Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Mar. 27, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Imprimis Pharmaceuticals, Inc. | ' |
Entity Central Index Key | '0001360214 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 9,085,715 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current assets | ' | ' |
Cash and cash equivalents | $14,201,144 | $15,579,309 |
Restricted short-term investment | 50,127 | 50,097 |
Accounts receivable | 1,410 | ' |
Due from Pharmacy Creations, LLC | 41,356 | ' |
Prepaid expenses and other current assets | 123,664 | 105,067 |
Total current assets | 14,417,701 | 15,734,473 |
Furniture and equipment, net | 34,230 | 26,892 |
TOTAL ASSETS | 14,451,931 | 15,761,365 |
Current liabilities | ' | ' |
Accounts payable and accrued expenses | 457,105 | 311,924 |
Accrued payroll and related liabilities | 198,362 | 338,703 |
Total current liabilities | 655,467 | 650,627 |
Commitments and contingencies | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' |
Common stock, $0.001 par value, 395,000,000 shares authorized, 9,085,715 and 8,970,364 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 9,086 | 8,970 |
Additional paid-in capital | 47,859,933 | 46,849,160 |
Deficit accumulated during the development stage | -34,072,555 | -31,747,392 |
TOTAL STOCKHOLDERS' EQUITY | 13,796,464 | 15,110,738 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $14,451,931 | $15,761,365 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 395,000,000 | 395,000,000 |
Common stock, shares issued | 9,085,715 | 8,970,364 |
Common stock, shares outstanding | 9,085,715 | 8,970,364 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 188 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Revenues: | ' | ' | ' |
License revenues | $1,410 | $2,500 | $111,410 |
Operating Expenses: | ' | ' | ' |
Selling, general and administrative | 2,276,730 | 1,019,949 | 20,911,228 |
Research and development | 60,152 | 455,100 | 10,794,995 |
Total operating expenses | 2,336,882 | 1,475,049 | 31,706,223 |
Loss from operations | -2,335,472 | -1,472,549 | -31,594,813 |
Other income (expense): | ' | ' | ' |
Interest expense | ' | ' | -1,730,892 |
Interest income | 10,309 | 7,068 | 197,055 |
Loss on extinguishment of debt | ' | ' | -1,195,410 |
Gain on settlement | ' | ' | 375,000 |
Gain on forgiveness of liabilities | ' | ' | 176,505 |
Total other income (expense), net | 10,309 | 7,068 | -2,177,742 |
Net loss | -2,325,163 | -1,465,481 | -33,772,555 |
Deemed dividend to preferred stockholders | ' | ' | -300,000 |
Net loss attributable to common stockholders | ($2,325,163) | ($1,465,481) | ($34,072,555) |
Net loss attributable to common stockholders per share of common stock, basic and diluted: | ($0.26) | ($0.19) | ' |
Weighted average number of shares of common stock outstanding, basic and diluted | 9,010,602 | 7,788,236 | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | 188 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' | ' |
Net loss | ($2,325,163) | ($1,465,481) | ($33,772,555) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Estimated fair value of contributed services | ' | ' | 2,475,000 |
Gain on forgiveness of liabilities | ' | ' | -176,505 |
Amortization of prepaid consulting fees | 26,649 | ' | 1,127,395 |
Depreciation | 2,556 | 899 | 14,313 |
Loss on extinguishment of debt | ' | ' | 1,195,410 |
Non-cash interest on notes payable | ' | ' | 1,730,892 |
Stock-based compensation | 661,288 | 410,715 | 7,788,551 |
Payments made on behalf of Company by related party | ' | ' | 254,142 |
Changes in assets and liabilities: | ' | ' | ' |
Accounts receivable | -1,410 | ' | -1,410 |
Prepaid expenses and other current assets | -45,276 | -142,898 | -263,792 |
Accounts payable and accrued expenses | 145,181 | 65,411 | 557,213 |
Accrued payroll and related liabilities | -140,341 | 72,746 | 284,953 |
Deferred revenue | ' | 833 | ' |
NET CASH USED IN OPERATING ACTIVITIES | -1,676,516 | -1,057,775 | -18,786,393 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' | ' |
Purchase of restricted short-term investment | ' | -50,000 | -50,000 |
Cash advances to Pharmacy Creations, LLC | -41,356 | ' | -41,356 |
Purchases of furniture and equipment | -9,894 | -1,449 | -48,543 |
NET CASH USED IN INVESTING ACTIVITIES | -51,250 | -51,449 | -139,899 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' | ' |
Cancelled common stock | ' | -192 | -192 |
Proceeds from issuance of notes payable to a related party | ' | ' | 976,300 |
Proceeds received in connection with debt modification | ' | ' | 50,000 |
Proceeds from issuance of preferred stock | ' | ' | 100,000 |
Proceeds from notes payable | ' | ' | 2,500,000 |
Preferred stock deemed dividend paid at conversion | ' | ' | -200,000 |
Cash advances to and from related parties | ' | ' | 27,537 |
Cash advances from related party | ' | ' | -281,679 |
Capital contributions | ' | ' | 168,707 |
Net proceeds from purchase of common stock and exercise of warrants and stock options | 349,601 | ' | 449,851 |
Proceeds from issuance of common stock and warrants for cash, net of offering costs | ' | 10,052,832 | 29,336,911 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 349,601 | 10,052,640 | 33,127,436 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | -1,378,165 | 8,943,416 | 14,201,144 |
CASH AND CASH EQUIVALENTS, beginning of period | 15,579,309 | ' | ' |
CASH AND CASH EQUIVALENTS, end of period | 14,201,144 | ' | 14,201,144 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ' | ' | ' |
Cash paid for income taxes | 800 | 1,600 | 14,400 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' | ' |
Issuance of and adjustment to common stock and warrants to consulting firms for prepaid consulting fees | ' | ' | 751,793 |
Conversion of related party accounts payable into common stock | ' | ' | 56,087 |
Conversion of notes payable and accrued interest into common stock | ' | ' | 3,435,314 |
Forgiveness of notes payable and accrued interest to shareholders | ' | ' | 241,701 |
Conversion of advances to notes payable to shareholders | ' | ' | 196,300 |
Accretion of preferred stock discount | ' | ' | 100,000 |
Related party acquisition of Phase 3 liabilities | ' | ' | 56,087 |
Conversion of preferred stock into common stock | ' | ' | 1,500 |
Reclassification of deferred offering costs to additional paid-in capital in connection with equity offering | ' | 596,281 | 596,281 |
Issuance of common stock for consulting services previously included in accounts payable and accrued expenses | ' | ' | $139,444 |
Overview_Basis_of_Presentation
Overview, Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Overview, Basis of Presentation and Summary of Significant Accounting Policies | ' | ||||||||
NOTE 1. OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Company and Background | |||||||||
Imprimis Pharmaceuticals, Inc. (“Imprimis” or the “Company”) is a vertically-integrated specialty pharmaceutical company dedicated to delivering high quality, novel and customizable medicines to physicians and patients at accessible prices. Imprimis is pioneering a new commercial pathway using compounding pharmacies for the formulation and distribution of its proprietary drug therapies which include formulations in ophthalmology, wound management and urology. | |||||||||
Basis of Presentation | |||||||||
Imprimis has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, refer to the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||
Principles of Consolidation | |||||||||
On September 17, 2007, Imprimis entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) by and among Imprimis, Transdel Pharmaceuticals Holdings, Inc., a privately held Nevada corporation (“Transdel Holdings”), and Trans-Pharma Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of Imprimis (“Acquisition Sub”). Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), Acquisition Sub merged with and into Transdel Holdings, and Transdel Holdings, as the surviving corporation, became a wholly-owned subsidiary of Imprimis. As a result of the Merger, the former owners of Transdel Holdings became the controlling stockholders of Imprimis. Accordingly, the merger of Transdel Holdings and Imprimis is a reverse merger that has been accounted for as a recapitalization of Transdel Holdings. | |||||||||
Effective on September 17, 2007, and for all reporting periods thereafter, Imprimis’ operating activities, including any prior comparative period, include only those of Transdel Holdings. All references to share and per share amounts in the accompanying condensed consolidated financial statements and footnotes have been restated to reflect the aforementioned share exchange. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||
On June 20, 2011, Transdel Holdings was merged with Imprimis Pharmaceuticals, Inc., at which time Transdel Holdings ceased as a corporation, and Imprimis Pharmaceuticals, Inc. remains as the sole surviving corporation. | |||||||||
Development Stage Enterprise | |||||||||
The Company is a development stage company as defined under Financial Accounting Standards Board (“FASB”) guidance. All losses accumulated since inception have been considered as part of the Company’s development stage activities. | |||||||||
These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage enterprise and has incurred recurring operating losses, has had negative operating cash flows and has not recognized any significant revenues since July 24, 1998 (Inception). In addition, the Company has a deficit accumulated during the development stage of approximately $34.1 million at March 31, 2014, and anticipates incurring further losses through the remainder of the fiscal year 2014 and beyond. The Company has not yet generated significant sales revenue and has funded its operating losses to date through debt and equity offerings and borrowings under its line of credit. The Company believes that its existing cash and cash equivalents will be sufficient to cover its cash flow requirements for at least the next twelve months. The Company’s pharmacy operations commenced on April 1, 2014. This change in the nature of the Company’s operations is expected to have a significant impact on our financial results in the future, including the recognition of significant revenues; as a result the Company will no longer be defined as a development stage company for reporting dates post April 1, 2014. | |||||||||
Research and Development | |||||||||
