Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Anthera Pharmaceuticals Inc | |
Entity Central Index Key | 1,316,175 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 41,955,126 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | ||
Current assets: | ||||
Cash and cash equivalents | $ 32,570 | $ 46,951 | [1] | |
Accounts receivable | 326 | [1] | ||
Prepaid expenses and other current assets | 943 | 585 | [1] | |
Total current assets | 33,513 | 47,862 | [1] | |
Property and equipment - net | 973 | 263 | [1] | |
TOTAL | 34,486 | 48,125 | [1] | |
Current liabilities: | ||||
Accounts payable | 3,391 | 5,259 | [1] | |
Accrued clinical expenses | 4,561 | 1,377 | [1] | |
Accrued liabilities | 517 | 98 | [1] | |
Accrued payroll and related costs | 1,722 | 1,596 | [1] | |
Warrant liability | 3,509 | |||
Deferred revenue - current | 138 | [1] | ||
Total current liabilities | 13,700 | 8,468 | [1] | |
Total liabilities | 13,700 | 8,468 | [1] | |
Commitments and contingencies (Note 7) | [1] | |||
Series X contingently redeemable convertible preferred stock, $0.001 par value, 5,000,000 shares authorized; 17,000 and 0 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | [2] | 9,553 | [1] | |
Stockholders' equity: | ||||
Right granted to investors to purchase future shares of Series X-1 convertible preferred stock | 3,689 | |||
Common stock, $0.001 par value, 100,000,000 shares authorized; 41,955,126 and 40,004,037 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 42 | 40 | [1] | |
Additional paid-in capital | 402,071 | 391,648 | [1] | |
Accumulated deficit | (394,569) | (352,031) | [1] | |
Total stockholders' equity | 11,233 | 39,657 | [1] | |
TOTAL | $ 34,486 | $ 48,125 | [1] | |
[1] | Derived from audited Financial Statements. | |||
[2] | The Company has designated (i) 17,000 of the 5,000,000 authorized shares of preferred stock as Series X Preferred Stock and (ii) 28,330 of the 5,000,000 authorized shares of preferred stock as Series X-1 Preferred Stock. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Contingently redeemable convertible preferred stock, par value per share | $ 0.001 | $ 0.001 |
Contingently redeemable convertible preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Contingently redeemable convertible preferred stock, shares issued | 17,000 | 0 |
Contingently redeemable convertible preferred stock, shares outstanding | 17,000 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 41,955,126 | 40,004,037 |
Common stock, shares outstanding | 41,955,126 | 40,004,037 |
Series X-1 Convertible Preferred Stock [Member] | ||
Contingently redeemable convertible preferred stock, shares authorized | 28,330 | 28,330 |
Series X Contingently Redeemable Convertible Preferred Stock [Member] | ||
Contingently redeemable convertible preferred stock, shares authorized | 17,000 | 17,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
License fee revenue | $ 548 | $ 139 | $ 743 | |
Collaborative revenue | 185 | 6 | 524 | |
Total revenues | 733 | 145 | 1,267 | |
Operating Expenses: | ||||
Research and development | 14,096 | 10,359 | 35,686 | 24,893 |
General and administrative | 2,504 | 2,091 | 7,318 | 5,694 |
Research award | (367) | (261) | (1,467) | |
Total operating expenses | 16,600 | 12,083 | 42,743 | 29,120 |
Loss From Operations | (16,600) | (11,350) | (42,598) | (27,853) |
Other Income (Expense): | ||||
Other income (expense) | (47) | 24 | (109) | (28) |
Change in fair value of warrant liability | 169 | 169 | ||
Net Loss | (16,478) | (11,326) | (42,538) | (27,881) |
Deemed dividends attributable to preferred stock | (8,807) | (8,807) | ||
Net Loss Applicable to Common Stockholders | $ (25,285) | $ (11,326) | $ (51,345) | $ (27,881) |
Net loss per share - basic and diluted | $ (0.61) | $ (0.29) | $ (1.25) | $ (0.81) |
Weighted-average number of shares used in per share calculation - basic and diluted | 41,682,669 | 39,241,738 | 40,924,480 | 34,260,866 |
CONSOLIDATED STATEMENTS OF CONT
CONSOLIDATED STATEMENTS OF CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Series X Contingently Redeemable Convertible Preferred Stock | Series X-1 Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | |
Balance at Dec. 31, 2015 | $ 40 | $ 391,648 | $ (352,031) | $ 39,657 | [1] | ||
Balance, shares at Dec. 31, 2015 | 40,004,037 | ||||||
Issuance of common stock pursuant to exercise of stock options and employee stock purchase plan | 304 | $ 304 | |||||
Issuance of common stock pursuant to exercise of stock options and employee stock purchase plan, shares | 135,275 | 116,773 | |||||
Share-based compensation related to equity awards | 4,084 | $ 4,084 | |||||
Issuance of common stock pursuant to an at-the-market equity program, net of issuance cost of $265 | $ 2 | 4,456 | 4,458 | ||||
Issuance of common stock pursuant to an at-the-market equity program, net of issuance cost of $265, shares | 1,300,985 | ||||||
Issuance of common stock pursuant to an equity purchase agreement, net of issuance cost of $87 | 1,579 | 1,579 | |||||
Issuance of common stock pursuant to an equity purchase agreement, net of issuance cost of $87, shares | 514,829 | ||||||
Issuance of Series X contingently redeemable, convertible preferred stock, net of issuance costs of $80 | $ 16,920 | 16,920 | |||||
Issuance of Series X contingently redeemable, convertible preferred stock, net of issuance costs of $80, shares | 17,000 | ||||||
Investors' right to acquire future shares of convertible preferred stock | $ (3,689) | 3,689 | 3,689 | ||||
Beneficial conversion feature on Series X contingently redeemable, convertible preferred stock | (8,807) | 8,807 | |||||
Deemed dividend attributable to beneficial conversion feature on Series X contingently redeemable convertible preferred stock | 8,807 | (8,807) | |||||
Issuance of warrants related to Series X contingently redeemable, convertible preferred stock | (3,678) | ||||||
Net loss | (42,538) | (42,538) | |||||
Balance at Sep. 30, 2016 | $ 9,553 | $ 3,689 | $ 42 | $ 402,071 | $ (394,569) | $ 11,233 | |
Balance, shares at Sep. 30, 2016 | 17,000 | 41,955,126 | |||||
[1] | Derived from audited Financial Statements. |
CONSOLIDATED STATEMENTS OF CON6
CONSOLIDATED STATEMENTS OF CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Issuance One [Member] | |
Stock issuance cost | $ 265 |
Issuance Two [Member] | |
Stock issuance cost | 87 |
Issuance Three [Member] | |
Stock issuance cost | $ 80 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
CASH FLOW FROM OPERATING ACTIVITIES: | |||
Net loss | $ (42,538) | $ (27,881) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 241 | 213 | |
Stock-based compensation expense | 3,943 | 2,495 | |
Change in fair value of warrant liability | (169) | ||
Changes in assets and liabilities: | |||
Accounts receivable | 326 | (983) | |
Prepaid expenses and other assets | (358) | 9 | |
Accounts payable | (1,868) | 4,789 | |
Accrued clinical expenses | 3,184 | 468 | |
Accrued liabilities | 419 | 113 | |
Accrued payroll and related costs | 267 | 66 | |
Deferred revenue | (138) | (743) | |
Net cash used in operating activities | (36,691) | (21,454) | |
INVESTING ACTIVITIES: | |||
Property and equipment purchases | (952) | (80) | |
Net cash used in investing activities | (952) | (80) | |
FINANCING ACTIVITIES: | |||
Proceeds from issuance of Series X contingently redeemable convertible preferred stock, warrants and option to purchase convertible future stock, net of offering cost | 16,920 | ||
Proceeds from issuance of common stock, net of offering cost | 6,037 | 65,378 | |
Proceeds from issuance of common stock to collaborative partner | 9,000 | ||
Proceeds from issuance of common stock pursuant to exercise of stock options | 305 | 279 | |
Net cash provided by financing activities | 23,262 | 74,657 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (14,381) | 53,123 | |
CASH AND CASH EQUIVALENTS - Beginning of period | 46,951 | [1] | 2,639 |
CASH AND CASH EQUIVALENTS - End of period | 32,570 | 55,762 | |
Non-cash financing activities: | |||
Fair value of warrants issued in connection with Series X contingently redeemable convertible preferred stock | 3,678 | ||
Issuance of common stock as a commitment fee pursuant to an equity purchase agreement | $ 87 | $ 60 | |
[1] | Derived from audited Financial Statements. |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization Anthera Pharmaceuticals, Inc. (the “Company” or “Anthera”) is a biopharmaceutical company focused on advancing the development and commercialization of innovative medicines that benefit patients with unmet medical needs. The Company currently has two compounds in development, liprotamase, also known as Sollpura™, Liquidity and Need for Additional Capital The Company’s planned principal operations are acquiring product and technology rights, raising capital and performing research and development activities. The Company is currently conducting research and development activities to treat autoimmune diseases and EPI. The Company’s activities are subject to significant risks and uncertainties. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing; develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances. Since inception in 2004, the Company has funded its operations through equity offerings, private placements of convertible debt, debt financing, equity investment and cost reimbursement from a former collaborative partner, Zenyaku Kogyo Co., Ltd (“Zenyaku”), and a research award from Cystic Fibrosis Foundation Therapeutics Incorporated ("CFFT"). On April 21, 2016, the Company entered into an At Market Issuance Sales Agreement (“ATM Agreement”) with H.C. Wainwright & Co., LLC (“H.C. Wainwright”) to create an at-the-market equity program under which the Company from time to time may offer and sell shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $25.0 million through H.C. Wainwright, as agent. On April 27, 2016, the Company amended an existing equity purchase agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company has the right, but not the obligation, to sell to LPC up to an aggregate of $15.0 million in shares of common stock by March 2017. In September 2016, the Company entered into a subscription agreement with certain institutional investors pursuant to which it sold 17,000 units for a purchase price of $1,000 per unit in a registered direct offering. Each unit consists of one share of Series X contingently redeemable convertible preferred stock and a warrant to purchase shares of common stock. Assuming an exercise price equal to $3.54 per share, which is a 20% premium over the closing price of our common stock on September 6, 2016, each unit would include a warrant to purchase up to 70.62 shares of common stock. The offering resulted in gross proceeds of $17.0 million. The subscription agreement provides that the investors have the right, but not the obligation, to make additional investments as follows: As of the date of this report, the Company anticipates its existing cash, and access to additional cash through the ATM Agreement with H.C. Wainwright and an equity purchase agreement with LPC will be sufficient to fund its near term liquidity needs for at least the next 12 months. To fully execute its business plan, the Company will need to complete certain research and development activities and clinical studies. Further, the Company’s product candidates will require regulatory approval prior to commercialization. These activities may span many years and require substantial capital to complete and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company will need substantial additional financing to continue development of its product candidates, obtain regulatory approvals, and prepare for commercial readiness if the clinical trials are successful; such financing may not be available on terms favorable to the Company, if at all. If adequate funds are not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its clinical trials. The Company plans to meet its capital requirements primarily through future partnerships, issuances of equity securities, debt financing, and in the longer term, revenue from product sales. Failure to generate revenue or raise additional capital would adversely affect the Company’s ability to achieve its intended business objectives. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and do not contain all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited Condensed Consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 14, 2016. In the opinion of management, the accompanying unaudited Condensed Consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary to present fairly the Company’s interim consolidated financial information. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other period. The consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date but it does not include all of the information and notes required by U.S. GAAP. The Company has evaluated events and transactions subsequent to the balance sheet date and has disclosed all events or transactions that occurred subsequent to the balance sheet date but prior to filing this Quarterly Report on Form 10-Q that would require recognition or disclosure in the unaudited Condensed Consolidated Financial Statements. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to clinical trial accruals, tax provision, stock-based compensation, warrant liabilities, and the computation of beneficial conversion features. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. Financial Instruments with Characteristics of Both Equity and Liabilities The Company has issued certain financial instruments, including warrants to purchase common stock and rights to purchase shares of Series X-1 convertible preferred stock, which have the characteristics of both liability and equity. Financial instruments such as warrants that are evaluated to be classified as liabilities are fair valued upon issuance and are remeasured at fair value at subsequent reporting periods with the resulting change in fair value recorded in other income/(expense). The fair value of warrants is estimated using the Monte Carlo simulation model and requires the input of subjective assumptions including expected stock price volatility, expected life and Recent Accounting Pronouncements In September 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as Going Concern (“ASU 2014-15”). ASU 2014-15 defines when and how companies are required to disclose going concern uncertainties, which must be evaluated each interim and annual period. Specifically, the ASU requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become within one year after the financial statements are issued (or available to be issued). If substantial doubt exists, certain disclosures are required; the extent of those disclosures depends on an evaluation of management’s plans (if any) to mitigate the going concern uncertainty. The guidance is effective for fiscal years ending after December 15, 2016 and for interim periods thereafter. The Company does not expect the adoption of this guidance to materially affect its consolidated financial statements. In November 2015, the FASB issued guidance on the classification of deferred taxes, Accounting Standards Update No. 2015-17 (“ASU 2015-17”), Balance Sheet Classification of Deferred Taxes. ASU 2015-17 eliminates the guidance in Topic 740, Income Taxes, that required an entity to separate deferred tax liabilities and assets between current and noncurrent amounts in a classified balance sheet. The amendments require that all deferred tax liabilities and assets of the same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single amount in a classified balance sheet. The amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted as of the beginning of any interim period or annual reporting period. The Company does not expect the adoption of this guidance to materially affect its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). ASU 2016-02 impacts any entity that enters into a lease with some specified scope exceptions. The guidance updates and supersedes Topic 840, Leases. For public entities, ASU 2016-02 is effective for fiscal years, and interim periods with those years, beginning after December 15, 2018, and early adoption is permitted. The Company does not expect the adoption of this standard to materially affect its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The adoption of ASU 2016-09 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations. |
COLLABORATIVE AGREEMENT
COLLABORATIVE AGREEMENT | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
COLLABORATIVE AGREEMENT | 2. COLLABORATIVE AGREEMENT In December 2014, the Company entered into an exclusive license agreement with Zenyaku (“Zenyaku Agreement”) for the development and commercialization of blisibimod in Japan and potentially other countries throughout Asia, while the Company retained full development and commercialization rights of blisibimod for all other global territories including North America and the European Union. In September 2015, Zenyaku provided the Company a notice of its intent to terminate the Zenyaku Agreement, effective January 7, 2016 (“Termination Notice”). As a result of the Termination Notice, the Company changed the amortization period of its deferred revenue and has fully amortized its deferred revenue as of January 7, 2016. |
RESEARCH AWARD
RESEARCH AWARD | 9 Months Ended |
Sep. 30, 2016 | |
Research and Development [Abstract] | |
RESEARCH AWARD | 3. RESEARCH AWARD In March 2015, the Company received a research award of up to $3 million from the CFFT for the Company's development of liprotamase. The Company retains the right to develop and commercialize liprotamase and will owe royalties to CFFT on net sales of any drug candidate approved and commercialized under the collaboration. The funding is to be disbursed by CFFT to the Company upon the Company’s achievement of milestones specified in the award agreement. At its discretion, the Company may choose to fund a particular stage of the liprotamase development plan without CFFT funds. Any CFFT funds not expended on the development program of liprotamase must be returned to CFFT and, upon such return, the amounts of such returned funds will not be included as part of the research award for the purpose of calculating royalties or other amounts owed by the Company to CFFT. To the extent CFFT provides or makes available any information, expertise, know-how or other intellectual property related to cystic fibrosis or the treatment, prevention or cure there-of (“CFFT Know-How”) to the Company, CFFT grants to the Company a non-exclusive, transferrable, sublicensable, worldwide rights and license under all of CFFT’s rights in such CFFT Know-How to assist the Company to research, develop, commercialize, make or have made, use, sell, have sold, offer for sale, import, export and otherwise exploit the product. In consideration for CFFT’s research award and any licenses of intellectual property granted by CFFT, the Company agrees to pay royalties to CFFT as follows: i) a one-time royalty in an amount equal to five times the actual award, payable in three installments between the first and second anniversaries of the first commercial sale of a product; ii) a one-time royalty in an amount equal to the actual award after net product sales reaches $100 million; and iii) in the event of a license, sale or other transfer of the product or a change of control transaction prior to the commercial sale of the product, a milestone payment equal to three times the actual award. For the nine months ended September 30, 2016 and 2015, the Company recognized $0.3 million and $1.5 million, respectively, from CFFT in connection with achieving certain milestones specified in the award agreement and included it as an offset to operating expense. There was no milestone recognized for the three months ended September 30, 2016 and $0.4 million recognized for the three months ended September 30, 2015. As of September 30, 2016, there was $0.1 million remaining under the research award. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | 4. NET LOSS PER SHARE Basic net loss attributable to common stockholders per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. The computation of diluted Earnings Per Share, or EPS, is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The following table summarizes the Company’s calculation of net loss per common share (in thousands except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net loss per share Numerator Net loss $ (16,478 ) $ (11,326 ) $ (42,538 ) $ (27,881 ) Deemed dividend attributable to preferred stock (8,807 ) — (8,807 ) — Net loss applicable to common stockholders $ (25,285 ) $ (11,326 ) $ (51,345 ) $ (27,881 ) Denominator Weighted average common shares outstanding 41,682,669 39,241,738 40,924,480 34,260,866 Basic and diluted net loss per share $ (0.61 ) $ (0.29 ) $ (1.25 ) $ (0.81 ) As the Company incurred net losses for all of the periods presented, the following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share, as the effect of including them would have been antidilutive: As of September 30, 2016 2015 Options to purchase common stock 5,982,673 4,282,356 Warrants to purchase common stock 40,178 40,178 Restricted Stock Units — 937 Total 6,022,851 4,323,471 In addition to the above outstanding equity instruments, the Company also excluded the conversion of its Preferred Stock and warrants as follows (see Note 8 for terms of Preferred Stock): As of September 30, 2016 Potential conversion of Series X contingently redeemable convertible preferred stock 5,762,712 (1) 5,396,825 (2) Potential conversion of Series X-1 convertible preferred stock 5,487,651 (3) 11,991,534 (4) Potential warrants for common stock issuable upon exercise of warrants 1,200,565 (5) 1,124,339 (6) (1) The number of potential shares is based on gross proceeds of $17 million from the issuance of Series X contingently redeemable convertible preferred stock divided by the stated conversion price of $2.95 applicable through the date of the initial public announcement of topline and/or efficacy data from the Chablis-SC1 study or the announcement of the suspension, abandonment or other termination of the Chablis SC-1 study. (2) The number of potential shares is based on gross proceeds of $17 million from the issuance of Series X contingently redeemable convertible preferred stock divided by an assumed conversion price of $3.15, which is based on the Company’s five-day volume-weighted average price, or VWAP, of the Company’s common stock price over the five full trading days ending September 30, 2016. The holder of the Series X contingently redeemable convertible preferred stock is able to convert at the lower of the $2.95 or the five-day VWAP, of the Company’s common stock price over the five full trading days following the earlier of the initial public announcement of topline and/or efficacy data from the Chablis-SC1 study or the announcement of the suspension, abandonment or other termination of the Chablis SC-1 study. (3) In connection with the issuance of Series X contingently redeemable convertible preferred stock, the Company granted a right to the Series X preferred stock investors to purchase Series X-1 convertible preferred stock in a future period. The number of potential shares is calculated assuming the right is fully exercised. The resulting gross proceeds of $28.33 million from the potential issuance of Series X-1 convertible preferred stock are divided by an assumed conversion price of $5.16, representing 175% of the Series X contingently redeemable convertible preferred stock’s assumed conversion price of $2.95 noted in (1) above. (4) In connection with the issuance of Series X contingently redeemable convertible preferred stock, the Company granted a right to the Series X preferred stock investors to purchase Series X-1 convertible preferred stock in a future period. The number of potential shares is calculated assuming the right is fully exercised. The resulting gross proceeds of $28.33 million from the issuance of Series X-1 preferred stock are divided by an assumed conversion price of $2.36, representing 75% of Series X contingently redeemable convertible preferred stock’s assumed conversion price of $3.15 noted in (2) above. (5) The number of potential warrant shares is based on $4.25 million divided by the exercise price of $3.54 representing a 20% premium over the Series X contingently redeemable convertible preferred stock’s assumed conversion price of $2.95 as noted in (1) above. (6) The number of potential warrant shares is based on $4.25 million divided by the exercise price of $3.78 representing a 20% premium over the Series X contingently redeemable convertible preferred stock’s assumed conversion price of $3.15 as noted in (2) above. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS Pursuant to the accounting guidance for fair value measurement and its subsequent updates, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a hierarchy for inputs used in measuring fair value that minimizes the use of unobservable inputs by requiring the use of observable market data when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on active market data. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is broken down into the three input levels summarized below: • Level 1 • Level 2 • Level 3 The following tables present the Company’s fair value hierarchy for all its financial assets (including those in cash and cash equivalents), in thousands, by major security type measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Estimated Fair Value Level 1 Level 2 Level 3 Asset Money market funds $ 30,410 $ 30,410 $ — $ — Liabilities Warrant liability $ 3,509 $ — $ — $ 3,509 December 31, 2015 Estimated Fair Value Level 1 Level 2 Level 3 Money market funds $ 45,156 $ 45,156 $ — $ — The Company used quoted market prices to determine the fair value of cash equivalents, which consist of money market funds and therefore these are classified in Level 1 of the fair value hierarchy. Warrants with an exercise price that is not yet determinable are accounted for as liabilities, with changes in the fair values included in net loss for the respective periods. Because some of the inputs to the valuation model are either not observable or are not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability is classified as Level 3 in the fair value hierarchy. The following table summarizes the changes in the Company’s Level 3 warrant liability (in thousands): September 30, 2016 Beginning balance $ — Issuance of warrants 3,678 Change in fair value (169 ) Ending balance $ 3,509 There were no transfers between Level 1, Level 2 or Level 3 for the nine months ended September 30, 2016 and year-ended December 31, 2015. |
WARRANT LIABILITY
WARRANT LIABILITY | 9 Months Ended |
Sep. 30, 2016 | |
Warrant Liability | |
WARRANT LIABILITY | 6 WARRANT LIABILITY In connection with the subscription agreement for the sale of convertible preferred stock entered in September 2016, the Company issued common stock warrants to certain institutional investors. Each warrant has an exercise price equal to 120% of the conversion price of the Series X convertible preferred stock (Note 8). The warrants are exercisable after March 13, 2017 and expire on September 13, 2019. The initial fair value of the liability associated with these warrants was $3.7 million, and the fair value decreased to $3.5 million as of September 30, 2016. All future changes in the fair value of the warrants will be recognized in the Company’s consolidated statements of operations until the earlier of (a) the exercise price becomes fixed; b) the warrants are exercised; or c) the warrants expire. The warrants are not traded in an active securities market, and as such the estimated fair value was determined by using the Monte Carlo simulation model with the following assumptions: September 14, September 30, 2016 2016 Common stock price $ 3.20 $ 3.15 Initial Series X contingently redeemable convertible preferred stock conversion price $ 2.95 $ 2.95 Expected volatility 120 % 120 % Dividend yield 0 % 0 % Risk-free interest rate 0.90 % 0.87 % Expected term (years) 3 2.96 Expected volatility is based on both historical and implied volatility. Historical volatility was computed using daily pricing observations for recent periods that correspond to the expected term of the warrants while implied volatility was computed using publicly traded options of the Company as well as the Company’s peer companies. The Company believes this method produces an estimate that is representative of its expectations of future volatility over the expected term of these warrants. The Company currently has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the warrants. The risk-free interest rate is the U.S. Treasury bond rate as of the valuation date. The fair value of these warrants also incorporates the Company’s assumptions about future performance. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES Leases The Company leases its main operating facility in Hayward, California. The lease is for approximately 14,000 square feet and the lease agreement will expire in September 2017. Other Commitments In December 2007, the Company and Amgen entered into a worldwide, exclusive license agreement (the “Amgen Agreement”) to develop and commercialize blisibimod in any indication, including for the treatment of systemic lupus erythematosus (“lupus”). Under the terms of the Amgen Agreement, the Company paid a nonrefundable, upfront license fee of $6.0 million. As there was no future alternative use for the technology, the Company expensed the license fee in research and development expenses during 2007. Under the terms of the Amgen Agreement, the Company is obligated to make additional milestone payments to Amgen of up to $33.0 million upon the achievement of certain development and regulatory milestones. The Company is also obligated to pay tiered royalties on future net sales of products, ranging from the high single digits to the low double digits, which are developed and approved as set forth in the Amgen Agreement. The Company’s royalty obligations as to a particular licensed product will be payable, on a country-by-country and licensed product-by-licensed product basis, for the longer of (a) the date of expiration of the last to expire valid claim within the licensed patents that covers the manufacture, use or sale, offer to sell, or import of such licensed product by the Company or a sublicense in such country or (b) 10 years after the first commercial sale of the applicable licensed product in the applicable country. In connection with the collaborative arrangement with Zenyaku pursuant to the Zenyaku Agreement, the Company amended the Amgen Agreement in November 2014 to (i) adjust certain royalty and milestone payment obligations payable to Amgen in light of the collaboration between Anthera and Zenyaku and (ii) provide that the sublicense granted by Anthera to Zenyaku shall survive the termination of the Amgen Agreement. Under this amendment, Anthera also agreed to grant Amgen that number of shares of its common stock equal to $1.0 million divided by the volume weighted average price of the Company’s common stock for 20 trading days prior to issuance. The Company issued 420,751 shares of common stock to Amgen at $2.3767 per share on January 28, 2015, pursuant to a subscription agreement with Amgen, with the On July 11, 2014, the Company and Eli Lilly and Company (“Eli Lilly”) entered into a worldwide, exclusive license agreement (the “Lilly Agreement”), to develop and commercialize liprotamase, a Phase 3 novel investigational Pancreatic Enzyme Replacement Therapy (“PERT”), for the treatment of patients with Exocrine Pancreatic Insufficiency, or EPI, often seen in patients with cystic fibrosis and other conditions. Under the terms of the Lilly Agreement, the Company was not required to make any up-front payment but is obligated to make milestone payments of up to up to $33.5 million for capsule products and $9.5 million for reformulated products upon the achievement of certain regulatory and commercial sales milestones, none of which have been achieved as of September 30, 2016. In addition, after sales of the licensed products exceed an aggregate of $100.0 million in the United States, the Company is obligated to pay tiered royalties on future net sales of products, ranging from the single digits to the mid-teens, that are developed and approved as defined in the Lilly Agreement. The Company’s royalty obligations as to a particular licensed product will be payable, on a licensed product-by-licensed product basis, for the longer of (a) the date of expiration of the last to expire valid claim within the licensed patents that covers the manufacture, use or sale, offer to sell, or import of such licensed product by the Company or a sublicense in such country, or (b) 12 years after the first commercial sale of the applicable licensed product in the applicable country. See Note 3 – “Research Award” for discussion of commitments and contingencies associated with the research award received from the CFFT. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | 8. STOCKHOLDERS’ EQUITY Preferred Stock The Company has authorized 5,000,000 shares of $0.001 par value preferred stock. The Company’s Board of Directors is authorized to designate the terms and conditions of any preferred stock issued by the Company without further action by the common stockholders. The Company designated 17,000 shares of its authorized and unissued preferred stock as Series X convertible preferred stock and filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series X Convertible Preferred Stock with the Delaware Secretary of State. There were 17,000 Series X contingently redeemable convertible preferred shares issued and outstanding as of September 30, 2016. In September, 2016, the Company entered into a subscription agreement with certain institutional investors pursuant to which it sold 17,000 (“Initial Tranche”) units for a purchase price of $1,000 per unit in a registered direct offering. Each unit consists of one share of Series X contingently redeemable convertible preferred stock and a warrant to purchase shares of common stock. Assuming an exercise price equal to $3.54 per share, which is a 20% premium over the closing price of our common stock on September 6, 2016, each unit would include a warrant to purchase up to 70.62 shares of common stock. The registered direct offering resulted in gross proceeds of $17.0 million. The conversion price for the Series X contingently redeemable convertible preferred stock is equal to the lower of: (a) $2.95 or (b) the five-day VWAP of the Company’s common stock over the five full trading days following the earlier of (1) the date of the Company’s initial public announcement of topline and/or efficacy data from the ongoing Chablis-SC1 study or (2) if applicable, the date of the Company’s initial public announcement of the suspension (including through the imposition of a clinical hold), abandonment or other termination of the Chablis-SC1 study, provided, however, that notwithstanding the above, the conversion price shall not be less than $0.60. The Series X contingently redeemable convertible preferred stockholders do not have any voting rights nor the right to elect any members to the board of directors. The Series X contingently redeemable convertible preferred stock has a contingent redemption clause. T he Company is not required to issue any shares of common stock upon conversion of The subscription agreement also provides that the investors have the right, but not the obligation, to make additional investments as follows: he conversion price for the Series X-1 convertible preferred stock will be equal to the lower of: (a) 75% of the five-day VWAP of the Company’s common stock over the five full trading days following the Company’s initial public announcement of topline clinical efficacy and safety data from the ongoing “SOLUTION” clinical study (Phase 3 study evaluating the efficacy and safety of Liprotamase in subjects with cystic fibrosis-related exocrine pancreatic insufficiency), or (b) 175% of the then-applicable conversion price for the Series X contingently redeemable convertible preferred stock, provided that the conversion price will in no event be lower than $2.95. The Series X-1 convertible preferred stock is not redeemable other than in the event of a deemed liquidation in which event both common and preferred shareholders would receive the same form of consideration. Accounting Treatment The Company has allocated the proceeds from the financing amongst the Series X contingently redeemable convertible preferred shares, the warrants to purchase shares of common stock, and the investors’ rights to purchase shares of Series X-1 convertible preferred stock. · Outstanding Series X Contingently Redeemable Convertible Preferred Stock · Warrants to Purchase Common Stock the · Rights to Purchase Series X-1 Convertible Preferred Stock The following table summarizes the assumptions used in the Monte Carlo simulation model to determine the fair value of the option related to the rights to purchase Series X-1 convertible preferred stock on the date of issuance: Common stock price $ 3.20 Initial Series X contingently redeemable convertible preferred stock conversion price $ 2.95 Expected volatility (1) 120 % Dividend yield 0 % Risk-free interest rate 0.90 % Expected term (years) 3 (1) The volatility was based on blended historical and implied volatilities. · Beneficial Conversion Feature As of the issuance date, and through September 30, 2016, it was not deemed probable that the redemption contingencies in the Series X contingently redeemable preferred stock would result in the stock becoming redeemable. As a result no adjustment is made to the discounts on the Series X convertible preferred stock related to the warrants to purchase common stock and right to purchase series X-1 convertible preferred stock presented in temporary equity. In the event it is deemed probable that the instrument will become redeemable, a deemed dividend will be recorded in respect of these discounts. Common Stock On March 14, 2016, the Company filed a universal shelf registration statement with the SEC on Form S-3 (File No. 333-210166) for the proposed offering from time to time of up to $100.0 million of its securities, including common stock, preferred stock, debt securities and/or warrants. In September 2016, the Company utilized $17.0 million of it’s shelf registration through the issuance of 17,000 shares of Series X contingently redeemable convertible preferred stock at purchase price of $1,000 per share. As of the date of this report, there is a balance of $43.6 million available for future issuance. On November 15, 2013, the Company entered into an at-the-market sales agreement (the “Cowen ATM Agreement”) with Cowen and Company, LLC (“Cowen”) under which the Company from time to time was able to offer and sell shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $25.0 million through Cowen, as agent. For the three and nine months ended September 30, 2016, the Company sold zero and $2.5 million, respectively, in shares of common stock pursuant to the Cowen ATM Agreement. The Cowen ATM Agreement was terminated on April 21, 2016. On April 21, 2016, the Company entered into an at-the-market sales agreement with H.C. Wainwright (the “H.C. Wainwright ATM Agreement”) under which the Company from time to time may offer and sell shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $25.0 million through H.C. Wainwright, as agent. For the three and nine months ended September 30, 2016, the Company sold $1.6 million and $2.3 million in shares of common stock pursuant to the H.C. Wainwright ATM Agreement, respectively, leaving a balance of $22.7 million available for future sale pursuant to the H.C. Wainwright ATM Agreement as of September 30, 2016. On March 12, 2015, the Company executed an equity purchase agreement with LPC, pursuant to which the Company has the right, but not the obligation, to sell to LPC up to an aggregate of $10.0 million in shares of common stock over a period of two years. In July 2015, the Company amended the equity purchase agreement to reduce the amount available for purchase to $6.0 million. On April 27, 2016, the Company amended the equity purchase agreement and increased the amount of common stock available for purchase to $15.0 million. For the three and nine months ended September 30, 2016, the Company sold approximately $0.6 million and $1.6 million in shares of common stock, respectively, pursuant to the equity purchase agreement, leaving a balance of $13.4 million available for future sales as of September 30, 2016. In connection with the sale of shares to LPC, for the three and nine months ended September 30, 2016, the Company issued 3,660 and 24,829 shares, respectively, to LPC as commitment fee pursuant to the equity purchase agreement. Warrants In March 2011, the Company issued a seven-year warrant to purchase 40,178 shares of the Company’s common stock at an exercise price of $48.00 per share. The warrant was immediately exercisable and expires in March 2018. As of September 30, 2016, the warrant remained outstanding and exercisable. In September 2016, the Company issued warrants to certain institutional investors to purchase shares of the Company’s common stock at an exercise price equal to the Series X contingently redeemable convertible preferred stock’s conversion price, plus a 20% premium, and will be exercisable at any time and from time to time after March 13, 2017, and will expire on September 13, 2019. The fair value of the Company’s warrant liability is discussed in Note 5 and Note 6. As of September 30, 2016, the warrant remained outstanding but not exercisable. |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
