Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 23, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Cocrystal Pharma, Inc. | ||
Entity Central Index Key | 1412486 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $31,000,000 | ||
Entity Common Stock, Shares Outstanding | 673,618,891 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $3,970 | $1,034 |
Accounts receivable | 122 | |
Marketable securities | 1,975 | |
Prepaid and other current assets | 144 | 139 |
Mortgage note receivable, current portion | 165 | |
Total current assets | 6,376 | 1,173 |
Property and equipment, net | 284 | 469 |
Deposits | 31 | 19 |
Mortgage note receivable, long-term portion | 2,431 | |
In process research and development | 184,966 | |
Goodwill | 65,195 | |
Total Assets | 259,283 | 1,661 |
Current liabilities: | ||
Accounts payable | 299 | 224 |
Accrued expenses | 394 | 139 |
Derivative liabilities | 8,464 | 23 |
Total current liabilities | 9,157 | 386 |
Deferred rent | 62 | |
Deferred tax liability | 65,195 | |
Total long-term liabilities | 65,257 | |
Total liabilities | 74,414 | 386 |
Commitments and contingencies | ||
Cocrystal Discovery, Inc. Series A convertible preferred stock, $0.001 par value; 7,150 shares authorized; 0 and 7,046 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively; liquidation preference of $14,000 as of December 31, 2013, owned by Cocrystal Discovery shareholders, converted in the merger with Biozone. | 10,108 | |
Series A convertible preferred stock, $0.001 par value; 1,000 shares authorized, issued and outstanding at December 31, 2014, issued in the merger with RFS Pharma, LLC | 178,218 | |
Shareholders' equity | ||
Series B convertible preferred stock, $.001 par value; 5,000 shares authorized; 1,000 and 279 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively | 1 | |
Common stock, $.001 par value; 200,000 and 262,186 shares authorized, 122,494 and 0 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively | 123 | |
Additional paid-in capital | 18,725 | 3,502 |
Accumulated other comprehensive income, net of tax | 236 | |
Accumulated deficit | -12,434 | -12,335 |
Total stockholders' equity (deficit) | 6,651 | -8,833 |
Total liabilities and stockholders' equity (deficit) | $259,283 | $1,661 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Stockholders' equity: | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 200,000 | 262,186 |
Common stock, shares issued | 122,494 | 0 |
Common stock, shares outstanding | 122,494 | 0 |
Cocrystal Series A Patent Company [Member] | ||
Stockholders' equity: | ||
Convertible preferred stock, Par value | $0.00 | $0.00 |
Convertible preferred stock, shares authorized | 7,150 | 7,150 |
Convertible preferred stock, shares issued | 0 | 0 |
Convertible preferred stock, shares outstanding | 7,046 | 7,046 |
liquidation preference | $14,000 | $14,000 |
Series A [Member] | ||
Stockholders' equity: | ||
Convertible preferred stock, Par value | $0.00 | |
Convertible preferred stock, shares authorized | 1,000 | |
Series B [Member] | ||
Stockholders' equity: | ||
Convertible preferred stock, Par value | $0.00 | $0.00 |
Convertible preferred stock, shares authorized | 5,000 | 5,000 |
Convertible preferred stock, shares issued | 1,000 | 1,000 |
Convertible preferred stock, shares outstanding | 279 | 279 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income Statement [Abstract] | ||
Grant revenues | $9 | |
Operating Expenses: | ||
Research and development | 4,071 | 3,862 |
General and adminstrative | 1,737 | 219 |
Total Operating Expenses | 5,808 | 4,081 |
Loss from operations | -5,799 | -4,081 |
Interest income | 96 | 2 |
Realized gain on sale of marketable securities | 1,359 | |
Other expense | -7 | |
Fair value of warrant liabilities in excess of proceeds from financing | -946 | |
Loss on return of escrowed shares | -584 | |
Change in fair market value of derivative liability | 5,730 | 192 |
Total other income, net | 5,648 | 194 |
Loss before income taxes | -151 | -3,887 |
Income tax benefit | 52 | |
Net loss | -99 | -3,887 |
Net loss | -99 | -3,887 |
Unrealized gain on marketable securities, net of tax | 236 | |
Total comprehensive income (loss) | $137 | ($3,887) |
Net loss per common share: | ||
Net loss per share, basic | $0 | ($0.07) |
Net loss per share, diluted | ($0.01) | ($0.07) |
Weighted average common shares outstanding, basic | 326,799 | 57,255 |
Weighted average common shares outstanding, diluted | 327,753 | 57,255 |
CONSOLIDATED_STATEMENTS_OF_CON
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERSb EQUITY (DEFICIT) (USD $) | Cocrystal Discovery, Inc. Series A Convertible Preferred Stock | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Common Stock | Additional Paid-In Capital | Accumulated other comprehensive income [Member] | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2012 | $10,108,000 | $3,440,000 | ($8,448,000) | ($5,008,000) | ||||
Beginning balance, shares at Dec. 31, 2012 | 7,046 | 279 | ||||||
Issuance of series A preferred stock | ||||||||
Stock based compensation | 55,000 | 55,000 | ||||||
Exercise of stock options | 7,000 | 7,000 | ||||||
Net loss | -3,887,000 | -3,887,000 | ||||||
Ending balance at Dec. 31, 2013 | 10,108,000 | 3,502,000 | -12,335,000 | -8,833,000 | ||||
Ending balance, shares at Dec. 31, 2013 | 7,046 | 279 | 0 | |||||
Stock based compensation | 38,000 | 38,000 | ||||||
Conversion of series A convertible stock, Amount | -10,108,000 | 1,000 | 10,107,000 | 10,108,000 | ||||
Conversion of series A convertible stock, Shares | -7,046 | 721 | ||||||
Merger between Biozone Pharmaceuticals, Inc. and Cocrystal Discovery, Inc., Amount | 116,000 | -1,596,000 | -1,480,000 | |||||
Merger between Biozone Pharmaceuticals, Inc. and Cocrystal Discovery, Inc., Shares | 115,907 | |||||||
Exercise of common stock options, Amount | 1,000 | 115,000 | 116,000 | |||||
Exercise of common stock options, Shares | 1,087 | |||||||
Issuance of common stock and warrants in January 2014, Amount | 6,000 | -6,000 | ||||||
Issuance of common stock and warrants in January 2014, Shares | 5,500 | |||||||
Unrealized gain on marketable securities, net of tax | 236,000 | 236,000 | ||||||
Series A preferred stock issued in the merger with RFS Pharm, LLC, Amount | 178,218,000 | |||||||
Series A preferred stock issued in the merger with RFS Pharm, LLC, Shares | 1,000 | |||||||
Stock options issued in the merger with RFS Pharm, LLC | 6,565,000 | 6,565,000 | ||||||
Net loss | -99,000 | -99,000 | ||||||
Ending balance at Dec. 31, 2014 | $178,218,000 | $1,000 | $123,000 | $18,725,000 | $236,000 | ($12,434,000) | $6,651,000 | |
Ending balance, shares at Dec. 31, 2014 | 1,000 | 1,000 | 122,494 | 122,494 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Operating activities: | ||
Net loss | ($99) | ($3,887) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 199 | 236 |
Stock-based compensation | 38 | 55 |
Fair value of warrant liabilities in excess of proceeds from financing | 946 | |
Change in fair value of derivative liabilities | -5,730 | -192 |
Deferred income tax | -52 | |
Loss on return of escrowed shares | 584 | |
Realized gain on sale of marketable securities | -1,359 | |
Loss on sale of equipment | 6 | |
Changes in operating assets and liabilities, net of effects of reverse merger with Biozone Pharmaceuticals, Inc. and the merger with RFS Pharma, LLC: | ||
Prepaid expenses and other current assets | 9 | -1 |
Accounts payable and accrued expenses | -551 | 103 |
Net cash used in operating activities | -6,009 | -3,686 |
Investing activities | ||
Cash acquired in acquisition of Biozone Pharmaceuticals, Inc. | 589 | |
Cash acquired in acquisition of RFS Pharma, Inc. | 194 | |
Purchase of property and equipment | -5 | -4 |
Long term deposits | -3 | |
Proceeds from sale of marketable securities | 7,900 | |
Investment in mortgage note receivable | -2,626 | |
Principal payments received on mortgage note receivable | 30 | |
Net cash provided by (used in) investing activities | 6,079 | -4 |
Financing activities | ||
Proceeds from exercise of stock options | 116 | 7 |
Proceeds from issuance of common stock and warrants | 2,750 | |
Net cash provided by financing activities | 2,866 | 7 |
Net increase (decrease) in cash and cash equivalents | 2,936 | -3,683 |
Cash and cash equivalents, beginning of period | 1,034 | 4,717 |
Cash and cash equivalents, end of period | 3,970 | 1,034 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Unrealized gain on marketable securities net of tax | 236 | |
Fair value of assets acquired and liabilities assumed in reverse merger with Biozone Pharmaceuticals, Inc. | ||
Prepaid expenses and other current assets | 5 | |
Marketable securities | 8,811 | |
Accounts payable and accrued expenses | -410 | |
Derivative liabilities | -10,475 | |
Fair value of Series A preferred stock issued in acquisition of RFS Pharma, LLC | 178,218 | |
Fair value of stock options issued in acquisition of RFS Pharma, LLC | 6,565 | |
Fair value of assets acquired and liabilities assumed in acquisition of RFS Pharma, LLC | ||
In-process research and development | 184,966 | |
Goodwill | 65,195 | |
Deferred tax liabilities | -65,195 | |
Prepaid expenses and other current assets | 132 | |
Accounts payable and accrued expenses | -532 | |
Property and equipment | 14 | |
Other long term assets | $10 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation | Cocrystal Pharma, Inc. (the “Company”) is a biopharmaceutical company focused on developing antiviral therapeutics for human diseases. |
On January 2, 2014, Biozone Pharmaceuticals, Inc. merged with Cocrystal Discovery, Inc. (as further described below). The Company was previously incorporated in Nevada under the name Biozone Pharmaceuticals, Inc. ("Biozone"). On March 18, 2014, the Company reincorporated in Delaware under the name Cocrystal Pharma, Inc. ("we", the "Company", or "Cocrystal"). | |
Our primary business going forward is to develop novel medicines for use in the treatment of human viral diseases. Cocrystal has been developing novel technologies and approaches to create antiviral drug candidates since its initial funding in 2008. Our focus is to pursue the development and commercialization of broad-spectrum antiviral drug candidates that will transform the treatment and prophylaxis of viral diseases in humans. By concentrating our research and development efforts on viral replication inhibitors, we plan to leverage our infrastructure and expertise in these areas. | |
Effective January 2, 2014, Biozone, Biozone Acquisitions Co., Inc., a wholly-owned subsidiary of Biozone (the “Merger Sub”), and Cocrystal Discovery entered into and closed an Agreement and Plan of Merger (the “Biozone Merger Agreement”). Pursuant to the Biozone Merger Agreement, Merger Sub merged with and into Cocrystal Discovery (the “Merger”), with Cocrystal Discovery continuing as the surviving corporation and a wholly-owned subsidiary of Biozone. Cocrystal Discovery is considered the accounting acquirer as its shareholders own 60% of the combined entity after the Merger. In connection with the Biozone Merger Agreement, all of the Company’s shares of Series A preferred stock were first converted to common stock, and Biozone then issued to Cocrystal Discovery’s security holders a total of 1,000,000 shares of the Company’s Series B Convertible Preferred Stock (“Series B”) (at a ratio of 0.07454 Series B stock for each common share of Cocrystal Discovery). The Series B shares: (i) automatically convert into shares of the Company’s common stock at a rate of 205.08308640 shares for each share of Series B at such time that the Company has sufficient authorized capital, (ii) are entitled to vote on all matters submitted to shareholders of the Company and vote on an as converted basis and (iii) have a nominal liquidation preference. Additionally, the Company assumed all of the outstanding stock options under the Cocrystal Discovery 2007 Equity Incentive Plan. Subsequent to the Merger, Biozone changed its name to Cocrystal Pharma, Inc. | |