The Company expenses all costs related to research and development as they are incurred. Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, and other overhead expenses, and costs related to clinical trials, contract services and outsourced contracts. | |||||||||
Intellectual Property | |||||||||
The costs of acquiring intellectual property rights to be used in the research and development process, including licensing fees and milestone payments, are charged to research and development expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized in situations where the Company has identified an alternative future use. No costs associated with acquiring intellectual property rights have been capitalized to date. Costs of maintaining intellectual property rights are expensed as incurred. | |||||||||
Revenue Recognition and Deferred Revenue | |||||||||
The Company will recognize revenues when all of the following criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. The Company believes it will begin to generate significant revenues beginning in the second quarter of 2014, which will include sales of our compounded drug formulations. | |||||||||
Product Revenues | |||||||||
Determination of criteria (3) and (4) will be based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or for which services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required. | |||||||||
License Revenues | |||||||||
License arrangements may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive licensed rights to patented or patent pending compounds, technology access fees, and various performance or sales milestones. These arrangements can be multiple element arrangements. | |||||||||
Non-refundable fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compounded drug preparations is delivered. Such deliverables may include physical quantities of compounded drug preparations, design of the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the patents or patents pending for such compounded drug preparations. We defer recognition of non-refundable fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have required continuing involvement through research and development services that are related to our proprietary know-how and expertise of the delivered technology, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement. Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term. | |||||||||
During the three months ended March 31, 2014 and 2013, the Company recorded $1,410 and $2,500, respectively, in revenues, related to royalty payments. In January 2013, the Company entered into a license agreement with ResolutionMD, LLC granting ResolutionMD, LLC rights to its Accudel delivery technology to be used for anti-cellulite formulations. Under the license agreement, the Company received $10,000 as a guaranteed minimum royalty amount for the year ended December 31, 2013. The Company is due annual guaranteed minimum royalty payments and additional royalty payments based on a percent (generally, 5%-7%) of net sales of any products covered under the license agreement in excess of the guaranteed amounts. The license agreement with ResolutionMD, LLC, unless terminated earlier, has a term of ten years following the first commercial sale of a product that is covered under the license agreement. The Company does not anticipate that the license agreement with ResolutionMD, LLC will generate significant revenues for the 2014 fiscal year. | |||||||||
Income Taxes | |||||||||
The Company accounts for income taxes under the provisions of Accounting Standards Codification (“ASC”) 740, “Income Taxes”, or ASC 740. As of March 31, 2014, there were no unrecognized tax benefits included in the condensed consolidated balance sheets that would, if recognized, affect the effective tax rate. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties in its condensed consolidated balance sheets at March 31, 2014 and December 31, 2013, and has not recognized interest and/or penalties in the condensed consolidated statements of operations for the periods ended March 31, 2014 and 2013. The Company is subject to taxation in the United States and California. The Company’s tax years for 2000 and forward are subject to examination by the federal and state tax authorities due to the carry forward of unutilized net operating losses. | |||||||||
Cash and Cash Equivalents | |||||||||
Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. | |||||||||
Concentrations of Credit Risk | |||||||||
The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. At March 31, 2014, the Company had approximately $14.0 million in cash deposits in excess of FDIC limits. | |||||||||
Furniture and Equipment | |||||||||
Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three to five years. | |||||||||
Deferred Rent | |||||||||
The Company accounts for rent expense related to its operating leases by determining total minimum rent payments on the leases over their respective periods and recognizing the rent expense on a straight-line basis. The difference between the actual amount paid and the amount recorded as rent expense in each fiscal year is recorded as an adjustment to deferred rent. | |||||||||
Fair Value Measurements | |||||||||
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels: | |||||||||
● | Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available. | ||||||||
● | Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | ||||||||
● | Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method. | ||||||||
At March 31, 2014 and December 31, 2013, the Company did not have any financial assets or liabilities which are measured on a recurring basis. At March 31, 2014 and December 31, 2013, the Company’s financial instruments include cash and cash equivalents, a restricted short-term investment, accounts receivable, accounts payable and accrued expenses, and accrued payroll and related liabilities. The carrying amount of these financial instruments, except for the restricted short-term investment, approximates fair value due to the short-term maturities of these instruments. The Company’s restricted short-term investment is carried at amortized cost which approximates fair value. | |||||||||
Stock-Based Compensation | |||||||||
All stock-based payments to employees and consultants, including grants of stock options, warrants, restricted stock units (“RSUs”) and restricted stock, are recognized in the consolidated financial statements based upon their fair values. The Company uses the Black-Scholes-Merton option pricing model and Monte Carlo Simulation to estimate the fair value of stock-based awards. The fair value is determined at the date of grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates. | |||||||||
The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows FASB guidance. As such, the value of the applicable stock-based compensation is periodically remeasured and income or expense is recognized during their vesting terms. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is primarily recognized over the term of the consulting agreement. In accordance with FASB guidance, an asset acquired in exchange for the issuance of fully vested, nonforfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of nonforfeitable equity instruments issued for future consulting services as prepaid stock-based consulting expenses in its consolidated balance sheets. | |||||||||
The Company recorded stock-based compensation (including the amortization of stock-based prepaid consulting fees) related to equity instruments granted to employees, directors and consultants as follows: | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Employees - selling, general and administrative | $ | 557,134 | $ | 86,003 | |||||
Employees - research and development | - | 67,131 | |||||||
Directors - selling, general and administrative | 42,146 | 202,792 | |||||||
Consultants - selling, general and administrative | 84,555 | 117,389 | |||||||
Consultants - research and development | 4,102 | (62,600 | ) | ||||||
Total | $ | 687,937 | $ | 410,715 | |||||
Basic and Diluted Net Loss per Common Share | |||||||||
Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants outstanding during the period. | |||||||||
Basic and diluted net loss applicable to common stock per share is computed using the weighted average number of shares of common stock outstanding during the period. Common stock equivalents (using the treasury stock or, “if converted” method) from convertible notes, preferred stock, stock options, unvested restricted stock units (“RSUs”) and warrants were 3,380,095 and 1,854,354 at March 31, 2014 and 2013, respectively, and are excluded from the calculation of diluted net loss per share for all periods presented because the effect is anti-dilutive. | |||||||||
The following table shows the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2014 and 2013: | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Numerator – net loss attributable to common stockholders | $ | (2,325,163 | ) | $ | (1,465,481 | ) | |||
Denominator – weighted average number of shares outstanding, basic and diluted | 9,010,602 | 7,788,236 | |||||||
Net loss per share, basic and diluted | $ | (0.26 | ) | $ | (0.19 | ) | |||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management are, among others, valuation of deferred taxes, realization of long-lived assets and valuation of stock-based compensation issued to employees and non-employees. Actual results could differ from those estimates. | |||||||||
Reclassifications | |||||||||
Certain prior period items and amounts have been reclassified to conform to the classifications used to prepare the 2014 condensed consolidated financial statements. These reclassifications had no material impact on the Company’s financial position, results of operations, or cash flows as previously reported. | |||||||||
Recently Adopted Accounting Pronouncements | |||||||||
In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, with an option for early adoption. This pronouncement is effective for reporting periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 did not have a material impact on the Company’s condensed consolidated financial statements. | |||||||||
Proposed Amendments to Current Accounting Standards. The FASB is currently developing amendments to existing accounting standards governing a number of areas including, but not limited to, revenue recognition and lease accounting. | |||||||||
