Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 14, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Entity File Number | 001-35994 | |
Entity Registrant Name | NightHawk Biosciences, Inc. | |
Entity Incorporation | DE | |
Entity Tax Identification Number | 26-2844103 | |
Entity Address, Address Line One | 627 Davis Drive, Suite 400 | |
Entity Address, City or Town | Morrisville | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 27560 | |
City Area Code | 919 | |
Local Phone Number | 240-7133 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | NHWK | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,661,488 | |
Entity Central Index Key | 0001476963 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 13,658,242 | $ 8,053,879 |
Short-term investments | 43,789,736 | 88,324,922 |
Accounts receivable | 5,907,829 | 66,049 |
Income tax refund receivable | 688,089 | |
Prepaid expenses and other current assets | 2,430,493 | 2,886,520 |
Total Current Assets | 66,474,389 | 99,331,370 |
Property and Equipment, net | 20,730,517 | 2,158,479 |
Intangible assets, net | 9,033,125 | 3,500,000 |
Goodwill | 3,467,748 | |
Grant receivable | 1,524,522 | 1,318,359 |
Operating lease right-of-use asset | 2,023,943 | 1,782,884 |
Finance lease right-of-use asset | 16,645,455 | 470,700 |
Other assets | 12,193,540 | |
Deposits | 265,215 | 205,901 |
Total Assets | 120,164,914 | 120,961,233 |
Current Liabilities | ||
Accounts payable | 3,479,175 | 922,782 |
Operating lease liability, current portion | 550,128 | 350,343 |
Finance lease liability, current portion | 328,959 | 260,574 |
Accrued expenses and other liabilities | 3,823,173 | 2,419,676 |
Contingent consideration, current portion | 6,269,114 | 593,037 |
Contingent consideration, related party - current portion | 174,333 | |
Total Current Liabilities | 14,450,549 | 4,720,745 |
Long Term Liabilities | ||
Other long-term liabilities | 53,530 | |
Derivative warrant liability | 274 | 11,020 |
Deferred tax liability | 3,326,000 | 215,937 |
Deferred revenue, net of current portion | 751,350 | 35,000 |
Operating lease liability, net of current portion | 1,173,040 | 1,060,856 |
Financing lease liability, net of current portion | 6,537,975 | 255,429 |
Contingent consideration | 10,800,000 | 1,990,118 |
Contingent consideration, related party | 585,027 | |
Total Liabilities | 37,039,188 | 8,927,662 |
Stockholders' Equity | ||
Common stock, $0.0002 par value; 250,000,000 and 250,000,000 shares authorized, 25,614,629 and 25,649,824 shares issued and outstanding at September 30, 2022 and December 31, 2021 | 5,122 | 5,055 |
Additional paid-in capital | 281,320,475 | 278,890,153 |
Accumulated deficit | (197,002,176) | (165,718,953) |
Accumulated other comprehensive income (loss) | 142,304 | (67,941) |
Total Stockholders' Equity - NightHawk Biosciences, Inc. | 84,465,725 | 113,108,314 |
Non-Controlling Interest | (1,339,999) | (1,074,743) |
Total Stockholders' Equity | 83,125,726 | 112,033,571 |
Total Liabilities and Stockholders' Equity | $ 120,164,914 | $ 120,961,233 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.0002 | $ 0.0002 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 25,614,629 | 25,649,824 |
Common stock, shares outstanding | 25,614,629 | 25,649,824 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue: | ||||
Revenue | $ 6,039,853 | $ 501,567 | $ 6,303,252 | $ 1,499,706 |
Operating expenses: | ||||
Product cost of sales | 6,362,783 | 6,362,783 | ||
Research and development | 6,861,470 | 4,381,542 | 15,521,334 | 12,004,084 |
General and administrative | 5,114,185 | 3,390,093 | 13,781,352 | 11,011,003 |
Amortization of intangible asset | 316,875 | 666,875 | ||
In-process research and development impairment | 3,500,000 | 3,500,000 | ||
Change in fair value of contingent consideration | (3,118,515) | 295,000 | (3,342,515) | 406,000 |
Total operating expenses | 19,036,798 | 8,066,635 | 36,489,829 | 23,421,087 |
Loss from operations | (12,996,945) | (7,565,068) | (30,186,577) | (21,921,381) |
Change in fair value of warrant liability | 1,456 | 6,831 | 10,746 | 2,808 |
Interest income | 241,638 | 195,344 | 537,513 | 567,307 |
Unrealized loss on available-for-sale securities | (145,543) | (1,577,174) | ||
Other expense, net | (411,314) | (185,332) | (548,924) | (440,675) |
Total non-operating (loss) income | (313,763) | 16,843 | (1,577,839) | 129,440 |
Net loss before income taxes | (13,310,708) | (7,548,225) | (31,764,416) | (21,791,941) |
Income tax benefit (expense) | 215,937 | 215,937 | ||
Net loss | (13,094,771) | (7,548,225) | (31,548,479) | (21,791,941) |
Net loss - non-controlling interest | (89,421) | (115,505) | (265,256) | (283,846) |
Net loss attributable to NightHawk Biosciences, Inc. | $ (13,005,350) | $ (7,432,720) | $ (31,283,223) | $ (21,508,095) |
Net loss per share, basic (in dollars per share) | $ (0.51) | $ (0.30) | $ (1.22) | $ (0.87) |
Net loss per share, diluted (in dollars per share) | $ (0.51) | $ (0.30) | $ (1.22) | $ (0.87) |
Weighted-average common shares outstanding, basic (in shares) | 25,613,316 | 25,137,628 | 25,603,481 | 24,828,438 |
Weighted-average common shares outstanding, diluted (in shares) | 25,613,316 | 25,137,628 | 25,603,481 | 24,828,438 |
Comprehensive loss: | ||||
Net loss | $ (13,094,771) | $ (7,548,225) | $ (31,548,479) | $ (21,791,941) |
Unrealized gain on foreign currency translation | 115,659 | 68,582 | 210,245 | 113,511 |
Total comprehensive loss | (12,979,112) | (7,479,643) | (31,338,234) | (21,678,430) |
Comprehensive loss attributable to non-controlling interest | (89,421) | (115,505) | (265,256) | (283,846) |
Comprehensive loss - NightHawk Biosciences, Inc. | (12,889,691) | (7,364,138) | (31,072,978) | (21,394,584) |
Product sales | ||||
Revenue: | ||||
Revenue | 5,980,993 | 5,980,993 | ||
Grant revenue | ||||
Revenue: | ||||
Revenue | $ 58,860 | $ 501,567 | $ 322,259 | $ 1,499,706 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | APIC | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interest | Total |
Beginning Balance at Dec. 31, 2020 | $ 4,519 | $ 247,048,349 | $ (130,647,485) | $ (166,056) | $ (745,404) | $ 115,493,923 |
Issuance of common stock under ATM, net of issuance costs | 420 | 26,303,862 | 26,304,282 | |||
Issuance of common stock from vesting of restricted stock awards | 83 | (83) | ||||
Stock issuance costs | (658,184) | (658,184) | ||||
Stock based compensation | 4,376,588 | 4,376,588 | ||||
Issuance of restricted stock | 3 | (3) | ||||
Exercise of options | 6 | 27,255 | 27,261 | |||
Cancellation and payout of fractional shares | (3) | 3 | ||||
Other comprehensive income | 113,511 | 113,511 | ||||
Net loss | (21,508,095) | (283,846) | (21,791,941) | |||
Ending Balance at Sep. 30, 2021 | 5,028 | 277,097,787 | (152,155,580) | (52,545) | (1,029,250) | 123,865,440 |
Beginning Balance at Jun. 30, 2021 | 5,027 | 276,225,048 | (144,722,860) | (121,127) | (913,745) | 130,472,343 |
Issuance of common stock from vesting of restricted stock awards | 1 | (1) | ||||
Stock based compensation | 872,740 | 872,740 | ||||
Other comprehensive income | 68,582 | 68,582 | ||||
Net loss | (7,432,720) | (115,505) | (7,548,225) | |||
Ending Balance at Sep. 30, 2021 | 5,028 | 277,097,787 | (152,155,580) | (52,545) | (1,029,250) | 123,865,440 |
Beginning Balance at Dec. 31, 2021 | 5,055 | 278,890,153 | (165,718,953) | (67,941) | (1,074,743) | 112,033,571 |
Issuance of common stock from vesting of restricted stock awards | 65 | (65) | ||||
Issuance of common stock - ESPP | 2 | (2) | ||||
Stock based compensation | 2,430,389 | 2,430,389 | ||||
Other comprehensive income | 210,245 | 210,245 | ||||
Net loss | (31,283,223) | (265,256) | (31,548,479) | |||
Ending Balance at Sep. 30, 2022 | 5,122 | 281,320,475 | (197,002,176) | 142,304 | (1,339,999) | 83,125,726 |
Beginning Balance at Jun. 30, 2022 | 5,120 | 280,603,302 | (183,996,826) | 26,645 | (1,250,578) | 95,387,663 |
Issuance of common stock - ESPP | 2 | (2) | ||||
Stock based compensation | 717,175 | 717,175 | ||||
Other comprehensive income | 115,659 | 115,659 | ||||
Net loss | (13,005,350) | (89,421) | (13,094,771) | |||
Ending Balance at Sep. 30, 2022 | $ 5,122 | $ 281,320,475 | $ (197,002,176) | $ 142,304 | $ (1,339,999) | $ 83,125,726 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows from Operating Activities | ||
Net loss | $ (31,548,479) | $ (21,791,941) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
In-process R&D impairment loss | 3,500,000 | |
Depreciation and amortization | 988,715 | 415,270 |
Amortization of intangible asset | 666,875 | |
Noncash lease expense | 127,681 | 78,697 |
Stock-based compensation | 2,430,389 | 4,376,588 |
Change in fair value of common stock warrants | (10,746) | (2,808) |
Change in fair value of contingent consideration | (3,342,515) | 406,000 |
Unrealized loss on investments | 1,577,174 | 278,172 |
Increase (decrease) in cash arising from changes in assets and liabilities: | ||
Accounts receivable | (5,843,564) | 104,598 |
Prepaid expenses and other current assets | 1,210,730 | (1,029,581) |
Contract receivables | 24,526,231 | |
Income tax receivable | 443,968 | |
Grant receivable | (206,163) | (870,032) |
Inventory | 5,844,000 | |
Other assets | 12,493,539 | (8,199,850) |
Right-of-use assets | (9,974,366) | |
Accounts payable | 2,354,279 | 14,766 |
Accrued expenses and other liabilities | (3,512,090) | 197,428 |
Other long-term liabilities | (53,530) | 14,268 |
Deferred tax liability | (215,937) | |
Deferred revenue | 718,850 | (603,717) |
Deposits | (33,064) | (126,778) |
Net Cash Provided by (Used In) Operating Activities | 2,141,977 | (26,738,920) |
Cash Flows from Investing Activities | ||
Purchase of short-term investments | (1,989,767) | (66,665,908) |
Sale of short-term investments | 44,947,779 | 66,197,924 |
Purchase of property and equipment | (19,271,087) | (1,383,596) |
Acquisition of Elusys Therapeutics, net of cash paid | 2,719,898 | |
Payment of contingent consideration | (22,784,571) | |
Net Cash Provided By (Used In) Investing Activities | 3,622,252 | (1,851,580) |
Cash Flows from Financing Activities | ||
Proceeds from the issuance of common stock | 26,304,282 | |
Proceeds from exercise of stock options | 27,261 | |
Stock issuance costs | (658,184) | |
Repayments on principal of finance lease | (145,672) | (121,503) |
Net Cash (Used In) Provided by Financing Activities | (145,672) | 25,551,856 |
Effect of exchange rate changes on cash and cash equivalents | (14,194) | (10,834) |
Net Increase (Decrease) in Cash and Cash Equivalents | 5,604,363 | (3,049,478) |
Cash and Cash Equivalents - Beginning of Period | 8,053,879 | 10,931,890 |
Cash and Cash Equivalents - End of Period | 13,658,242 | 7,882,412 |
Supplemental Disclosure for Cash Flow Information: | ||
Right-of-use assets obtained on operating lease commencements | 351,098 | 88,596 |
Right-of-use assets obtained on operating lease modifications | 37,767 | |
Right-of-use assets obtained on financing lease commencements | 16,470,969 | $ 408,677 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable | 1,233,232 | |
Contingent and deferred cash consideration related to Elusys acquisition | $ 42,853,685 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Polices | 9 Months Ended |
Sep. 30, 2022 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | 1. Basis of Presentation and Significant Accounting Policies Basis of Presentation and Principles of Consolidation Effective May 3, 2022, Heat Biologics, Inc. changed its name to NightHawk Biosciences, Inc. (the “Company”) by filing a Certificate of Amendment (the “Certificate of Amendment”) to its Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Certain information or footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, these financial statements include all normal and recurring adjustments necessary for the fair statement of the results for the interim periods presented. The results for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2022. The consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 are unaudited. The balance sheet as of December 31, 2021 is derived from the audited consolidated financial statements as of that date. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 11, 2022 (the “2021 Annual Report”). The accompanying unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 include the accounts of the Company, and its subsidiaries, Pelican Therapeutics, Inc. (“Pelican”), Heat Biologics I, Inc. (“Heat I”), Heat Biologics III, Inc. (“Heat III”), Heat Biologics IV, Inc. (“Heat IV”), Heat Biologics GmbH, Heat Biologics Australia Pty Ltd., Zolovax, Inc., Skunkworx Bio, Inc. (“Skunkworx”, formerly known as Delphi Therapeutics, Inc.), Scorpion Biological Services, Inc. (“Scorpion”) (formerly Scorpion Biosciences, Inc), Elusys Therapeutics, Inc. (“Elusys”), Blackhawk Bio, Inc. (“Blackhawk”), and Abacus Biotech, Inc. (“Abacus”). The functional currency of the entities located outside the United States of America (the foreign entities) is the applicable local currency of the foreign entities. Assets and liabilities of the foreign entities are translated at period-end exchange rates. Statement of operations accounts are translated at the average exchange rate during the period. The effects of foreign currency translation adjustments are included in other comprehensive loss, which is a component of accumulated other comprehensive loss in stockholders’ equity. All significant intercompany accounts and transactions have been eliminated in consolidation. At September 30, 2022 and December 31, 2021, NightHawk held an 85% controlling interest in Pelican. NightHawk accounts for its less than 100% interest in accordance with U.S. GAAP. Accordingly, the Company presents non-controlling interest as a component of stockholders’ equity on its consolidated balance sheets and reports non-controlling interest net loss under the heading “net loss – non-controlling interest” on its consolidated statements of operations and comprehensive loss. Liquidity and Capital Resources The Company has an accumulated deficit of approximately $197.0 million as of September 30, 2022 and a net loss of approximately $13.1 million and $31.5 million for the three and nine months ended September 30, 2022 and has not generated significant revenue or positive cash flows from operations. The Company expects to incur significant expenses and continued losses from operations for the foreseeable future. The Company expects its expenses to increase in connection with its ongoing activities, particularly as the Company ramps up operations in its in-house bioanalytic, process development and manufacturing facility in San Antonio, TX, expands its infectious disease/biological threat program, and continues to support the development of, and commencement of operations at, a new biodefense-focused large molecule and biologics biomanufacturing facility in Manhattan, Kansas. As of September 30, 2022, a lease has not been executed for this Kansas facility. In addition, any new business ventures that the Company may engage in are likely to require commitments of capital. Accordingly, the Company will in the future need to obtain substantial additional funding in connection with its planned operations. Adequate additional financing may not be available to the Company on acceptable terms, or at all. If the Company is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce or eliminate its research and development programs, any future commercialization efforts or the manufacturing services it plans to provide. To meet its capital needs, the Company intends to continue to consider multiple alternatives, including, but not limited to, additional equity financings such as sales of its common stock under at-the-market offerings, debt financings, partnerships, grants, funding collaborations and other funding transactions, if any are available. As of September 30, 2022, the Company had approximately $57.4 million in cash and cash equivalents and short-term investments, which it believes is sufficient to fund its operations for at least one year from the date these consolidated financial statements are issued. This is based on the Company’s current estimates, and the Company could use its available capital resources sooner than it currently expects. The Company will need to generate significant revenues to achieve profitability, and it may never do so. Risk and Uncertainties 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, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates or its manufacturing facility, the timing of completion of construction of the planned manufacturing facility in Kansas, uncertainty of market acceptance of the Company’s products or manufacturing capability or success of new business ventures, competition from substitute products and larger companies, government budget and spending on biological threat programs, securing and protecting proprietary technology, strategic relationships and dependence on key individuals and sole source suppliers. The Company relies on third-party manufacturers to purchase from their third-party vendors the materials necessary to produce product candidates and manufacture product candidates for clinical studies. The Company also depends on third-party suppliers for key materials and services used in research and development, as well as manufacturing processes, and is subject to certain risks related to the loss of these third-party suppliers or their inability to supply adequate materials and services. The Company does not control the manufacturing processes of the contract development and manufacturing organizations, or CDMOs, with whom it contracts and is dependent on these third parties for the production of its therapeutic candidates in accordance with relevant regulations (such as current Good Manufacturing Practices, or cGMP), which include, among other things, quality control, quality assurance and the maintenance of records and documentation. Cash and Cash Equivalents The Company considers all cash and other highly liquid investments with initial maturities from the date of purchase of three months or less to be cash and cash equivalents. Derivative Financial Instruments The Company has issued common stock warrants in connection with the execution of certain equity financings. The fair value of the warrants, which were deemed to be derivative instruments, was recorded as a derivative liability under the provisions of ASC Topic 815, Derivatives and Hedging (“ASC 815”) The fair value of the warrants, including the warrants issued in connection with the January 2020 common stock offering and recorded as a liability, was determined using the Monte Carlo simulation model, which is deemed to be an appropriate model due to the terms of the warrants issued. The fair value of warrants was affected by changes in inputs to the Monte Carlo simulation model including the Company’s stock price, expected stock price volatility, the remaining term, and the risk-free interest rate. This model uses Level 3 inputs, including stock price volatility, in the fair value hierarchy established by ASC 820 Fair Value Measurement Short-term Investments The Company’s short-term investments are equity securities and are carried at their fair value based on quoted market prices. Realized and unrealized gains and losses on equity securities are included in net earnings in the period earned or incurred. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, useful lives of fixed assets, contingent consideration, in process research and development (“IPR&D”), income taxes, valuation of warrant liabilities, and stock-based compensation. Actual results may differ from those estimates. Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed the operations and managed the business as one segment. Business Combinations The accounting for our business combinations consists of allocating the purchase price to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values, with the excess recorded as goodwill. We have up to one year from the acquisition date to use information as of each acquisition date to adjust the fair value of the acquired assets and liabilities, which may result in material changes to their recorded values with an offsetting adjustment to goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant judgment, which includes, among other factors, analysis of historical performance and estimates of future performance. In some cases, we have used discounted cash flow analyses, which were based on our best estimate of future revenue, earnings and cash flows as well as our discount rate, adjusted for risk, and estimated attrition rates. Goodwill and Intangible Assets The Company classifies intangible assets into three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. The Company determines the useful lives of definite-lived intangible assets after considering specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, and other economic facts; including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized, primarily on a straight-line basis, over their estimated useful lives. Intangible assets that are deemed to have indefinite lives are reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test for indefinite-lived intangibles consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. Indefinite-lived intangible assets are not amortized. In-process research and development, or IPR&D, assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development projects. IPR&D assets represent the fair value assigned to technologies that the Company acquires, which at the time of acquisition have not reached technological feasibility and have no alternative future use. During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts. If and when development is complete, which generally occurs upon regulatory approval and the ability to commercialize products associated with the IPR&D assets, these assets are then deemed definite-lived and are amortized based on their estimated useful lives at that point in time. If development is terminated or abandoned, the Company may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of the carrying value of the IPR&D assets over their fair value. As of September 30, 2022, the Company decided to terminate any further development of PTX-35, Pelican's lead product candidate. The abandonment of this product triggered full impairment of the IPR&D asset. Contingent Consideration Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future (“contingent consideration”). Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations. The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones. The milestone payments will be made upon the achievement of clinical and commercialization milestones as well as single low digit royalty payments and payments upon receipt of sublicensing income. Subsequent to the date of acquisition, the Company reassesses the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date. Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations. Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets. During the quarter ended September 30, 2022, $3.1 million of contingent consideration related to Pelican was written off as PTX-35 will not continue on to a Phase 2 trial. Research and Development Research and development includes costs associated with developmental products not yet approved by the FDA as well as costs associated with bringing developmental products into advanced phase clinical trials as incurred. These costs consist primarily of pre-manufacturing and manufacturing drug costs, clinical trial execution, investigator payments, license fees, salaries, stock-based compensation and related personnel costs. Other costs include fees paid to consultants and outside service providers related to the development of the Company’s product candidates and other expenses relating to the design, development, testing and enhancement of its product candidates. Inventory The Company maintains inventory consisting of bulk drug substance (“BDS”) used in the manufacturing process. The Company values inventory at net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs to sell. The Company performs an analysis and records a provision for potentially obsolete inventory. The reserve for obsolescence is generally an estimate of the amount of inventory held at period end that is expected to expire in the future based on projected sales volume and expected product expiration or sell-by dates. These assumptions require the Company to analyze the aging of and forecasted demand for its inventory and make estimates regarding future product sales. Revenue Recognition The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the most likely method based on historical experience as well as applicable information currently available. Product Sales The Company recognizes revenue from product sales when its performance obligation with its customers has been satisfied. The performance obligation is satisfied at a point in time when the Company’s customers obtain control of the product, which is typically upon acceptance of the product at the delivery site. The Company invoices its customers after acceptance of the product and invoice payments are generally due within 30 days of the invoice date. The Company records product sales net of any variable consideration, including refund rights. The Company uses the most likely amount method when estimating its variable consideration, unless terms are specified within contracts. The Company recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period. These estimates may differ from actual consideration received. The Company evaluates these estimates to reflect known changes. Grant Revenue The Company recognizes revenue from is grant revenue related to the Cancer Prevention and Research Institute of Texas (“CPRIT”) contract, which is being accounted for under ASU No. 2018-08, Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, The CPRIT grant covers the period from June 1, 2017 through May 31, 2023, for a total grant award of up to $15.2 million. CPRIT advances grant funds upon request by the Company consistent with the agreed upon amounts and schedules as provided in the contract. The first tranche of funding of $1.8 million was received in May 2017, a second tranche of funding of $6.5 million was received in October 2017, and the third tranche of funding of $5.4 million was received in December 2019. The remaining $1.5 million will be paid, on a reimbursement basis, after the Company has fulfilled every objective of the final goals of the grant. Funds received are reflected in deferred revenue as a liability until revenue is earned. Grant revenue is recognized when qualifying costs are incurred. When grant funds are received after costs have been incurred, the Company records revenue and a corresponding grants receivable until grant funds are received. As of the September 30, 2022, all $15.2 million has been recognized. On January 7, 2020, the Company was awarded a grant of up to $224,713 from the National Institute of Allergy and Infectious Diseases, which is under the umbrella of the National Institutes of Health (“NIH”). The NIH grant provides funding for continued development of the Company’s technologies for PTX-35. The grant funds will be made available by the NIH to the Company as allowable expenses are incurred. For both the three and nine months ended September 30, 2022, the Company incurred $0.04 million of allowable expenses, respectively, under the NIH grant and recognized the corresponding revenue. For the three and nine months ended September 30, 2021, the Company incurred approximately $0.0 million and $0.03 million of allowable expenses under the NIH grant and recognized a corresponding amount of grant revenues Deferred Revenue Deferred revenue is comprised of an exclusive license agreement with Shattuck Labs, Inc. (“Shattuck”) and process development customer deposits received in advance of our fulfillment of performance obligations. License Agreements The Company has licensed certain provisional patent applications and know-how related to fusion proteins to treat cancer and other diseases that were not being developed by the Company. Shattuck paid the Company an initial license fee of $50,000 in June 2016 and is obligated to pay the Company fees upon its receipt of sublicensing income, achievement of certain milestones, and royalties upon sales of commercial products. In-as-much as the technology that the Company out-licensed is in the early stages of development and there is a low likelihood of success for any technology at such stage, there can be no assurance that any products will be developed by Shattuck or that the Company will derive any revenue from Shattuck. Process Development Process development deferred revenue generally represents customer deposits received in advance of the Company’s fulfillment of performance obligations associated with the custom development of a manufacturing process and analytical methods for a customer’s product. Accounts Receivable Accounts receivable is primarily comprised of amounts owed to us for services and sales provided under our customer contracts and are recorded at the invoiced amount net of an allowance for doubtful accounts, if necessary. We apply judgment in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts based on various factors, such as the aging of our receivables, historical experience, and the financial condition of our customers. Prepaid Expenses and Other Current Assets The Company’s prepaid expenses and other current assets consist primarily of amounts paid in advance for manufacturing activities, clinical trial support, and insurance. Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that utilization is not likely. Other Assets In conjunction with a lease agreement further discussed in Note 13, Scorpion has made reimbursement payments to the lessor for costs incurred in conjunction with the leased site. During the construction of the site, these payments were included in other assets on the consolidated balance sheets. On September 15, 2022, the lease commenced, and in accordance with ASC 842 guidance, the Company capitalized $13.2 million of payments to lab equipment, expensed $0.9 million as supplies and facilities expense, and $10.2 million is included in the operating lease right-of-use asset. Significant Accounting Policies The significant accounting policies used in preparation of these interim financial statements are disclosed in the audited consolidated financial statements and related notes included in the Company’s 2021 Annual Report. Due to the acquisition of Elusys, there have been changes in the significant accounting policies and estimates during the first nine months of fiscal year 2022 which are reflected in the business combinations, inventory, revenue recognition and deferred revenue policies listed above. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2022 and the Company is currently evaluating the expected impact of this standard but does not expect it to have a material impact on its consolidated financial statements upon adoption. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Acquisitions | |
Acquisitions | 2. Acquisitions Pelican Therapeutics In 2017, the Company consummated the acquisition of 80% of the outstanding equity of Pelican, a related party, and Pelican became a majority owned subsidiary of the Company. In October 2018, the Company entered into an agreement with the University of Miami (“UM”) whereby UM exchanged its shares of stock in the Company’s subsidiaries, Heat I, Inc. and Pelican. The stock exchange resulted in the Company increasing its controlling ownership in Pelican from 80% to 85%. Under the Pelican stock acquisition agreement, the Company is also obligated to make future payments based on the achievement of certain clinical and commercialization milestones, as well as low single digit royalty payments and payments upon receipt of sublicensing income. The fair value of these future milestone payments is reflected in the contingent consideration account under current liabilities with the non-current portion under long term liabilities on the balance sheet. The estimated fair value of the contingent consideration was determined using a probability-weighted income approach. The Company estimates the fair value of the contingent consideration on a quarterly basis. At the time of the Pelican acquisition, the Company’s CEO and certain affiliated entities as well as two of the Company’s other directors and certain affiliated entities directly or indirectly owned shares of Pelican common stock purchased by the Company. As a result, approximately 22.7% of any such milestone payments will be paid to the Company ’ As discussed in Note 10, in May 2016, Pelican was awarded a $15.2 million CPRIT Grant from CPRIT for development of Pelican’s lead product candidate, PTX-35. The CPRIT Grant supported Pelican in developing PTX-35 through its current Phase 1 clinical trial designed to evaluate PTX-35 in combination with other immunotherapies. Elusys Therapeutics On April 18, 2022 (“Closing Date”), the Company closed on the acquisition of Elusys. NightHawk paid at the closing a cash upfront payment of $3,000,000 to the former owners (“Sellers”) of Elusys. NightHawk is obligated to pay the Sellers $2,000,000 of deferred cash consideration (“Merger Consideration”) at the same time that the payment of the receivable consideration is to be distributed to the Sellers as described below, which was paid in the second quarter of 2022. Earn out payments will be paid to the sellers for a period of 12 years from the date of the closing equal to 10% of the gross dollar amount of payments received during each one year period during such twelve year period with respect to any sale, license or commercialization anywhere in the world of ANTHIM® that either: (a) occurs during the first nine years after the closing date in any respect; or (b) occurs thereafter pursuant to any contract, agreement, commitment or order that is placed, granted, awarded, or entered into during the first nine years after the Closing Date. Per the Merger Agreement, upon collection of the Elusys contract receivables of $24.5 million, NightHawk will remit payment of $22.3 million (the “Receivable Consideration”) to the Sellers. In April 2022, $20.8 million was remitted to the sellers less a hold back related to future fulfillment cost. Elusys is expected to receive additional revenue from the future fulfillment of an existing U.S. Government contract, and NightHawk has agreed to fulfill the future obligations of Elusys under such contract and pass through and distribute to the Sellers the payments received under such contract minus the costs associated with such fulfillment obligations, subject to certain adjustments to the Merger Consideration specified in the Merger Agreement, including income taxes payable with respect to such payments (the “Contract Deferred Consideration”). The Merger Agreement further provides that 80% of any amounts paid to and received by Elusys (the “Additional Earn Out”) after the Closing Date and prior to June 30, 2023, with respect to the sale of 1,500 pre-filled vials of ANTHIM® The Company acquired Elusys to expand its role in the biodefense space, complementing NightHawk’s focus to target emerging biological threats. NightHawk plans to leverage Elusys’ existing relationships and distribution channels. In addition, NightHawk expects to leverage the capabilities of its planned Scorpion biomanufacturing facility in Manhattan, Kansas, which will enable the Company to manufacture these therapies internally and therefore benefit from significant operating synergies, as well as enhanced oversight, quality control, and speed to market. The Company is also exploring opportunities to expand ANTHIM® distribution abroad. The acquisition is aligned with NightHawk’s vision to establish a fully-integrated ecosystem to deliver medical innovations faster, better, and more efficiently. The fair value of the purchase consideration was approximately $42.9 million. The purchase consideration consists of $3.0 million in cash and $2.0 million in deferred cash consideration, and the preliminary estimated fair value of the contingent and deferred consideration liabilities related to the receivable consideration, contract deferred consideration, earn out and additional earn out totaling $37.9 million. The preliminary valuation of the contract deferred consideration and earn out liabilities were valued using a discounted cash flow analysis that utilized discount rates of 24% and 14% , respectively. The preliminary value of the additional earn out liability was calculated as 80% of the estimated gross sales price of 1,500 pre-filled vials of , less estimated fulfillment costs to be incurred. The value of the receivable consideration was equal to the value of the contract receivables acquired as this liability was settled within 30 days of the Closing Date. The acquisition of Elusys was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805, Business Combinations . The acquired Elusys’ assets, including identifiable intangible assets and liabilities assumed, have been recorded at their preliminary estimated fair values with the excess purchase price assigned to goodwill. The recognition of goodwill is largely attributed to the value paid for Elusys’ capabilities, which will broaden NightHawk’s role in the biodefense space. The goodwill recorded for this transaction is valued at $3.5 million and will be deductible for tax purposes over 15 years . A preliminary purchase price allocation has been performed and the recorded amounts for intangible assets, inventory, other assets, contingent and deferred consideration liabilities, deferred income tax liability and other liabilities are subject to change pending finalization of valuation efforts and review of tax matters. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the closing date. The preliminary fair value of the purchase consideration, or the purchase price, is estimated to be $42.9 million. The following table highlights the components of the preliminary purchase consideration: Aggregate consideration: Cash consideration $ 3,000,000 Deferred cash consideration 2,000,000 Earn out 5,900,000 Additional earn out 4,735,000 Receivable consideration 22,318,685 Contract deferred consideration 4,900,000 Total estimated purchase consideration $ 42,853,685 The preliminary purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the closing date based on their respective preliminary fair values summarized below: Purchase price allocation: Cash and cash equivalents $ 5,719,899 Contract receivables 24,526,232 Prepaid expenses and other current assets 1,905,490 Inventory 5,844,000 Intangible asset – definite-lived (Note 7) 9,700,000 Property and equipment 50,224 Operating lease right of use assets 352,906 Other assets 326,249 Total assets acquired 48,425,000 Accounts payable (204,794) Accrued expenses and other current liabilities (5,155,363) Operating lease obligations (352,906) Deferred income tax liability (3,326,000) Total liabilities assumed (9,039,063) Net assets acquired and liabilities assumed 39,385,937 Goodwill 3,467,748 Total estimated purchase consideration $ 42,853,685 In connection with the acquisition, the Company incurred one-time expenses consisting primarily of legal fees, accounting fees and consultant fees. For the three and nine months ended September 30, 2022, the Company incurred approximately $5.0 thousand and $0.6 million of acquisition costs related to the Elusys transaction, which are included in general and administrative expenses in the consolidated statements of operations. From the Elusys’ acquisition date through September 30, 2022, $6.0 million of total revenue and a net loss of $3.9 million associated with Elusys operations are included in the condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2022. Upon achievement of the next milestone payment event, contingent consideration of $4.7 million is expected to be paid to Elusys’ shareholders by June 30, 2023. The following unaudited pro forma financial information assumes the companies were combined as of January 1, 2021. The unaudited pro forma financial information as presented below is for informational purposes only and is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information. This is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021, nor is it necessarily indicative of future results. Consequently, actual results could differ materially from the unaudited pro forma financial information presented below. The following table presents the pro forma operating results as if Elusys had been included in the Company’s Consolidated Statements of Operations and Comprehensive Loss as of January 1, 2021 (unaudited): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 (unaudited) (unaudited) (unaudited) (unaudited) Revenue $ 29,347,513 $ 44,237,698 $ 29,892,585 $ 46,834,404 Net loss (1,296,510) 23,542,744 (21,282,125) 7,072,846 Net loss per share, basic and diluted (0.05) 0.94 (0.83) 0.28 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 3. Fair Value of Financial Instruments The carrying amount of certain of the Company’s financial instruments, including cash and cash equivalents, accounts payable and accrued expenses and other payables approximate fair value due to their short maturities. As a basis for determining the fair value of certain of the Company’s financial instruments, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level I – Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level II – Observable inputs, other than Level I prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level III – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability. The Company’s cash equivalents are classified within Level I of the fair value hierarchy. The Company’s short-term investments consist of Level I securities which are comprised of highly liquid money market funds. The estimated fair value of the short-term investments was based on quoted market prices. There were no transfers between fair value hierarchy levels during the quarters ended September 30, 2022 or 2021. In January 2020, the Company issued warrants in connection with the public offering of common stock (the “January 2020 Warrants”). Pursuant to the terms of these warrants, the warrants were not considered indexed to the Company’s own stock and therefore are required to be measured at fair value and reported as a liability in the consolidated balance sheets. Additionally, upon the closing of the January 2020 offering, 479,595 outstanding warrants were evaluated for whether they were modified for accounting purposes and it was determined that they were required to be classified as a liability. The fair value of the warrant liability is based on the Monte Carlo methodology. The Company is required to revalue the warrants at each reporting date with any changes in fair value recorded in our consolidated statement of operations and comprehensive loss. The valuation of the warrants is classified under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable. In order to calculate the fair value of the warrants, certain assumptions were made, including the selling price or fair market value of the underlying common stock, risk-free interest rate, volatility, and remaining life. Changes to the assumptions could cause significant adjustments to valuation. The Company estimated a volatility factor utilizing its own data. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The following table presents quantitative information about the inputs used in the valuation for the Company’s fair value measurement of the warrant liability classified as Level 3: September 30, 2022 December 31, 2021 Current stock price $ 1.73 $ 3.04 Estimated volatility of future stock price 85.00 % 133.13 % Risk free interest rate 3.94 % 0.55 % Contractual term 1.16 years 1.90 years As of September 30, 2022, there were a total of 9,357 warrants outstanding that were reported as a liability on the consolidated balance sheet. The fair value of financial instruments measured on a recurring basis is as follows: As of September 30, 2022 Description Total Level 1 Level 2 Level 3 Assets: Short-term investments $ 43,789,736 $ 43,789,736 — — Liabilities: Contingent consideration 17,069,114 — — 17,069,114 Warrant liability 274 — — 274 As of December 31, 2021 Description Total Level 1 Level 2 Level 3 Assets: Short-term investments $ 88,324,922 $ 88,324,922 — — Liabilities: Contingent consideration 3,342,515 — — 3,342,515 Warrant liability 11,020 — — 11,020 The following tables summarize the change in fair value, as determined by Level 3 inputs, for all Pelican assets and liabilities using unobservable Level 3 inputs for the nine months ended September 30, 2022 and 2021: Pelican Elusys Total Contingent Contingent Contingent Warrant Consideration Consideration Consideration Liability Balance at December 31, 2021 $ 3,342,515 $ — $ 3,342,515 $ 11,020 Change in fair value (3,342,515) — (3,342,515) (10,746) Acquisition of Elusys — 39,853,685 39,853,685 — Payment of receivable consideration — (20,784,571) (20,784,571) — Payment of deferred cash consideration — (2,000,000) (2,000,000) Balance at September 30, 2022 $ — $ 17,069,114 $ 17,069,114 $ 274 Pelican Contingent Warrant Consideration Liability Balance at December 31, 2020 $ 2,912,515 $ 33,779 Change in fair value 406,000 (2,808) Balance at September 30, 2021 $ 3,318,515 $ 30,971 The change in the fair value of the Pelican contingent consideration for the nine months ended September 30, 2022 was primarily due to the termination of the PTX-35 trial. As described in Note 2, the Company acquired Elusys Therapeutics and subsequently paid out $22.8 million in contingent consideration payments. The change in fair value of the warrant liability for the nine months ended September 30, 2022 was primarily due to a decrease in the fair value of the underlying stock. Adjustments associated with the change in fair value of contingent consideration and warrant liability are included in the Company’s consolidated statement of operations and comprehensive loss. The following table presents quantitative information about the inputs and valuation methodologies used for the Company’s fair value measurements of contingent consideration classified as Level 3 as of September 30, 2022 and December 31, 2021: As of September 30, 2022 Valuation Significant Weighted Average Methodology Unobservable Input (range, if applicable) Elusys Revenue earn-out Discounted cash flow analysis Timing of expected payments 2025-2036 Discount rate 24.5% Future revenue projections $ 325.9 million Elusys Contract deferred consideration Discounted cash flow analysis Timing of expected payments 2023 Discount rate 15% Future revenue projections $ 7.6 million As of September 30, 2021 Valuation Significant Weighted Average Methodology Unobservable Input (range, if applicable) Pelican contingent consideration Probability weighted income approach Milestone dates 2022-2031 Discount rate 7.52 Probability of occurrence 4.9% to 55% The Company records certain non-financial assets on a non-recurring basis, including goodwill and in-process R&D. This analysis requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post-launch cash flows and a risk-adjusted weighted average cost of capital. |
Short-Term Investments
Short-Term Investments | 9 Months Ended |
Sep. 30, 2022 | |
Short-Term Investments. | |
Short-Term Investments | 4. Short-Term Investments Short-term investments consist of equity securities. The Company holds its securities at fair value as of September 30, 2022 and December 31, 2021. Unrealized gains and losses on securities are reported in the other expense line item in the Statements of Operations and Comprehensive Loss. Short-term investments at September 30, 2022 and December 31, 2021 consisted of mutual funds with fair values of $43.8 million and $88.3 million, respectively. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses And Other Current Assets. | |
Prepaid Expenses and Other Current Assets | 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following at: September 30, December 31, 2022 2021 Prepaid preclinical and clinical expenses $ 1,097,594 $ 1,158,560 Prepaid manufacturing expense 727,995 563,280 Other prepaid expenses and current assets 476,659 460,030 Prepaid insurance 128,245 704,650 $ 2,430,493 $ 2,886,520 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, ranging generally from three Property and equipment consist of the following at: September 30, December 31, 2022 2021 Lab equipment $ 17,530,993 $ 3,178,855 Construction-in-process 2,291,007 309,620 Furniture and fixtures 235,346 66,106 Computers 453,822 85,071 Leasehold improvements 2,427,797 22,563 Vehicles 44,562 — Total 22,983,527 3,662,215 Accumulated depreciation (2,253,010) (1,503,736) Property and equipment, net $ 20,730,517 $ 2,158,479 Depreciation expense was $442,497 and $749,274 for the three and nine months ended September 30, 2022, respectively, and $115,251 and $292,960 for the three and nine months ended September 30, 2021, respectively. |
Goodwill and other intangible a
Goodwill and other intangible assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and other intangible assets | |
Goodwill and other intangible assets | 7. In-process R&D of $5.9 million was recorded in connection with the acquisition of Pelican, as described in Note 2. During the fourth quarter of 2021, due to a sustained decline in the quoted market price of its common stock, the Company performed an interim impairment analysis using the income approach and in-process R&D with a total carrying value of $5.9 million was written down to its estimated fair value of $3.5 million and an impairment charge of $2.4 million during the fourth quarter of 2021 was recorded. Goodwill and an intangible asset were recorded in connection with the acquisition of Elusys Therapeutics, as described in Note 2. The intangible asset consists of the fair value of the ANTHIM® formulation and will be amortized over its estimated useful life of 80 months . The change in the carrying amount of goodwill and intangible assets during the nine months ended September 30, 2022 is as follows: Intangible Goodwill IPR&D Assets Balance at December 31, 2021 $ — $ 3,500,000 $ — Impairment of intangible asset — (3,500,000) — Acquisition of Elusys Therapeutics 5,067,748 — 11,200,000 Acquisition fair value adjustment (1,600,000) — (1,500,000) Amortization of intangible assets — — (666,875) Balance at September 30, 2022 $ 3,467,748 $ — $ 9,033,125 During the three months ended September 30, 2022, the Company received an updated valuation report from a third-party valuation firm. After considering the results of the valuation report, the Company has estimated that the fair value of the contract deferred consideration to be $4.9 million and the intangible asset to be $9.7 million. As a result, the fair value of the contract deferred consideration was decreased by $1.6 million with a corresponding decrease to goodwill and the intangible asset was decreased by $1.5 million with a corresponding decrease to the earn out contingent consideration. Significant factors in the consideration of goodwill and intangible assets for impairment include expectations of future cash flows, market capitalization relative to book value, and expected growth rates. As a result of the decrease in share price, we performed an analysis to determine if a triggering event occurred that indicated it was more likely than not that the fair value of one or more of our reporting units was less than its carrying value. The analysis resulted in the determination that no triggering event occurred as of September 30, 2022. Management considered the structural and timing factors, comparatively low stock trading volume, and limited historical operating results that include only one full quarter of results. We believe the downward pressure on the stock price of our publicly traded shares is unrelated to the ongoing operations of the Company. However, with the macroeconomic uncertainty and decline in the Company’s stock price, there could be a non-cash charge for impairment in a future period should the decline in stock price subsequent to September 30, 2022 be sustained. As additional facts and circumstances evolve, the Company will continue to observe and assess whether an impairment trigger has occurred. To the extent it becomes more likely than not that the fair value of the Company is less than its carrying amount, the Company will be required to perform a quantitative impairment test, which may result in a non-cash impairment charge in future periods. The Company performs an annual impairment test at the reporting unit level as of April 1st of each fiscal year. A full impairment of the Pelican IPR&D asset was recorded during the quarter ended September 30, 2022. No impairment was recorded for the quarter ended September 30, 2021. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses and Other Liabilities | |
Accrued Expenses and Other Liabilities | 8. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following: September 30, December 31, 2022 2021 Income tax payable $ 1,092,558 $ — Accrued preclinical and clinical trial expenses 721,923 955,013 Other expenses 725,723 631,312 Compensation and related benefits 313,526 459,178 Accrued manufacturing expenses 959,443 179,173 Accrued franchise tax 10,000 195,000 $ 3,823,173 $ 2,419,676 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity At-The-Market-Offering From January 1, 2021 to March 31, 2021 the Company sold 2,106,027 shares of common stock under the Amended and Restated At Market Issuance Sales Agreement, dated August 24, 2020 by and between the Company, B. Riley Securities, Inc. and Cantor Fitzgerald & Co., as amended (the “Common Stock Sales Agreement”), at an average price of approximately $12.18 per share, raising aggregate net proceeds of $25,646,099 after deducting a commission up to 3% . No shares of common stock were sold during the three or nine months ended September 30, 2022. Common Stock Warrants As of September 30, 2022 and December 31, 2021, the Company has outstanding warrants to purchase 747,383 shares of common stock issuable at a weighted-average exercise price of $11.06 per share. The Company had no common stock warrant activity during the nine months ended September 30, 2022. The following table summarizes the activity of the Company’s common stock warrants for the nine months ended September 30, 2021. Common Stock Warrants Outstanding, December 31, 2020 758,939 Issued 31,000 Expired (42,556) Outstanding, September 30, 2021 747,383 Equity Compensation Plans The Company maintains various equity compensation plans (“Plans”) with substantially similar provisions under which it may award employees, directors and consultants incentive and non-qualified stock options, restricted stock, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the plans. In addition, at its 2021 Annual Meeting for Stockholders, the stockholders approved the Company’s 2021 Subsidiaries Stock Incentive Plan (the “SSIP”) which allows for the grant of equity interests in subsidiaries of the Company including Skunkworx, Scorpion, Abacus, Blackhawk and other newly formed subsidiaries of the Company that adopt the SSIP by resolution of their Board of Directors. On August 2, 2021, the Board of Directors, the Compensation Committee and the Boards of Directors of Skunkworx, Scorpion, Abacus and Blackhawk granted to Jeff Wolf, Chief Executive Officer, an option under the SSIP to purchase 10,526, 10,638, 10,526 and 10,526 shares of common stock of Skunkworx, Scorpion, Abacus and Blackhawk, respectively, and to William Ostrander, Chief Financial Officer, an option under the SSIP to purchase 2,127 shares of common stock of Scorpion. In addition, at its 2022 Annual Meeting for Stockholders, the stockholders approved adding Elusys as a participating subsidiary in the SSIP and increasing the numbers of shares that each participating subsidiary may issue under the SSIP. Accounting for Stock-Based Compensation: Stock Compensation Expense Stock Options Fair Value Determination The following weighted-average assumptions were used for option grants during the three and nine months ended September 30, 2022 and 2021: ● Volatility – The Company used an average historical stock price volatility from its own data plus an analysis of reported data for a peer group of comparable companies that have issued stock options with substantially similar terms. ● Expected life of options – The expected term represents the period that the Company’s stock option grants are expected to be outstanding. The Company elected to utilize the “simplified” method to estimate the expected term. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. ● Risk-free interest rate – The rate is based on U.S. Treasury interest rates at the time of the grant whose term is consistent with the expected life of the stock options. ● Dividend yield – The expected dividend yield was considered to be 0% since the Company has not paid any dividends and has no plan to do so in the future. ● Forfeitures – As required by ASC 718, Compensation—Stock Compensation, the Company reviews recent forfeitures and stock compensation expense. The Company accounts for forfeitures as they occur. The following table summarizes weighted-average assumptions used in our calculations of fair value for the nine months ended September 30, 2022 and 2021: 2022 2021 Dividend yield — % — % Expected volatility 102.75 % 102.15 % Risk-free interest rate 2.51 % 0.67 % Expected lives (years) 6.0 years 5.6 years Stock Option Activity - The following is a summary of the stock option activity for the nine months ended September 30, 2022: Weighted Weighted Average Aggregate Average Exercise Intrinsic Remaining Shares Price Value Contractual Life Stock options outstanding at December 31, 2021 2,954,315 $ 7.62 Granted 204,050 $ 2.79 Expired (40,375) $ 12.72 Forfeited (111,022) $ 4.71 Stock options outstanding at September 30, 2022 3,006,968 $ 7.34 $ 42,330 8.3 Years Stock options exercisable at September 30, 2022 1,580,965 $ 10.00 $ 42,330 7.6 Years Unrecognized compensation expense related to unvested stock options was $3.7 million as of September 30, 2022, which is expected to be recognized over a weighted-average period of 1.3 years and will be adjusted for forfeitures as they occur. Restricted Stock The following is a summary of restricted stock award activity for the nine months ended September 30, 2022: Weighted Average Shares Fair Value Restricted stock at December 31, 2021 370,170 $ 4.71 Vested (323,311) $ 4.92 Restricted stock at September 30, 2022 46,859 $ 3.28 Restricted Stock Units - Under the Plans, the Company previously issued time-based Restricted Stock Units (“RSUs”). RSUs are not actual shares, but rather a right to receive shares in the future. The shares are not issued and the employee cannot sell or transfer shares prior to vesting and has no voting rights until the RSUs vest. The employees' time-based RSUs vest 25% on the award date and 25% each anniversary thereafter. The grant date fair value of the RSUs is equal to the closing market price of our common stock on the grant date. The Company recognizes the grant date fair value of RSUs the Company expects to issue as compensation expense ratably over the requisite service period. No RSUs are outstanding as of September 30, 2022 and December 31, 2021 |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue | |
Revenue | 10. Revenue Product Sales On April 19, 2022, Elusys entered into a contract with Public Works and Government Services of Canada to deliver 3,000 vials of ANTHIM® (FDA-approved anthrax antitoxin) for treatment of inhalational anthrax due to Bacillus anthrax. The total contract award is $6.0 million with a delivery date on or before September 30, 2022. This order was fulfilled on September 13, 2022 for the total contract amount of $6.0 million which is in accounts receivable on the consolidated balance sheet as of September 30, 2022. The Company did not believe there were factors that indicated the need for an allowance for doubtful accounts. During the quarter ended September 30, 2022, the Company had no bad debt expense. Grant Revenue In June 2016, Pelican entered into a cancer research grant contract (or “Grant Contract”) with CPRIT, under which CPRIT awarded a grant not to exceed $15.2 million for use in developing cancer treatments by targeting a novel T-cell costimulatory receptor (namely, TNFRSF25). The Grant Contract covers a period from June 1, 2016 through November 30, 2020, as amended through May 31, 2023. The first tranche of funding of $1.8 million was received in May 2017, a second tranche of funding of $6.5 million was received in October 2017 and a third tranche of funding of $5.4 million was received in December 2019. The remaining $1.5 million will be awarded on a reimbursement basis after the Company has fulfilled every requirement of the grant and the grant has been approved to be finalized. As of September 30, 2022, all $15.2 million have been recognized to date. The grant is subject to customary CPRIT funding conditions including a matching funds requirement where Pelican will match $0.50 for every $1.00 from CPRIT. Consequently, Pelican was required to provide $7.6 million in matching funds over the life of the project. Upon commercialization of the product, the terms of the grant require Pelican to pay tiered royalties in the low to mid-single digit percentages. Such royalties reduce to less than one percent after a mid-single-digit multiple of the grant funds have been paid to CPRIT in royalties. On January 7, 2020, the Company was awarded a grant of up to $224,713 from the NIH. The NIH grant provided funding for development of the Company’s technologies for PTX-35. The grant funds were made available by the NIH to the Company as allowable expenses are incurred. The Company incurred $40,470 of allowable expenses under the grant and recognized the corresponding grant revenue in the quarter ended September 30, 2022. No NIH grant revenue was recognized in the quarter ended September 30, 2021. Through September 30, 2022, $15.2 million of grant funding has been recognized as revenue. As of September 30, 2022 and December 31, 2021, the Company had a grant receivable balance of $1.5 million and $1.3 million, respectively, for CPRIT proceeds not yet received but for which the costs had been incurred or the conditions of the award has been met. At the conclusion of the grant, the Company will be subject to an audit by CPRIT before the final grant payment can be approved and distributed. The Company believes this will not be finalized until 2023. Due to the inviability of the PTX-35 candidate, the Company has decided not to move forward to a Phase 2 trial. However, the Company expects to receive the full outstanding receivable despite the termination of the trial. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss Per Share | |
Net Loss Per Share | 11. Net Loss 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 during the periods. Fully diluted net loss per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options, warrants, and unvested restricted stock that are computed using the treasury stock method. For the quarters ended September 30, 2022 and 2021, all of the Company’s common stock options, unvested restricted stock units and warrants are anti-dilutive and therefore have been excluded from the diluted calculation. The following table reconciles net loss to net loss attributable to NightHawk Biosciences, Inc.: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net loss $ (13,094,771) $ (7,548,225) $ (31,548,479) $ (21,791,941) Net loss - Non-controlling interest (89,421) (115,505) (265,256) (283,846) Net loss attributable to NightHawk $ (13,005,350) $ (7,432,720) $ (31,283,223) $ (21,508,095) Weighted-average common shares outstanding, basic and diluted 25,613,316 25,137,628 25,603,481 24,828,438 Net loss per share, basic and diluted $ (0.51) $ (0.30) $ (1.22) $ (0.87) The following potentially dilutive securities were excluded from the calculation of diluted net loss per share during the three and nine months ended September 30, 2022 and 2021 due to their anti-dilutive effect: 2022 2021 Outstanding stock options 3,006,968 1,890,174 Restricted stock subject to forfeiture and restricted stock units 46,859 259,874 Outstanding common stock warrants 747,383 747,383 |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax | |
Income Tax | 12. Income Tax Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. As of September 30, 2022, the value of the indefinite lived R&D in process costs have been written off and the previously recorded deferred tax liability associated with indefinite lived R&D in process costs has been reduced to zero. In accordance with FASB ASC 740, Accounting for Income Taxes, the Company reflects in the accompanying unaudited condensed consolidated financial statements the benefit of positions taken in a previously filed tax return or expected to be taken in a future tax return only when it is considered ‘more-likely-than-not’ that the position taken will be sustained by a taxing authority. As of September 30, 2022, and December 31, 2021, the Company had no unrecognized income tax benefits and correspondingly there is no impact on the Company’s effective income tax rate associated with these items. The Company’s policy for recording interest and penalties relating to uncertain income tax positions is to record them as a component of income tax expense in the accompanying statements of operations and comprehensive loss. As of September 30, 2022, and December 31, 2021, the Company had no such accruals. At September 30, 2022, the Company has federal net operating loss carryforwards of approximately $170,426,581, including $3,027,284 acquired from Pelican Therapeutics, which are available to offset future taxable income. No NOLs were acquired with the purchase of Elusys Therapeutics in April of 2022. The Company completed a Section 382 study during Q3 2021. It was determined that the Company has experienced five ownership changes of over 50% since 2013, the latest occurring on June 30, 2020. Going forward, the utilization of loss carryforwards and tax credits generated before June 30, 2020 will be subject to an annual limitation. As a result of the ownership changes and limitations, $58,182,000 of federal NOLs and approximately $2,935,000 of federal R&D credits will expire unutilized, in addition to Sec 382 limits on Pelican already in place. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | 13. Leases The Company accounts for its leases under ASC 842. The Company conducts its operations from leased facilities in Morrisville, North Carolina; San Antonio, Texas; Parsippany, New Jersey and North Brunswick, New Jersey. The North Carolina lease will expire in 2027, the Texas lease will expire in 2037, the Parsippany lease will expire in 2024 and the New Brunswick leases will expire in 2023. The leases are for general office space, manufacturing space, and lab space and require the Company to pay property taxes, insurance, common area expenses and maintenance costs. In June 2021, the Company entered into a lease agreement with Durham KTP Tech 7, LLC, to lease a 15,996 square foot facility in Morrisville, North Carolina to expand its research and development activities. The lease has a term of eight years following the commencement date and provides the Company the option to extend the lease term for one five year term. It is subject to fixed rate escalation increases and also provides up to $2.4 million for tenant improvements. As the lease had not commenced as of September 30, 2022, the Company has not recorded an operating lease right-of-use (“ROU”) asset or lease liability for this lease in the accompanying condensed consolidated balance sheets. The initial estimate of the minimum amount of undiscounted lease payments due under this lease is $4.7 million. Further, the tabular disclosure of minimum lease payments below does not include payments due under this lease. In October 2021, Scorpion entered into a lease agreement with Merchants Ice II, LLC to lease a 20,144 square foot facility in San Antonio, TX for general office, laboratory, research, analytical, and/or biomanufacturing purposes. Merchants Ice II, LLC is a nonprofit entity investing in the building with the intention to encourage development of emerging technologies. As a result, investments made by both Merchants Ice II, LLC and Scorpion into the building may qualify and share tax credits under the New Market Tax Credit (“NMTC”) program. Scorpion agreed that all investments and expenditures qualifying under the NMTC (i.e., certain equipment and building improvements) would be purchased by Merchants Ice II, LLC to generate the largest possible tax incentive and Scorpion would reimburse Merchants Ice II, LLC for these payments. The lease officially commenced on September 15, 2022. As of September 30, 2022, Scorpion has reimbursed Merchants Ice II, LLC $24.3 million. Based on the ASC 842 guidance, the Company has capitalized $13.2 million of the reimbursements as lab equipment, expensed $0.9 million as supplies and facilities, and $10.2 million has been included in the finance lease right-of-use asset. Total cash paid for operating leases during the nine months ended September 30, 2022 was $0.2 million, and is included within cash flows from operating activities within the consolidated statement of cash flows. The Company leases furniture and specialized lab equipment under finance leases. The related right-of-use assets are amortized on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset. The effective interest rate is 6.65%. The Company’s lease cost is reflected in the accompanying statements of operations and comprehensive loss within the general and administrative and research and development balances as follows: For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022 Operating lease cost $ 195,368 $ 531,371 Finance lease cost Amortization of lease assets 170,492 296,214 Interest on lease liabilities 44,903 56,772 Total finance lease cost $ 215,395 $ 352,986 The weighted average remaining lease term and incremental borrowing rate as of September 30, 2022 and 2021 were as follows: For the Nine Months Ended September 30, 2022 For the Nine Months Ended September 30, 2021 Weighted average remaining lease term Operating leases 4.2 years 5.6 years Finance leases 9.5 years 2.1 years Weighted average incremental borrowing rate Operating leases 5.25 % 6.44 % Finance leases 6.65 % 5.63 % Maturities of operating and finance lease liabilities as of September 30, 2022 were as follows: Operating Leases Finance Leases Total Years Ending December 31, 2022 (excluding the nine months ended September 30, 2022) $ 179,752 245,867 425,619 2023 558,216 700,292 1,258,508 2024 403,966 812,383 1,216,349 2025 315,132 715,782 1,030,914 2026 245,606 595,309 840,915 2027 209,214 615,269 824,483 Thereafter - 7,716,135 7,716,135 Total minimum lease payments 1,911,886 11,401,037 13,312,923 Less: imputed interest (188,718) (4,534,103) (4,722,821) Present value of lease liabilities $ 1,723,168 $ 6,866,934 $ 8,590,102 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation Effective May 3, 2022, Heat Biologics, Inc. changed its name to NightHawk Biosciences, Inc. (the “Company”) by filing a Certificate of Amendment (the “Certificate of Amendment”) to its Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Certain information or footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, these financial statements include all normal and recurring adjustments necessary for the fair statement of the results for the interim periods presented. The results for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2022. The consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 are unaudited. The balance sheet as of December 31, 2021 is derived from the audited consolidated financial statements as of that date. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 11, 2022 (the “2021 Annual Report”). The accompanying unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 include the accounts of the Company, and its subsidiaries, Pelican Therapeutics, Inc. (“Pelican”), Heat Biologics I, Inc. (“Heat I”), Heat Biologics III, Inc. (“Heat III”), Heat Biologics IV, Inc. (“Heat IV”), Heat Biologics GmbH, Heat Biologics Australia Pty Ltd., Zolovax, Inc., Skunkworx Bio, Inc. (“Skunkworx”, formerly known as Delphi Therapeutics, Inc.), Scorpion Biological Services, Inc. (“Scorpion”) (formerly Scorpion Biosciences, Inc), Elusys Therapeutics, Inc. (“Elusys”), Blackhawk Bio, Inc. (“Blackhawk”), and Abacus Biotech, Inc. (“Abacus”). The functional currency of the entities located outside the United States of America (the foreign entities) is the applicable local currency of the foreign entities. Assets and liabilities of the foreign entities are translated at period-end exchange rates. Statement of operations accounts are translated at the average exchange rate during the period. The effects of foreign currency translation adjustments are included in other comprehensive loss, which is a component of accumulated other comprehensive loss in stockholders’ equity. All significant intercompany accounts and transactions have been eliminated in consolidation. At September 30, 2022 and December 31, 2021, NightHawk held an 85% controlling interest in Pelican. NightHawk accounts for its less than 100% interest in accordance with U.S. GAAP. Accordingly, the Company presents non-controlling interest as a component of stockholders’ equity on its consolidated balance sheets and reports non-controlling interest net loss under the heading “net loss – non-controlling interest” on its consolidated statements of operations and comprehensive loss. |
Liquidity and Capital Resources | Liquidity and Capital Resources The Company has an accumulated deficit of approximately $197.0 million as of September 30, 2022 and a net loss of approximately $13.1 million and $31.5 million for the three and nine months ended September 30, 2022 and has not generated significant revenue or positive cash flows from operations. The Company expects to incur significant expenses and continued losses from operations for the foreseeable future. The Company expects its expenses to increase in connection with its ongoing activities, particularly as the Company ramps up operations in its in-house bioanalytic, process development and manufacturing facility in San Antonio, TX, expands its infectious disease/biological threat program, and continues to support the development of, and commencement of operations at, a new biodefense-focused large molecule and biologics biomanufacturing facility in Manhattan, Kansas. As of September 30, 2022, a lease has not been executed for this Kansas facility. In addition, any new business ventures that the Company may engage in are likely to require commitments of capital. Accordingly, the Company will in the future need to obtain substantial additional funding in connection with its planned operations. Adequate additional financing may not be available to the Company on acceptable terms, or at all. If the Company is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce or eliminate its research and development programs, any future commercialization efforts or the manufacturing services it plans to provide. To meet its capital needs, the Company intends to continue to consider multiple alternatives, including, but not limited to, additional equity financings such as sales of its common stock under at-the-market offerings, debt financings, partnerships, grants, funding collaborations and other funding transactions, if any are available. As of September 30, 2022, the Company had approximately $57.4 million in cash and cash equivalents and short-term investments, which it believes is sufficient to fund its operations for at least one year from the date these consolidated financial statements are issued. This is based on the Company’s current estimates, and the Company could use its available capital resources sooner than it currently expects. The Company will need to generate significant revenues to achieve profitability, and it may never do so. |
Risk and Uncertainties | Risk and Uncertainties 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, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates or its manufacturing facility, the timing of completion of construction of the planned manufacturing facility in Kansas, uncertainty of market acceptance of the Company’s products or manufacturing capability or success of new business ventures, competition from substitute products and larger companies, government budget and spending on biological threat programs, securing and protecting proprietary technology, strategic relationships and dependence on key individuals and sole source suppliers. The Company relies on third-party manufacturers to purchase from their third-party vendors the materials necessary to produce product candidates and manufacture product candidates for clinical studies. The Company also depends on third-party suppliers for key materials and services used in research and development, as well as manufacturing processes, and is subject to certain risks related to the loss of these third-party suppliers or their inability to supply adequate materials and services. The Company does not control the manufacturing processes of the contract development and manufacturing organizations, or CDMOs, with whom it contracts and is dependent on these third parties for the production of its therapeutic candidates in accordance with relevant regulations (such as current Good Manufacturing Practices, or cGMP), which include, among other things, quality control, quality assurance and the maintenance of records and documentation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all cash and other highly liquid investments with initial maturities from the date of purchase of three months or less to be cash and cash equivalents. |
Derivative Financial Instruments | Derivative Financial Instruments The Company has issued common stock warrants in connection with the execution of certain equity financings. The fair value of the warrants, which were deemed to be derivative instruments, was recorded as a derivative liability under the provisions of ASC Topic 815, Derivatives and Hedging (“ASC 815”) The fair value of the warrants, including the warrants issued in connection with the January 2020 common stock offering and recorded as a liability, was determined using the Monte Carlo simulation model, which is deemed to be an appropriate model due to the terms of the warrants issued. The fair value of warrants was affected by changes in inputs to the Monte Carlo simulation model including the Company’s stock price, expected stock price volatility, the remaining term, and the risk-free interest rate. This model uses Level 3 inputs, including stock price volatility, in the fair value hierarchy established by ASC 820 Fair Value Measurement |
Short-term Investments | Short-term Investments The Company’s short-term investments are equity securities and are carried at their fair value based on quoted market prices. Realized and unrealized gains and losses on equity securities are included in net earnings in the period earned or incurred. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, useful lives of fixed assets, contingent consideration, in process research and development (“IPR&D”), income taxes, valuation of warrant liabilities, and stock-based compensation. Actual results may differ from those estimates. |
Segments | Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed the operations and managed the business as one segment. |
Business Combinations | Business Combinations The accounting for our business combinations consists of allocating the purchase price to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values, with the excess recorded as goodwill. We have up to one year from the acquisition date to use information as of each acquisition date to adjust the fair value of the acquired assets and liabilities, which may result in material changes to their recorded values with an offsetting adjustment to goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant judgment, which includes, among other factors, analysis of historical performance and estimates of future performance. In some cases, we have used discounted cash flow analyses, which were based on our best estimate of future revenue, earnings and cash flows as well as our discount rate, adjusted for risk, and estimated attrition rates. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company classifies intangible assets into three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. The Company determines the useful lives of definite-lived intangible assets after considering specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, and other economic facts; including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized, primarily on a straight-line basis, over their estimated useful lives. Intangible assets that are deemed to have indefinite lives are reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test for indefinite-lived intangibles consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. Indefinite-lived intangible assets are not amortized. In-process research and development, or IPR&D, assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development projects. IPR&D assets represent the fair value assigned to technologies that the Company acquires, which at the time of acquisition have not reached technological feasibility and have no alternative future use. During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts. If and when development is complete, which generally occurs upon regulatory approval and the ability to commercialize products associated with the IPR&D assets, these assets are then deemed definite-lived and are amortized based on their estimated useful lives at that point in time. If development is terminated or abandoned, the Company may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of the carrying value of the IPR&D assets over their fair value. As of September 30, 2022, the Company decided to terminate any further development of PTX-35, Pelican's lead product candidate. The abandonment of this product triggered full impairment of the IPR&D asset. |
Contingent Consideration | Contingent Consideration Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future (“contingent consideration”). Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations. The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones. The milestone payments will be made upon the achievement of clinical and commercialization milestones as well as single low digit royalty payments and payments upon receipt of sublicensing income. Subsequent to the date of acquisition, the Company reassesses the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date. Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations. Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets. During the quarter ended September 30, 2022, $3.1 million of contingent consideration related to Pelican was written off as PTX-35 will not continue on to a Phase 2 trial. |
Research and Development | Research and Development Research and development includes costs associated with developmental products not yet approved by the FDA as well as costs associated with bringing developmental products into advanced phase clinical trials as incurred. These costs consist primarily of pre-manufacturing and manufacturing drug costs, clinical trial execution, investigator payments, license fees, salaries, stock-based compensation and related personnel costs. Other costs include fees paid to consultants and outside service providers related to the development of the Company’s product candidates and other expenses relating to the design, development, testing and enhancement of its product candidates. |