The Merger is being treated as a reverse merger and recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of Biozone’s operations were disposed of immediately prior to the consummation of the Merger as reported on a Form 8-K filed by Biozone on January 2, 2014. Cocrystal Discovery is treated as the accounting acquirer as its shareholders control the Company after the Merger, even though Biozone was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of Cocrystal Discovery as if Cocrystal Discovery had always been the reporting company and, on the Merger date, changed its name and reorganized its capital stock. Since Biozone had no operations upon the Merger taking place, the transaction was treated as a recapitalization for accounting purposes and no goodwill or other intangible assets were recorded by the Company as a result of the Merger. Historical common stock amounts and additional paid-in capital have been retroactively adjusted using the exchange ratio of 0.07454 Series B shares for each one common share of Cocrystal Discovery. | |
Effective November 25, 2014, Cocrystal, Cocrystal Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Cocrystal, Cocrystal Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (the “Cocrystal Merger Sub”), RFS Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “RFS Merger Sub”) and RFS Pharma, LLC, a Georgia limited liability company (“RFS Pharma”), entered into and closed an Agreement and Plan of Merger (the “RFS Merger Agreement”). | |
The consideration paid by the Company was approximately $184.8 million, consisting of the issuance of 1,000,000 shares of Series A Preferred stock (“Series A”) with an estimated fair value of approximately $178.2 million and the issuance of 16,542,538 options to purchase the Company’s common stock as replacements of awards previously issued to employees of RFS Pharma with an estimated fair value of approximately $6.6 million. The Series A shares automatically converted into 340,760,802 shares of the Company’s common stock upon the approval of the Company’s shareholders on March 3, 2015 to increase the total number of the Company’s authorized common shares to 800,000,000 shares. Prior to the Series A shares being converted to common stock, the Series A shares contained a provision that they could be redeemed at each holder’s option based on a defined conversation price beginning on November 25, 2015 if not previously converted to common stock. The Series A shares were therefore classified as mezzanine equity in the Company’s balance sheet as of December 31, 2014, because at that time such shares could potentially have been redeemed by its holders for events that were outside the Company’s control. No accretion to redemption value was required, as redemption was not probable. | |
Basis of Presentation | |
The financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of Cocrystal Pharma, Inc. and its wholly owned subsidiaries: RFS Pharma, LLC, Cocrystal Discovery, Inc., Cocrystal Merger Sub, Inc., Baker Cummins Corp. and Biozone Laboratories, Inc. Intercompany transactions and balances have been eliminated. | |
Liquidity | |
The Company has no products approved for sale, has not generated any revenues to date from product sales, and has incurred significant operating losses since inception. The Company has never been profitable and has incurred losses from operations of $5.8 million and $4.1 million in the years ended December 31, 2014 and 2013, respectively. Subsequent to December 31, 2014, the Company received commitments for a $15,000,000 private stock placement, of which $11,800,000 has been received. The Company believes that its cash and cash equivalents of $4.0 million as of December 31, 2014, and funds received in this financing will be sufficient to allow the Company to fund its current operating plan for at least the next 12 months As the Company continues to incur losses, achieving profitability is dependent upon the successful development, approval and commercialization of its product candidates, and achieving a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital. Management intends to fund future operations through additional private or public debt or equity offerings, and may seek additional capital through arrangements with strategic partners or from other sources. There can be no assurances, however, that additional funding will be available on terms acceptable to the Company, or at all. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2014 | |||
Accounting Policies [Abstract] | |||
Summary of Significant Accounting Policies | Segments | ||
The Company operates in only one segment. Management uses cash flow as the primary measure to manage its business and does not segment its business for internal reporting or decision-making. | |||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. | |||
Concentrations of Credit Risk | |||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash. | |||
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, regulatory approvals, competition from current treatments and therapies and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals. | |||
Products developed by the Company require clearances from the U.S. Food and Drug Administration (the “FDA”) and other international regulatory agencies prior to commercial sales in their respective markets. The Company’s products may not receive the necessary clearances and if they are denied clearance, clearance is delayed or the Company is unable to maintain clearance the Company’s business could be materially adversely impacted. | |||
Cash and Cash Equivalents | |||
The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include cash in a readily available checking account. | |||
Marketable securities | |||
Marketable securities consist of equity securities of publicly traded entities, and are classified as available-for-sale and carried at fair value on the balance sheet. Changes in the fair value of marketable securities are recorded as other comprehensive income. | |||
Property and Equipment | |||
Property and equipment, which consists of lab equipment, computer equipment, and office equipment, are stated at cost and depreciated over the estimated useful lives of the assets (three to five years) using the straight-line method. | |||
Goodwill and In-Process Research and Development | |||
Goodwill and an intangible asset for in-process research and development were recorded in connection with the acquisition of RFS Pharma in November 2014. In-process research and development represents a series of awarded patents, filed patent applications and an in-process research program acquired in the acquisition of RFS Pharma that are integral to the development of the Company’s planned future products. In-process research and development represents an indefinite-lived intangible asset. As a result, both goodwill and in-process research and development are not amortized but are tested for impairment annually at the reporting unit level on November 30 or more frequently if events and circumstances indicate impairment may have occurred. Factors the Company considers important that could trigger an interim review for impairment include, but are not limited to, the following: | |||
• | Significant changes in the manner of its use of acquired assets or the strategy for its overall business; | ||
• | Significant negative industry or economic trends; | ||
• | Significant decline in stock price for a sustained period; and | ||
• | Significant decline in market capitalization relative to net book value. | ||
Goodwill and in-process research and development are evaluated for impairment first by a qualitative assessment to determine the likelihood of impairment. If it is determined that impairment is more likely than not, the Company will then proceed to the two step impairment test. For goodwill, the first step is to compare the fair value of the reporting unit to the carrying amount of the reporting unit and for in-process research and development to compare the fair value of the in-process research and development asset to its carrying amount (the “First Step”). If the carrying amount exceeds the fair value, a second step must be followed to calculate impairment (the “Second Step”). Otherwise, if the fair value exceeds the carrying amount, the goodwill or indefinite-lived research and development asset is not considered to be impaired as of the measurement date. In its review of the carrying value of the goodwill for its single reporting unit and its in-process research and development, the Company determines fair values of its goodwill using the market approach, and its in-process research and development asset using the income approach. | |||
In performing the preliminary purchase price allocation for the RFS Pharma acquisition, the Company considered, among other factors, the Company’s intention for future use of acquired assets, analyses of historical financial performance and estimates of future performance of RFS Pharma’s product candidates. The fair values of intangible assets were calculated primarily using a discounted cash flow analysis of future development costs and exit values under a number of different scenarios. Company management estimated the probabilities of occurrence of each scenario and prepared forecast balance sheets and income statements for the combined company. The rates utilized to discount net cash flows to their present values were based on a range of discount rates from 4.7% (rate during the active periods) to 15.6% (terminal rate). | |||
No impairment of goodwill or in-process research and development assets was recorded during the year ended December 31, 2014. The Company had no goodwill or in-process research and development assets as of December 31, 2013. | |||
Long-Lived Assets | |||
The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective. Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount over the asset’s fair value. The Company has not recognized any impairment losses through December 31, 2014. | |||
Mortgage Note Receivable | |||
The Company records its mortgage note receivable at the amount advanced to the borrower, which includes the stated principal amount and certain loan origination and commitment fees that are recognized over the term of the mortgage note. Interest income is accrued as earned over the term of the mortgage note. The Company evaluates the collectability of both interest and principal of the note to determine whether it is impaired. The note would be considered to be impaired if, based on current information and events, the Company determined that it was probable that it would be unable to collect all amounts due according to the existing contractual terms. If the note were considered to be impaired, the amount of loss would be calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the note’s effective interest rate or to the fair value of the Company’s interest in the underlying collateral, less the cost to sell. No impairment loss has been recognized in connection with the mortgage note receivable. | |||
Grant Revenue and Accounts Receivable | |||
Research and development grants are recorded as revenue when there is reasonable assurance that the Company has complied with all conditions necessary to achieve the grants, collectability is reasonably assured, and as the expenditures are incurred. Accounts receivable represents amounts due under research and development grants that has not yet been received. | |||
Research and Development Expenses | |||
All research and development costs are expensed as incurred. | |||
Income Taxes | |||
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon future taxable income. A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings. The Company recognizes an uncertain tax position in its financial statements when it concludes that a tax position is more likely than not to be sustained upon examination based solely on its technical merits. Only after a tax position passes the first step of recognition will measurement be required. Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs. The Company elects to accrue any interest or penalties related to income taxes as part of its income tax expense. | |||
Stock-Based Compensation | |||
The Company recognizes compensation expense using a fair-value-based method for costs related to stock-based payments, including stock options. The fair value of options awarded to employees is measured on the date of grant using the Black-Scholes option pricing model and is recognized as expense, net of a forfeiture rate, over the requisite service period on a straight-line basis. | |||