In June 2010, the FASB issued an exposure draft, Revenue from Contracts with Customers, which would supersede most of the existing guidance on revenue recognition in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. In November 2011, the FASB re-exposed this draft and it expects a final standard to be issued in the year ending December 31, 2014. As the standard-setting process is still ongoing, the Company is unable to determine the impact this proposed change in accounting will have in the Company’s condensed consolidated financial statements at this time. | |||||||||
In August 2010, the FASB issued an exposure draft, Leases, which would result in significant changes to the accounting requirements for both lessees and lessors in ASC Topic 840, Leases. In May 2013, the FASB re-exposed this draft and the comment period was closed in September 2013. As the standard-setting process is still ongoing, the Company is unable to determine the impact this proposed change in accounting will have in the Company’s condensed consolidated financial statements at this time. | |||||||||
In November 2013, the FASB issued an exposure draft, Development Stage Entities. The amendments in this proposed update would remove the definition of a development stage entity from ASC Topic 915, Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from GAAP. In addition, the proposed amendments would eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows, and shareholder’s equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The comment period for this exposure draft was closed in December 2013. The Company expects to record significant revenues beginning April 1, 2014. Accordingly, the presentation and disclosure requirements for development stage activities will not be required. |
Restricted_ShortTerm_Investmen
Restricted Short-Term Investment | 3 Months Ended |
Mar. 31, 2014 | |
Restricted Short-Term Investment | ' |
Restricted Short-Term Investment | ' |
NOTE 2. RESTRICTED SHORT-TERM INVESTMENT | |
The restricted short-term investment at March 31, 2014 and December 31, 2013, consists of a certificate of deposit, which is classified as held-to-maturity. At March 31, 2014 and December 31, 2013, the restricted short-term investment was recorded at amortized cost which approximates fair value. | |
At March 31, 2014 and December 31, 2013, the certificate of deposit of $50,127 and $50,097, respectively, was classified as a current asset. The certificate of deposit is required as collateral under the Company’s corporate credit card agreement and automatically renews every twelve months. |
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Accounts Payable and Accrued Expenses | ' | ||||||||
NOTE 3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |||||||||
Accounts payable and accrued expenses consisted of the following: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Accounts payable | $ | 357,105 | $ | 261,924 | |||||
Other accrued expenses | 100,000 | 50,000 | |||||||
Total accounts payable and accrued expenses | $ | 457,105 | $ | 311,924 |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
Stockholders' Equity | ' | ||||||||||||||||||||
NOTE 4. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION | |||||||||||||||||||||
Common Stock | |||||||||||||||||||||
During the three months ended March 31, 2014, the Company issued a total of 89,906 shares of common stock for gross proceeds of $330,854 for stock option exercises. | |||||||||||||||||||||
In the three months ended March 31, 2014, the Company issued 22,281 shares of common stock to net settle common stock options to purchase 41,664 shares of common stock with exercise prices of $3.60 - $3.68 per share pursuant to cashless exercise provisions. | |||||||||||||||||||||
During the three months ended March 31, 2014, the Company issued 3,164 shares of common stock for gross proceeds of $18,747 for warrant exercises. | |||||||||||||||||||||
Preferred Stock | |||||||||||||||||||||
At March 31, 2014, the Company had 5,000,000 shares of preferred stock, $0.001 par value, authorized and no shares of preferred stock issued and outstanding. | |||||||||||||||||||||
Stock Option Plan | |||||||||||||||||||||
On September 17, 2007, the Company’s Board of Directors and stockholders adopted the Company’s 2007 Incentive Stock and Awards Plan, which was subsequently amended on November 5, 2008, February 26, 2012, July 18, 2012 , May 2, 2013 and September 27, 2013 (as amended, the “Plan”). As of March 31, 2014, the Plan provides for the issuance of a maximum of an aggregate of 5,000,000 shares of the Company’s common stock. The purpose of the Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in the Company’s development and financial success. Under the Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, non-qualified stock options and restricted stock. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. | |||||||||||||||||||||
A summary of the Plan activity with respect to options to purchase common stock for the three months ended March 31, 2014 is as follows: | |||||||||||||||||||||
Number of | Weighted Avg. | Weighted Avg. | Aggregate | ||||||||||||||||||
shares | Exercise Price | Remaining | Intrinsic Value | ||||||||||||||||||
Contractual Life | |||||||||||||||||||||
Options outstanding - January 1, 2014 | 1,328,790 | $ | 5.31 | ||||||||||||||||||
Options granted | 95,029 | 6.46 | |||||||||||||||||||
Options exercised | (131,570 | ) | 3.67 | ||||||||||||||||||
Options cancelled/forfeit | (20,000 | ) | 5.87 | ||||||||||||||||||
Options outstanding - March 31, 2014 | 1,272,249 | 5.56 | 6.35 | $ | 2,426,496 | ||||||||||||||||
Options exercisable | 776,379 | 4.76 | 4.58 | $ | 1,963,208 | ||||||||||||||||
Options vested and expected to vest | 1,222,662 | 5.51 | 6.23 | $ | 2,380,167 | ||||||||||||||||
The aggregate intrinsic value in the table above represents the total pre-tax amount of the proceeds, net of exercise price, which would have been received by option holders if all option holders had exercised and immediately sold all options with an exercise price lower than the market price on March 31, 2014, based on the closing price of the Company’s common stock of $6.71 on that date. The intrinsic value of stock options exercised during the three months ended March 31, 2014 was $572,904. | |||||||||||||||||||||
During the three months ended March 31, 2014, the Company granted stock options to certain employees, directors and consultants. The stock options were granted with an exercise price equal to the current market price of the Company’s common stock, as reported by the applicable quotation system of securities exchange on which the common stock was then quoted or listed, at the grant date and have contractual terms ranging from 5 to 10 years. Vesting terms for options granted to employees, directors and consultants typically included one of the following vesting schedules: 25% or 33% of the shares subject to the option vest and become exercisable on the first anniversary of the grant date and the remaining 75% or 67%, respectively, of the shares subject to the option vest and become exercisable quarterly in equal installments thereafter over two or three years, respectively; quarterly vesting over a three year period; annual vesting over three years; or monthly, quarterly or 100% vesting associated with the provision or completion of services provided under contracts with consultants. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the Plan) and in the event of certain modifications to the option award agreement. | |||||||||||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. Prior to April 1, 2013, expected volatilities were based on historical volatility of the Company’s common stock and other factors. Following April 1, 2013, the expected volatility is based on the historical volatilities of the common stock of comparable publicly traded companies based on the Company’s belief that it has significantly changed its business operations and focus, and as a result, it currently has limited relevant historical data regarding the volatility of its stock price on which to base a meaningful estimate of expected volatility. The expected term of options granted was determined in accordance with the “simplified approach” as the Company has limited, relevant, historical data on employee exercises and post-vesting employment termination behavior. The expected risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates. For option grants to employees and directors, the Company assigns a forfeiture factor of 10%. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. Utilizing these assumptions, the fair value is determined at the date of grant. | |||||||||||||||||||||
The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to employees: | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Weighted-average fair value of options granted | $ | 5.05 | |||||||||||||||||||
Expected terms (in years) | 5.81 - 6.91 | ||||||||||||||||||||
Expected volatility | 100 - 102 | % | |||||||||||||||||||
Risk-free interest rate | 1.37 - 1.65 | % | |||||||||||||||||||
Dividend yield | - | ||||||||||||||||||||
The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to consultants: | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Weighted-average fair value of options granted | $ | 6.71 | |||||||||||||||||||
Expected terms (in years) | 2.84 - 5 | ||||||||||||||||||||
Expected volatility | 83 - 91 | % | |||||||||||||||||||
Risk-free interest rate | 0.12 - 0.78 | % | |||||||||||||||||||
Dividend yield | - | ||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at March 31, 2014: | |||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||
Weighted | |||||||||||||||||||||
Average | Weighted | Weighted | |||||||||||||||||||
Remaining | Average | Average | |||||||||||||||||||
Number | Contractual | Exercise | Number | Exercise | |||||||||||||||||
Range of Exercise Prices | Outstanding | Life in Years | Price | Exercisable | Price | ||||||||||||||||
$2.40 - $3.20 | 250,000 | 5.32 | $ | 2.8 | 250,000 | $ | 2.8 | ||||||||||||||
$3.60 - $4.51 | 553,746 | 5.03 | $ | 4.21 | 398,789 | $ | 4.29 | ||||||||||||||
$6.00 - $9.00 | 454,100 | 8.54 | $ | 8.1 | 113,187 | $ | 8.2 | ||||||||||||||
$10.75 | 7,603 | 3.71 | $ | 10.75 | 7,603 | $ | 10.75 | ||||||||||||||
$28.00 - $80.00 | 6,800 | 5.88 | $ | 40.86 | 6,800 | $ | 40.86 | ||||||||||||||
1,272,249 | 6.35 | $ | 5.56 | 776,379 | $ | 4.76 | |||||||||||||||