Inventory | Inventory The Company maintains inventory consisting of bulk drug substance (“BDS”) used in the manufacturing process. The Company values inventory at net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs to sell. The Company performs an analysis and records a provision for potentially obsolete inventory. The reserve for obsolescence is generally an estimate of the amount of inventory held at period end that is expected to expire in the future based on projected sales volume and expected product expiration or sell-by dates. These assumptions require the Company to analyze the aging of and forecasted demand for its inventory and make estimates regarding future product sales. |
Revenue Recognition | Revenue Recognition The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the most likely method based on historical experience as well as applicable information currently available. Product Sales The Company recognizes revenue from product sales when its performance obligation with its customers has been satisfied. The performance obligation is satisfied at a point in time when the Company’s customers obtain control of the product, which is typically upon acceptance of the product at the delivery site. The Company invoices its customers after acceptance of the product and invoice payments are generally due within 30 days of the invoice date. The Company records product sales net of any variable consideration, including refund rights. The Company uses the most likely amount method when estimating its variable consideration, unless terms are specified within contracts. The Company recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period. These estimates may differ from actual consideration received. The Company evaluates these estimates to reflect known changes. Grant Revenue The Company recognizes revenue from is grant revenue related to the Cancer Prevention and Research Institute of Texas (“CPRIT”) contract, which is being accounted for under ASU No. 2018-08, Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, The CPRIT grant covers the period from June 1, 2017 through May 31, 2023, for a total grant award of up to $15.2 million. CPRIT advances grant funds upon request by the Company consistent with the agreed upon amounts and schedules as provided in the contract. The first tranche of funding of $1.8 million was received in May 2017, a second tranche of funding of $6.5 million was received in October 2017, and the third tranche of funding of $5.4 million was received in December 2019. The remaining $1.5 million will be paid, on a reimbursement basis, after the Company has fulfilled every objective of the final goals of the grant. Funds received are reflected in deferred revenue as a liability until revenue is earned. Grant revenue is recognized when qualifying costs are incurred. When grant funds are received after costs have been incurred, the Company records revenue and a corresponding grants receivable until grant funds are received. As of the September 30, 2022, all $15.2 million has been recognized. On January 7, 2020, the Company was awarded a grant of up to $224,713 from the National Institute of Allergy and Infectious Diseases, which is under the umbrella of the National Institutes of Health (“NIH”). The NIH grant provides funding for continued development of the Company’s technologies for PTX-35. The grant funds will be made available by the NIH to the Company as allowable expenses are incurred. For both the three and nine months ended September 30, 2022, the Company incurred $0.04 million of allowable expenses, respectively, under the NIH grant and recognized the corresponding revenue. For the three and nine months ended September 30, 2021, the Company incurred approximately $0.0 million and $0.03 million of allowable expenses under the NIH grant and recognized a corresponding amount of grant revenues |
Deferred Revenue | Deferred Revenue Deferred revenue is comprised of an exclusive license agreement with Shattuck Labs, Inc. (“Shattuck”) and process development customer deposits received in advance of our fulfillment of performance obligations. License Agreements The Company has licensed certain provisional patent applications and know-how related to fusion proteins to treat cancer and other diseases that were not being developed by the Company. Shattuck paid the Company an initial license fee of $50,000 in June 2016 and is obligated to pay the Company fees upon its receipt of sublicensing income, achievement of certain milestones, and royalties upon sales of commercial products. In-as-much as the technology that the Company out-licensed is in the early stages of development and there is a low likelihood of success for any technology at such stage, there can be no assurance that any products will be developed by Shattuck or that the Company will derive any revenue from Shattuck. Process Development Process development deferred revenue generally represents customer deposits received in advance of the Company’s fulfillment of performance obligations associated with the custom development of a manufacturing process and analytical methods for a customer’s product. |
Accounts Receivable | Accounts Receivable Accounts receivable is primarily comprised of amounts owed to us for services and sales provided under our customer contracts and are recorded at the invoiced amount net of an allowance for doubtful accounts, if necessary. We apply judgment in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts based on various factors, such as the aging of our receivables, historical experience, and the financial condition of our customers. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets The Company’s prepaid expenses and other current assets consist primarily of amounts paid in advance for manufacturing activities, clinical trial support, and insurance. |
Income Taxes | Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that utilization is not likely. |
Other Assets | Other Assets In conjunction with a lease agreement further discussed in Note 13, Scorpion has made reimbursement payments to the lessor for costs incurred in conjunction with the leased site. During the construction of the site, these payments were included in other assets on the consolidated balance sheets. On September 15, 2022, the lease commenced, and in accordance with ASC 842 guidance, the Company capitalized $13.2 million of payments to lab equipment, expensed $0.9 million as supplies and facilities expense, and $10.2 million is included in the operating lease right-of-use asset. |
Significant Accounting Policies | Significant Accounting Policies The significant accounting policies used in preparation of these interim financial statements are disclosed in the audited consolidated financial statements and related notes included in the Company’s 2021 Annual Report. Due to the acquisition of Elusys, there have been changes in the significant accounting policies and estimates during the first nine months of fiscal year 2022 which are reflected in the business combinations, inventory, revenue recognition and deferred revenue policies listed above. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2022 and the Company is currently evaluating the expected impact of this standard but does not expect it to have a material impact on its consolidated financial statements upon adoption. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Acquisitions | |
Schedule of purchase price allocation | Aggregate consideration: Cash consideration $ 3,000,000 Deferred cash consideration 2,000,000 Earn out 5,900,000 Additional earn out 4,735,000 Receivable consideration 22,318,685 Contract deferred consideration 4,900,000 Total estimated purchase consideration $ 42,853,685 Purchase price allocation: Cash and cash equivalents $ 5,719,899 Contract receivables 24,526,232 Prepaid expenses and other current assets 1,905,490 Inventory 5,844,000 Intangible asset – definite-lived (Note 7) 9,700,000 Property and equipment 50,224 Operating lease right of use assets 352,906 Other assets 326,249 Total assets acquired 48,425,000 Accounts payable (204,794) Accrued expenses and other current liabilities (5,155,363) Operating lease obligations (352,906) Deferred income tax liability (3,326,000) Total liabilities assumed (9,039,063) Net assets acquired and liabilities assumed 39,385,937 Goodwill 3,467,748 Total estimated purchase consideration $ 42,853,685 |
Schedule of proforma operating results | The following table presents the pro forma operating results as if Elusys had been included in the Company’s Consolidated Statements of Operations and Comprehensive Loss as of January 1, 2021 (unaudited): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 (unaudited) (unaudited) (unaudited) (unaudited) Revenue $ 29,347,513 $ 44,237,698 $ 29,892,585 $ 46,834,404 Net loss (1,296,510) 23,542,744 (21,282,125) 7,072,846 Net loss per share, basic and diluted (0.05) 0.94 (0.83) 0.28 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Instruments | |
Schedule of fair value inputs | September 30, 2022 December 31, 2021 Current stock price $ 1.73 $ 3.04 Estimated volatility of future stock price 85.00 % 133.13 % Risk free interest rate 3.94 % 0.55 % Contractual term 1.16 years 1.90 years The following table presents quantitative information about the inputs and valuation methodologies used for the Company’s fair value measurements of contingent consideration classified as Level 3 as of September 30, 2022 and December 31, 2021: As of September 30, 2022 Valuation Significant Weighted Average Methodology Unobservable Input (range, if applicable) Elusys Revenue earn-out Discounted cash flow analysis Timing of expected payments 2025-2036 Discount rate 24.5% Future revenue projections $ 325.9 million Elusys Contract deferred consideration Discounted cash flow analysis Timing of expected payments 2023 Discount rate 15% Future revenue projections $ 7.6 million As of September 30, 2021 Valuation Significant Weighted Average Methodology Unobservable Input (range, if applicable) Pelican contingent consideration Probability weighted income approach Milestone dates 2022-2031 Discount rate 7.52 Probability of occurrence 4.9% to 55% |
Schedule of fair value of financial instruments measured on a recurring basis | The fair value of financial instruments measured on a recurring basis is as follows: As of September 30, 2022 Description Total Level 1 Level 2 Level 3 Assets: Short-term investments $ 43,789,736 $ 43,789,736 — — Liabilities: Contingent consideration 17,069,114 — — 17,069,114 Warrant liability 274 — — 274 As of December 31, 2021 Description Total Level 1 Level 2 Level 3 Assets: Short-term investments $ 88,324,922 $ 88,324,922 — — Liabilities: Contingent consideration 3,342,515 — — 3,342,515 Warrant liability 11,020 — — 11,020 |
Schedule of change in fair value, as determined by Level 3 inputs, for all assets and liabilities using unobservable Level 3 inputs | The following tables summarize the change in fair value, as determined by Level 3 inputs, for all Pelican assets and liabilities using unobservable Level 3 inputs for the nine months ended September 30, 2022 and 2021: Pelican Elusys Total Contingent Contingent Contingent Warrant Consideration Consideration Consideration Liability Balance at December 31, 2021 $ 3,342,515 $ — $ 3,342,515 $ 11,020 Change in fair value (3,342,515) — (3,342,515) (10,746) Acquisition of Elusys — 39,853,685 39,853,685 — Payment of receivable consideration — (20,784,571) (20,784,571) — Payment of deferred cash consideration — (2,000,000) (2,000,000) Balance at September 30, 2022 $ — $ 17,069,114 $ 17,069,114 $ 274 Pelican Contingent Warrant Consideration Liability Balance at December 31, 2020 $ 2,912,515 $ 33,779 Change in fair value 406,000 (2,808) Balance at September 30, 2021 $ 3,318,515 $ 30,971 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses And Other Current Assets. | |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following at: September 30, December 31, 2022 2021 Prepaid preclinical and clinical expenses $ 1,097,594 $ 1,158,560 Prepaid manufacturing expense 727,995 563,280 Other prepaid expenses and current assets 476,659 460,030 Prepaid insurance 128,245 704,650 $ 2,430,493 $ 2,886,520 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consist of the following at: September 30, December 31, 2022 2021 Lab equipment $ 17,530,993 $ 3,178,855 Construction-in-process 2,291,007 309,620 Furniture and fixtures 235,346 66,106 Computers 453,822 85,071 Leasehold improvements 2,427,797 22,563 Vehicles 44,562 — Total 22,983,527 3,662,215 Accumulated depreciation (2,253,010) (1,503,736) Property and equipment, net $ 20,730,517 $ 2,158,479 |
Goodwill and other intangible_2
Goodwill and other intangible assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and other intangible assets | |
Schedule of carrying amount of goodwill and intangible assets | Intangible Goodwill IPR&D Assets Balance at December 31, 2021 $ — $ 3,500,000 $ — Impairment of intangible asset — (3,500,000) — Acquisition of Elusys Therapeutics 5,067,748 — 11,200,000 Acquisition fair value adjustment (1,600,000) — (1,500,000) Amortization of intangible assets — — (666,875) Balance at September 30, 2022 $ 3,467,748 $ — $ 9,033,125 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses and Other Liabilities | |
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consist of the following: September 30, December 31, 2022 2021 Income tax payable $ 1,092,558 $ — Accrued preclinical and clinical trial expenses 721,923 955,013 Other expenses 725,723 631,312 Compensation and related benefits 313,526 459,178 Accrued manufacturing expenses 959,443 179,173 Accrued franchise tax 10,000 195,000 $ 3,823,173 $ 2,419,676 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity | |
Schedule of common stock warrants outstanding | Common Stock Warrants Outstanding, December 31, 2020 758,939 Issued 31,000 Expired (42,556) Outstanding, September 30, 2021 747,383 |
Schedule of stock option valuation assumptions | The following table summarizes weighted-average assumptions used in our calculations of fair value for the nine months ended September 30, 2022 and 2021: 2022 2021 Dividend yield — % — % Expected volatility 102.75 % 102.15 % Risk-free interest rate 2.51 % 0.67 % Expected lives (years) 6.0 years 5.6 years |