Use of the Black-Scholes option pricing model requires the input of subjective assumptions including expected volatility, expected term, and a risk free interest rate. The Company estimates volatility using market comparable entities since the Company’s common stock has limited trading history and limited observable volatility of its own. The expected term of the options is estimated by using the Securities and Exchange Commission Staff Bulletin No. 107’s Simplified Method for Estimate Expected Term. The risk free interest rate is estimated using comparable published federal funds rates. | |||
The Company accounts for equity instruments issued to parties, other than employees, for acquiring goods or services under the guidance of Subtopic 505-50 of the Accounting Standards Codification (“ASC”), Equity-Based Payments to Non-Employees. Transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the equity instrument issued. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which a performance commitment is reached. | |||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | |||
We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 ("Contracts in Entity's Own Equity"). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. | |||
Our derivative instruments consisting of warrants to purchase our common stock were valued using the Black-Scholes option pricing model, using the following assumptions at December 31, 2014: | |||
· | Estimated dividends: | None | |
· | Expected volatility: | 79 - 103% | |
· | Risk-free interest rate: | 0.25 - 2.11% | |
· | Expected term: | 1.16 – 9.05 years | |
Recent Accounting Pronouncements | |||
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities: Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity, or DSE, in its entirety from GAAP. Under previous guidance, DSEs were required to report incremental information, including inception-to-date financial information, in their financial statements. A DSE is an entity devoting substantially all of its efforts to establishing a new business and for which either planned principal operations have not yet commenced or have commenced but there has been no significant revenues generated from that business. Entities classified as DSEs are no longer subject to these incremental reporting requirements after adopting ASU No. 2014-10. ASU No. 2014-10 is effective for fiscal years beginning after December 15, 2014, with early adoption permitted. Prior to the issuance of ASU No. 2014-10, the Company had met the definition of a DSE since its inception. The Company elected to adopt this ASU early, and therefore it has eliminated the incremental disclosures previously required of DSEs. | |||
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption, which generally refers to an entity’s ability to meet its obligations as they become due. If substantial doubt exists but is not alleviated by management’s plan, the footnotes must specifically state that “there is substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued”. In addition, if substantial doubt exists, regardless of whether such doubt was alleviated, entities must disclose (a) principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans, if any); (b) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (c) management’s plans that are intended to mitigate the conditions or events that raise substantial doubt, or that did alleviate substantial doubt, about the entity’s ability to continue as a going concern. If substantial doubt has not been alleviated, these disclosures should become more extensive in subsequent reporting periods as additional information becomes available. In the period that substantial doubt no longer exists (before or after considering management’s plans), management should disclose how the principal conditions and events that originally gave rise to substantial doubt have been resolved. The ASU applies prospectively to all entities for annual periods ending after December 15, 2016, and to annual and interim periods thereafter. Early adoption is permitted. The Company has not adopted the provisions of this ASU. Upon adoption, the Company will use this guidance to evaluate going concern. |
RFS_Pharma_LLC_Acquisition
RFS Pharma, LLC Acquisition | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Business Combinations [Abstract] | |||||
RFS Pharma, LLC Acquisition | On November 25, 2014, the Company entered into and closed an Agreement and Plan of Merger with RFS Pharma. At the closing of the merger, the Company issued to RFS Pharma’s members 1,000,000 shares of the Company’s Series A preferred shares to purchase all of the outstanding member interests in RFS Pharma, and also issued 16,542,538 options to purchase the Company’s common stock as replacements of awards previously issued to employees of RFS Pharma. The Series A shares automatically converted into 340,760,802 shares of the Company’s common stock upon the approval of the Company’s shareholders on March 3, 2015 to increase the total number of the Company’s authorized common shares to 800,000,000 shares. | ||||
The goodwill associated with the acquisition is not deductible for tax purposes. | |||||
The fair value of the Series A shares was based on the quoted market price of the Company’s common stock into which the Series A shares were convertible and the fair value of the replacement options issued was based on the Black-Scholes option pricing model. | |||||
The purchase price consideration was allocated based on the estimated fair value of the tangible and identifiable intangible assets acquired and liabilities assumed from RFS Pharma. Based upon the estimated fair values determined by the Company, the total purchase price was allocated as follows (in thousands): | |||||
Purchased in-process research and development | $ | 184,966 | |||
Net book value of tangible assets acquired and liabilities assumed | (183 | ) | |||
Goodwill | 65,195 | ||||
Deferred tax liability | (65,195 | ) | |||
Total purchase price | $ | 184,783 |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and Equipment | Property and equipment consist of the following (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Lab equipment | $ | 1,146 | $ | 1,113 | |||||
Computer and office equipment | 87 | 92 | |||||||
Total equipment | $ | 1,233 | 1,205 | ||||||
Less accumulated depreciation | (949 | ) | (736 | ) | |||||
Property and equipment, net | $ | 284 | $ | 469 | |||||
Depreciation expense for the years ended December 31, 2014 and 2013 was $199,000 and $236,000, respectively. |
Marketable_Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2014 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | As of December 31, 2014, the Company owns 260,000 shares of MusclePharm, Inc. (“MusclePharm”) common stock. The 260,000 shares were part of 600,000 shares originally issued to the Company related to the Company’s sale of assets to MusclePharm that were required to be held in escrow until October 2014 to satisfy any breaches of representations under the Biozone Merger Agreement. The 600,000 shares received by the Company that were not required to be held in escrow were sold for $5,400,000 in June 2014. On September 29, 2014, the Company signed a Memo of Understanding in which it agreed to release 90,000 shares of MusclePharm stock out of the original balance of 600,000 shares held in escrow in exchange for a release from all claims which MusclePharm had made concerning assets which it acquired in its purchase of assets from the Company in January 2014. The Company recognized a net loss on the return of these MusclePharm shares of $584,000 in the year ended December 31, 2014. In October 2014, MusclePharm exercised its right to repurchase 250,000 shares of MusclePharm shares at $10.00 per share. MusclePharm did not withdraw the portion of its claim that relates to the pending eviction proceedings (See note 14) and will continue to hold in escrow 260,000 shares of its stock pending such time as MusclePharm and the Company can reach a mutually agreeable arrangement with respect to the MusclePharm lease; however, it no longer has the option to repurchase such shares at $10.00 per share. As of December 31, 2014, the Company owned 260,000 MusclePharm shares which were recorded at their estimated fair value of $1,975,000. |
Mortgage_Note_Receivable
Mortgage Note Receivable | 12 Months Ended |
Dec. 31, 2014 | |
Receivables [Abstract] | |
Mortgage Note Receivable | In June 2014, the Company acquired a mortgage note from a bank for $2,626,290 which is collateralized by, among other things, the underlying real estate and related improvements. The property subject to the mortgage is owned by Daniel Fisher, one of the founders of Biozone, and is currently under lease to MusclePharm. At December 31, 2014, the carrying amount of the mortgage note receivable was $2,596,000, which consisted of $2,478,000 of principal, $91,000 of interest and $27,000 of fees paid to the selling bank. The mortgage note has a maturity date of August 1, 2032 and bears an interest rate of 7.24%. The Company records its mortgage note receivable at the amount advanced to the borrower, which includes the stated principal amount and certain loan origination and commitment fees that are recognized over the term of the mortgage note. Interest income is accrued as earned over the term of the mortgage note. The Company evaluates the collectability of both interest and principal of the note to determine whether it is impaired. The note would be considered to be impaired if, based on current information and events, the Company determined that it was probable that it would be unable to collect all amounts due according to the existing contractual terms. If the note were considered to be impaired, the amount of loss would be calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the note’s effective interest rate or to the fair value of the Company’s interest in the underlying collateral, less the cost to sell. No impairment loss has been recognized in connection with the mortgage note receivable. |
Convertible_Preferred_Stock
Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Convertible Preferred Stock | Series A Convertible Preferred Stock |
As of December 31, 2013, Cocrystal Discovery, Inc. had outstanding shares of its Series A Preferred Stock (“Cocrystal Discovery Series A”). The holders of Cocrystal Discovery Series A preferred stock were entitled to receive cumulative dividends at a rate of $0.1153 per share per annum. The preferred stock dividends were payable when and if declared by the Company’s Board of Directors. No dividends were ever declared on the Cocrystal Discovery Series A. | |
In connection with the merger with Biozone, the Company exchanged the above Cocrystal Discovery Series A for a new Series B Convertible Preferred Stock. See below for more information. | |
The Company has authorized up to 5,000,000 shares of preferred stock, $0.001 par value per share, for issuance. In connection with the merger with RFS Pharma in November 2014, the Company created a new series of Series A Preferred Stock (“Series A”). The Series A shares automatically converted into 340,760,802 shares of the Company’s common stock on March 3, 2015 as a result of the Company’s shareholders approving an increase in the number of the Company’s authorized common shares to 800,000,000. The Series A shares were classified as mezzanine equity in the Company’s balance sheet as of December 31, 2014, because at that date such shares could potentially have been redeemed by its holders for events that were outside the Company’s control. No accretion to redemption value was required, as redemption was not probable. | |
Series B Convertible Preferred Stock | |
In connection with the merger with Biozone, the Company issued to Cocrystal Discovery’s Series A and Common security holders 1,000,000 shares of the Company’s Series B Convertible Preferred Stock (“Series B”). The Series B shares automatically converted into 205,083,086 shares of the Company’s common stock on March 3, 2015 as a result of the Company’s shareholders approving an increase in the number of the Company’s authorized common shares to 800,000,000. |
Common_Stock
Common Stock | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Common Stock | As of December 31, 2014, the Company had 200,000,000 shares of authorized common stock, $0.001 par value per share, and had 122,493,690 shares issued and outstanding. As discussed above, on March 3, 2015, the Company’s shareholders approved an increase in the number of authorized shares to 800,000,000, which automatically resulted in the conversion of all outstanding Series A and Series B shares to common stock and thereby increased the number of outstanding shares of common stock by 545,844,608. |