As of March 31, 2014, there was approximately $2,545,000 of total unrecognized compensation expense related to unvested stock options granted under the Plan. That expense is expected to be recognized over the weighted-average remaining vesting period of 2.59 years. The stock-based compensation for all stock options was $324,294 during the three months ended March 31, 2014. | |||||||||||||||||||||
Restricted Stock Units | |||||||||||||||||||||
Restricted stock unit, or RSU, awards are granted subject to certain vesting requirements and other restrictions, including performance and market based vesting criteria. The grant-date fair value of the RSUs, which has been determined based upon the market value of the Company’s shares on the grant date, is expensed over the vesting period. Unvested portions of RSUs issued to consultants are remeasured on an interim basis until vesting criteria is met. On May 2, 2013, the Board of Directors of the Company amended and restated the Plan to provide for the issuance of RSUs under the Plan. | |||||||||||||||||||||
During March 2014, the Company terminated its agreement with a consultant that provided for the grant of 100,000 RSUs that had vesting criteria based on the satisfaction of certain market-based conditions subject to the consultant’s continued service, among other things. Upon termination of the agreement, all 100,000 RSUs were forfeited and deemed reconveyed to the Company. | |||||||||||||||||||||
A summary of the Company’s RSU activity and related information for the three months ended March 31, 2014 is as follows: | |||||||||||||||||||||
Number of RSUs | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
RSUs outstanding - January 1, 2014 | 1,389,960 | $ | 3.19 | ||||||||||||||||||
RSUs granted | - | $ | - | ||||||||||||||||||
RSUs vested | - | $ | - | ||||||||||||||||||
RSUs cancelled/forfeited | (100,000 | ) | $ | 2.88 | |||||||||||||||||
Balance at March 31, 2014 | 1,289,960 | $ | 3.22 | ||||||||||||||||||
As of March 31, 2014, the total unrecognized compensation expense related to unvested RSUs was approximately $2,758,000 which is expected to be recognized over a weighted-average period of 2.05 years, based on estimated vesting schedules. The stock-based compensation for RSU’s during the three months ended March 31, 2014 was $336,994. | |||||||||||||||||||||
Warrants | |||||||||||||||||||||
From time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, note holders, underwriters and to non-employees for services rendered or to be rendered in the future. | |||||||||||||||||||||
A summary of the activity of the warrants for the three months ended March 31, 2014 is as follows: | |||||||||||||||||||||
Number of Shares | Weighted Avg. | ||||||||||||||||||||
Subject to Warrants | Exercise Price | ||||||||||||||||||||
Outstanding | |||||||||||||||||||||
Warrants outstanding - January 1, 2014 | 821,050 | $ | 5.94 | ||||||||||||||||||
Granted | - | $ | - | ||||||||||||||||||
Exercised | (3,164 | ) | $ | 5.93 | |||||||||||||||||
Expired | - | $ | - | ||||||||||||||||||
Warrants outstanding and exercisable - March 31, 2014 | 817,886 | $ | 5.94 | ||||||||||||||||||
Weighted average remaining contractual life of the outstanding warrants in years - March 31, 2014 | 1.95 | ||||||||||||||||||||
The fair value of each warrant is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The intrinsic value of warrants exercised during the three months ended March 31, 2014 was $5,078. | |||||||||||||||||||||
A list of the warrants outstanding as of March 31, 2014 is included in the table below: | |||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||||
Warrants | Exercise | Warrants | Expiration | ||||||||||||||||||
Warrant Series | Issue Date | Outstanding | Price | Exercisable | Date | ||||||||||||||||
Investors | 4/25/12 | 48,262 | $ | 5.93 | 48,262 | 4/25/15 | |||||||||||||||
Investors | 4/25/12 | 499,764 | $ | 5.93 | 499,764 | 4/25/15 | |||||||||||||||
Underwriter | 2/7/13 | 179,860 | $ | 5.25 | 179,860 | 2/7/18 | |||||||||||||||
Consultant | 2/28/13 | 30,000 | $ | 5.25 | 30,000 | 2/28/16 | |||||||||||||||
Consultant | 7/19/13 | 60,000 | $ | 8.5 | 60,000 | 7/19/18 | |||||||||||||||
817,886 | $ | 5.94 | 817,886 | ||||||||||||||||||
The stock-based compensation for warrants was $26,649 for the three months ended March 31, 2014. |
Employee_Savings_Plan
Employee Savings Plan | 3 Months Ended |
Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
Employee Savings Plan | ' |
NOTE 5. EMPLOYEE SAVINGS PLAN | |
The Company has established an employee savings plan pursuant to Section 401(k) of the Internal Revenue Code, effective January 1, 2014. The plan allows participating employees to deposit into tax deferred investment accounts up to 100% of their salary, subject to annual limits. The Company makes contributions to the plan in an amount not less than 3% of the participants’ annual cash compensation, subject to annual limits. The Company contributed approximately $21,000 to the plan during the three months ended March 31, 2014. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
NOTE 6. COMMITMENTS AND CONTINGENCIES | |
Commitments | |
In April 2013, the Company entered into a lease agreement for 3,874 square feet of office space from May 1, 2013 to September 30, 2016, effective May 1, 2013. Monthly rent began on May 1, 2013 in the amount of $10,406, with a 3% increase in the base rent amount on an annual basis. The lease agreement allows for the monthly rent amount to be abated for five months at various times during the lease agreement. | |
Legal | |
In the ordinary course of business, the Company may face various claims brought by third parties and the Company may, from time to time, make claims or take legal actions to assert the Company’s rights, including intellectual property rights, contractual disputes and other commercial disputes. Any of these claims could subject the Company to litigation. Management believes the outcomes of currently pending claims will not likely have a material effect on the Company’s condensed consolidated financial position and results of operations. | |
Indemnities and Guarantees | |
In addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate indemnification agreements with the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessor in connection with its facility lease for certain claims arising from the use of the facility. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying condensed consolidated balance sheets. | |
PCCA License Agreement | |
Professional Compounding Centers of America, or PCCA, has granted to the Company and its affiliates certain exclusive rights under PCCA’s proprietary formulations, other technologies and data, and the Company has agreed to pay to PCCA certain royalties on net sales relating to the sale of certain future products, which royalties range from 4.5% to 9% for each product, subject to certain minimum royalty payments. PCCA may terminate the PCCA License Agreement if the Company fails to commence efforts to research and develop future products within certain time periods, as set forth in the PCCA License Agreement. | |
PCCA Strategic Alliance Agreement | |
On February 18, 2013, the Company entered into a Strategic Alliance Agreement with PCCA. Under this agreement, PCCA has agreed that during the term of the agreement, it will not introduce any of PCCA’s members or customers meeting certain criteria (the “Member/Customers”) to any third party whereby such third party licenses or otherwise acquires the intellectual property rights of such Member/Customer, without first presenting such an opportunity to the Company. PCCA may, but is not required to, present such opportunities to the Company, use reasonable efforts to facilitate an introductory meeting between the Member/Customer and the Company, and to further provide certain key technical assistance to a potential development project associated with the Member/Customer’s intellectual property rights. In the event the Company and a Member/Customer introduced to the Company by PCCA enter into a commercial agreement for the license or acquisition of the intellectual property rights owned by the Member/Customer, PCCA will be entitled to receive certain cash fees up to an aggregate of $100,000, as well as a commission based on net sales, if any, generated by the Company as a result of the acquired intellectual property rights. The agreement has a term of one year and is automatically extended for successive one year periods unless either party gives the other written notice of non-renewal. This agreement automatically renewed for a one-year term on February 18, 2014. | |
Asset Purchase Agreements | |
The Company has acquired intellectual property rights related to certain proprietary innovations from certain inventors (the “Inventors”) through multiple asset purchase agreements. The asset purchase agreements provide that the Inventors will cooperate with the Company in obtaining patent protection for the acquired intellectual property and that the Company will use commercially reasonable efforts to research, develop and commercialize a product based on the acquired intellectual property. In addition, the Company has acquired a right of first refusal on additional intellectual property and drug development opportunities presented by these Inventors. | |
In consideration for the acquisition of the intellectual property rights, the Company is obligated to make payments to the Inventors based on the completion of certain milestones, generally consisting of: (1) a payment payable within 30 days after the issuance of the first patent in the United States arising from the acquired intellectual property (if any); (2) a payment payable within 30 days after the Company files the first Investigational New Drug application (“IND”) with the FDA for the first product arising from the acquired intellectual property (if any); (3) for certain of the Inventors, a payment payable within 30 days after the Company files the first New Drug application with the FDA for the first product arising from the acquired intellectual property (if any); and (4) certain royalty payments based on the net receipts received by the Company in connection with the sale or licensing of any product based on the acquired intellectual property (if any), after deducting (among other things) the Company’s development costs associated with such product. If, following five years after the date of the applicable asset purchase agreement, the Company either (a) for certain of the Inventors, has not filed an IND or, for the remaining Inventors, has not initiated a study where data is derived, or (b) has failed to generate royalty payments to the Inventors for any product based on the acquired intellectual property, the Inventors may terminate the applicable asset purchase agreement and request that the Company re-assign the acquired technology to the Inventors. |
