Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation |
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The consolidated financial statements include the accounts of Vaccinogen, Inc. and its direct or indirect wholly owned subsidiaries, Vaccinogen BV (a company incorporated in the Netherlands); Vaccinogen (US) R&D, Inc.; Vaccinogen International Partners, LP; and Vaccinogen Bermuda, Ltd. All intercompany balances and transactions have been eliminated in consolidation. |
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New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Standards |
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In September 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update define when and how companies are required to disclose going concern uncertainties, which must be evaluated each interim and annual period. Specifically, the ASU requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). If substantial doubt exists, certain disclosures are required; the extent of those disclosures depends on an evaluation of management’s plans (if any) to mitigate the going concern uncertainty. The new standard applies prospectively, to annual periods ending after December 15, 2016, and to annual and interim periods thereafter. Early adoption is permitted. The Company has evaluated the new standard and it is not expected to have an effect on its consolidated financial statements. |
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates |
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The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in its financial statements. On an ongoing basis, the Company evaluates the estimates used in recording common stock warrant related liabilities, derivative financial instruments, stock-based compensation, and where applicable, the fair value of assets. The Company may base such estimates on various assumptions which it believes to be reasonable under the circumstances. Actual results could differ from those estimates. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents |
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The Company considers all highly liquid securities with a maturity of three months or less at acquisition to be cash equivalents. Cash and cash equivalents include demand deposits with financial institutions and at times the amounts may exceed federally insured deposit limits. The Company has not experienced any losses and does not believe it is exposed to any significant credit risk related to demand deposits. |
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Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash |
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Restricted cash represents monies pledged by the Company’s foreign subsidiary for a lease obligation related to the manufacturing facility and to the Dutch government as required for companies with irradiator equipment. |
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of Credit Risk |
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Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-credit-quality financial institutions in the United States and the Netherlands. |
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Cash and cash equivalents in the United States are maintained at financial institutions and, at times, balances may exceed federally insured limits. All non-interest bearing cash balances were fully insured to $250,000 per depositor at each financial institution, and noninterest bearing cash balances may again exceed federally insured limits. |
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Cash and cash equivalents in The Netherlands are maintained at a financial institution and, at times, balances may exceed insured limits. Insurance coverage is limited to €100.000 for all Company accounts at each financial institution. |
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The Company has not experienced any losses with respect to cash and cash equivalents. |
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Inventory, Policy [Policy Text Block] | Inventory |
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Inventory is reported at the lower of cost or market value. The Company analyzes its inventory and writes down inventory that has become obsolete, or has a cost basis in excess of its expected net realizable value and inventory quantities in excess of expected requirements. Inventory primarily consists of a product used in creating vaccines using the OncoVAX® technology platform to be utilized in the planned phase IIIb clinical trial and for research and development activities. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment |
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Property and equipment are recorded at cost and are depreciated or amortized over their estimated useful lives using the straight-line method. Estimated useful lives are as follows: |
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Machinery and equipment | | 3 – 5 years | | | | | | | | |
Automobile | | 3 – 5 years | | | | | | | | |
Furniture and fixtures | | 5 years | | | | | | | | |
Computers and software | | 3 years | | | | | | | | |
Leasehold improvements | | Shorter of lease term or useful life | | | | | | | | |
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Maintenance and repairs are charged to expense as incurred. Major betterments and improvements, which extend the useful life of the underlying assets, are capitalized and depreciated. |
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Goodwill and Intangible Assets, Policy [Policy Text Block] | Intangible Assets |
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Intangible assets consist primarily of the cost of acquired patents associated with OncoVAX® to be used in research and development and the commercialization of cancer related vaccines. The Company has capitalized the cost of the acquired patents because the Company has identified alternative future research and development efforts for numerous forms of cancer which it intends to pursue and for which management believes will result in commercialization of related vaccines. Acquired patents are carried at cost less accumulated amortization. Amortization is calculated on a straight-line basis, over the estimated useful economic life of the patent, which is 12.6 years for OncoVAX®. |
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Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets |
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The Company accounts for the impairment of long-lived assets in accordance with ASC No. 360, Property, Plant and Equipment, which requires that long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. No impairment losses have been recorded in the accompanying consolidated statements of operations. |
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Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Translation |
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The financial statements of foreign subsidiaries are maintained in their functional currency, which generally is the local currency. The assets and liabilities are translated to U.S. dollars using the exchange rate in effect at the balance sheet date. Revenues, expenses and cash flows of these operations are translated using average exchange rates during the reporting period which they occur. The resulting translation adjustments are reflected in other comprehensive loss. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition |
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To date, the Company has not earned any revenues as the use of OncoVAX® to create cancer related vaccines still requires additional clinical trials and has not received regulatory approval for commercialization and sale. |
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Research and Development Expense, Policy [Policy Text Block] | Research and Development Expense |
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Research and development costs are expensed as incurred. Research and development expenses primarily include the amortization of intangible assets, cost of conducting clinical trials, compensation and related overhead for employees, consultants, facilities costs and the cost of materials purchased for research and development. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-Based Compensation |
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The Company measures the cost of employee services received in exchange for stock options or restricted stock awards based upon the fair value of the award on the date of the grant. The Company recognizes the estimated grant date fair value of the award as stock-based compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period. |
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The Company initially measures the cost of awards granted to non-employees based on the fair value of the award on the date of grant however such cost is re-measured at the end of each reporting period until performance is fully satisfied or services are rendered by the non-employee. |
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The fair value of stock options granted is calculated using the Black-Scholes option-pricing model, which requires the use of subjective assumptions including volatility, expected term, risk-free rate, and the fair value of the underlying common stock. The fair value of non-vested stock awards is determined based upon the estimated fair value of the Company's common stock. |
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Income Tax, Policy [Policy Text Block] | Income Taxes |
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Deferred income tax assets and liabilities are determined based on differences between the financial statements and tax basis of assets and liabilities, as measured using the enacted tax rates, which are expected to be in effect when the differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. A full valuation allowance was recorded against its deferred tax assets for the years ended December 31, 2014 and 2013, respectively. |
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The tax effects of uncertain tax positions are recognized in the financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that had greater than 50% likelihood of being realized. Management has not identified any uncertain tax positions with the exception of income tax return filing penalties and accordingly has established a liability of $100,000 and $130,000 under ASC 740-10 as of December 31, 2014 and 2013, respectively. It is the Company’s accounting policy to account for ASC 740-10 related penalties and interest by including those items in other liabilities/expenses and not in the income tax provision in the consolidated statements of operations. The Company has identified its U.S. Federal income tax return, its state return in Maryland and Netherlands corporate income tax returns as its major tax jurisdictions. Tax returns for fiscal years 2007 and forward are still open for examination. |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Financial Instruments |
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Warrants Accounted for as Liabilities |
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Abell Warrants |
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In October 2011, the Company entered into a borrowing arrangement with The Abell Foundation (“Abell”). In connection with that arrangement, the Company also issued warrants (the “Abell Warrants”) exercisable into common stock of the Company. In February 2012, the Company and Abell amended the agreement to provide for additional borrowings (the “Abell Loan”). Between January 2013 and August 2014, the maturity of the Abell Loan was extended on various occasions and additional warrants were issued. The accounting treatment of these extensions is described within Note 7 to these consolidated financial statements. |
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In connection with the promissory note issued to The Abell Foundation, the Company granted The Abell Foundation a security interest in its patents related to OncoVAX®. The promissory note was paid in full on August 25, 2014 and Abell released its security interest in Vaccinogen’s patents. |
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The number of shares issuable pursuant to the Abell Warrants is based upon a fixed amount of $1.1 million divided by 85% of the per share price of stock sold in the next qualifying round of venture capital financing where the total proceeds are at least $35 million. The Abell Warrants have a contractual term of 10 years and were fully vested upon issuance. |
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As of December 31, 2014 and 2013, the estimated fair value of the Abell Warrants was $458,537 and $1,615,835, respectively. The Company recorded a gain of approximately $1.2 million and a loss of $784,030 for the years ended December 31, 2014 and 2013, respectively. |
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The Abell Warrants represent a fixed obligation that is to be settled through the issuance of a variable number of shares of the Company’s common stock. Consistent with the provisions of ASC Topic 480, Distinguishing Liabilities from Equity, the Company has concluded that the Abell Warrants should be accounted for as a liability. The Company is required to record the Abell Warrants at their estimated fair value at the end of each reporting period, with changes in the estimated fair value recorded in the consolidated statements of operations as a component of Loss on Financial Instruments. |
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Abell Investment Option |
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Accounting for Warrants – The Company has adopted FASB guidance related to determining whether an instrument or embedded feature is indexed to an entity’s own stock. This guidance applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined in ASC Topic 815, Derivatives and hedging, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. As a result, certain warrants were considered to be derivatives and were valued using various assumptions as they are recorded as liabilities. |
