volatility 83.2% to 87.9% Dividend yield - |
Schedule of total stock-based compensation expense recognized | The Company recorded stock-based compensation expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss as follows: Three Months Nine Months Ended September 30, Ended September 30, (in thousands) 2017 2016 2017 2016 General and administrative $ 278 $ 273 $ 1,477 $ 275 Research and development 67 40 296 42 $ 345 $ 313 $ 1,773 $ 317 |
Nature of Operations (Details)
Nature of Operations (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 259,497 | $ 240,610 |
Number of product candidates approved for sale | item | 0 | |
Total liabilities | $ 24,145 | $ 9,097 |
Chapter 11 Filing (Narrative) (
Chapter 11 Filing (Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | May 09, 2016 | Apr. 03, 2016 | Dec. 31, 2016 | Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 15, 2016 |
Bankruptcy claims, amount | $ 32,000 | |||||||||||
Property and equipment, net | $ 68 | $ 30 | 30 | $ 68 | ||||||||
Gain on lease termination | $ 227 | |||||||||||
Accounts payable | 4,072 | 4,177 | 4,177 | 4,072 | ||||||||
Notes payable to vendors | 1,273 | 1,322 | 1,322 | 1,273 | ||||||||
Beneficial conversion feature | 484 | |||||||||||
Accrued expenses | 736 | 2,990 | 2,990 | 736 | ||||||||
Cash payment for reorganization items | $ 190 | $ 1,824 | $ 834 | $ 4,052 | ||||||||
Former Director [Member] | ||||||||||||
Litigation accrual expense | $ 16,000 | |||||||||||
Shares reserved for issuance in connection with class action lawsuit | 3,750 | 3,750 | ||||||||||
Contract Termination [Member] | ||||||||||||
Property and equipment, net | 85 | 85 | ||||||||||
Deferred rent liabilities | $ 312 | $ 312 | ||||||||||
Gain on lease termination | $ 227 | |||||||||||
PIPE Litigation Plaintiffs [Member] | ||||||||||||
Litigation accrual expense | 1,500 | |||||||||||
Shares reserved for issuance in connection with class action lawsuit | 327,608 | 327,608 | 327,608 | |||||||||
Litigation claims amount | 6,900 | |||||||||||
Class Action Lawsuit Alleging Violations Of Securities Laws By Former CEO [Member] | ||||||||||||
Shares reserved for issuance in connection with class action lawsuit | 300,000 | 300,000 | ||||||||||
Litigation claims amount | 20,000 | |||||||||||
Class Action Suit Related To Former CEO [Member] | ||||||||||||
Litigation accrual expense | 1,300 | |||||||||||
Shares reserved for issuance in connection with class action lawsuit | 300,000 | |||||||||||
Shares awarded to claimants | 300,000 | 300,000 | ||||||||||
Damages awarded to claimants | $ 250 | $ 250 | ||||||||||
Claim Filed By Certain Investors In Connection With 2015 Private Financing Transaction [Member] | ||||||||||||
Litigation claims amount | $ 6,900 | |||||||||||
Shares awarded to claimants | 327,608 | 327,608 | ||||||||||
Damages awarded to claimants | $ 250 | $ 250 | ||||||||||
Subject To Review By Bankruptcy Court [Member] | ||||||||||||
Bankruptcy claims, amount | 731 | |||||||||||
Accounts payable | $ 28 | 28 | ||||||||||
Notes payable to vendors | $ 31 | 31 | ||||||||||
Net Expense [Member] | ||||||||||||
Stock issued during period, value | $ 700 | |||||||||||
General and administrative expenses [Member] | ||||||||||||
Stock issued during period, value | 751 | |||||||||||
Credit Agreement [Member] | ||||||||||||
Debtor in possession amount | $ 3,000 | |||||||||||
Interest rate | 12.00% | |||||||||||
Original discount upfront fee | $ 191 | |||||||||||
Commitment fee | $ 150 | |||||||||||
Beneficial conversion feature | $ 484 | |||||||||||
Credit Agreement [Member] | Cortleigh Limited [Member] | ||||||||||||
Shares issued for repayment of debt | 235,048 | |||||||||||
Additional percentage interest in shares assigned | 20.00% | |||||||||||
Credit Agreement [Member] | Black Horse Capital LP [Member] | ||||||||||||
Shares issued for repayment of debt | 201,436 | |||||||||||
Payments for fees and expenses | $ 406 | |||||||||||
Credit Agreement [Member] | Black Horse Capital Master Fund Ltd. [Member] | ||||||||||||
Shares issued for repayment of debt | 470,096 | |||||||||||
Credit Agreement [Member] | Cheval Holdings, Ltd. [Member] | ||||||||||||
Shares issued for repayment of debt | 503,708 | |||||||||||
Credit Agreement [Member] | Nomis Bay LTD [Member] | ||||||||||||
Shares issued for repayment of debt | 940,192 | |||||||||||
Payments for fees and expenses | $ 285 | |||||||||||
Securities Purchase Agreement [Member] | ||||||||||||
Interest rate | 20.00% | |||||||||||
Debt instrument amount | $ 11,000 | |||||||||||
Shares issued as bankruptcy settlement | 9,497,515 | 5,885,000 | ||||||||||
Commitment fee | $ 770 | |||||||||||