Subsequent_Events
Subsequent Events | 3 Months Ended | ||
Mar. 31, 2014 | |||
Subsequent Events [Abstract] | ' | ||
Subsequent Events | ' | ||
NOTE 7. SUBSEQUENT EVENTS | |||
The Company has performed an evaluation of events occurring subsequent to March 31, 2014 through the filing date of this Quarterly Report. Based on our evaluation, nothing other than the events described below need to be disclosed. | |||
From April 1, 2014 through the filing date of this Quarterly Report, the Company issued a total of 7,500 shares of common stock for gross proceeds of $27,600 for stock option exercises. | |||
In addition, from April 1, 2014 through the filing date of this Quarterly Report, the Company issued 984 shares of common stock to net settle common stock options to purchase 2,500 shares of common stock with an exercise price of $4.27 per share pursuant to a cashless exercise provision. | |||
During April 2014, the Company issued 3,164 shares of common stock for gross proceeds of $18,747 for warrant exercises. | |||
During April 2014, the Company issued 6,868 shares of common stock, valued at $50,000, related to the resolution of a contract dispute, which amount was included in accrued expenses as of March 31, 2014 in the accompanying condensed consolidated balance sheet. | |||
Pharmacy Creations Acquisition | |||
On April 1, 2014, the Company acquired all of the outstanding membership interests of Pharmacy Creations, LLC (“Pharmacy Creations”) from J. Scott Karolchyk and Bernard Covalesky (the “Sellers”, and such transaction, the “PC Acquisition”). The acquisition of Pharmacy Creations, a compounding pharmacy located in Randolph, New Jersey, permits the Company to make and distribute its patent-pending proprietary drug formulations and other novel pharmaceutical solutions. | |||
At the closing of the PC Acquisition, the Company paid to the Sellers an aggregate cash purchase price of $600,000. In addition, the Sellers are entitled to receive additional contingent consideration upon the satisfaction of certain conditions: | |||
● | A contingent cash payment of $50,000, payable if Pharmacy Creations earns revenue of over $3,500,000 for the 12 month period ending March 31, 2015. | ||
● | A contingent stock payment of up to an aggregate of 215,190 shares of our common stock, issuable only if the following revenue milestones are met: | ||
● | if Pharmacy Creations earns revenue of over $7,500,000 during the 12 month period ending March 31, 2016, all 215,190 shares; | ||
● | if Pharmacy Creations earns revenue of between $3,500,000 and $7,500,000 during the 12 month period ending March 31, 2016, an aggregate of that number of shares of our common stock equal to the amount that such revenue exceeds $3,500,000 divided by 18.5882, rounded down to the lower whole number (not to exceed 215,190 shares). |
Overview_Basis_of_Presentation1
Overview, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Company and Background | ' | ||||||||
Company and Background | |||||||||
Imprimis Pharmaceuticals, Inc. (“Imprimis” or the “Company”) is a vertically-integrated specialty pharmaceutical company dedicated to delivering high quality, novel and customizable medicines to physicians and patients at accessible prices. Imprimis is pioneering a new commercial pathway using compounding pharmacies for the formulation and distribution of its proprietary drug therapies which include formulations in ophthalmology, wound management and urology. | |||||||||
Basis of Presentation | ' | ||||||||
Basis of Presentation | |||||||||
Imprimis has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, refer to the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||
Principles of Consolidation | ' | ||||||||
Principles of Consolidation | |||||||||
On September 17, 2007, Imprimis entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) by and among Imprimis, Transdel Pharmaceuticals Holdings, Inc., a privately held Nevada corporation (“Transdel Holdings”), and Trans-Pharma Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of Imprimis (“Acquisition Sub”). Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), Acquisition Sub merged with and into Transdel Holdings, and Transdel Holdings, as the surviving corporation, became a wholly-owned subsidiary of Imprimis. As a result of the Merger, the former owners of Transdel Holdings became the controlling stockholders of Imprimis. Accordingly, the merger of Transdel Holdings and Imprimis is a reverse merger that has been accounted for as a recapitalization of Transdel Holdings. | |||||||||
Effective on September 17, 2007, and for all reporting periods thereafter, Imprimis’ operating activities, including any prior comparative period, include only those of Transdel Holdings. All references to share and per share amounts in the accompanying condensed consolidated financial statements and footnotes have been restated to reflect the aforementioned share exchange. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||
On June 20, 2011, Transdel Holdings was merged with Imprimis Pharmaceuticals, Inc., at which time Transdel Holdings ceased as a corporation, and Imprimis Pharmaceuticals, Inc. remains as the sole surviving corporation. | |||||||||
Development Stage Enterprise | ' | ||||||||
Development Stage Enterprise | |||||||||
The Company is a development stage company as defined under Financial Accounting Standards Board (“FASB”) guidance. All losses accumulated since inception have been considered as part of the Company’s development stage activities. | |||||||||
These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage enterprise and has incurred recurring operating losses, has had negative operating cash flows and has not recognized any significant revenues since July 24, 1998 (Inception). In addition, the Company has a deficit accumulated during the development stage of approximately $34.1 million at March 31, 2014, and anticipates incurring further losses through the remainder of the fiscal year 2014 and beyond. The Company has not yet generated significant sales revenue and has funded its operating losses to date through debt and equity offerings and borrowings under its line of credit. The Company believes that its existing cash and cash equivalents will be sufficient to cover its cash flow requirements for at least the next twelve months. The Company’s pharmacy operations commenced on April 1, 2014. This change in the nature of the Company’s operations is expected to have a significant impact on our financial results in the future, including the recognition of significant revenues; as a result the Company will no longer be defined as a development stage company for reporting dates post April 1, 2014. | |||||||||
Research and Development | ' | ||||||||
Research and Development | |||||||||
The Company expenses all costs related to research and development as they are incurred. Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, and other overhead expenses, and costs related to clinical trials, contract services and outsourced contracts. | |||||||||
Intellectual Property | ' | ||||||||
Intellectual Property | |||||||||
The costs of acquiring intellectual property rights to be used in the research and development process, including licensing fees and milestone payments, are charged to research and development expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized in situations where the Company has identified an alternative future use. No costs associated with acquiring intellectual property rights have been capitalized to date. Costs of maintaining intellectual property rights are expensed as incurred. | |||||||||
Revenue Recognition and Deferred Revenue | ' | ||||||||
Revenue Recognition and Deferred Revenue | |||||||||
The Company will recognize revenues when all of the following criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. The Company believes it will begin to generate significant revenues beginning in the second quarter of 2014, which will include sales of our compounded drug formulations. | |||||||||
Product Revenues | |||||||||
Determination of criteria (3) and (4) will be based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or for which services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required. | |||||||||
License Revenues | |||||||||
License arrangements may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive licensed rights to patented or patent pending compounds, technology access fees, and various performance or sales milestones. These arrangements can be multiple element arrangements. | |||||||||
Non-refundable fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compounded drug preparations is delivered. Such deliverables may include physical quantities of compounded drug preparations, design of the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the patents or patents pending for such compounded drug preparations. We defer recognition of non-refundable fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have required continuing involvement through research and development services that are related to our proprietary know-how and expertise of the delivered technology, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement. Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term. | |||||||||
During the three months ended March 31, 2014 and 2013, the Company recorded $1,410 and $2,500, respectively, in revenues, related to royalty payments. In January 2013, the Company entered into a license agreement with ResolutionMD, LLC granting ResolutionMD, LLC rights to its Accudel delivery technology to be used for anti-cellulite formulations. Under the license agreement, the Company received $10,000 as a guaranteed minimum royalty amount for the year ended December 31, 2013. The Company is due annual guaranteed minimum royalty payments and additional royalty payments based on a percent (generally, 5%-7%) of net sales of any products covered under the license agreement in excess of the guaranteed amounts. The license agreement with ResolutionMD, LLC, unless terminated earlier, has a term of ten years following the first commercial sale of a product that is covered under the license agreement. The Company does not anticipate that the license agreement with ResolutionMD, LLC will generate significant revenues for the 2014 fiscal year. | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | |||||||||