SHARE-BASED COMPENSATION PLANS | 9. SHARE-BASED COMPENSATION PLANS 2013 Plan On March 25, 2013, the Company’s board of directors adopted the 2013 Stock Option and Incentive Plan (the “2013 Plan”), which was also approved by the Company’s stockholders at its annual general meeting on May 16, 2013. The Company initially reserved 1,750,000 shares of its common stock for the issuance of awards under the 2013 Plan, plus all shares remaining available for grant under the Company’s 2010 Stock Option and Incentive Plan (the “2010 Plan”), plus any additional shares returned under the 2010 Plan or 2013 Plan as a result of the cancellation, forfeiture or other termination (other than by exercise) of awards issued pursuant to the 2010 Plan or 2013 Plan, subject in all cases to adjustment including reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock. In May 2015, the Company’s shareholders approved an additional 1,790,818 shares of its common stock for issuance under the 2013 Plan. In April 2016, the Company’s shareholders approved an additional 1,600,000 shares of its common stock for issuance under the 2013 Plan. Of the shares of common stock reserved for issuance under the 2013 Plan, no more than 750,000 shares will be issued to any individual participant as incentive options, non-qualified options or stock appreciation rights during any calendar year. The 2013 Plan permits the granting of incentive and non-statutory stock options, restricted and unrestricted stock awards, restricted stock units, stock appreciation rights, performance share awards, cash-based awards and dividend equivalent rights to eligible employees, directors and consultants. The option exercise price of an option granted under the 2013 Plan may not be less than 100% of the fair market value of a share of the Company’s common stock on the date the stock option is granted. Options granted under the 2013 Plan have a maximum term of 10 years and generally vest over four years. In addition, in the case of certain large stockholders, the minimum exercise price of incentive options must equal 110% of fair market value on the date of grant and the maximum term is limited to five years. Subject to overall Plan limitations, the maximum aggregate number of shares of common stock that may be issued in the form of incentive options shall not exceed 6,250,000 shares of common stock. The 2013 Plan does not allow the option holders to exercise their options prior to vesting. The terms of awards granted during the three and nine months ended September 30, 2016 and the method for determining the grant date fair value of the awards were consistent with those described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The following table summarizes stock option activity for the nine months ended September 30, 2016 (in thousands except share and per share information): Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life in Years Aggregate Intrinsic Value Balance at December 31, 2015 4,255,981 $ 4.78 8.44 $ 4,323 Granted 2,592,322 $ 3.49 Exercised (116,773 ) $ 2.20 Cancelled and expired (658,857 ) $ 4.90 Forfeited (90,000 ) $ 9.48 Balance at September 30, 2016 5,982,673 $ 4.19 8.36 $ 1,627 Exercisable at September 30, 2016 2,488,364 $ 4.41 7.36 $ 851 The intrinsic value of stock options represents the difference between the exercise price of stock options and the market price of our stock on that day for all in-the-money options. As of September 30, 2016, there was $9.9 million of total unrecognized compensation expense related to stock options and is expected to be amortized on a straight-line basis over a weighted-average remaining period of 2.73 years. The assumptions used in the Black-Scholes option-pricing model to value stock options are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Expected Volatility 97 % 94 % 98 % 94 % Dividend Yield 0 % 0 % 0 % 0 % Risk-Free Interest Rate 1.23 % 1.74 % 1.45 % 1.69 % Expected Term (years) 6.02 6.02 5.93 5.92 Weighted-average fair value per option $ 2.45 $ 7.29 $ 2.70 $ 5.46 Fair value of awards vested (in thousands) $ 929 $ 567 $ 3,907 $ 2,695 2010 Employee Stock Purchase Plan (“ESPP”) Effective July 2010, under the terms of the ESPP, eligible employees of the Company may authorize the Company to deduct amounts from their compensation, which amounts are used to enable the employees to purchase shares of the Company’s common stock. The Company initially reserved 12,500 shares of common stock for issuance thereunder on January 1, 2011, and on each January 1 thereafter, the number of shares of stock reserved and available for issuance under the Plan shall be cumulatively increased by the lesser of (i) one percent (1%) of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or (ii) 31,250 shares of common stock. On January 1, 2016, in accordance with the ESPP’s annual increase provisions, the authorized shares in the ESPP increased by 31,250. The purchase price per share is 85% of the fair market value of the common stock as of the first date or the ending date of the applicable semi-annual purchase period, whichever is less (the “Look-Back Provision”). The 15% discount and the Look-Back Provision make the ESPP compensatory. The Black-Scholes option pricing model was used to value the employee stock purchase rights. The assumptions used in the Black-Scholes option-pricing model to value the employee stock purchase rights are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Expected Volatility 99 % 109 % 94 % 65 % Dividend Yield 0 % 0 % 0 % 0 % Risk-Free Interest Rate 0.40 % 0.09 % 0.33 % 0.07 % Expected Term (years) 0.50 0.50 0.50 0.50 Stock-Based Compensation Expense Total stock-based compensation expense, including expense recorded for the ESPP, was as follows (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Research and development $ 454 $ 583 1,330 $ 1,025 General and administrative 932 729 2,613 1,470 Total stock-based compensation $ 1,386 $ 1,312 $ 3,943 $ 2,495 |
ORGANIZATION AND SIGNIFICANT 17
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Organization | Organization Anthera Pharmaceuticals, Inc. (the “Company” or “Anthera”) is a biopharmaceutical company focused on advancing the development and commercialization of innovative medicines that benefit patients with unmet medical needs. The Company currently has two compounds in development, liprotamase, also known as Sollpura™, |
Liquidity and Need for Additional Capital | Liquidity and Need for Additional Capital The Company’s planned principal operations are acquiring product and technology rights, raising capital and performing research and development activities. The Company is currently conducting research and development activities to treat autoimmune diseases and EPI. The Company’s activities are subject to significant risks and uncertainties. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing; develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances. Since inception in 2004, the Company has funded its operations through equity offerings, private placements of convertible debt, debt financing, equity investment and cost reimbursement from a former collaborative partner, Zenyaku Kogyo Co., Ltd (“Zenyaku”), and a research award from Cystic Fibrosis Foundation Therapeutics Incorporated ("CFFT"). On April 21, 2016, the Company entered into an At Market Issuance Sales Agreement (“ATM Agreement”) with H.C. Wainwright & Co., LLC (“H.C. Wainwright”) to create an at-the-market equity program under which the Company from time to time may offer and sell shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $25.0 million through H.C. Wainwright, as agent. On April 27, 2016, the Company amended an existing equity purchase agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company has the right, but not the obligation, to sell to LPC up to an aggregate of $15.0 million in shares of common stock by March 2017. In September 2016, the Company entered into a subscription agreement with certain institutional investors pursuant to which it sold 17,000 units for a purchase price of $1,000 per unit in a registered direct offering. Each unit consists of one share of Series X contingently redeemable convertible preferred stock and a warrant to purchase shares of common stock. Assuming an exercise price equal to $3.54 per share, which is a 20% premium over the closing price of our common stock on September 6, 2016, each unit would include a warrant to purchase up to 70.62 shares of common stock. The offering resulted in gross proceeds of $17.0 million. The subscription agreement provides that the investors have the right, but not the obligation, to make additional investments as follows: As of the date of this report, the Company anticipates its existing cash, and access to additional cash through the ATM Agreement with H.C. Wainwright and an equity purchase agreement with LPC will be sufficient to fund its near term liquidity needs for at least the next 12 months. To fully execute its business plan, the Company will need to complete certain research and development activities and clinical studies. Further, the Company’s product candidates will require regulatory approval prior to commercialization. These activities may span many years and require substantial capital to complete and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company will need substantial additional financing to continue development of its product candidates, obtain regulatory approvals, and prepare for commercial readiness if the clinical trials are successful; such financing may not be available on terms favorable to the Company, if at all. If adequate funds are not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its clinical trials. The Company plans to meet its capital requirements primarily through future partnerships, issuances of equity securities, debt financing, and in the longer term, revenue from product sales. Failure to generate revenue or raise additional capital would adversely affect the Company’s ability to achieve its intended business objectives. |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and do not contain all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited Condensed Consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 14, 2016. In the opinion of management, the accompanying unaudited Condensed Consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary to present fairly the Company’s interim consolidated financial information. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other period. The consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date but it does not include all of the information and notes required by U.S. GAAP. The Company has evaluated events and transactions subsequent to the balance sheet date and has disclosed all events or transactions that occurred subsequent to the balance sheet date but prior to filing this Quarterly Report on Form 10-Q that would require recognition or disclosure in the unaudited Condensed Consolidated Financial Statements. |