Shares issued for repayment of debt | 7,147,035 | |||||||||||
Contingent percentage interest in shares to be assigned | 10.00% | |||||||||||
Securities Purchase Agreement [Member] | Cortleigh Limited [Member] | ||||||||||||
Shares issued for repayment of debt | 714,703 | |||||||||||
Securities Purchase Agreement [Member] | Black Horse Capital LP [Member] | ||||||||||||
Shares issued for repayment of debt | 612,501 | |||||||||||
Payments for fees and expenses | $ 427 | |||||||||||
Securities Purchase Agreement [Member] | Black Horse Capital Master Fund Ltd. [Member] | ||||||||||||
Shares issued for repayment of debt | 1,429,407 | |||||||||||
Securities Purchase Agreement [Member] | Cheval Holdings, Ltd. [Member] | ||||||||||||
Shares issued for repayment of debt | 1,531,610 | |||||||||||
Securities Purchase Agreement [Member] | Nomis Bay LTD [Member] | ||||||||||||
Shares issued for repayment of debt | 2,858,814 | |||||||||||
Payments for fees and expenses | $ 304 | |||||||||||
Promissory Notes To Holders Of Unsecured Claims [Member] | ||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Debt instrument amount | $ 1,200 | $ 1,200 | ||||||||||
Accrued expenses | 148 | $ 148 | ||||||||||
Martin Shkreli [Member] | ||||||||||||
Description of governance agreement | Under the terms of the Governance Agreement, for 180 days following the Effective Date, Mr. Shkreli could not sell his shares of common stock at a price per share that was less than the greater of (x) $2.50 and (y) a 10% discount to the prior two week volume-weighted average price (the Market Discount Price). In addition, for 180 days following the 61st day after the Effective Date, the Company had a right to purchase any or all of Mr. Shkrelis shares at a purchase price per share equal to the Market Discount Price. For a limited time, the Company also had a right of first refusal to purchase shares that Mr. Shkreli proposed to sell. Mr. Shkreli was also prohibited from transferring any shares to his affiliates or associates unless such transferee agreed to be subject to the terms of the Governance Agreement. Transfers of shares by Mr. Shkreli not made in compliance with the Governance Agreement would be null and void. | |||||||||||
Financial Reporting in Reorganization [Member] | ||||||||||||
Liabilities subject to compromise | 3,400 | 3,400 | 5,400 | |||||||||
Deferred rent liabilities | 300 | 300 | ||||||||||
Accounts payable | 100 | $ 100 | 2,800 | |||||||||
Notes payable to vendors | 1,200 | 1,300 | 1,300 | 1,200 | 1,200 | |||||||
Accrued expenses | $ 100 | 100 | $ 800 | |||||||||
Liabilities paid | 100 | 100 | ||||||||||
Write off claim reduce in settlement | $ 200 | $ 200 | ||||||||||
Equity Award [Member] | ||||||||||||
Stock issued during period, shares | 323,155 | |||||||||||
Stock issued during period, value | $ 1,451 |
Chapter 11 Filing (Credit Agree
Chapter 11 Filing (Credit Agreement Expenses) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Chapter 11 Filing Credit Agreement Expenses Details | |||
Upfront fee | $ 191 | ||
Commitment fee | 150 | ||
Beneficial conversion feature | 484 | ||
Legal fees | 802 | ||
Total credit agreement expense | $ 1,627 | $ 1,627 |
Chapter 11 Filing (Reorganizati
Chapter 11 Filing (Reorganization Items, Net) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Chapter 11 Filing Reorganization Items Net Details | ||||
Legal fees | $ 97 | $ 224 | $ 263 | $ 4,780 |
Professional fees | 5 | 203 | 26 | 1,159 |
Debtor-in-possession financing costs | 1,143 | |||
Beneficial conversion on debtor-in-possession financing | 484 | |||
Fair value of shares issued to officer and directors for service in bankruptcy | 700 | |||
Gain on lease termination | (227) | |||
Total reorganization items, net | $ 102 | $ 427 | $ 289 | $ 8,039 |
Potentially Dilutive Securiti27
Potentially Dilutive Securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computations of diluted net loss per common share | 2,935,141 | 2,371,060 |
Options to purchase common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computations of diluted net loss per common share | 2,578,948 | 2,036,117 |
Restricted stock units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computations of diluted net loss per common share | 3,750 | |
Warrants to purchase common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computations of diluted net loss per common share | 356,193 | 131,193 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 101 | $ 101 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 101 | 101 |
Money Market Funds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 101 | 101 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 101 | 101 |