The Company accounts for income taxes under the provisions of Accounting Standards Codification (“ASC”) 740, “Income Taxes”, or ASC 740. As of March 31, 2014, there were no unrecognized tax benefits included in the condensed consolidated balance sheets that would, if recognized, affect the effective tax rate. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties in its condensed consolidated balance sheets at March 31, 2014 and December 31, 2013, and has not recognized interest and/or penalties in the condensed consolidated statements of operations for the periods ended March 31, 2014 and 2013. The Company is subject to taxation in the United States and California. The Company’s tax years for 2000 and forward are subject to examination by the federal and state tax authorities due to the carry forward of unutilized net operating losses. | |||||||||
Cash and Cash Equivalents | ' | ||||||||
Cash and Cash Equivalents | |||||||||
Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. | |||||||||
Concentrations of Credit Risk | ' | ||||||||
Concentrations of Credit Risk | |||||||||
The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. At March 31, 2014, the Company had approximately $14.0 million in cash deposits in excess of FDIC limits. | |||||||||
Furniture and Equipment | ' | ||||||||
Furniture and Equipment | |||||||||
Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three to five years. | |||||||||
Deferred Rent | ' | ||||||||
Deferred Rent | |||||||||
The Company accounts for rent expense related to its operating leases by determining total minimum rent payments on the leases over their respective periods and recognizing the rent expense on a straight-line basis. The difference between the actual amount paid and the amount recorded as rent expense in each fiscal year is recorded as an adjustment to deferred rent. | |||||||||
Fair Value Measurements | ' | ||||||||
Fair Value Measurements | |||||||||
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels: | |||||||||
● | Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available. | ||||||||
● | Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | ||||||||
● | Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method. | ||||||||
At March 31, 2014 and December 31, 2013, the Company did not have any financial assets or liabilities which are measured on a recurring basis. At March 31, 2014 and December 31, 2013, the Company’s financial instruments include cash and cash equivalents, a restricted short-term investment, accounts receivable, accounts payable and accrued expenses, and accrued payroll and related liabilities. The carrying amount of these financial instruments, except for the restricted short-term investment, approximates fair value due to the short-term maturities of these instruments. The Company’s restricted short-term investment is carried at amortized cost which approximates fair value. | |||||||||
Stock-Based Compensation | ' | ||||||||
Stock-Based Compensation | |||||||||
All stock-based payments to employees and consultants, including grants of stock options, warrants, restricted stock units (“RSUs”) and restricted stock, are recognized in the consolidated financial statements based upon their fair values. The Company uses the Black-Scholes-Merton option pricing model and Monte Carlo Simulation to estimate the fair value of stock-based awards. The fair value is determined at the date of grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates. | |||||||||
The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows FASB guidance. As such, the value of the applicable stock-based compensation is periodically remeasured and income or expense is recognized during their vesting terms. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is primarily recognized over the term of the consulting agreement. In accordance with FASB guidance, an asset acquired in exchange for the issuance of fully vested, nonforfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of nonforfeitable equity instruments issued for future consulting services as prepaid stock-based consulting expenses in its consolidated balance sheets. | |||||||||
The Company recorded stock-based compensation (including the amortization of stock-based prepaid consulting fees) related to equity instruments granted to employees, directors and consultants as follows: | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Employees - selling, general and administrative | $ | 557,134 | $ | 86,003 | |||||
Employees - research and development | - | 67,131 | |||||||
Directors - selling, general and administrative | 42,146 | 202,792 | |||||||
Consultants - selling, general and administrative | 84,555 | 117,389 | |||||||
Consultants - research and development | 4,102 | (62,600 | ) | ||||||
Total | $ | 687,937 | $ | 410,715 | |||||
Basic and Diluted Loss per Common Share | ' | ||||||||
Basic and Diluted Net Loss per Common Share | |||||||||
Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants outstanding during the period. | |||||||||
Basic and diluted net loss applicable to common stock per share is computed using the weighted average number of shares of common stock outstanding during the period. Common stock equivalents (using the treasury stock or, “if converted” method) from convertible notes, preferred stock, stock options, unvested restricted stock units (“RSUs”) and warrants were 3,380,095 and 1,854,354 at March 31, 2014 and 2013, respectively, and are excluded from the calculation of diluted net loss per share for all periods presented because the effect is anti-dilutive. | |||||||||
The following table shows the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2014 and 2013: | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Numerator – net loss attributable to common stockholders | $ | (2,325,163 | ) | $ | (1,465,481 | ) | |||
Denominator – weighted average number of shares outstanding, basic and diluted | 9,010,602 | 7,788,236 | |||||||
Net loss per share, basic and diluted | $ | (0.26 | ) | $ | (0.19 | ) | |||
Use of Estimates | ' | ||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management are, among others, valuation of deferred taxes, realization of long-lived assets and valuation of stock-based compensation issued to employees and non-employees. Actual results could differ from those estimates. | |||||||||
Reclassifications | ' | ||||||||
Reclassifications | |||||||||
Certain prior period items and amounts have been reclassified to conform to the classifications used to prepare the 2014 condensed consolidated financial statements. These reclassifications had no material impact on the Company’s financial position, results of operations, or cash flows as previously reported. | |||||||||
Recently Adopted Accounting Pronouncements | ' | ||||||||
Recently Adopted Accounting Pronouncements | |||||||||
In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, with an option for early adoption. This pronouncement is effective for reporting periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 did not have a material impact on the Company’s condensed consolidated financial statements. | |||||||||
Proposed Amendments to Current Accounting Standards. The FASB is currently developing amendments to existing accounting standards governing a number of areas including, but not limited to, revenue recognition and lease accounting. | |||||||||
In June 2010, the FASB issued an exposure draft, Revenue from Contracts with Customers, which would supersede most of the existing guidance on revenue recognition in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. In November 2011, the FASB re-exposed this draft and it expects a final standard to be issued in the year ending December 31, 2014. As the standard-setting process is still ongoing, the Company is unable to determine the impact this proposed change in accounting will have in the Company’s condensed consolidated financial statements at this time. | |||||||||
In August 2010, the FASB issued an exposure draft, Leases, which would result in significant changes to the accounting requirements for both lessees and lessors in ASC Topic 840, Leases. In May 2013, the FASB re-exposed this draft and the comment period was closed in September 2013. As the standard-setting process is still ongoing, the Company is unable to determine the impact this proposed change in accounting will have in the Company’s condensed consolidated financial statements at this time. | |||||||||
In November 2013, the FASB issued an exposure draft, Development Stage Entities. The amendments in this proposed update would remove the definition of a development stage entity from ASC Topic 915, Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from GAAP. In addition, the proposed amendments would eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows, and shareholder’s equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The comment period for this exposure draft was closed in December 2013. The Company expects to record significant revenues beginning April 1, 2014. Accordingly, the presentation and disclosure requirements for development stage activities will not be required. |
Overview_Basis_of_Presentation2
Overview, Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Schedule of Stock Based Compensation and Equity Instruments | ' | ||||||||
The Company recorded stock-based compensation (including the amortization of stock-based prepaid consulting fees) related to equity instruments granted to employees, directors and consultants as follows: | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Employees - selling, general and administrative | $ | 557,134 | $ | 86,003 | |||||
Employees - research and development | - | 67,131 | |||||||
Directors - selling, general and administrative | 42,146 | 202,792 | |||||||
Consultants - selling, general and administrative | 84,555 | 117,389 | |||||||
Consultants - research and development | 4,102 | (62,600 | ) | ||||||
Total | $ | 687,937 | $ | 410,715 | |||||
Schedule of Basic and Diluted Earnings Per Common Share | ' | ||||||||