Use of Estimates | Use of Estimates The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to clinical trial accruals, tax provision, stock-based compensation, warrant liabilities, and the computation of beneficial conversion features. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. |
Financial Instruments with Characteristics of Both Equity and Liabilities | Financial Instruments with Characteristics of Both Equity and Liabilities The Company has issued certain financial instruments, including warrants to purchase common stock and rights to purchase shares of Series X-1 convertible preferred stock, which have the characteristics of both liability and equity. Financial instruments such as warrants that are evaluated to be classified as liabilities are fair valued upon issuance and are remeasured at fair value at subsequent reporting periods with the resulting change in fair value recorded in other income/(expense). The fair value of warrants is estimated using the Monte Carlo simulation model and requires the input of subjective assumptions including expected stock price volatility, expected life and |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In September 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as Going Concern (“ASU 2014-15”). ASU 2014-15 defines when and how companies are required to disclose going concern uncertainties, which must be evaluated each interim and annual period. Specifically, the ASU requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become within one year after the financial statements are issued (or available to be issued). If substantial doubt exists, certain disclosures are required; the extent of those disclosures depends on an evaluation of management’s plans (if any) to mitigate the going concern uncertainty. The guidance is effective for fiscal years ending after December 15, 2016 and for interim periods thereafter. The Company does not expect the adoption of this guidance to materially affect its consolidated financial statements. In November 2015, the FASB issued guidance on the classification of deferred taxes, Accounting Standards Update No. 2015-17 (“ASU 2015-17”), Balance Sheet Classification of Deferred Taxes. ASU 2015-17 eliminates the guidance in Topic 740, Income Taxes, that required an entity to separate deferred tax liabilities and assets between current and noncurrent amounts in a classified balance sheet. The amendments require that all deferred tax liabilities and assets of the same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single amount in a classified balance sheet. The amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted as of the beginning of any interim period or annual reporting period. The Company does not expect the adoption of this guidance to materially affect its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). ASU 2016-02 impacts any entity that enters into a lease with some specified scope exceptions. The guidance updates and supersedes Topic 840, Leases. For public entities, ASU 2016-02 is effective for fiscal years, and interim periods with those years, beginning after December 15, 2018, and early adoption is permitted. The Company does not expect the adoption of this standard to materially affect its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The adoption of ASU 2016-09 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Net Loss Per Common Share | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net loss per share Numerator Net loss $ (16,478 ) $ (11,326 ) $ (42,538 ) $ (27,881 ) Deemed dividend attributable to preferred stock (8,807 ) — (8,807 ) — Net loss applicable to common stockholders $ (25,285 ) $ (11,326 ) $ (51,345 ) $ (27,881 ) Denominator Weighted average common shares outstanding 41,682,669 39,241,738 40,924,480 34,260,866 Basic and diluted net loss per share $ (0.61 ) $ (0.29 ) $ (1.25 ) $ (0.81 ) |
Schedule of Antidilutive Securities | As of September 30, 2016 2015 Options to purchase common stock 5,982,673 4,282,356 Warrants to purchase common stock 40,178 40,178 Restricted Stock Units — 937 Total 6,022,851 4,323,471 In addition to the above outstanding equity instruments, the Company also excluded the conversion of its Preferred Stock and warrants as follows (see Note 8 for terms of Preferred Stock): As of September 30, 2016 Potential conversion of Series X contingently redeemable convertible preferred stock 5,762,712 (1) 5,396,825 (2) Potential conversion of Series X-1 convertible preferred stock 5,487,651 (3) 11,991,534 (4) Potential warrants for common stock issuable upon exercise of warrants 1,200,565 (5) 1,124,339 (6) (1) The number of potential shares is based on gross proceeds of $17 million from the issuance of Series X contingently redeemable convertible preferred stock divided by the stated conversion price of $2.95 applicable through the date of the initial public announcement of topline and/or efficacy data from the Chablis-SC1 study or the announcement of the suspension, abandonment or other termination of the Chablis SC-1 study. (2) The number of potential shares is based on gross proceeds of $17 million from the issuance of Series X contingently redeemable convertible preferred stock divided by an assumed conversion price of $3.15, which is based on the Company’s five-day volume-weighted average price, or VWAP, of the Company’s common stock price over the five full trading days ending September 30, 2016. The holder of the Series X contingently redeemable convertible preferred stock is able to convert at the lower of the $2.95 or the five-day VWAP, of the Company’s common stock price over the five full trading days following the earlier of the initial public announcement of topline and/or efficacy data from the Chablis-SC1 study or the announcement of the suspension, abandonment or other termination of the Chablis SC-1 study. (3) In connection with the issuance of Series X contingently redeemable convertible preferred stock, the Company granted a right to the Series X preferred stock investors to purchase Series X-1 convertible preferred stock in a future period. The number of potential shares is calculated assuming the right is fully exercised. The resulting gross proceeds of $28.33 million from the potential issuance of Series X-1 convertible preferred stock are divided by an assumed conversion price of $5.16, representing 175% of the Series X contingently redeemable convertible preferred stock’s assumed conversion price of $2.95 noted in (1) above. (4) In connection with the issuance of Series X contingently redeemable convertible preferred stock, the Company granted a right to the Series X preferred stock investors to purchase Series X-1 convertible preferred stock in a future period. The number of potential shares is calculated assuming the right is fully exercised. The resulting gross proceeds of $28.33 million from the issuance of Series X-1 preferred stock are divided by an assumed conversion price of $2.36, representing 75% of Series X contingently redeemable convertible preferred stock’s assumed conversion price of $3.15 noted in (2) above. (5) The number of potential warrant shares is based on $4.25 million divided by the exercise price of $3.54 representing a 20% premium over the Series X contingently redeemable convertible preferred stock’s assumed conversion price of $2.95 as noted in (1) above. (6) The number of potential warrant shares is based on $4.25 million divided by the exercise price of $3.78 representing a 20% premium over the Series X contingently redeemable convertible preferred stock’s assumed conversion price of $3.15 as noted in (2) above. |
FAIR VALUE OF FINANCIAL INSTR19
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | September 30, 2016 Estimated Fair Value Level 1 Level 2 Level 3 Asset Money market funds $ 30,410 $ 30,410 $ — $ — Liabilities Warrant liability $ 3,509 $ — $ — $ 3,509 December 31, 2015 Estimated Fair Value Level 1 Level 2 Level 3 Money market funds $ 45,156 $ 45,156 $ — $ — |
Schedule of Changes in Level 3 Warrant Liability | September 30, 2016 Beginning balance $ — Issuance of warrants 3,678 Change in fair value (169 ) Ending balance $ 3,509 |
WARRANT LIABILITY (Tables)
WARRANT LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Warrant [Member] | |
Summary of Fair Value Assumptions | September 14, September 30, 2016 2016 Common stock price $ 3.20 $ 3.15 Initial Series X contingently redeemable convertible preferred stock conversion price $ 2.95 $ 2.95 Expected volatility 120 % 120 % Dividend yield 0 % 0 % Risk-free interest rate 0.90 % 0.87 % Expected term (years) 3 2.96 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Warrant [Member] | |
Summary of Fair Value Assumptions | September 14, September 30, 2016 2016 Common stock price $ 3.20 $ 3.15 Initial Series X contingently redeemable convertible preferred stock conversion price $ 2.95 $ 2.95 Expected volatility 120 % 120 % Dividend yield 0 % 0 % Risk-free interest rate 0.90 % 0.87 % Expected term (years) 3 2.96 |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Option Activity | Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life in Years Aggregate Intrinsic Value Balance at December 31, 2015 4,255,981 $ 4.78 8.44 $ 4,323 Granted 2,592,322 $ 3.49 Exercised (116,773 ) $ 2.20 Cancelled and expired (658,857 ) $ 4.90 Forfeited (90,000 ) $ 9.48 Balance at September 30, 2016 5,982,673 $ 4.19 8.36 $ 1,627 Exercisable at September 30, 2016 2,488,364 $ 4.41 7.36 $ 851 |
Schedule of Stock-Based Compensation Expense | Three Months Ended Nine Months Ended 2016 2015 2016 2015 Research and development $ 454 $ 583 1,330 $ 1,025 General and administrative 932 729 2,613 1,470 Total stock-based compensation $ 1,386 $ 1,312 $ 3,943 $ 2,495 |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Fair Value Assumptions | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Expected Volatility 97 % 94 % 98 % 94 % Dividend Yield 0 % 0 % 0 % 0 % Risk-Free Interest Rate 1.23 % 1.74 % 1.45 % 1.69 % Expected Term (years) 6.02 6.02 5.93 5.92 Weighted-average fair value per option $ 2.45 $ 7.29 $ 2.70 $ 5.46 Fair value of awards vested (in thousands) $ 929 $ 567 $ 3,907 $ 2,695 |