Cash And Cash Equivalents [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | ||
Restricted cash, long-term [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | $ 101 | $ 101 |
Fair Value of Financial Instr29
Fair Value of Financial Instruments (Fair Value of Financial Assets) (Details) - Fair Value Measurements Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | $ 101 | $ 101 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | ||
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | ||
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | 101 | 101 |
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | ||
Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | ||
Estimate Of Fair Value Fair Value Disclosure [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | 101 | 101 |
Estimate Of Fair Value Fair Value Disclosure [Member] | Money Market Funds [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total assets measured at fair value | $ 101 | $ 101 |
Debt and Equity Financing (Deta
Debt and Equity Financing (Details) - USD ($) $ in Thousands | Jul. 08, 2017 | Aug. 24, 2017 | Sep. 30, 2017 | Mar. 21, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 21, 2016 | Jun. 30, 2016 |
Debt Instrument [Line Items] | ||||||||||
Notes payable to vendors | $ 1,322 | $ 1,322 | $ 1,273 | |||||||
Interest Expense | $ 1,269 | $ 30 | $ 2,245 | $ 76 | ||||||
Commitment fee | $ 150 | |||||||||
Common stock shares issued | 14,986,712 | 14,986,712 | 14,977,397 | |||||||
December 2016 Term Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Accrued interest | $ 662 | |||||||||
Interest Expense | 639 | |||||||||
Line of credit facility on Original amount | $ 3,315 | |||||||||
Original Discount Amount | 265 | |||||||||
Commitment fee | $ 153 | |||||||||
Term loan interest rate | 9.00% | |||||||||
Rate to be paid in the event of default | 14.00% | |||||||||
Original principal amount of the loan reduced by the Upfront Fee | $ 2,993 | |||||||||
Line of Credit interest | 234 | |||||||||
Loan cost accretion | 428 | |||||||||
Balance of Loan as per Balance sheet | $ 3,655 | 3,655 | ||||||||
March 2017 Term Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Accrued interest | 938 | |||||||||
Interest Expense | 937 | |||||||||
Line of credit facility on Original amount | $ 5,978 | |||||||||
Commitment fee | 275 | |||||||||
Original principal amount of the loan reduced by the Upfront Fee | 5,500 | |||||||||
Line of Credit interest | 288 | |||||||||
Loan cost accretion | 650 | |||||||||
Balance of Loan as per Balance sheet | 6,438 | 6,438 | ||||||||
Upfront fee | $ 478 | |||||||||
July 2017 Term Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Accrued interest | 563 | |||||||||
Interest Expense | 563 | |||||||||
Line of credit facility on Original amount | $ 5,435 | |||||||||
Commitment fee | 263 | |||||||||
Line of Credit interest | 91 | |||||||||
Loan cost accretion | 472 | |||||||||
Balance of Loan as per Balance sheet | 5,563 | 5,563 | ||||||||
Upfront fee | $ 435 | |||||||||
July 2017 Term Loan [Member] | Second Amendment [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount of the loan reduced by the Upfront Fee | 5,000 | |||||||||
Upfront fee | $ 435 | 435 | ||||||||
Proceeds from term loans | 14,700 | |||||||||
ELOC Purchase Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Shares repurchased value | $ 15,000 | |||||||||
Discount rate | 6.00% | |||||||||
Document preparation fee | $ 15 | |||||||||
Common stock shares issued | 9,315 | |||||||||
Notes Payable To Vendors [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 10.00% | |||||||||
Notes payable to vendors | $ 1,200 | |||||||||
Accrued interest | 148 | |||||||||
Interest Expense | $ 87 |
Share Based Compensation (Equit
Share Based Compensation (Equity Incentive Plan) (Details) - Equity Incentive Plan Twenty Twelve [Member] - shares | Sep. 13, 2016 | Sep. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period expiration | 10 years | |
Additional shares authorized | 3,000,000 | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Common stock available for issuance | 125,000 | 1,100,000 |
Share Based Compensation (Stock
Share Based Compensation (Stock Option Activity) (Details) - $ / shares | 3 Months Ended | ||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | |
Options | |||
Balance at the beginning of the period (in shares) | 2,428,948 | 2,432,843 | 1,835,835 |
Options granted (in shares) | 150,000 | 615,000 | |
Options exercised (in shares) | |||
Options Cancelled (forfeited) (in shares) | (3,895) | (17,905) | |
Options Cancelled (expired) (in shares) | (87) | ||