The following table shows the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2014 and 2013: | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Numerator – net loss attributable to common stockholders | $ | (2,325,163 | ) | $ | (1,465,481 | ) | |||
Denominator – weighted average number of shares outstanding, basic and diluted | 9,010,602 | 7,788,236 | |||||||
Net loss per share, basic and diluted | $ | (0.26 | ) | $ | (0.19 | ) |
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Accounts Payable and Accrued Expenses | ' | ||||||||
Accounts payable and accrued expenses consisted of the following: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Accounts payable | $ | 357,105 | $ | 261,924 | |||||
Other accrued expenses | 100,000 | 50,000 | |||||||
Total accounts payable and accrued expenses | $ | 457,105 | $ | 311,924 |
Stockholders_Equity_Tables
Stockholder's Equity (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
Schedule of Stock Option Plan Activity | ' | ||||||||||||||||||||
A summary of the Plan activity with respect to options to purchase common stock for the three months ended March 31, 2014 is as follows: | |||||||||||||||||||||
Number of | Weighted Avg. | Weighted Avg. | Aggregate | ||||||||||||||||||
shares | Exercise Price | Remaining | Intrinsic Value | ||||||||||||||||||
Contractual Life | |||||||||||||||||||||
Options outstanding - January 1, 2014 | 1,328,790 | $ | 5.31 | ||||||||||||||||||
Options granted | 95,029 | 6.46 | |||||||||||||||||||
Options exercised | (131,570 | ) | 3.67 | ||||||||||||||||||
Options cancelled/forfeit | (20,000 | ) | 5.87 | ||||||||||||||||||
Options outstanding - March 31, 2014 | 1,272,249 | 5.56 | 6.35 | $ | 2,426,496 | ||||||||||||||||
Options exercisable | 776,379 | 4.76 | 4.58 | $ | 1,963,208 | ||||||||||||||||
Options vested and expected to vest | 1,222,662 | 5.51 | 6.23 | $ | 2,380,167 | ||||||||||||||||
Schedule of Fair Value Assumption | ' | ||||||||||||||||||||
The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to employees: | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Weighted-average fair value of options granted | $ | 5.05 | |||||||||||||||||||
Expected terms (in years) | 5.81 - 6.91 | ||||||||||||||||||||
Expected volatility | 100 - 102 | % | |||||||||||||||||||
Risk-free interest rate | 1.37 - 1.65 | % | |||||||||||||||||||
Dividend yield | - | ||||||||||||||||||||
The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to consultants: | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Weighted-average fair value of options granted | $ | 6.71 | |||||||||||||||||||
Expected terms (in years) | 2.84 - 5 | ||||||||||||||||||||
Expected volatility | 83 - 91 | % | |||||||||||||||||||
Risk-free interest rate | 0.12 - 0.78 | % | |||||||||||||||||||
Dividend yield | - | ||||||||||||||||||||
Schedule of Shares Outstanding and Exercisable | ' | ||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at March 31, 2014: | |||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||
Weighted | |||||||||||||||||||||
Average | Weighted | Weighted | |||||||||||||||||||
Remaining | Average | Average | |||||||||||||||||||
Number | Contractual | Exercise | Number | Exercise | |||||||||||||||||
Range of Exercise Prices | Outstanding | Life in Years | Price | Exercisable | Price | ||||||||||||||||
$2.40 - $3.20 | 250,000 | 5.32 | $ | 2.8 | 250,000 | $ | 2.8 | ||||||||||||||
$3.60 - $4.51 | 553,746 | 5.03 | $ | 4.21 | 398,789 | $ | 4.29 | ||||||||||||||
$6.00 - $9.00 | 454,100 | 8.54 | $ | 8.1 | 113,187 | $ | 8.2 | ||||||||||||||
$10.75 | 7,603 | 3.71 | $ | 10.75 | 7,603 | $ | 10.75 | ||||||||||||||
$28.00 - $80.00 | 6,800 | 5.88 | $ | 40.86 | 6,800 | $ | 40.86 | ||||||||||||||
1,272,249 | 6.35 | $ | 5.56 | 776,379 | $ | 4.76 | |||||||||||||||
Schedule of Restricted Stock Units Activity | ' | ||||||||||||||||||||
A summary of the Company’s RSU activity and related information for the three months ended March 31, 2014 is as follows: | |||||||||||||||||||||
Number of RSUs | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
RSUs outstanding - January 1, 2014 | 1,389,960 | $ | 3.19 | ||||||||||||||||||
RSUs granted | - | $ | - | ||||||||||||||||||
RSUs vested | - | $ | - | ||||||||||||||||||
RSUs cancelled/forfeited | (100,000 | ) | $ | 2.88 | |||||||||||||||||
Balance at March 31, 2014 | 1,289,960 | $ | 3.22 | ||||||||||||||||||
Schedule of Warrants Activity | ' | ||||||||||||||||||||
A summary of the activity of the warrants for the three months ended March 31, 2014 is as follows: | |||||||||||||||||||||
Number of Shares | Weighted Avg. | ||||||||||||||||||||
Subject to Warrants | Exercise Price | ||||||||||||||||||||
Outstanding | |||||||||||||||||||||
Warrants outstanding - January 1, 2014 | 821,050 | $ | 5.94 | ||||||||||||||||||
Granted | - | $ | - | ||||||||||||||||||
Exercised | (3,164 | ) | $ | 5.93 | |||||||||||||||||
Expired | - | $ | - | ||||||||||||||||||
Warrants outstanding and exercisable - March 31, 2014 | 817,886 | $ | 5.94 | ||||||||||||||||||
Weighted average remaining contractual life of the outstanding warrants in years - March 31, 2014 | 1.95 | ||||||||||||||||||||
Schedule of Warrants Outstanding and Warrants Exercisable | ' | ||||||||||||||||||||
A list of the warrants outstanding as of March 31, 2014 is included in the table below: | |||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||||
Warrants | Exercise | Warrants | Expiration | ||||||||||||||||||
Warrant Series | Issue Date | Outstanding | Price | Exercisable | Date | ||||||||||||||||
Investors | 4/25/12 | 48,262 | $ | 5.93 | 48,262 | 4/25/15 | |||||||||||||||
Investors | 4/25/12 | 499,764 | $ | 5.93 | 499,764 | 4/25/15 | |||||||||||||||
Underwriter | 2/7/13 | 179,860 | $ | 5.25 | 179,860 | 2/7/18 | |||||||||||||||
Consultant | 2/28/13 | 30,000 | $ | 5.25 | 30,000 | 2/28/16 | |||||||||||||||
Consultant | 7/19/13 | 60,000 | $ | 8.5 | 60,000 | 7/19/18 | |||||||||||||||
817,886 | $ | 5.94 | 817,886 |
Overview_Basis_of_Presentation3
Overview, Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 188 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |
Minimum [Member] | Maximum [Member] | |||||
Accumulated deficit during development stage | $34,100,000 | ' | $34,100,000 | ' | ' | ' |
Revenue | 1,410 | 2,500 | 111,410 | ' | ' | ' |
Additional royalty payments based on percent of net sales | ' | ' | ' | ' | 5.00% | 7.00% |
License revenues | 1,410 | 2,500 | 111,410 | ' | ' | ' |
Deposit coverage limits by FDIC | 250,000 | ' | ' | ' | ' | ' |
Cash deposits in excess of FDIC limits | 15,300,000 | ' | ' | ' | ' | ' |
Unrecognized tax benefits | ' | ' | ' | 0 | ' | ' |
Deferred offering costs | 14,417,701 | ' | 14,417,701 | 15,734,473 | ' | ' |
Depreciation expense | $2,556 | $899 | $14,313 | ' | ' | ' |
Common stock equivalents, dilutive instruments | 1,682,678 | ' | 1,682,678 | 3,539,800 | ' | ' |
Overview_Basis_of_Presentation4
Overview, Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Stock Based Compensation and Equity Intruments (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Compensation Expenses | $687,937 | $410,715 |
Employees - Selling, General And Administrative [Member] | ' | ' |
Compensation Expenses | 557,134 | 86,003 |
Employees - Research And Development [Member] | ' | ' |
Compensation Expenses | ' | 67,131 |
Directors - Selling, General And Administrative [Member] | ' | ' |
Compensation Expenses | 42,146 | 202,792 |
Consultants - Selling, General And Adminstrative [Member] | ' | ' |
Compensation Expenses | 84,555 | 117,389 |
Consultants - Research And Development [Member] | ' | ' |
Compensation Expenses | $4,102 | ($62,600) |
Overview_Basis_of_Presentation5
Overview, Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Basic and Diluted Earnings Per Common Share (Details) (USD $) | 3 Months Ended | 188 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' | ' | ' |
Numerator - net loss attributable to common stockholders | ($2,325,163) | ($1,465,481) | ($34,072,555) |
Denominator - weighted average number of shares outstanding, basic and diluted | 9,010,602 | 7,788,236 | ' |
Net loss per share, basic and diluted | ($0.26) | ($0.19) | ' |
Restricted_ShortTerm_Investmen1
Restricted Short-Term Investment (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Restricted Short-Term Investment | ' | ' |
Certificate of deposit | $50,127 | $50,097 |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Accounts payable | $357,105 | $261,924 |
Other accrued expenses | 100,000 | 50,000 |
Total accounts payable and accrued expenses | $457,105 | $311,924 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Shares issued upon exercise of stock options, shares | 89,906 |
Shares issued upon exercise of stock options | $330,854 |
Common stock issued shares | 22,281 |
Option issue to purchase number of common stock | 41,664 |
Shares issued upon warrants exercise | 3,164 |
Proceeds form warrants exercise | 18,747 |
Preferred stock, shares authorized | 5,000,000 |
Preferred stock, par value | $0.00 |
Preferred stock, shares issued | 0 |
Preferred stock, shares outstanding | 0 |
stock option exercise price | $6.71 |
Intrinsic value of stock options exercised | 572,904 |
Stock options granted vesting terms | ' |
Vesting terms for options granted to employees, directors and consultants typically included one of the following vesting schedules: 25% or 33% of the shares subject to the option vest and become exercisable on the first anniversary of the grant date and the remaining 75% or 67%, respectively, of the shares subject to the option vest and become exercisable quarterly in equal installments thereafter over two or three years, respectively; quarterly vesting over a three year period; annual vesting over three years; or monthly, quarterly or 100% vesting associated with the provision or completion of services provided under contracts with consultants. | |
Total unrecognized compensation expense related to unvested stock options granted under the Plan | 2,545,000 |
Expense expected to recognize over the weighted-average remaining vesting period | '2 years 7 months 2 days |
Stock-based compensation | 324,294 |
Intrinsic value of warrants exercised | 5,078 |
2007 Incentive Stock And Awards Plan [Member] | ' |
Maximum number of common stock issuance under the plan | 5,000,000 |
Restricted Stock Units [Member] | ' |
Total unrecognized compensation expense related to unvested stock options granted under the Plan | 2,758,000 |
Expense expected to recognize over the weighted-average remaining vesting period | '2 years 18 days |
Stock-based compensation | 336,994 |
RSUs were forfeited | 100,000 |