On January 21, 2014, the Company completed the sale of 5,500,000 shares of its common stock in a private placement in exchange for $2,750,000. Also, 5,500,000 warrants to purchase common stock at an exercise price of $0.50 for a period of ten years were issued in conjunction with this sale. These warrants were recorded as liabilities upon issuance due to potential cash settlement provisions, as discussed in Note 10. The fair value of these warrants was estimated to be $3,696,000 at issuance. As this exceeds total proceeds received of $2,750,000, the excess of $946,000 was expensed during 2014. | |
The holders of common stock are entitled to one vote for each share of common stock held. |
Stock_Based_Awards
Stock Based Awards | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Equity [Abstract] | |||||||||||||
Stock Based Awards | 2007 Equity Incentive Plan | ||||||||||||
The Company adopted an equity incentive plan (the “2007 Plan”) in 2007 under which 53,599,046 shares of common stock have been reserved for issuance to employees, nonemployee directors and consultants of the Company. Recipients of incentive stock options shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The maximum term of options granted under the 2007 Plan is ten years. The options generally vest 25% after one year, with the balance vesting monthly over the remaining three years. As of December 31, 2014, 32,822,534 shares of common stock remain available for future grant under the 2007 Plan. | |||||||||||||
The following table summarizes stock option transactions for the 2007 Plan for the years ended December 31, 2013 and 2014: | |||||||||||||
Number of shares available for grant | Total options outstanding | Weighted Average Exercise Price | |||||||||||
Balance at December 31, 2012 | 1,773,390 | 4,326,461 | $ | 0.11 | |||||||||
Granted | (229,318 | ) | 229,318 | 0.16 | |||||||||
Exercised | (49,319 | ) | 0.1 | ||||||||||
Cancelled | 103,560 | (103,560 | ) | 0.1 | |||||||||
Balance at December 31, 2013 | 1,647,632 | 4,402,900 | 0.12 | ||||||||||
Increase in option pool | 47,459,195 | ||||||||||||
Options granted to merger employees | (16,542,538 | ) | 16,542,538 | 0.1 | |||||||||
Exercised | (1,087,081 | ) | 0.11 | ||||||||||
Cancelled | 258,245 | (258,245 | ) | 0.11 | |||||||||
Balance at December 31, 2014 | 32,822,534 | 19,600,112 | $ | 0.1 | |||||||||
The Company recognizes compensation expense using a fair-value-based method for costs related to stock-based payments, including stock options. The fair value of options awarded to employees is measured on the date of grant using the Black-Scholes option pricing model and is recognized as expense over the requisite service period on a straight-line basis. The Black-Scholes option pricing model includes the following weighted average assumptions: | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
2014 | 2013 | ||||||||||||
Assumptions: | |||||||||||||
Risk-free interest rate | 1.08 – 2.51 | % | 1.11 | % | |||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||
Expected volatility | 108 | % | 108 | % | |||||||||
Expected term (in years) | 6.08 | 6.08 | |||||||||||
In the merger with RFS Pharma, the Company issued 16,542,538 options with a weighted average exercise price of $0.10 per share in exchange for RFS options then outstanding. These were the only options issued in 2014. The weighted average fair value of options granted during 2014 and 2013 was $0.45 and $0.17, respectively. | |||||||||||||
The Company uses historical data to estimate forfeitures at the time of grant and is required to record stock-based compensation only for those awards that are expected to vest. The Company recorded employee stock-based compensation expense of $37,578 and $55,483 for the years ended December 31, 2014 and 2013, respectively. | |||||||||||||
As of December 31, 2014, there was $885,325 of total unrecognized compensation expense related to non-vested employee stock options that is expected to be recognized over a weighted average period of 1.8 years. | |||||||||||||
As of December 31, 2014, options to purchase 19,600,112 shares of common stock, with an aggregate intrinsic value of $6,272,000, were outstanding that were fully vested or expected to vest with a weighted average remaining contractual term of 4.9 years. As of December 31, 2014, options to purchase 17,125,790 shares of common stock, with an aggregate intrinsic value of $5,549,000, were exercisable with a weighted-average exercise price of $0.10 per share and a weighted-average remaining contractual term of 4.4 years. The aggregate intrinsic value of outstanding and exercisable options at December 31, 2014 was calculated based on the closing price of the Company’s common stock as reported on the Over-the-Counter Bulletin Board and the OTCQx markets on December 31, 2014 of $0.42 per share less the exercise price of the options. The aggregate intrinsic value is calculated based on the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying options. | |||||||||||||
In 2008 and 2009, the Company granted options to purchase 1,941,544 shares of common stock to nonemployees at an exercise price of $0.10 per share. The assumptions used to calculate the fair value of nonemployee options were the same as the employee assumptions except the expected life is considered to be 6.02 years. The Company recorded stock-based compensation expense related to these options of $0 and $4,395 in 2014 and 2013, respectively. As of December 31, 2014, there were 1,941,112 outstanding nonemployee options at an exercise price of $0.10 per share and all of these options were fully vested. | |||||||||||||
Common Stock Reserved for Future Issuance | |||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||
Conversion of preferred stock | - | 148,494,693 | |||||||||||
Stock options issued and outstanding | 19,600,112 | 4,402,900 | |||||||||||
Authorized for future option grants | 32,822,534 | 1,647,632 | |||||||||||
Warrants outstanding | 26,669,000 | ||||||||||||
Total | 79,091,646 | 154,545,225 |
Warrants
Warrants | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||
Warrants | The following is a summary of activity in the number of warrants outstanding to purchase the Company’s common stock for the year ended December 31, 2014 (in thousands): | ||||||||||||||||||||
Warrants accounted for as: | Warrants accounted for as: | ||||||||||||||||||||
Equity | Liabilities | ||||||||||||||||||||
Total | |||||||||||||||||||||
January 2012 warrants | March 2013 warrants | April 2013 warrants | February 2012 warrants | August 2013 warrants | October 2013 warrants | October 2013 Series A warrants | January 2014 warrants | ||||||||||||||
Outstanding, January 1, 2014 | - | - | - | - | - | - | - | - | - | ||||||||||||
Warrants acquired in merger with Biozone | 650 | 455 | 1,864 | 1,000 | 10,000 | 200 | 7,000 | - | 21,169 | ||||||||||||
Warrants issued | - | - | - | - | - | - | - | 5,500 | 5,500 | ||||||||||||
Outstanding, December 31, 2014 | 650 | 455 | 1,864 | 1,000 | 10,000 | 200 | 7,000 | 5,500 | 26,669 | ||||||||||||
Expiration date | 11-Jan-16 | 1-Mar-16 | 25-Apr-18 | 28-Feb-16 | 26-Aug-23 | 18-Oct-18 | 24-Oct-23 | 16-Jan-24 | |||||||||||||
Warrants consist of warrants potentially settleable in cash, which are liability-classified warrants, and equity-classified warrants. | |||||||||||||||||||||
Warrants classified as liabilities | |||||||||||||||||||||
Liability-classified warrants consist of warrants issued by Biozone in connection with equity financings in February 2012, August 2013, October 2013 and January 2014, which were assumed by the Company in connection with its merger with Biozone in January 2014. As of December 31, 2014, 23,700,000 warrants are accounted for as liabilities and 2,969,000 warrants are accounted for as equity. Warrants accounted for as liabilities are either potentially settleable in cash or not indexed to the Company’s own stock because they contain contingencies under which the Company could be forced to settle them for cash or because they contain potential adjustments to their exercise price. As such, they are therefore accounted for as liabilities. | |||||||||||||||||||||
The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the consolidated statement of operations and comprehensive income (loss) as changes in fair value of derivative liabilities. The fair value of the warrants classified as liabilities is estimated using the Black-Scholes option-pricing model with the following inputs as of December 31, 2014: | |||||||||||||||||||||
February 2012 warrants | August 2013 warrants | October 2013 warrants | October 2013 warrants | January 2014 warrants | |||||||||||||||||
Strike price | $ | 0.6 | $ | 0.4 | $ | 0.5 | $ | 0.5 | $ | 0.5 | |||||||||||
Expected term (years) | 1.2 | 8.7 | 3.8 | 8.8 | 9.1 | ||||||||||||||||
Cumulative volatility % | 79 | % | 103 | % | 81 | % | 103 | % | 103 | % | |||||||||||
Risk-free rate % | 0.25 | % | 2.08 | % | 1.32 | % | 2.09 | % | 2.11 | % | |||||||||||
The Company’s expected volatility is based on a combination of implied volatilities of similar publicly traded entities given that the Company has limited history of its own observable stock price. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero coupon rates in effect at the balance sheet date. The dividend yield used in the pricing model is zero, because the Company has no present intention to pay cash dividends. | |||||||||||||||||||||
Subsequent to December 31, 2014, 12,689,000 warrants have been converted into 4,991,331 common shares using the warrants’ cashless exercise provision. |
Licenses_and_Collaborations
Licenses and Collaborations | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Licenses and Collaborations | Agreements with Teva Pharmaceuticals- |
On September 13, 2011, the Company signed a Share Purchase Agreement with Teva Pharmaceuticals Industries Limited (“Teva”). Under the terms of this agreement, Teva purchased at an initial closing 687,442 shares of the Company’s common stock for $7.5 million and, concurrent with the purchase of the common stock, obtained options to purchase up to an additional $37.5 million of the Company’s common stock. Teva never exercised any options to purchase additional common stock, and all options have expired as of December 31, 2014. | |
Contemporaneously with the signing of the Share Purchase Agreement, the Company also signed a Research and Collaboration Agreement and an Exclusive License Option Agreement with Teva. Under the terms of the Research and Collaboration Agreement, the Company carried out a research and development program (“R&D Program”) to develop novel therapeutics for Hepatitis C that target the viral polymerase enzyme involved in replication of the virus. The R&D Program has been concluded. Teva's options to extend the R&D Program or to receive a license to the technology developed by the Company under the R&D Program have expired. The Company retains all rights to the technology. | |
Accounting Treatment | |
The Company determined that Teva’s options to purchase additional shares of common stock were freestanding instruments that were required to be classified as liabilities and carried at fair value under the provisions of ASC 480-10, Distinguishing Liabilities from Equity. Accordingly, the Company allocated the proceeds from the initial $7.5 million investment between the common stock and the options to purchase additional shares of common stock under the terms outlined in the Share Purchase Agreement. The Company recorded a liability of $4.2 million for the initial fair value of Teva’s options in 2011, and allocated the remainder of the proceeds to common stock issued for $3.1 million, net of transaction costs of $172,000. | |
The liability representing the fair value of the options was included on the accompanying balance sheets as “Derivative liability” and was required to be remeasured at fair value at each reporting date. The fair value of the options to purchase additional common stock was estimated using a probability-weighted Black-Scholes-Merton model. As of December 31, 2013, the fair value of the liability was approximately $23,000, which represented a reduction in fair value during the year ended December 31, 2013 of approximately $192,000. As of December 31, 2014, all such options had expired and the liability had been reduced to zero. |