Balance at the end of the period (in shares) | 2,578,948 | 2,428,948 | 2,432,843 |
Weighted Average Exercise Price (Per Share) | |||
Balance at the beginning of the period (in dollars per share) | $ 3.85 | $ 3.85 | $ 4.15 |
Options granted (in dollars per share) | 0.33 | 2.92 | |
Options exercised (in dollars per share) | |||
Options Cancelled (forfeited) (in dollars per share) | 3.20 | 3.29 | |
Options Cancelled (expired) (in dollars per share) | 4.24 | ||
Balance at the ending of the period (in dollars per share) | $ 3.65 | $ 3.85 | $ 3.85 |
Share Based Compensation (Weigh
Share Based Compensation (Weighted-average assumption) (Details) | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Exercise price | $ 2.41 |
Market value | $ 2.41 |
Dividend yield | |
Minimum [Member] | |
Risk-free rate | 1.78% |
Expected term | 5 years |
Expected volatility | 83.20% |
Maximum [Member] | |
Risk-free rate | 2.09% |
Expected term | 6 years |
Expected volatility | 87.90% |
Share Based Compensation (Sto34
Share Based Compensation (Stock-Based Compensation Expense Recognized) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 345 | $ 313 | $ 1,773 | $ 317 |
Unrecognized compensation expense | $ 2,500 | $ 2,500 | ||
Weighted average period for recognition | 1 year 10 months 25 days | |||
Weighted average fair value of options granted | $ 0.22 | $ 1.49 | ||
General And Administrative Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 278 | 273 | $ 1,477 | 275 |
Research And Development Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 67 | $ 40 | $ 296 | $ 42 |
Savant Arrangements (Details)
Savant Arrangements (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 10, 2017 | Feb. 29, 2016 | May 26, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2017 |
Payments for in process research and development | $ 2,625 | |||||||||
Legal expenses | 802 | |||||||||
Warrant expense included in research and development expenses | $ 59 | $ 97 | ||||||||
Research and development | $ 1,000 | $ 1,000 | 3,807 | $ 1,741 | 10,328 | $ 7,805 | ||||
Aggregate cost overages | 3,400 | 3,400 | ||||||||
Net of duductible | $ 500 | 500 | ||||||||
Savant Neglected Diseases, LLC [Member] | ||||||||||
Monthly payment amount | $ 88 | |||||||||
Payments for in process research and development | 500 | 2,687 | $ 250 | |||||||
Initial payment amount | $ 3,000 | $ 2,500 | ||||||||
Legal expenses | 262 | |||||||||
Number of shares called by warrant | 200,000 | 200,000 | 200,000 | |||||||
Exercise price of warrant | $ 2.25 | $ 2.25 | $ 2.25 | |||||||
Milestone payments and certain other contingent payments | $ 21,000 | $ 21,000 | ||||||||
Exercise period of warrant | 5 years | 5 years | ||||||||
Fair value of warrants | 670 | $ 670 | ||||||||
Warrant expense included in research and development expenses | 87,500 | |||||||||
Research and development | $ 3,250 | |||||||||
Due to Savant | 2,100 | 2,100 | $ 2,000 | |||||||
Due from Savant | $ 1,400 | $ 1,400 | ||||||||
Savant Neglected Diseases, LLC [Member] | Exercisable Immediately [Member] | ||||||||||
Percentage of warrants exercisable | 25.00% | 25.00% |
Litigation (Details)
Litigation (Details) - USD ($) $ in Thousands | Jun. 15, 2016 | May 09, 2016 | May 09, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Obligation to issue common stock in settlement of litigation | $ 2,800 | |||||
Class Action Lawsuit Alleging Violations Of Securities Laws By Former CEO [Member] | ||||||
Damages sought | $ 20,000 | |||||
Shares reserved for issuance in connection with class action lawsuit | 300,000 | |||||
Settlement amount awarded | $ 250 | |||||
Advance insurance proceeds awarded | 1,250 | |||||
Class Action Suit Related To Former CEO [Member] | ||||||
Shares reserved for issuance in connection with class action lawsuit | 300,000 | |||||
Claim Filed By Certain Investors In Connection With 2015 Private Financing Transaction [Member] | ||||||
Damages sought | $ 6,900 | |||||
PIPE Litigation Plaintiffs [Member] | ||||||
Damages sought | $ 6,900 | |||||
Shares reserved for issuance in connection with class action lawsuit | 327,608 | 327,608 | 327,608 | |||
Settlement amount awarded | $ 250 | $ 250 | ||||
Settled Litigation [Member] | ||||||
Liabilities subject to compromise | $ 500 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Oct. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Gain loss | $ (7,185) | $ (4,523) | $ (18,887) | $ (21,961) | |
Subsequent Event [Member] | |||||
Trade payables | $ 2,000 | ||||
Long-term liability | 1,100 | ||||
Gain loss | 900 | ||||
Outstanding principal balance | 14,700 | ||||
Aggregate amount outstanding | $ 16,100 |