Employee Stock Purchase Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Fair Value Assumptions | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Expected Volatility 99 % 109 % 94 % 65 % Dividend Yield 0 % 0 % 0 % 0 % Risk-Free Interest Rate 0.40 % 0.09 % 0.33 % 0.07 % Expected Term (years) 0.50 0.50 0.50 0.50 |
ORGANIZATION AND SIGNIFICANT 23
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 06, 2016 | Apr. 27, 2016 | Apr. 21, 2016 | Dec. 31, 2015 | Sep. 30, 2011 | |
Common stock, par value per share | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Maximum proceeds pursuant to security agreement | $ 15,000 | $ 25,000 | |||||
Exercise price | $ 48 | ||||||
Proceeds from issuance of Series X convertible preferred stock, net of offering cost | $ 16,920 | ||||||
Series X Contingently Redeemable Convertible Preferred Stock [Member] | |||||||
Number of preferred units sold | 17,000 | ||||||
Preferred units sold, price per share | $ 1,000 | ||||||
Exercise price | $ 3.54 | ||||||
Percentage over closing price | 20.00% | ||||||
Number of shares per warrant | 70.62 | ||||||
Number of shares that may be purchased | 28,330 | ||||||
Redemption price per share | $ 1,000 | ||||||
Redemption amount | $ 28,300 |
RESEARCH AWARD (Details)
RESEARCH AWARD (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Research and Development [Abstract] | ||||
Research award amount | $ 3,000 | $ 3,000 | ||
Royalty threshold amount | 100,000 | 100,000 | ||
Remaining research award | 100 | 100 | ||
Research award | $ (367) | $ (261) | $ (1,467) |
NET LOSS PER SHARE (Schedule of
NET LOSS PER SHARE (Schedule of Calculation of Net Loss Per Common Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator | ||||
Net loss | $ (16,478) | $ (11,326) | $ (42,538) | $ (27,881) |
Deemed dividend attributable to preferred stock | (8,807) | (8,807) | ||
Net loss applicable to common stockholders | $ (25,285) | $ (11,326) | $ (51,345) | $ (27,881) |
Denominator | ||||
Weighted average common shares oustanding | 41,682,669 | 39,241,738 | 40,924,480 | 34,260,866 |
Basic and diluted net loss per share | $ (0.61) | $ (0.29) | $ (1.25) | $ (0.81) |
NET LOSS PER SHARE (Schedule 26
NET LOSS PER SHARE (Schedule of Antidilutive Securities) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 14, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | 6,022,851 | 4,323,471 | |||
Stated conversion price | $ 2.95 | $ 2.95 | |||
Employee Stock Option [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | 5,982,673 | 4,282,356 | |||
Warrant [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | 40,178 | 40,178 | |||
Warrant [Member] | Conversion One [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | [1] | 1,200,565 | |||
Potential proceeds | $ 4,250,000 | ||||
Assumed conversion price | $ 2.95 | ||||
Exercise price | $ 3.54 | ||||
Premium percentage | 20.00% | ||||
Warrant [Member] | Conversion Two [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | [2] | 1,124,339 | |||
Potential proceeds | $ 4,250,000 | ||||
Assumed conversion price | $ 3.15 | ||||
Exercise price | $ 3.78 | ||||
Premium percentage | 20.00% | ||||
Restricted Stock Units [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | 937 | ||||
Series X Contingently Redeemable Convertible Preferred Stock [Member] | Conversion One [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | [3] | 5,762,712 | |||
Potential proceeds | $ 17,000,000 | ||||
Stated conversion price | $ 2.95 | ||||
Series X Contingently Redeemable Convertible Preferred Stock [Member] | Conversion Two [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | [4] | 5,396,825 | |||
Potential proceeds | $ 17,000,000 | ||||
Stated conversion price | $ 2.95 | ||||
Assumed conversion price | $ 3.15 | ||||
Series X-1 Convertible Preferred Stock [Member] | Conversion One [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | [5] | 5,487,651 | |||
Potential proceeds | $ 28,330,000 | ||||
Assumed conversion price | $ 2.95 | ||||
Assumed conversion price, percentage | 175.00% | ||||
Assumed exercise price | $ 5.16 | ||||
Premium percentage | 20.00% | ||||
Series X-1 Convertible Preferred Stock [Member] | Conversion Two [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive common share equivalents outstanding | [6] | 11,991,534 | |||
Potential proceeds | $ 28,330,000 | ||||
Assumed conversion price | $ 3.15 | ||||
Assumed conversion price, percentage | 75.00% | ||||
Assumed exercise price | $ 2.36 | ||||
Premium percentage | 20.00% | ||||
[1] | The number of potential warrant shares is based on $4.25 million divided by the exercise price of $3.54 representing a 20% premium over the Series X contingently redeemable convertible preferred stock's assumed conversion price of $2.95 as noted in (1) above. | ||||
[2] | The number of potential warrant shares is based on $4.25 million divided by the exercise price of $3.78 representing a 20% premium over the Series X contingently redeemable convertible preferred stock's assumed conversion price of $3.15 as noted in (2) above. | ||||
[3] | The number of potential shares is based on gross proceeds of $17 million from the issuance of Series X contingently redeemable convertible preferred stock divided by the stated conversion price of $2.95 applicable through the date of the initial public announcement of topline and/or efficacy data from the Chablis-SC1 study or the announcement of the suspension, abandonment or other termination of the Chablis SC-1 study. | ||||
[4] | The number of potential shares is based on gross proceeds of $17 million from the issuance of Series X contingently redeemable convertible preferred stock divided by an assumed conversion price of $3.15, which is based on the Company's five-day volume-weighted average price, or VWAP, of the Company's common stock price over the five full trading days ending September 30, 2016. The holder of the Series X contingently redeemable convertible preferred stock is able to convert at the lower of the $2.95 or the five-day VWAP, of the Company's common stock price over the five full trading days following the earlier of the initial public announcement of topline and/or efficacy data from the Chablis-SC1 study or the announcement of the suspension, abandonment or other termination of the Chablis SC-1 study. | ||||
[5] | In connection with the issuance of Series X contingently redeemable convertible preferred stock, the Company granted a right to the Series X preferred stock investors to purchase Series X-1 convertible preferred stock in a future period. The number of potential shares is calculated assuming the right is fully exercised. The resulting gross proceeds of $28.33 million from the potential issuance of Series X-1 convertible preferred stock are divided by an assumed conversion price of $5.16, representing 175% of the Series X contingently redeemable convertible preferred stock's assumed conversion price of $2.95 noted in (1) above. | ||||
[6] | In connection with the issuance of Series X contingently redeemable convertible preferred stock, the Company granted a right to the Series X preferred stock investors to purchase Series X-1 convertible preferred stock in a future period. The number of potential shares is calculated assuming the right is fully exercised. The resulting gross proceeds of $28.33 million from the issuance of Series X-1 preferred stock are divided by an assumed conversion price of $2.36, representing 75% of Series X contingently redeemable convertible preferred stock's assumed conversion price of $3.15 noted in (2) above. |
FAIR VALUE OF FINANCIAL INSTR27
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Estimated Fair Value [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | $ 30,410 | $ 45,156 |
Warrant [Member] | Estimated Fair Value [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured on a recurring basis | 3,509 | |
Level 1 [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | 30,410 | 45,156 |
Level 1 [Member] | Warrant [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured on a recurring basis | ||
Level 2 [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | ||
Level 2 [Member] | Warrant [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured on a recurring basis | ||
Level 3 [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | ||
Level 3 [Member] | Warrant [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured on a recurring basis | $ 3,509 |
FAIR VALUE OF FINANCIAL INSTR28
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Changes in Level 3 Warrant Liability) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Fair Value Of Financial Instruments Schedule Of Changes In Level 3 Warrant Liability Details | |
Beginning balance | |
Issuance of warrants | 3,678 |
Change in fair value | (169) |
Ending balance | $ 3,509 |
WARRANT LIABILITY (Narrative) (
WARRANT LIABILITY (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 14, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | ||
Expected volatility | 120.00% | 120.00% | |||
Addition to warrant liability | $ 3,678 | ||||
Fair value of warrant liability | $ 3,509 | $ 3,509 | |||
Warrant One [Member] | |||||
Expected volatility | [1] | 120.00% | |||
Warrant Two [Member] | |||||
Expected volatility | 120.00% | ||||
[1] | The volatility was based on blended historical and implied volatilities. |
WARRANT LIABILITY (Summary of F
WARRANT LIABILITY (Summary of Fair Value Assumptions) (Details) - $ / shares | 1 Months Ended | |
Sep. 30, 2016 | Sep. 14, 2016 | |
Warrant Liability Summary Of Fair Value Assumptions Details | ||
Common stock price | $ 3.15 | $ 3.20 |
Initial Series X contingently redeemable convertible preferred stock conversion price | $ 2.95 | $ 2.95 |
Expected volatility | 120.00% | 120.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 0.87% | 0.90% |
Expected term | 2 years 11 months 16 days | 3 years |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($)ft²$ / sharesshares | Dec. 31, 2007USD ($) | |
Loss Contingencies [Line Items] | ||
Square footage of operating facility, in square feet | ft² | 14,000 | |
Amgen Inc [Member] | ||
Loss Contingencies [Line Items] | ||
Number of shares issued under collaborative arrangement | shares | 420,751 | |
Share issue price | $ / shares | $ 2.3767 | |
Value of shares granted divided by weighted average price of common stock | $ 1,000 | |
Amgen Inc [Member] | Collaborative Arrangement [Member] | ||
Loss Contingencies [Line Items] | ||
License initiation fees | $ 6,000 | |