Fair_Value_Measurement
Fair Value Measurement | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurement | ASC 820 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: | ||||||||||||||||
Level 1 — quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2 — other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date. | |||||||||||||||||
Level 3 — significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. | |||||||||||||||||
The Company categorized its cash equivalents as Level 1 fair value measurements. As further discussed in Note 5 above, certain of the Company’s marketable securities were subject to restrictions on sale as of December 31, 2014 because they are held in escrow pending resolution of the lease dispute discussion in Note 5. They are considered to be a Level 2 fair value measurement. The valuation for the 260,000 marketable securities categorized as Level 2 was based on applying a discount for lack of marketability to the quoted market price of the issuer’s unrestricted securities. The Company categorized its warrants potentially settleable in cash and its options issued to Teva Pharmaceuticals, Inc. as Level 3 fair value measurements. The warrants potentially settleable in cash are measured at fair value on a recurring basis and are being marked to fair value at each reporting date until they are completely settled or meet the requirements to be accounted for as component of stockholders’ equity. The warrants are valued using the Black-Scholes option-pricing model as discussed in Note 10 above. | |||||||||||||||||
The following table presents a summary of fair values of assets and liabilities that are remeasured at fair value at each balance sheet date as of December 31, 2014 and 2013, and their placement within the fair value hierarchy as discussed above (in thousands): | |||||||||||||||||
Quoted Prices in Active Markets | Significant Other Observable Inputs | Unobservable Inputs | |||||||||||||||
Description | 31-Dec-14 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 3,970 | $ | 3,970 | $ | - | $ | - | |||||||||
Marketable securities | 1,975 | - | 1,975 | - | |||||||||||||
Total assets | $ | 5,945 | $ | 3,970 | $ | 1,975 | $ | - | |||||||||
Liabilities: | |||||||||||||||||
Warrants potentially settleable in cash | $ | 8,464 | $ | - | $ | - | $ | 8,464 | |||||||||
Total liabilities | $ | 8,464 | $ | - | $ | - | $ | 8,464 | |||||||||
Quoted Prices in Active Markets | Significant Other Observable Inputs | Unobservable Inputs | |||||||||||||||
Description | 31-Dec-13 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,034 | $ | 1,034 | $ | - | $ | - | |||||||||
Total assets | $ | 1,034 | $ | 1,034 | $ | - | $ | - | |||||||||
Liabilities: | |||||||||||||||||
Derivative liability | $ | 23 | $ | - | $ | - | $ | 23 | |||||||||
Total liabilities | $ | 23 | $ | - | $ | - | $ | 23 | |||||||||
The Company has not transferred any financial instruments into or out of Level 3 classification during the year ended December 31, 2014. A reconciliation of the beginning and ending Level 3 liabilities for the years ended December 31, 2014 and 2013, is as follows (in thousands): | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Balance , January 1, | $ | 23 | $ | 215 | |||||||||||||
Change in fair value of Teva option | (23 | ) | (192 | ) | |||||||||||||
Estimated fair value of warrants assumed in merger on January 2, 2014 | 10,475 | - | |||||||||||||||
Estimated fair value of warrants issued in January common stock sale | 3,696 | - | |||||||||||||||
Change in fair value of warrants for the year ended December 31, 2014 | (5,707 | ) | - | ||||||||||||||
Balance at December 31, | $ | 8,464 | $ | 23 |
Net_Loss_per_Share
Net Loss per Share | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Net Loss per Share | The Company accounts for and discloses net loss per common share in accordance with FASB ASC Topic 260, Earnings Per Share. Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding (which includes the common share equivalents of the outstanding Series B preferred shares). The common share equivalents of the Series A preferred shares are not included in the calculation of the weighted average number of common shares outstanding for 2014 because they were not convertible into common stock as of December 31, 2014. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common shares for all potential dilutive common shares outstanding. Potential common shares consist of shares issuable upon the exercise of stock options and warrants and the conversion of the Cocrystal Discovery, Inc. Series A preferred stock in 2013. | ||||||||
The following table sets forth the computation of basic and diluted net loss per share (amounts in thousands, except per share amounts): | |||||||||
For the year ended: | |||||||||
2014 | 2013 | ||||||||
Numerator: | |||||||||
Net loss attributed to shareholders | $ | (99 | ) | $ | (3,887 | ) | |||
Adjustment for change in fair value of derivative liability | $ | (2,228 | ) | $ | — | ||||
Net loss attributable to shareholders adjusted for assumed exercises | $ | (2,327 | ) | $ | (3,887 | ) | |||
Denominator: | |||||||||
Weighted average shares outstanding used to compute net loss per share: | |||||||||
Basic | 326,799 | 57,255 | |||||||
Adjustment for dilutive effects of warrants | 954 | — | |||||||
Diluted | 327,753 | 57,255 | |||||||
Net loss per share | |||||||||
Basic | $ | (0.00 | ) | $ | (0.07 | ) | |||
Diluted | $ | (0.01 | ) | $ | (0.07 | ) | |||
The following table sets forth the number of potential common shares excluded from the 2014 and 2013 calculations of net loss per diluted share because their inclusion would be anti-dilutive (in thousands): | |||||||||
For the year ended December 31, | |||||||||
2014 | 2013 | ||||||||
Options to purchase common stock | 19,600 | 4,403 | |||||||
Warrants to purchase common stock | 26,669 | 21,169 | |||||||
CoCrystal Discovery, Inc. Series A convertible preferred stock | 9,670 | ||||||||
Total | 46,269 | 35,242 |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Income Tax Disclosure [Abstract] | ||||||||||
Income Taxes | In accordance with the authoritative guidance for income taxes under ASC 740, a deferred tax asset or liability is determined based on the difference between the financial statement and the tax basis of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. | |||||||||
The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. | ||||||||||
The Company is subject to taxation in the U.S. and various state jurisdictions. Currently no years are under examination. All tax years are subject to examination by the U.S. and state tax authorities due to the carry-forward of unutilized net operating losses and research and development credits. | ||||||||||
A reconciliation of income tax expense (benefit) for the years ended December 31, 2014 and 2013 is as follows: | ||||||||||
Year Ended December 31, | ||||||||||
2014 | 2013 | |||||||||
Federal | $ | - | $ | - | ||||||
State | 2 | - | ||||||||
Total current income tax expense | 2 | - | ||||||||
Deferred: | ||||||||||
Federal | (51 | ) | - | |||||||
State | (3 | ) | - | |||||||
Total deferred income tax expense (benefit) | (54 | ) | - | |||||||
Total income tax expense (benefit) | $ | (52 | ) | $ | - | |||||
Significant components of the Company’s deferred income taxes at December 31, 2014 and 2013 are shown below (in thousands): | ||||||||||
2014 | 2013 | |||||||||
Deferred Tax Assets: | ||||||||||
Net operating loss carryforwards | $ | 7,276 | $ | 5,802 | ||||||
Compensation | 14 | 56 | ||||||||
Research and development tax credits | 835 | 840 | ||||||||
Other | 65 | 1 | ||||||||
Total gross deferred tax assets | 8,190 | 6,699 | ||||||||
Deferred Tax Liabilities | ||||||||||
Unrealized gain on marketable securities | (185 | ) | - | |||||||
Property and equipment | (18 | ) | (15 | ) | ||||||
Acquired in-process research and development | (65,195 | ) | - | |||||||
Total Deferred Tax Liabilities | (65,398 | ) | (15 | ) | ||||||
Net deferred tax assets | (57,208 | ) | 6,684 | |||||||
Valuation allowance | (7,987 | ) | (6,684 | ) | ||||||
Net Deferred Tax Liability | $ | (65,195 | ) | $ | - | |||||
The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. The Company has not considered the deferred tax liability related to acquired in-process research and development to be a future source of taxable income in evaluating the need for a valuation allowance against its deferred tax assets due to the in-process research and development asset being considered an indefinite-lived intangible asset. | ||||||||||
At December 31, 2014, the Company had federal and California net operating losses, or NOL, carryforwards of approximately $20.5 million and $5.4 million, respectively. The federal NOL carryforwards begin to expire in 2027, and the California NOL carryforwards begin to expire in 2029. At December 31, 2014, the Company also had federal and California research tax credit carryforwards of approximately $631,000 and $309,000 thousand, respectively. The federal research tax credit carryforwards begin to expire in 2029, and the California research tax credit carryforwards do not expire and can be carried forward indefinitely until utilized. | ||||||||||
The above NOL carryforwards and the research tax credit carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes, which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. | ||||||||||
A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows: | ||||||||||
Year Ended December 31, | ||||||||||
2014 | 2013 | |||||||||
Statutory federal income tax rate | 34 | % | 34 | % | ||||||
Change in fair value of warrant liability | 10.7 | 2 | ||||||||
State income taxes, net of federal benefit | 0.4 | 3 | ||||||||
Tax credits | 0.9 | 3 | ||||||||
Change in valuation allowance | (11.2 | ) | (42.0 | ) | ||||||
Permanent differences | (0.7 | ) | - | |||||||
Other | (0.1 | ) | - | |||||||
Effective rate | 34 | % | 0 | % |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Commitments and Contingencies | Commitments | ||||
The Company leases office and laboratory space in Bothell, Washington; Tucker, Georgia; and Princeton, New Jersey, under operating leases that expire in January 2019, December 2016, and September 2016, respectively. Future minimum lease payments, by year and in aggregate, are as follows (in thousands): | |||||
Year ending December 31, | |||||
2015 | $ | 369 | |||
2016 | 358 | ||||
2017 | 159 | ||||
2018 | 168 | ||||
2019 | 14 | ||||
Total Minimum Lease Payments | $ | 1,068 | |||
The minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under some of the Company’s operating leases, but are not fixed and can fluctuate from year to year. | |||||
The minimum lease payments above include the amounts that would be paid if the Company maintains its Bothell lease for the five year term. The Company has the right to terminate this lease after three years, by giving prior notice at least 180 days prior to such early termination date and by paying a termination fee equal to the sum of three months’ rent plus the unamortized balance of the sum of (a) all brokerage commissions paid by the landlord of the property in connection with the lease and (b) the abated free base rent related to the five months of the lease, treating items (a) and (b) as being amortized on a level basis over the five year base term of the lease. | |||||
Rent expense for 2014 and 2013, totaled $295,000 and $196,000, respectively. | |||||
Contingencies | |||||
From time to time, we are a party to, or otherwise involved in, legal proceedings arising in the normal course of business. As of the date of this report, except as described below, we are not aware of any proceedings, threatened or pending, against us which, if determined adversely, would have a material effect on our business, results of operations, cash flows or financial position. | |||||
The Company is named in two legal proceedings involving Daniel Fisher. | |||||
The first proceeding was an action filed in Contra Costa County, California by the landlord, which is an entity managed by Mr. Fisher, to evict MusclePharm as a tenant from real property our now inactive subsidiary, Biozone Laboratories, Inc. (“Biozone Labs”) previously leased. | |||||