Warrant [Member] | ' |
Stock-based compensation | $26,649 |
Minimum [Member] | ' |
Common stock exercise price per share | $3.60 |
Contractual term of stock options granted | '5 years |
Maximum [Member] | ' |
Common stock exercise price per share | $3.68 |
Contractual term of stock options granted | '10 years |
Stockholders_Equity_Schedule_o
Stockholders' Equity - Schedule of Stock Option Plan Activity (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Number of shares, Options exercised | 89,906 |
Number of shares, Outstanding, Ending balance | 1,272,249 |
Weighted Avg. Remaining Contractual Life, Options outstanding | '6 years 4 months 6 days |
Stock Option Plan [Member] | ' |
Number of shares, Outstanding, Beginning balance | 1,328,790 |
Number of shares, Options granted | 95,029 |
Number of shares, Options exercised | -131,570 |
Number of shares, Options cancelled/forfeit | -20,000 |
Number of shares, Outstanding, Ending balance | 1,272,249 |
Number of shares, Options exercisable | 776,379 |
Number of shares, Options vested and expected to vest | 1,222,662 |
Weighted Avg. Exercise Price, Outstanding, Beginning balance | 5.31 |
Weighted Avg. Exercise Price, Options granted | 6.46 |
Weighted Avg. Exercise Price, Options exercised | 3.67 |
Weighted Avg. Exercise Price, Options cancelled/forfeit | 5.87 |
Weighted Avg. Exercise Price, Outstanding, Ending balance | 5.56 |
Weighted Avg. Exercise Price, Exercisable Ending Balance | 4.76 |
Weighted Avg. Exercise Price, Vested and expected to vest - end of period | 5.51 |
Weighted Avg. Remaining Contractual Life, Options outstanding | '6 years 4 months 6 days |
Weighted Avg. Remaining Contractual Life, Options exercisable | '4 years 6 months 29 days |
Weighted Avg. Remaining Contractual Life, Options vested and expected to vest | '6 years 2 months 23 days |
Aggregate Intrinsic Value, Options outstanding | 2,426,496 |
Aggregate Intrinsic Value, Options exercisable | 1,963,208 |
Aggregate Intrinsic Value, Options vested and expected to vest | 2,380,167 |
Stockholders_Equity_Schedule_o1
Stockholders' Equity - Schedule of Fair Value Assumption (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Options Granted To Employees [Member] | ' |
Weighted-average fair value of options granted | $5.05 |
Expected volatility, minimum | 100.00% |
Expected volatility, maximum | 102.00% |
Risk-free interest rate, minimum | 1.37% |
Risk-free interest rate, maximum | 1.65% |
Dividend yield | 0.00% |
Options Granted To Employees [Member] | Minimum [Member] | ' |
Expected terms (in years) | '5 years 9 months 22 days |
Options Granted To Employees [Member] | Maximum [Member] | ' |
Expected terms (in years) | '6 years 10 months 28 days |
Options Granted To Consultants [Member] | ' |
Weighted-average fair value of options granted | $6.71 |
Expected volatility, minimum | 83.00% |
Expected volatility, maximum | 91.00% |
Risk-free interest rate, minimum | 0.12% |
Risk-free interest rate, maximum | 0.78% |
Dividend yield | 0.00% |
Options Granted To Consultants [Member] | Minimum [Member] | ' |
Expected terms (in years) | '2 years 10 months 2 days |
Options Granted To Consultants [Member] | Maximum [Member] | ' |
Expected terms (in years) | '5 years |
Stockholders_Equity_Schedule_o2
Stockholders' Equity - Schedule of Shares Outstanding and Exercisable (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Number of Options Outstanding | 1,272,249 |
Weighted Average Remaining Contractual Life in Years | '6 years 4 months 6 days |
Weighted Average Exercise Price | $5.56 |
Number Exercisable | 776,379 |
Weighted Average Exercisable Exercise Price | $4.76 |
Range One [Member] | ' |
Range of Exercise Prices, minimum | $2.40 |
Range of Exercise Prices, maximum | $3.20 |
Number of Options Outstanding | 250,000 |
Weighted Average Remaining Contractual Life in Years | '5 years 3 months 26 days |
Weighted Average Exercise Price | $2.80 |
Number Exercisable | 250,000 |
Weighted Average Exercisable Exercise Price | $2.80 |
Range Two [Member] | ' |
Range of Exercise Prices, minimum | $3.60 |
Range of Exercise Prices, maximum | $4.51 |
Number of Options Outstanding | 553,746 |
Weighted Average Remaining Contractual Life in Years | '5 years 11 days |
Weighted Average Exercise Price | $4.21 |
Number Exercisable | 398,789 |
Weighted Average Exercisable Exercise Price | $4.29 |
Range Three [Member] | ' |
Range of Exercise Prices, minimum | $6 |
Range of Exercise Prices, maximum | $9 |
Number of Options Outstanding | 454,100 |
Weighted Average Remaining Contractual Life in Years | '8 years 6 months 15 days |
Weighted Average Exercise Price | $8.10 |
Number Exercisable | 113,187 |
Weighted Average Exercisable Exercise Price | $8.20 |
Range Four [Member] | ' |
Range of Exercise Prices, minimum | ' |
Range of Exercise Prices, maximum | $10.75 |
Number of Options Outstanding | 7,603 |
Weighted Average Remaining Contractual Life in Years | '3 years 8 months 16 days |
Weighted Average Exercise Price | $10.75 |
Number Exercisable | 7,603 |
Weighted Average Exercisable Exercise Price | $10.75 |
Range Five [Member] | ' |
Range of Exercise Prices, minimum | $28 |
Range of Exercise Prices, maximum | $80 |
Number of Options Outstanding | 6,800 |
Weighted Average Remaining Contractual Life in Years | '5 years 10 months 17 days |
Weighted Average Exercise Price | $40.86 |
Number Exercisable | 6,800 |
Weighted Average Exercisable Exercise Price | $40.86 |
Stockholders_Equity_Schedule_o3
Stockholders' Equity - Schedule of Restrited Stock Units Activity (Details) (Restricted Stock Units [Member], USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Restricted Stock Units [Member] | ' |
Number of RSUs, Outstanding, Beginning balance | 1,389,960 |
Number of RSUs granted | ' |
Number of RSUs vested | ' |
Number of RSUs cancelled/forfeit | -100,000 |
Number of RSUs, Outstanding, Ending balance | 1,289,960 |
Weighted Average Grant Date Fair Value, Beginning balance | $3.19 |
Weighted Average Grant Date Fair Value, RSUs granted | ' |
Weighted Average Grant Date Fair Value, RSUs vested | ' |
Weighted Average Grant Date Fair Value, RSUs cancelled/forfeit | $2.88 |
Weighted Average Grant Date Fair Value, Ending balance | $3.22 |
Stockholders_Equity_Schedule_o4
Stockholders' Equity - Schedule of Warrants Activity (Details) (Warrant [Member], USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Warrant [Member] | ' |
Number of shares, Outstanding, Beginning balance | 821,050 |
Number of Shares Subject to Warrants Outstanding, Granted | ' |
Number of Shares Subject to Warrants Outstanding, Exercised | -3,164 |
Number of Shares Subject to Warrants Outstanding, Expired | ' |
Number of shares, Outstanding, Ending balance | 817,886 |
Weighted average remaining contractual life of the outstanding warrants in years | '1 year 11 months 12 days |
Weighted Avg. Exercise Price, Outstanding, Beginning balance | $5.94 |
Weighted Avg. Exercise Price, Granted | ' |
Weighted Avg. Exercise Price, Exercised | $5.93 |
Weighted Avg. Exercise Price, Expired | ' |
Weighted Avg. Exercise Price, Outstanding, Ending balance | $5.94 |
Stockholders_Equity_Schedule_o5
Stockholders' Equity - Schedule of Warrants Outstanding and Warrants Exercisable (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
Investors [Member] | Investors [Member] | Underwriter [member] | Consultant [Member] | Consultant 2 [Member] | Warrant [Member] | |
Issue Date | 25-Apr-12 | 25-Apr-12 | 7-Feb-13 | 28-Feb-13 | 19-Jul-13 | ' |
Warrants Outstanding | 48,262 | 499,764 | 179,860 | 30,000 | 60,000 | 817,886 |
Exercise Price | $5.93 | $5.93 | $5.25 | $5.25 | $8.50 | $5.94 |
Warrants Exercisable | 48,262 | 499,764 | 179,860 | 30,000 | 60,000 | 817,886 |
Expiration Date | 25-Apr-15 | 25-Apr-15 | 7-Feb-18 | 28-Feb-16 | 19-Jul-18 | ' |
Employee_Savings_Plan_Details_
Employee Savings Plan (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
Percentage of salary deposits in tax deferred investment account | 100.00% |
Percentage of contributions made by the company | 3.00% |
Contributions by the company | $21,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 1 Months Ended | |||
Apr. 30, 2013 | Feb. 18, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | |
sqft | Minimum [Member] | Maximum [Member] | ||
Lease agreement for office space (Square feet) | 3,874 | ' | ' | ' |
Operating lease Expiry | 30-Sep-16 | ' | ' | ' |
Operating lease, monthly rental | $10,406 | ' | ' | ' |
Operating lease, rent increase percentage | 3.00% | ' | ' | ' |
Royalties range percentage | ' | ' | 4.50% | 9.00% |
Maximum aggregate value of cash fees | ' | $100,000 | ' | ' |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | |
Apr. 30, 2014 | 14-May-14 | Mar. 31, 2014 | |
Shares issued upon exercise of stock options | ' | ' | $330,854 |
Shares issued upon exercise of stock options | ' | ' | 89,906 |
Common stock issued shares | ' | ' | 22,281 |
Option issue to purchase number of common stock | ' | ' | 41,664 |
Shares issued upon warrants exercise | ' | ' | 3,164 |
Proceeds form warrants exercise | ' | ' | 18,747 |
Payment of cash to contigent | ' | ' | 50,000 |
Minimum revenue for contingent payment | ' | ' | 3,500,000 |
Contigent stock payment | ' | ' | 215,910 |
Contingencies One [Member] | ' | ' | ' |
Condition for contigent stock payment | ' | ' | ' |
if Pharmacy Creations earns revenue of over $7,500,000 during the 12 month period ending March 31, 2016, all 215,190 shares | |||
Contingencies Two [Member] | ' | ' | ' |
Condition for contigent stock payment | ' | ' | ' |
if Pharmacy Creations earns revenue of between $3,500,000 and $7,500,000 during the 12 month period ending March 31, 2016, an aggregate of that number of shares of our common stock equal to the amount that such revenue exceeds $3,500,000 divided by 18.5882, rounded down to the lower whole number (not to exceed 215,190 shares). | |||
Subsequent Event [Member] | ' | ' | ' |
Shares issued upon exercise of stock options | ' | 27,600 | ' |
Shares issued upon exercise of stock options | ' | 7,500 | ' |
Common stock issued shares | ' | 984 | ' |
Option issue to purchase number of common stock | ' | 2,500 | ' |
Common stock exercise price per share | ' | $4.27 | ' |
Shares issued upon warrants exercise | ' | 3,164 | ' |
Proceeds form warrants exercise | ' | 18,747 | ' |
Common stock issued for resolution of contract dispute, shares | 6,868 | ' | ' |
Common stock issued for resolution of contract dispute | 50,000 | ' | ' |
Payement of cash purchase price | ' | ' | $600,000 |