Amgen Inc [Member] | Maximum [Member] | ||
Loss Contingencies [Line Items] | ||
Additional milestone payments upon the achievement of certain development and regulatory milestones | 33,000 | |
Eli Lilly [Member] | Maximum [Member] | ||
Loss Contingencies [Line Items] | ||
Additional milestone payments upon the achievement of certain development and regulatory milestones for capsule products | 33,500 | |
Additional milestone payments upon the achievement of certain development and regulatory milestones for reformulated products | 9,500 | |
Royalty obligation, sales amount | $ 100,000 |
STOCKHOLDERS' EQUITY (Narrative
STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||
Sep. 30, 2016 | Sep. 14, 2016 | Sep. 06, 2016 | Apr. 27, 2016 | Mar. 14, 2016 | Jul. 31, 2015 | Mar. 12, 2015 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Apr. 21, 2016 | Dec. 31, 2015 | Nov. 15, 2013 | Sep. 30, 2011 | |||
Class of Stock [Line Items] | ||||||||||||||||
Exercise price of warrants | $ 48 | |||||||||||||||
Proceeds from issuance of common stock | $ 6,037 | $ 65,378 | ||||||||||||||
Number of shares called by warrant(s) | 40,178 | |||||||||||||||
Redeemable convertible preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | 5,000,000 | ||||||||||||
Redeemable convertible preferred stock, par value per share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||
Redeemable convertible preferred stock, shares issued | 17,000 | 17,000 | 17,000 | 0 | ||||||||||||
Redeemable convertible preferred stock, shares outstanding | 17,000 | 17,000 | 17,000 | 0 | ||||||||||||
Proceeds from issuance of Series X convertible preferred stock, net of offering cost | $ 16,920 | |||||||||||||||
Stated conversion price | $ 2.95 | $ 2.95 | ||||||||||||||
Maximum proceeds pursuant to security agreement | $ 15,000 | $ 25,000 | ||||||||||||||
Common stock, par value per share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||
Contingently redeemable convertible preferred stock value | [1] | $ 9,553 | $ 9,553 | $ 9,553 | [2] | |||||||||||
Addition to warrant liability | 3,678 | |||||||||||||||
Convertible preferred stock, right to purchase Series X-1 | $ 3,689 | $ 3,689 | $ 3,689 | |||||||||||||
Series X-1 Convertible Preferred Stock [Member] | Conversion One [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Assumed conversion price, percentage | 175.00% | |||||||||||||||
Premium percentage | 20.00% | |||||||||||||||
Series X-1 Convertible Preferred Stock [Member] | Conversion Two [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Assumed conversion price, percentage | 75.00% | |||||||||||||||
Premium percentage | 20.00% | |||||||||||||||
Warrant [Member] | Conversion One [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Premium percentage | 20.00% | |||||||||||||||
Warrant [Member] | Conversion Two [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Premium percentage | 20.00% | |||||||||||||||
Series X Contingently Redeemable Convertible Preferred Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Exercise price of warrants | $ 3.54 | |||||||||||||||
Percentage over closing price | 20.00% | |||||||||||||||
Redeemable convertible preferred stock, shares authorized | 17,000 | 17,000 | 17,000 | 17,000 | ||||||||||||
Number of preferred units sold | 17,000 | |||||||||||||||
Preferred units sold, price per share | $ 1,000 | |||||||||||||||
Number of shares per unit | 70.62 | |||||||||||||||
Stated conversion price | $ 2.95 | |||||||||||||||
Number of shares that may be purchased | 28,330 | |||||||||||||||
Redemption price per share | $ 1,000 | |||||||||||||||
Redemption amount | $ 28,300 | |||||||||||||||
Deemed dividend | $ 8,800 | |||||||||||||||
Minimum number of shares for conversion | 8,385,828 | |||||||||||||||
Threshold ownership percentage | 19.99% | |||||||||||||||
Series X Contingently Redeemable Convertible Preferred Stock [Member] | Minimum [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Stated conversion price | $ 0.60 | |||||||||||||||
Second Shelf Registration [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Maximum amount of shares of common stock, preferred stock, debt securities and/or warrants that may be issued under a shelf registration statement | $ 100,000 | |||||||||||||||
Equity agreement, amount remaining for future sale | $ 43,600 | 43,600 | $ 43,600 | |||||||||||||
Lincoln Park Capital Fund [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Proceeds from issuance of common stock | $ 600 | $ 1,600 | ||||||||||||||
Shares issued as commitment fee pursuant to equity purchase agreement | 3,660 | 24,829 | ||||||||||||||
Equity purchase agreement, authorized amount of equity authorized for sale | $ 15,000 | $ 6,000 | $ 10,000 | |||||||||||||
Equity agreement, amount remaining for future sale | 13,400 | $ 13,400 | $ 13,400 | |||||||||||||
Cowen [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Proceeds from issuance of common stock | 0 | 2,500 | ||||||||||||||
Maximum proceeds pursuant to security agreement | $ 25,000 | |||||||||||||||
Common stock, par value per share | $ 0.001 | |||||||||||||||
Wainwright [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Proceeds from issuance of common stock | 1,600 | 2,300 | ||||||||||||||
Equity agreement, amount remaining for future sale | $ 22,700 | $ 22,700 | $ 22,700 | |||||||||||||
Maximum proceeds pursuant to security agreement | $ 25,000 | |||||||||||||||
Common stock, par value per share | $ 0.001 | |||||||||||||||
[1] | The Company has designated (i) 17,000 of the 5,000,000 authorized shares of preferred stock as Series X Preferred Stock and (ii) 28,330 of the 5,000,000 authorized shares of preferred stock as Series X-1 Preferred Stock. | |||||||||||||||
[2] | Derived from audited Financial Statements. |
STOCKHOLDERS' EQUITY (Summary o
STOCKHOLDERS' EQUITY (Summary of Fair Value Assumptions) (Details) - $ / shares | 1 Months Ended | |
Sep. 30, 2016 | Sep. 14, 2016 | |
Stockholders Equity Summary Of Fair Value Assumptions Details | ||
Common stock price | $ 3.15 | $ 3.20 |
Initial Series X contingently redeemable convertible preferred stock conversion price | $ 2.95 | $ 2.95 |
Expected volatility | 120.00% | 120.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 0.87% | 0.90% |
Expected term | 2 years 11 months 16 days | 3 years |
SHARE-BASED COMPENSATION PLAN34
SHARE-BASED COMPENSATION PLANS (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2016 | May 31, 2015 | Sep. 30, 2016 | |
2013 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Additional shares authorized | 1,600,000 | 1,790,818 | |
Share-based compensation, shares authorized under plan | 1,750,000 | ||
Purchase price as percentage of fair market value of common stock | 100.00% | ||
Maximum term for options granted under the plan | 10 years | ||
Maximum shares allowed to be issued per individual | 750,000 | ||
Vesting period | 4 years | ||
Maximum shares allowed to be issued as incentive options | 6,250,000 | ||
2013 Plan [Member] | Stockholder Group One [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Purchase price as percentage of fair market value of common stock | 110.00% | ||
Maximum term for options granted under the plan | 5 years | ||
Employee Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation, shares authorized under plan | 12,500 | ||
Maximum number of shares of common stock by which the number of shares of stock reserved and available for grant shall be cumulatively increased | 31,250 | ||
Purchase price as percentage of fair market value of common stock | 85.00% | ||
Discount percentage on issuance of stock | 15.00% | ||
Percentage of the number of shares of common stock by which the number of shares available for sale shall be increased | 1.00% | ||
Employee Stock [Member] | 2013 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation cost | $ 9,900 | ||
Unrecognized compensation cost, period of recognition | 2 years 8 months 23 days |
SHARE-BASED COMPENSATION PLAN35
SHARE-BASED COMPENSATION PLANS (Summary of Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Number of Options | ||
Balance at December 31, 2015 | 4,255,981 | |
Granted | 2,592,322 | |
Exercised | (116,773) | |
Cancelled and expired | (658,857) | |
Forfeited | (90,000) | |
Balance at September 30, 2016 | 5,982,673 | 4,255,981 |
Exercisable at September 30, 2016 | 2,488,364 | |
Weighted-Average Exercise Price | ||
Balance at December 31, 2015 | $ 4.78 | |
Granted | 3.49 | |
Exercised | 2.20 | |
Cancelled and expired | 4.90 | |
Forfeited | 9.48 | |
Balance at September 30, 2016 | 4.19 | $ 4.78 |
Exercisable at September 30, 2016 | $ 4.41 | |
Weighted-Average Remaining Contractual Life in Years | ||
Outstanding | 8 years 4 months 10 days | 8 years 5 months 8 days |
Exercisable at September 30, 2016 | 7 years 4 months 10 days | |
Aggregate Intrinsic Value | ||
Balance at December 31, 2015 | $ 4,323 | |
Balance at September 30, 2016 | 1,627 | $ 4,323 |
Exercisable at September 30, 2016 | $ 851 |
SHARE-BASED COMPENSATION PLAN36
SHARE-BASED COMPENSATION PLANS (Summary of Fair Value Assumptions) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 14, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected Volatility | 120.00% | 120.00% | ||||
Dividend Yield | 0.00% | 0.00% | ||||
Risk-Free Interest Rate | 0.87% | 0.90% | ||||
Expected Term | 2 years 11 months 16 days | 3 years | ||||
Employee Stock Option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected Volatility | 97.00% | 94.00% | 98.00% | 94.00% | ||
Dividend Yield | 0.00% | 0.00% | 0.00% | 0.00% | ||
Risk-Free Interest Rate | 1.23% | 1.74% | 1.45% | 1.69% | ||
Expected Term | 6 years 7 days | 6 years 7 days | 5 years 11 months 5 days | 5 years 11 months 1 day | ||
Weighted-average fair value per option | $ 2.45 | $ 7.29 | $ 2.70 | $ 5.46 | ||
Fair value of awards vested | $ 929 | $ 567 | $ 3,907 | $ 2,695 | ||
Employee Stock Purchase Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected Volatility | 99.00% | 109.00% | 94.00% | 65.00% | ||
Dividend Yield | 0.00% | 0.00% | 0.00% | 0.00% | ||
Risk-Free Interest Rate | 0.40% | 0.09% | 0.33% | 0.07% | ||
Expected Term | 6 months | 6 months | 6 months | 6 months |
SHARE-BASED COMPENSATION PLAN37
SHARE-BASED COMPENSATION PLANS (Schedule of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | $ 1,386 | $ 1,312 | $ 3,934 | $ 2,495 |
Research and Development [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | 454 | 583 | 1,330 | 1,025 |
General and Administrative [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | $ 932 | $ 729 | $ 2,613 | $ 1,470 |