On March 27, 2014, the landlord filed suit in the Contra Costa County Court against us and Biozone Labs, as well as MusclePharm, alleging an assignment of the lease to MusclePharm in January 2014 was a violation of the lease and its provision requiring the landlord’s consent for a change of control. As indicated above, the landlord failed to either approve or reject the proposed assignment when requested in December 2013. | |||||
On February 24, 2015, Mr. Fisher agreed to withdraw this lawsuit in exchange for an agreement that all parties would be responsible for their own legal fees. | |||||
In the second proceeding, the Company has been named as a party to a lawsuit filed on April 15, 2014 in Contra Costa County, California by the same entity managed by Mr. Fisher. Also named in this action are two of the Company’s subsidiaries – BioZone Labs and Cocrystal Discovery. The action seeks recovery on a promissory note purportedly executed by BioZone Labs in the principal amount of $295,000 in 2007. Motions challenging the sufficiency of the allegations in the complaint were filed in the third quarter, 2014, the motions were granted and plaintiff was given an opportunity to amend the complaint, and plaintiff has filed an amended complaint. The Company intends to vigorously defend the action. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Subsequent Events | On March 25, 2015, the Company entered into binding Securities Purchase Agreements with each of its directors and a number of other accredited investors who agreed to purchase 16,304,350 shares of the Company’s common stock at $0.92 per share for a total of $15,000,000. The Company’s principal shareholders and two of its directors, Dr. Raymond Schinazi and Dr. Phillip Frost, each purchased $3,187,667 of common stock although Dr. Schinazi’s Agreement is subject to the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. As of March 31, 2015, the Company has received approximately $11,800,000 related to these sales of common stock. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Accounting Policies [Abstract] | |||
Basis of Presentation | The financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). | ||
Principles of Consolidation | The consolidated financial statements include the accounts of Cocrystal Pharma, Inc. and its wholly owned subsidiaries: RFS Pharma, LLC, Cocrystal Discovery, Inc., Cocrystal Merger Sub, Inc., Baker Cummins Corp. and Biozone Laboratories, Inc. Intercompany transactions and balances have been eliminated. | ||
Liquidity | The Company has no products approved for sale, has not generated any revenues to date from product sales, and has incurred significant operating losses since inception. The Company has never been profitable and has incurred losses from operations of $5.8 million and $4.1 million in the years ended December 31, 2014 and 2013, respectively. Subsequent to December 31, 2014, the Company received commitments for a $15,000,000 private stock placement, of which $11,800,000 has been received. The Company believes that its cash and cash equivalents of $4.0 million as of December 31, 2014, and funds received in this financing will be sufficient to allow the Company to fund its current operating plan for at least the next 12 months As the Company continues to incur losses, achieving profitability is dependent upon the successful development, approval and commercialization of its product candidates, and achieving a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital. Management intends to fund future operations through additional private or public debt or equity offerings, and may seek additional capital through arrangements with strategic partners or from other sources. There can be no assurances, however, that additional funding will be available on terms acceptable to the Company, or at all. | ||
Segments | The Company operates in only one segment. Management uses cash flow as the primary measure to manage its business and does not segment its business for internal reporting or decision-making. | ||
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. | ||
Concentrations of Credit Risk | Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash. | ||
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, regulatory approvals, competition from current treatments and therapies and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals. | |||
Products developed by the Company require clearances from the U.S. Food and Drug Administration (the “FDA”) and other international regulatory agencies prior to commercial sales in their respective markets. The Company’s products may not receive the necessary clearances and if they are denied clearance, clearance is delayed or the Company is unable to maintain clearance the Company’s business could be materially adversely impacted. | |||
Cash and Cash Equivalents | The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include cash in a readily available checking account. | ||
Marketable securities | Marketable securities consist of equity securities of publicly traded entities, and are classified as available-for-sale and carried at fair value on the balance sheet. Changes in the fair value of marketable securities are recorded as other comprehensive income. | ||
Property and equipment | Property and equipment, which consists of lab equipment, computer equipment, and office equipment, are stated at cost and depreciated over the estimated useful lives of the assets (three to five years) using the straight-line method. | ||
Goodwill and In-Process Research and Development | Goodwill and an intangible asset for in-process research and development were recorded in connection with the acquisition of RFS Pharma in November 2014. In-process research and development represents a series of awarded patents, filed patent applications and an in-process research program acquired in the acquisition of RFS Pharma that are integral to the development of the Company’s planned future products. In-process research and development represents an indefinite-lived intangible asset. As a result, both goodwill and in-process research and development are not amortized but are tested for impairment annually at the reporting unit level on November 30 or more frequently if events and circumstances indicate impairment may have occurred. Factors the Company considers important that could trigger an interim review for impairment include, but are not limited to, the following: | ||
• | Significant changes in the manner of its use of acquired assets or the strategy for its overall business; | ||
• | Significant negative industry or economic trends; | ||
• | Significant decline in stock price for a sustained period; and | ||
• | Significant decline in market capitalization relative to net book value. | ||
Goodwill and in-process research and development are evaluated for impairment first by a qualitative assessment to determine the likelihood of impairment. If it is determined that impairment is more likely than not, the Company will then proceed to the two step impairment test. For goodwill, the first step is to compare the fair value of the reporting unit to the carrying amount of the reporting unit and for in-process research and development to compare the fair value of the in-process research and development asset to its carrying amount (the “First Step”). If the carrying amount exceeds the fair value, a second step must be followed to calculate impairment (the “Second Step”). Otherwise, if the fair value exceeds the carrying amount, the goodwill or indefinite-lived research and development asset is not considered to be impaired as of the measurement date. In its review of the carrying value of the goodwill for its single reporting unit and its in-process research and development, the Company determines fair values of its goodwill using the market approach, and its in-process research and development asset using the income approach. | |||
In performing the preliminary purchase price allocation for the RFS Pharma acquisition, the Company considered, among other factors, the Company’s intention for future use of acquired assets, analyses of historical financial performance and estimates of future performance of RFS Pharma’s product candidates. The fair values of intangible assets were calculated primarily using a discounted cash flow analysis of future development costs and exit values under a number of different scenarios. Company management estimated the probabilities of occurrence of each scenario and prepared forecast balance sheets and income statements for the combined company. The rates utilized to discount net cash flows to their present values were based on a range of discount rates from 4.7% (rate during the active periods) to 15.6% (terminal rate). | |||
No impairment of goodwill or in-process research and development assets was recorded during the year ended December 31, 2014. The Company had no goodwill or in-process research and development assets as of December 31, 2013. | |||
Long-Lived Assets | The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective. Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount over the asset’s fair value. The Company has not recognized any impairment losses through December 31, 2014. | ||
Grant Revenue and Accounts Receivable | Research and development grants are recorded as revenue when there is reasonable assurance that the Company has complied with all conditions necessary to achieve the grants, collectability is reasonably assured, and as the expenditures are incurred. Accounts receivable represents amounts due under research and development grants that has not yet been received. | ||
Research and Development Expenses | All research and development costs are expensed as incurred. | ||
Income taxes | The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon future taxable income. A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings. The Company recognizes an uncertain tax position in its financial statements when it concludes that a tax position is more likely than not to be sustained upon examination based solely on its technical merits. Only after a tax position passes the first step of recognition will measurement be required. Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs. The Company elects to accrue any interest or penalties related to income taxes as part of its income tax expense. | ||
Stock-based compensation | The Company recognizes compensation expense using a fair-value-based method for costs related to stock-based payments, including stock options. The fair value of options awarded to employees is measured on the date of grant using the Black-Scholes option pricing model and is recognized as expense, net of a forfeiture rate, over the requisite service period on a straight-line basis. | ||
Use of the Black-Scholes option pricing model requires the input of subjective assumptions including expected volatility, expected term, and a risk free interest rate. The Company estimates volatility using market comparable entities since the Company’s common stock has limited trading history and limited observable volatility of its own. The expected term of the options is estimated by using the Securities and Exchange Commission Staff Bulletin No. 107’s Simplified Method for Estimate Expected Term. The risk free interest rate is estimated using comparable published federal funds rates. | |||
The Company accounts for equity instruments issued to parties, other than employees, for acquiring goods or services under the guidance of Subtopic 505-50 of the Accounting Standards Codification (“ASC”), Equity-Based Payments to Non-Employees. Transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the equity instrument issued. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which a performance commitment is reached. | |||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 ("Contracts in Entity's Own Equity"). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. | ||
Our derivative instruments consisting of warrants to purchase our common stock were valued using the Black-Scholes option pricing model, using the following assumptions at December 31, 2014: | |||
· | Estimated dividends: | None | |
· | Expected volatility: | 79 - 103% | |
· | Risk-free interest rate: | 0.25 - 2.11% | |
· | Expected term: | 1.16 – 9.05 years | |