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On January 16, 2013, the Company entered into an investment agreement with Abell under which Abell was granted an option to acquire up to $5.0 million of common stock of the Company (the “Abell Option”). On August 22, 2014 the Company entered into a letter agreement with Abell (the “Abell Amendment”), pursuant to which Abell agreed to either (a) purchase up to 909,091 shares of the Company’s common stock at $5.50 per share, for a total of up to $5,000,000, on or before the 14th day following Abell’s receipt of written notice (together with such further related information and documentation as Abell may reasonably require) that both (i) the first patient has been given three doses of OncoVAX, with positive results (Delayed-Type Hypersensitivity), in the next phase IIIb trial and (ii) the aggregate investment by TIS of at least $40,000,000 for the purchase of our securities in accordance with the TIS Agreement has occurred or (b) surrender its investment option if the conditions above have occurred and Abell chooses not to invest within such 14 day period. TIS executed the Abell Letter Agreement for the sole purpose of affirming our commitments to (x) relocate our offices to Baltimore, Maryland within 12 months of the closing of a financing of at least $35 million and (y) to construct and maintain our next and principal manufacturing facility in Baltimore, Maryland. |
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As of December 31, 2014 and 2013, the estimated fair value of the Abell Option was $0 and $7,392,528, which the Company has recorded a liability. The Company recorded a gain of $4,224,304 and a loss of $1,437,983 for the years ended December 31, 2014 and 2013, respectively. |
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The Abell Investment Agreement was determined to no longer be classified as a liability as of August 22, 2014, due to changes in terms and conditions of the instrument and was reclassified to permanent equity in the amount of approximately $3.2 million. |
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Derivative Financial Instruments |
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The Company may enter into transactions that represent free-standing or embedded derivative financial instruments as those terms are defined in ASC Topic 815 Derivatives and Hedging (“Topic 815”). The Company records the estimated fair value of derivative financial instruments in its consolidated balance sheets and records changes in the estimated fair value of derivative financial instruments as income or expense in its consolidated statements of operations. |
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Round C Warrants |
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From October 2012 through December 2013 and then again from January 2014 through December 31, 2014, the Company issued warrants to certain investors in the common stock of the Company (the “Round C Warrants”). Round C Warrants to acquire 339,966 shares of common stock were issued through December 2013 and Round C Warrants to acquire 990,281 shares of common stock were issued during the year ended December 31, 2014. The Round C Warrants have an exercise price of $6.05, a contractual term of 5 years and were fully vested upon issuance. |
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As of December 31, 2014 and 2013, the estimated fair value of the Round C Warrants was $1,359,647 and $1,796,427, respectively. The Company recorded a gain of $2,462,093 and a loss of $453,088 for the years ended December 31, 2014 and 2013, respectively. |
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2012 Bridge Loan |
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Between April 2012 and October 2012, the Company entered into transactions with various investors which resulted in the Company raising $1,019,000 from the issuance of unsecured notes payable (collectively the “Bridge Loan”). The Bridge Loan has no contractual maturity date, and is repayable only in the event that the Company closes on a future round of equity financing which results in gross proceeds of at least $20 million. If the Company fails to raise sufficient additional capital, there is no obligation to pay interest or repay any amount borrowed under the Bridge Loan. The Company did meet the $20 million threshold upon receipt of the second tranche of funding under the TIS Agreement and at that time the Company repaid an amount to the investors equal to 2 times the amount originally raised. |
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The Company has classified the Bridge Loan as a derivative financial instrument, as it met the qualifying criteria of ASC Topic 815 Derivatives and Hedging (“Topic 815”) including the contractual terms whereby the Company can be required to settle its obligation under the Bridge Loan by transferring cash to investors if and only when sufficient additional capital is raised. As of December 31, 2014 and 2013, the estimated fair value of the liability associated with the Bridge Loan was $0 and $990,000 respectively, which has been recorded and included in financial instruments in the accompanying consolidated balance sheets. The Company recorded a loss of $80,000 and $389,500 for the years ended December 31, 2014 and 2013, respectively. |
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The changes in the estimated fair value have been classified in Gain (Loss) on Financial Instruments in the accompanying consolidated statements of operations for the years ended December 31, 2014 and 2013. |
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Earnings Per Share, Policy [Policy Text Block] | Net Loss Per Share |
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Basic loss per share is determined by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. The following common stock equivalents were excluded in the calculation of diluted loss per share because their effect would be anti-dilutive: |
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| | 2014 | | 2013 | | | | |
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Stock Option Pool | | | 177,000 | | | 77,000 | | | | |
Abell Investment Option | | | 909,091 | | | 934,579 | | | | |
Convertible debt | | | - | | | 73,421 | | | | |
Restricted stock awards | | | 179,969 | | | 129,846 | | | | |
Warrants | | | 4,759,065 | | | 3,310,378 | | | | |
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Dilutive loss per share is determined by dividing loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. The net loss available to common shareholders is adjusted for gains on financial instruments, as its effect would be anti-dilutive. |
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| | Year ended December 31, 2014 | |
| | | | | Weighted | | Loss | |
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| | Net Loss | | Shares | | Share | |
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Basic loss per share | | $ | -8,526,805 | | | 32,760,479 | | $ | -0.26 | |
Gain on derivatives | | | -7,753,694 | | | | | | | |
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Dilutive loss per share | | $ | -16,280,499 | | | 32,760,479 | | $ | -0.5 | |
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| | Year ended December 31, 2013 | |
| | | | | Weighted | | Loss | |
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| | Net Loss | | Shares | | Share | |
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Basic loss per share | | $ | -24,580,541 | | | 31,089,148 | | $ | -0.79 | |
Gain on derivatives | | | 0 | | | | | | | |
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Dilutive loss per share | | $ | -24,580,541 | | | 31,089,148 | | $ | -0.79 | |
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