Recent Accounting Pronouncements | In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities: Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity, or DSE, in its entirety from GAAP. Under previous guidance, DSEs were required to report incremental information, including inception-to-date financial information, in their financial statements. A DSE is an entity devoting substantially all of its efforts to establishing a new business and for which either planned principal operations have not yet commenced or have commenced but there has been no significant revenues generated from that business. Entities classified as DSEs are no longer subject to these incremental reporting requirements after adopting ASU No. 2014-10. ASU No. 2014-10 is effective for fiscal years beginning after December 15, 2014, with early adoption permitted. Prior to the issuance of ASU No. 2014-10, the Company had met the definition of a DSE since its inception. The Company elected to adopt this ASU early, and therefore it has eliminated the incremental disclosures previously required of DSEs. | ||
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption, which generally refers to an entity’s ability to meet its obligations as they become due. If substantial doubt exists but is not alleviated by management’s plan, the footnotes must specifically state that “there is substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued”. In addition, if substantial doubt exists, regardless of whether such doubt was alleviated, entities must disclose (a) principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans, if any); (b) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (c) management’s plans that are intended to mitigate the conditions or events that raise substantial doubt, or that did alleviate substantial doubt, about the entity’s ability to continue as a going concern. If substantial doubt has not been alleviated, these disclosures should become more extensive in subsequent reporting periods as additional information becomes available. In the period that substantial doubt no longer exists (before or after considering management’s plans), management should disclose how the principal conditions and events that originally gave rise to substantial doubt have been resolved. The ASU applies prospectively to all entities for annual periods ending after December 15, 2016, and to annual and interim periods thereafter. Early adoption is permitted. The Company has not adopted the provisions of this ASU. Upon adoption, the Company will use this guidance to evaluate going concern. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
Derivative instruments | Estimated dividends: | None |
Expected volatility: | 79 - 103% | |
Risk-free interest rate: | 0.25 - 2.11% | |
Expected term: | 1.16 – 9.05 years |
RFS_Pharma_LLC_Acquisition_Tab
RFS Pharma, LLC Acquisition (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Business Combinations [Abstract] | |||||
Schedule of purchase price consideration | |||||
Purchased in-process research and development | $ | 184,966 | |||
Net book value of tangible assets acquired and liabilities assumed | (183 | ) | |||
Goodwill | 65,195 | ||||
Deferred tax liability | (65,195 | ) | |||
Total purchase price | $ | 184,783 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of property and equipment | December 31, | ||||||||
2014 | 2013 | ||||||||
Lab equipment | $ | 1,146 | $ | 1,113 | |||||
Computer and office equipment | 87 | 92 | |||||||
Total equipment | $ | 1,233 | 1,205 | ||||||
Less accumulated depreciation | -949 | -736 | |||||||
Property and equipment, net | $ | 284 | $ | 469 |
Stock_Based_Awards_Tables
Stock Based Awards (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Equity [Abstract] | |||||||||||||
Summary of stock option transactions | Number of shares available for grant | Total options outstanding | Weighted Average Exercise Price | ||||||||||
Balance at December 31, 2012 | 1,773,390 | 4,326,461 | $ | 0.11 | |||||||||
Granted | (229,318 | ) | 229,318 | 0.16 | |||||||||
Exercised | (49,319 | ) | 0.1 | ||||||||||
Cancelled | 103,560 | (103,560 | ) | 0.1 | |||||||||
Balance at December 31, 2013 | 1,647,632 | 4,402,900 | 0.12 | ||||||||||
Increase in option pool | 47,459,195 | ||||||||||||
Options granted to merger employees | (16,542,538 | ) | 16,542,538 | 0.1 | |||||||||
Exercised | (1,087,081 | ) | 0.11 | ||||||||||
Cancelled | 258,245 | (258,245 | ) | 0.11 | |||||||||
Balance at December 31, 2014 | 32,822,534 | 19,600,112 | $ | 0.1 | |||||||||
Schedule of weighted average assumptions | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
2014 | 2013 | ||||||||||||
Assumptions: | |||||||||||||
Risk-free interest rate | 1.08 – 2.51 | % | 1.11 | % | |||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||
Expected volatility | 108 | % | 108 | % | |||||||||
Expected term (in years) | 6.08 | 6.08 | |||||||||||
Common Stock Reserved for Future Issuance | |||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||
Conversion of preferred stock | - | 148,494,693 | |||||||||||
Stock options issued and outstanding | 19,600,112 | 4,402,900 | |||||||||||
Authorized for future option grants | 32,822,534 | 1,647,632 | |||||||||||
Warrants outstanding | 26,669,000 | ||||||||||||
Total | 79,091,646 | 154,545,225 |
Warrants_Tables
Warrants (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||
Summary of warrants outstanding | Warrants accounted for as: | Warrants accounted for as: | |||||||||||||||||||
Equity | Liabilities | ||||||||||||||||||||
Total | |||||||||||||||||||||
January 2012 warrants | March 2013 warrants | April 2013 warrants | February 2012 warrants | August 2013 warrants | October 2013 warrants | October 2013 Series A warrants | January 2014 warrants | ||||||||||||||
Outstanding, January 1, 2014 | - | - | - | - | - | - | - | - | - | ||||||||||||
Warrants acquired in merger with Biozone | 650 | 455 | 1,864 | 1,000 | 10,000 | 200 | 7,000 | - | 21,169 | ||||||||||||
Warrants issued | - | - | - | - | - | - | - | 5,500 | 5,500 | ||||||||||||
Outstanding, December 31, 2014 | 650 | 455 | 1,864 | 1,000 | 10,000 | 200 | 7,000 | 5,500 | 26,669 | ||||||||||||
Expiration date | 11-Jan-16 | 1-Mar-16 | 25-Apr-18 | 28-Feb-16 | 26-Aug-23 | 18-Oct-18 | 24-Oct-23 | 16-Jan-24 | |||||||||||||
Fair value of each option award | February 2012 warrants | August 2013 warrants | October 2013 warrants | October 2013 warrants | January 2014 warrants | ||||||||||||||||
Strike price | $ | 0.6 | $ | 0.4 | $ | 0.5 | $ | 0.5 | $ | 0.5 | |||||||||||
Expected term (years) | 1.2 | 8.7 | 3.8 | 8.8 | 9.1 | ||||||||||||||||
Cumulative volatility % | 79 | % | 103 | % | 81 | % | 103 | % | 103 | % | |||||||||||
Risk-free rate % | 0.25 | % | 2.08 | % | 1.32 | % | 2.09 | % | 2.11 | % |
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Financial instruments carried at fair value on a recurring | Quoted Prices in Active Markets | Significant Other Observable Inputs | Unobservable Inputs | ||||||||||||||
Description | 31-Dec-14 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 3,970 | $ | 3,970 | $ | - | $ | - | |||||||||
Marketable securities | 1,975 | - | 1,975 | - | |||||||||||||
Total assets | $ | 5,945 | $ | 3,970 | $ | 1,975 | $ | - | |||||||||
Liabilities: | |||||||||||||||||
Warrants potentially settleable in cash | $ | 8,464 | $ | - | $ | - | $ | 8,464 | |||||||||
Total liabilities | $ | 8,464 | $ | - | $ | - | $ | 8,464 | |||||||||
Quoted Prices in Active Markets | Significant Other Observable Inputs | Unobservable Inputs | |||||||||||||||
Description | 31-Dec-13 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,034 | $ | 1,034 | $ | - | $ | - | |||||||||
Total assets | $ | 1,034 | $ | 1,034 | $ | - | $ | - | |||||||||
Liabilities: | |||||||||||||||||
Derivative liability | $ | 23 | $ | - | $ | - | $ | 23 | |||||||||
Total liabilities | $ | 23 | $ | - | $ | - | $ | 23 | |||||||||
Level 3 financial assets and liabilities | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Balance , January 1, | $ | 23 | $ | 215 | |||||||||||||
Change in fair value of Teva option | -23 | -192 | |||||||||||||||
Estimated fair value of warrants assumed in merger on January 2, 2014 | 10,475 | - | |||||||||||||||
Estimated fair value of warrants issued in January common stock sale | 3,696 | - | |||||||||||||||
Change in fair value of warrants for the year ended December 31, 2014 | -5,707 | - | |||||||||||||||
Balance at December 31, | $ | 8,464 | $ | 23 |
Net_Loss_per_Share_Tables
Net Loss per Share (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Computation of basic and diluted net loss per share | |||||||||
For the year ended: | |||||||||
2014 | 2013 | ||||||||
Numerator: | |||||||||
Net loss attributed to shareholders | $ | (99 | ) | $ | (3,887 | ) | |||
Adjustment for change in fair value of derivative liability | $ | (2,228 | ) | $ | — | ||||
Net loss attributable to shareholders adjusted for assumed exercises | $ | (2,327 | ) | $ | (3,887 | ) | |||
Denominator: | |||||||||
Weighted average shares outstanding used to compute net loss per share: | |||||||||
Basic | 326,799 | 57,255 | |||||||
Adjustment for dilutive effects of warrants | 954 | — | |||||||
Diluted | 327,753 | 57,255 | |||||||
Net loss per share | |||||||||
Basic | $ | (0.00 | ) | $ | (0.07 | ) | |||
Diluted | $ | (0.01 | ) | $ | (0.07 | ) | |||
Calculations of net loss per diluted share | |||||||||
For the year ended December 31, | |||||||||
2014 | 2013 | ||||||||
Options to purchase common stock | 19,600 | 4,403 | |||||||
Warrants to purchase common stock | 26,669 | 21,169 | |||||||
CoCrystal Discovery, Inc. Series A convertible preferred stock | 9,670 | ||||||||
Total | 46,269 | 35,242 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Income Tax Disclosure [Abstract] | ||||||||||
Reconciliation of income tax benefit | Year Ended December 31, | |||||||||
2014 | 2013 | |||||||||
Federal | $ | - | $ | - | ||||||
State | 2 | - | ||||||||
Total current income tax expense | 2 | - | ||||||||
Deferred: | ||||||||||
Federal | (51 | ) | - | |||||||
State | (3 | ) | - | |||||||
Total deferred income tax expense (benefit) | (54 | ) | - | |||||||
Total income tax expense (benefit) | $ | (52 | ) | $ | - | |||||
Significant components of deferred income taxes | 2014 | 2013 | ||||||||
Deferred Tax Assets: | ||||||||||
Net operating loss carryforwards | $ | 7,276 | $ | 5,802 | ||||||
Compensation | 14 | 56 | ||||||||
Research and development tax credits | 835 | 840 | ||||||||
Other | 65 | 1 | ||||||||
Total gross deferred tax assets | 8,190 | 6,699 | ||||||||
Deferred Tax Liabilities | ||||||||||
Unrealized gain on marketable securities | (185 | ) | - | |||||||
Property and equipment | (18 | ) | (15 | ) | ||||||
Acquired in-process research and development | (65,195 | ) | - | |||||||
Total Deferred Tax Liabilities | (65,398 | ) | (15 | ) | ||||||
Net deferred tax assets | (57,208 | ) | 6,684 | |||||||
Valuation allowance | (7,987 | ) | (6,684 | ) | ||||||
Net Deferred Tax Liability | $ | (65,195 | ) | $ | - | |||||
Net deferred tax liability | Year Ended December 31, | |||||||||
2014 | 2013 | |||||||||
Statutory federal income tax rate | 34 | % | 34 | % | ||||||
Change in fair value of warrant liability | 10.7 | 2 | ||||||||
State income taxes, net of federal benefit | 0.4 | 3 | ||||||||
Tax credits | 0.9 | 3 | ||||||||
Change in valuation allowance | (11.2 | ) | (42.0 | ) | ||||||
Permanent differences | (0.7 | ) | - | |||||||
Other | (0.1 | ) | - | |||||||
Effective rate | 34 | % | 0 | % |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Summary of future minimum lease payments | |||||
Year ending December 31, | |||||
2015 | $ | 369 | |||
2016 | 358 | ||||
2017 | 159 | ||||
2018 | 168 | ||||
2019 | 14 | ||||
Total Minimum Lease Payments | $ | 1,068 | |||
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | |||
Losses from operation | $5,800 | $4,100 | |
Cash and cash equivalents | 3,970 | 1,034 | 4,717 |
Commitments | |||
Subsequent commitments | $11,200 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Estimated dividends | 0.00% | |
Expected volatility | 108.00% | 108.00% |
Risk-free interest rate | 1.11% | |
Expected term | 6 years 29 days | 6 years 29 days |
Minimum [Member] | ||
Expected volatility | 79.00% | |
Risk-free interest rate | 0.25% | |
Expected term | 1 year 1 month 28 days | |
Maximum [Member] | ||
Expected volatility | 103.00% | |
Risk-free interest rate | 2.11% | |
Expected term | 9 years 18 days |
RFS_Pharma_LLC_Acquisition_Det
RFS Pharma, LLC Acquisition (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Business Combinations [Abstract] | |
Purchased in-process research and development | $184,966 |
Net book value of tangible assets acquired | -182 |
Goodwill | 65,195 |
Deferred tax liability | -65,195 |
Total purchase price | $184,784 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Abstract] | ||
Lab equipment | $1,146 | $1,113 |
Computer and office equipment | 87 | 92 |
Total equipment | 1,233 | 1,205 |
Less accumulated depreciation | -949 | -736 |
Property and equipment, net | $284 | $469 |
Property_and_Equipment_Details1
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $199,000 | $236,000 |
Marketable_Securities_Details_
Marketable Securities (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Net loss | ($99,000) | ($3,887,000) |
Fair value | ||
MusclePharm, Inc. [Member] | ||
Common Stock | 260,000 | |
Net loss | 584,000 | |
Fair value | $1,975,000 |
Mortgage_Note_Receivable_Detai
Mortgage Note Receivable (Details Narrative) (USD $) | Dec. 31, 2014 |
Receivables [Abstract] | |
Mortgage note receivable | $2,596,000 |
Principal | 2,478,000 |
Interest | 91,000 |
Fees | $27,000 |
Common_Stock_Details_Narrative
Common Stock (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Common Stock Details Narrative | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 200,000 | 262,186 |
Common stock, shares issued | 122,494 | 0 |
Common stock, shares outstanding | 122,494 | 0 |
Stock_Based_Awards_Details
Stock Based Awards (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Equity [Abstract] | ||
Available for grant, Beginning Balance | 1,647,632 | 1,773,390 |
Increase in option pool | 47,459,195 | |
Available for grant, Granted | -16,542,538 | -229,318 |
Available for grant, Exercised | ||
Available for grant, Cancelled | 258,245 | 103,560 |
Available for grant, Ending Balance | 32,822,534 | 1,647,632 |
Outstanding beginning balance | 4,402,900 | 4,326,461 |
Total options outstanding, Granted | 16,542,538 | 229,318 |
Total options outstanding, Exercised | -1,087,081 | -49,319 |
Total options outstanding, Cancelled | -258,245 | -103,560 |
Outstanding ending balance | 19,600,112 | 4,402,900 |
Weighted Average Exercise Price, Beginning Balance | $0.12 | $0.11 |
Weighted Average Exercise Price, Granted | $0.10 | $0.16 |
Weighted Average Exercise Price, Exercised | $0.11 | $0.10 |
Weighted Average Exercise Price, Cancelled | $0.11 | $0.10 |
Weighted Average Exercise Price, Ending Balance | $0.10 | $0.12 |
Stock_Based_Awards_Details_1
Stock Based Awards (Details 1) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Risk-free interest rate | 1.11% | |
Expected dividend yield | 0.00% | |
Expected volatility | 108.00% | 108.00% |
Expected term (in years) | 6 years 29 days | 6 years 29 days |
Minimum [Member] | ||
Risk-free interest rate | 0.25% | |
Expected volatility | 79.00% | |
Expected term (in years) | 1 year 1 month 28 days | |
Maximum [Member] | ||
Risk-free interest rate | 2.11% | |
Expected volatility | 103.00% | |
Expected term (in years) | 9 years 18 days | |
2007 Equity Incentive Plan [Member] | Minimum [Member] | ||
Risk-free interest rate | 1.08% | |
2007 Equity Incentive Plan [Member] | Maximum [Member] | ||
Risk-free interest rate | 2.51% |
Stock_Based_Awards_Details_2
Stock Based Awards (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Equity [Abstract] | ||
Conversion of preferred stock | 148,494,693 | |
Stock options issued and outstanding | 19,600,112 | 4,402,900 |
Authorized for future option grants | $32,822,534 | $1,647,632 |
Warrants outstanding | 26,669,000 | |
Total | 79,091,646 | 154,545,225 |
Stock_Based_Awards_Details_Nar
Stock Based Awards (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Common stock remain available for future grant | 32,822,534 | 1,647,632 | 1,773,390 |
Weighted average fair value of options granted | $0.45 | $0.17 | |
Employee stock-based compensation expense | $37,578 | $55,483 | |
Unrecognized compensation expense | 885,325 | ||
Weighted average period | 1 year 9 months 18 days | ||
Purchase of common stock | 19,600,112 | ||
Aggregate intrinsic value | 6,272,000 | ||
Weighted average remaining contractual term | 4 years 10 months 24 days | ||
Exercise price of the options | $0.42 | ||
Stock-based compensation expense | 0 | 4,395 | |
Outstanding nonemployee options | 1,941,112 | ||
Nonemployee options at an exercise price | $0.10 | ||
2007 Equity Incentive Plan [Member] | |||
Purchase of common stock | 17,125,790 | ||
Aggregate intrinsic value | $5,549,000 | ||
Weighted average remaining contractual term | 4 years 4 months 24 days | ||
Weighted-average exercise price | $0.10 |
Warrants_Details
Warrants (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Outstanding beginning balance | 4,402,900 | 4,326,461 |
Warrants issued | 16,542,538 | 229,318 |
Outstanding ending balance | 19,600,112 | 4,402,900 |
Equity [Member] | January 2012 warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 650 | |
Warrants issued | ||
Outstanding ending balance | 650 | |
Expiration date | 11-Jan-16 | |
Equity [Member] | March 2013 warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 455 | |
Warrants issued | ||
Outstanding ending balance | 455 | |
Expiration date | 1-Mar-16 | |
Equity [Member] | April 2013 warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 1,864 | |
Warrants issued | ||
Outstanding ending balance | 1,864 | |
Expiration date | 25-Apr-18 | |
Liabilities [Member] | February 2012 warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 1,000 | |
Warrants issued | ||
Outstanding ending balance | 1,000 | |
Expiration date | 28-Feb-16 | |
Liabilities [Member] | August 2013 warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 1,000 | |
Warrants issued | ||
Outstanding ending balance | 1,000 | |
Expiration date | 26-Aug-23 | |
Liabilities [Member] | October 2013 warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 200 | |
Warrants issued | ||
Outstanding ending balance | 200 | |
Expiration date | 18-Oct-18 | |
Liabilities [Member] | October 2013 Series A warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 7,000 | |
Warrants issued | ||
Outstanding ending balance | 7,000 | |
Expiration date | 24-Oct-23 | |
Liabilities [Member] | January 2014 [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | ||
Warrants issued | 5,500 | |
Outstanding ending balance | 5,500 | |
Expiration date | 16-Jan-02 | |
Warrants [Member] | ||
Outstanding beginning balance | ||
Warrants acquired in merger with Biozone | 21,169 | |
Warrants issued | 5,500 | |
Outstanding ending balance | 26,669 |
Warrants_Details_1
Warrants (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Expected term (years) | 6 years 29 days | 6 years 29 days |
Cumulative volatility % | 108.00% | 108.00% |
Risk-free rate % | 1.11% | |
Liabilities [Member] | February 2012 warrants [Member] | ||
Strike price | 0.6 | |
Expected term (years) | 1 year 2 months 12 days | |
Cumulative volatility % | 79.00% | |
Risk-free rate % | 0.25% | |
Liabilities [Member] | August 2013 warrants [Member] | ||
Strike price | 0.4 | |
Expected term (years) | 8 years 8 months 12 days | |
Cumulative volatility % | 103.00% | |
Risk-free rate % | 2.08% | |
Liabilities [Member] | October 2013 warrants [Member] | ||
Strike price | 0.5 | |
Expected term (years) | 3 years 9 months 18 days | |
Cumulative volatility % | 81.00% | |
Risk-free rate % | 1.32% | |
Liabilities [Member] | October 2013 Series A warrants [Member] | ||
Strike price | 0.5 | |
Expected term (years) | 8 years 9 months 18 days | |
Cumulative volatility % | 103.00% | |
Risk-free rate % | 2.09% | |
Liabilities [Member] | January 2014 [Member] | ||
Strike price | 0.5 | |
Expected term (years) | 9 years 1 month 6 days | |
Cumulative volatility % | 103.00% | |
Risk-free rate % | 2.11% |
Licenses_and_Collaborations_De
Licenses and Collaborations (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Fair value of Liability | $23 | $192 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Assets: | |||
Cash and cash equivalents | $3,970 | $1,034 | $4,717 |
Marketable securities | 1,975 | ||
Total assets | 5,945 | 1,034 | |
Liabilities: | |||
Warrants potentially settleable in cash | 8,464 | ||
Derivative liability | 8,464 | 23 | |
Total liabilities | 8,464 | 23 | |
Fair Value, Inputs, Level 1 | |||
Assets: | |||
Cash and cash equivalents | 3,970 | 1,034 | |
Total assets | 3,970 | 1,034 | |
Liabilities: | |||
Warrants potentially settleable in cash | |||
Total liabilities | |||
Fair Value, Inputs, Level 2 | |||
Assets: | |||
Cash and cash equivalents | |||
Marketable securities | 1,975 | ||
Total assets | 1,975 | ||
Liabilities: | |||
Warrants potentially settleable in cash | |||
Derivative liability | |||
Total liabilities | |||
Fair Value, Inputs, Level 3 | |||
Assets: | |||
Cash and cash equivalents | |||
Marketable securities | |||
Total assets | |||
Liabilities: | |||
Warrants potentially settleable in cash | 8,464 | ||
Derivative liability | 23 | ||
Total liabilities | $8,464 | $23 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 1) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Estimated fair value of warrants assumed in merger on January 2, 2014 | $946 | |
Fair Value Measurements [Member] | ||
Balance - January 1 | 23 | 215 |
Change in fair value of Teva option | -23 | -192 |
Estimated fair value of warrants assumed in merger on January 2, 2014 | 10,475 | |
Estimated fair value of warrants issued in January common stock sale | 3,696 | |
Change in fair value of warrants for the year ended December 31, 2014 | -5,707 | |
Balance at December 31 | $8,464 | $23 |
Net_Loss_per_Share_Details
Net Loss per Share (Details) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Earnings Per Share [Abstract] | ||
Net loss attributable to shareholders | ($99) | ($3,887) |
Change in fair market value of derivative liability | -2,228 | |
Net loss attributable to shareholders adjusted for assumed exercises | ($2,327) | ($3,887) |
Weighted average common shares outstanding, basic | 326,799 | 57,255 |
Adjustment for dilutive effect of warrants | 954 | |
Weighted average common shares outstanding, diluted | 327,753 | 57,255 |
Net loss per share, basic | $0 | ($0.07) |
Net loss per share, diluted | ($0.01) | ($0.07) |
Net_Loss_per_Share_Details_1
Net Loss per Share (Details 1) (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Earnings Per Share [Abstract] | ||
Options to purchase common stock | $19,600 | $4,403 |
Warrants to purchase common stock | 16,669 | 21,169 |
Cocrystal Discover, Inc. Series A convertible preferred stock | $9,670 | |
Total | $36,269 | $35,242 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Federal | $0 | |
State | 2 | |
Total current income tax expense | 2 | |
Deferred Federal | -51 | |
Deferred State | -3 | |
Total deferred income tax expense (benefit) | -54 | |
Total income tax expense (benefit) | ($52) |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets | ||
Net operating loss carryforwards | $7,276 | $5,802 |
Compensation | 14 | 56 |
Research and development tax credits | 835 | 840 |
Other deferred tax assets | 65 | 1 |
Total gross deferred tax assets | 8,190 | 6,699 |
Unrealized gain on marketable securities | -185 | |
Property and equipment | -18 | -15 |
Acquired in-process research and development | -65,195 | |
Total Deferred Tax Liabilities | -65,398 | -15 |
Net deferred tax assets | -57,208 | 6,684 |
Valuation allowance | -7,987 | -6,684 |
Net Deferred Tax Liability | ($65,195) |
Income_Taxes_Details_2
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory rate | -34.00% | -34.00% |
Change in fair value of warrant liability | 1070.00% | 200.00% |
State income taxes, net of federal benefit | 40.00% | 300.00% |
Tax credits | 90.00% | 300.00% |
Change in valuation allowance | -1120.00% | -4200.00% |
Permanent differences | -70.00% | |
Other | -10.00% | |
Effective rate | -34.00% | 0.00% |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Federal and California net operating losses | $20,500,000 | $5,400,000 |
Federal and California research tax credit carryforwards | $631,000,000 | $309,000,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | |
2015 | $369 |
2016 | 358 |
2017 | 159 |
2018 | 168 |
2019 | 14 |
Total Minimum Lease Payments | $1,068 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $295,000 | $196,000 |