Schedule of stock option activity | Weighted Weighted Average Aggregate Average Exercise Intrinsic Remaining Shares Price Value Contractual Life Stock options outstanding at December 31, 2021 2,954,315 $ 7.62 Granted 204,050 $ 2.79 Expired (40,375) $ 12.72 Forfeited (111,022) $ 4.71 Stock options outstanding at September 30, 2022 3,006,968 $ 7.34 $ 42,330 8.3 Years Stock options exercisable at September 30, 2022 1,580,965 $ 10.00 $ 42,330 7.6 Years |
Schedule of restricted stock activity | Weighted Average Shares Fair Value Restricted stock at December 31, 2021 370,170 $ 4.71 Vested (323,311) $ 4.92 Restricted stock at September 30, 2022 46,859 $ 3.28 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss Per Share | |
Schedule of reconciliation of net loss | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net loss $ (13,094,771) $ (7,548,225) $ (31,548,479) $ (21,791,941) Net loss - Non-controlling interest (89,421) (115,505) (265,256) (283,846) Net loss attributable to NightHawk $ (13,005,350) $ (7,432,720) $ (31,283,223) $ (21,508,095) Weighted-average common shares outstanding, basic and diluted 25,613,316 25,137,628 25,603,481 24,828,438 Net loss per share, basic and diluted $ (0.51) $ (0.30) $ (1.22) $ (0.87) |
Schedule of potentially dilutive securities | 2022 2021 Outstanding stock options 3,006,968 1,890,174 Restricted stock subject to forfeiture and restricted stock units 46,859 259,874 Outstanding common stock warrants 747,383 747,383 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of lease cost | For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022 Operating lease cost $ 195,368 $ 531,371 Finance lease cost Amortization of lease assets 170,492 296,214 Interest on lease liabilities 44,903 56,772 Total finance lease cost $ 215,395 $ 352,986 |
Schedule of weighted average remaining lease term and incremental borrowing rate | For the Nine Months Ended September 30, 2022 For the Nine Months Ended September 30, 2021 Weighted average remaining lease term Operating leases 4.2 years 5.6 years Finance leases 9.5 years 2.1 years Weighted average incremental borrowing rate Operating leases 5.25 % 6.44 % Finance leases 6.65 % 5.63 % |
Schedule of maturities of operating and finance lease liabilities | Maturities of operating and finance lease liabilities as of September 30, 2022 were as follows: Operating Leases Finance Leases Total Years Ending December 31, 2022 (excluding the nine months ended September 30, 2022) $ 179,752 245,867 425,619 2023 558,216 700,292 1,258,508 2024 403,966 812,383 1,216,349 2025 315,132 715,782 1,030,914 2026 245,606 595,309 840,915 2027 209,214 615,269 824,483 Thereafter - 7,716,135 7,716,135 Total minimum lease payments 1,911,886 11,401,037 13,312,923 Less: imputed interest (188,718) (4,534,103) (4,722,821) Present value of lease liabilities $ 1,723,168 $ 6,866,934 $ 8,590,102 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 76 Months Ended | |||||||||||
Sep. 15, 2022 USD ($) | Jan. 07, 2020 USD ($) | Dec. 31, 2019 USD ($) | Oct. 31, 2017 USD ($) | May 31, 2017 USD ($) | Jun. 30, 2016 USD ($) | May 31, 2016 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Oct. 31, 2018 | Sep. 30, 2018 | |
Basis of Presentation and Significant Accounting Policies | |||||||||||||||
Accumulated deficit | $ 197,002,176 | $ 197,002,176 | $ 197,002,176 | $ 165,718,953 | |||||||||||
Net loss | 13,094,771 | $ 7,548,225 | 31,548,479 | $ 21,791,941 | |||||||||||
Cash, cash equivalents and short term investments | 57,400,000 | 57,400,000 | 57,400,000 | ||||||||||||
Derivative warrant liability | 274 | $ 274 | $ 274 | 11,020 | |||||||||||
Number of operating segments | segment | 1 | ||||||||||||||
Revenue Recognition | |||||||||||||||
Revenue | 6,039,853 | 501,567 | $ 6,303,252 | 1,499,706 | |||||||||||
Allowable expenses incurred under NIH grant | $ 40,000 | 0 | $ 40,000 | 30,000 | |||||||||||
Other Assets. | |||||||||||||||
Other assets | $ 12,193,540 | ||||||||||||||
Shattuck Labs Inc. License Agreement | Shattuck | |||||||||||||||
Deferred Revenue | |||||||||||||||
Initial license fees | $ 50,000 | ||||||||||||||
Lab equipment | |||||||||||||||
Other Assets. | |||||||||||||||
Reimbursement of expenses, capitalized | $ 13,200,000 | ||||||||||||||
Reimbursements, expensed | 900,000 | ||||||||||||||
Reimbursement Included in operating lease right of use asset | $ 10,200,000 | ||||||||||||||
Pelican Therapeutics, Inc. | |||||||||||||||
Basis of Presentation and Significant Accounting Policies | |||||||||||||||
Ownership interest in subsidiary | 85% | 85% | 85% | 85% | 85% | 80% | |||||||||
Pelican Therapeutics, Inc. | |||||||||||||||
Basis of Presentation and Significant Accounting Policies | |||||||||||||||
Contingent consideration liability, written off | $ 3,100,000 | ||||||||||||||
Revenue Recognition | |||||||||||||||
Amount awarded from CPRIT grant | $ 15,200,000 | ||||||||||||||
Grant revenue | |||||||||||||||
Revenue Recognition | |||||||||||||||
Revenue | 58,860 | 501,567 | $ 322,259 | $ 1,499,706 | |||||||||||
Allowable expenses incurred under NIH grant | 40,470 | $ 0 | |||||||||||||
Grant revenue | Maximum | |||||||||||||||
Revenue Recognition | |||||||||||||||
Amount awarded from NIH grant | $ 224,713 | ||||||||||||||
Grant revenue | Pelican Therapeutics, Inc. | |||||||||||||||
Revenue Recognition | |||||||||||||||
Revenue | $ 15,200,000 | ||||||||||||||
Remaining grant amount receivable | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | ||||||||||||
Grant revenue | Pelican Therapeutics, Inc. | Maximum | |||||||||||||||
Revenue Recognition | |||||||||||||||
Amount awarded from CPRIT grant | $ 15,200,000 | ||||||||||||||
Grant revenue | Tranche 1 | Pelican Therapeutics, Inc. | |||||||||||||||
Revenue Recognition | |||||||||||||||
Revenue | $ 1,800,000 | ||||||||||||||
Grant revenue | Tranche 2 | Pelican Therapeutics, Inc. | |||||||||||||||
Revenue Recognition | |||||||||||||||
Revenue | $ 6,500,000 | ||||||||||||||
Grant revenue | Tranche 3 | Pelican Therapeutics, Inc. | |||||||||||||||
Revenue Recognition | |||||||||||||||
Revenue | $ 5,400,000 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Apr. 18, 2022 | Apr. 30, 2022 | Jun. 30, 2016 | May 31, 2016 | Sep. 30, 2022 | Sep. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2021 | Oct. 31, 2018 | Sep. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Acquisitions | ||||||||||||
Goodwill | $ 3,467,748 | $ 3,467,748 | ||||||||||
Pelican Therapeutics, Inc. | ||||||||||||
Acquisitions | ||||||||||||
Ownership interest in subsidiary | 85% | 85% | 85% | 85% | 80% | |||||||
Pelican Therapeutics, Inc. | ||||||||||||
Acquisitions | ||||||||||||
Percentage of voting interests acquired in acquisition | 80% | |||||||||||
Amount awarded from CPRIT grant | $ 15,200,000 | |||||||||||
Pelican Therapeutics, Inc. | Grant revenue | Maximum | ||||||||||||
Acquisitions | ||||||||||||
Amount awarded from CPRIT grant | $ 15,200,000 | |||||||||||
Pelican Therapeutics, Inc. | Certain Directors | ||||||||||||
Acquisitions | ||||||||||||
Percentage of milestone payments that will be paid to related parties | 22.70% | |||||||||||
Elusys Therapeutics | ||||||||||||
Acquisitions | ||||||||||||
Acquisition costs | $ 5,000 | $ 600,000 | ||||||||||
Earn out payments period | 12 years | |||||||||||
Percentage of earn out payments | 10% | |||||||||||
Frequency of periodic earn out payment | 1 year | |||||||||||
Period of occurrence of earn payment | 9 years | |||||||||||
Receivable consideration | $ 22,318,685 | |||||||||||
Consideration paid | $ 20,800,000 | |||||||||||
Contract receivables | 24,526,232 | |||||||||||
Fair value of the purchase consideration | 42,900,000 | |||||||||||
Cash consideration | 3,000,000 | |||||||||||
Deferred cash consideration | 2,000,000 | |||||||||||
Fair value of contingent and deferred consideration liabilities | $ 37,900,000 | |||||||||||
Discount rate for deferred consideration | 24% | |||||||||||
Discount rate for earn out liabilities | 14% | |||||||||||
Preliminary value of Additional Earn Out liability as percentage | 80% | |||||||||||
Goodwill | $ 3,467,748 | |||||||||||
Goodwill deductible for tax purposes | 15 years | |||||||||||
Elusys Therapeutics | Forecast | ||||||||||||
Acquisitions | ||||||||||||
Contingent consideration | $ 4,700,000 |
Acquisitions - Preliminary Fair
Acquisitions - Preliminary Fair Value of Purchase Consideration (Details) - USD ($) | 9 Months Ended | |
Apr. 18, 2022 | Sep. 30, 2022 | |
Acquisitions | ||
Total estimated purchase consideration | $ 42,853,685 | |
Elusys Therapeutics | ||
Acquisitions | ||
Cash consideration | $ 3,000,000 | |
Deferred cash consideration | 2,000,000 | |
Earn out | 5,900,000 | |
Additional earn out | 4,735,000 | |
Receivable consideration | 22,318,685 | |
Contract deferred Consideration | 4,900,000 | |
Total estimated purchase consideration | $ 42,853,685 |
Acquisitions - Preliminary Purc
Acquisitions - Preliminary Purchase Price Allocation (Details) - USD ($) | 5 Months Ended | |
Sep. 30, 2022 | Apr. 18, 2022 | |
Purchase price allocation: | ||
Intangible asset - definite-lived (Note 7) | $ 9,700,000 | |
Goodwill | 3,467,748 | |
Elusys Therapeutics | ||
Purchase price allocation: | ||
Cash and cash equivalents | $ 5,719,899 | |
Contract receivables | 24,526,232 | |
Inventory | 5,844,000 | |
Prepaid expenses and other current assets | 1,905,490 | |
Intangible asset - definite-lived (Note 7) | 9,700,000 | |
Property and equipment | 50,224 | |
Operating lease right of use assets | 352,906 | |
Other assets | 326,249 | |
Total assets acquired | 48,425,000 | |
Accounts payable | (204,794) | |
Accrued expenses and other current liabilities | (5,155,363) | |
Operating lease obligations | (352,906) | |
Deferred income tax liability | (3,326,000) | |
Total liabilities assumed | (9,039,063) | |
Net assets acquired and liabilities assumed | 39,385,937 | |
Goodwill | 3,467,748 | |
Total estimated purchase consideration | $ 42,853,685 | |
Total revenue of acquiree from acquisition date | 6,000,000 | |
Net loss of acquiree from acquisition date | $ 3,900,000 |
Acquisitions - Supplemental Pro
Acquisitions - Supplemental Pro Forma Financial Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Acquisitions | ||||
Revenue | $ 29,347,513 | $ 44,237,698 | $ 29,892,585 | $ 46,834,404 |
Net loss | $ (1,296,510) | $ 23,542,744 | $ (21,282,125) | $ 7,072,846 |
Net loss per share, basic | $ (0.05) | $ 0.94 | $ (0.83) | $ 0.28 |
Net loss per share, diluted | $ (0.05) | $ 0.94 | $ (0.83) | $ 0.28 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Warrant Weighted Average Assumptions (Details) | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2020 shares | Sep. 30, 2022 USD ($) item $ / shares shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 $ / shares item | |
Fair Value of Financial Instruments | ||||
Assets transfer from level 1 to level 2 | $ 0 | $ 0 | ||
Level 3 Asset transferred, net | 0 | 0 | ||
Level 3 liabilities transferred, net | $ 0 | $ 0 | ||
Warrants outstanding | shares | 9,357 | |||
Current stock price | ||||
Fair Value of Financial Instruments | ||||
Fair value measurement input | $ / shares | 1.73 | 3.04 | ||
Estimated volatility of future stock price | ||||
Fair Value of Financial Instruments | ||||
Fair value measurement input | 0.8500 | 1.3313 | ||
Risk free interest rate | ||||
Fair Value of Financial Instruments | ||||
Fair value measurement input | 0.0394 | 0.0055 | ||
Contractual term | ||||
Fair Value of Financial Instruments | ||||
Fair value measurement input | item | 1.16 | 1.90 | ||
Warrant | ||||
Fair Value of Financial Instruments | ||||
Number of warrants reclassified to liability | shares | 479,595 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Schedule of Fair Value Financial Instruments (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Liabilities: | ||
Derivative warrant liability | $ 274 | $ 11,020 |
Recurring | ||
Assets: | ||
Short-term investments | 43,789,736 | 88,324,922 |
Liabilities: | ||
Contingent consideration | 17,069,114 | 3,342,515 |
Derivative warrant liability | 274 | 11,020 |
Recurring | Level 1 | ||
Assets: | ||
Short-term investments | 43,789,736 | 88,324,922 |
Recurring | Level 3 | ||
Liabilities: | ||
Contingent consideration | 17,069,114 | 3,342,515 |
Derivative warrant liability | $ 274 | $ 11,020 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Change in Fair Value (Details) - USD ($) | 9 Months Ended | ||
Apr. 18, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Elusys Therapeutics | |||
Change in fair value | |||
Contingent consideration paid | $ 22,800,000 | ||
Contingent Consideration | |||
Change in fair value | |||
Balance at the beginning | $ 3,342,515 | ||
Change in fair value | (3,342,515) | ||
Acquisition of Elusys | 39,853,685 | ||
Payment of receivable consideration | (20,784,571) | ||
Payment of deferred cash consideration | (2,000,000) | ||
Balance at end | 17,069,114 | ||
Contingent Consideration | Pelican Therapeutics, Inc. | |||
Change in fair value | |||
Balance at the beginning | 3,342,515 | $ 2,912,515 | |
Change in fair value | (3,342,515) | 406,000 | |
Balance at end | 3,318,515 | ||
Contingent Consideration | Elusys Therapeutics | |||
Change in fair value | |||
Acquisition of Elusys | 39,853,685 | ||
Payment of receivable consideration | (20,784,571) | ||
Payment of deferred cash consideration | (2,000,000) | ||
Balance at end | 17,069,114 | ||
Warrant Liability | |||
Change in fair value | |||
Balance at the beginning | 11,020 | 33,779 | |
Change in fair value | (10,746) | (2,808) | |
Balance at end | $ 274 | $ 30,971 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Schedule of Inputs and Valuation Methodologies Used (Details) - Level 3 $ in Millions | Sep. 30, 2022 USD ($) | Sep. 30, 2021 |
Contingent Consideration | Pelican Therapeutics, Inc. | Discount rate | Probability weighted income approach | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 0.0752 | |
Revenue earn-out | Elusys Therapeutics | Discount rate | Discounted cash flow analysis | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 0.245 | |
Revenue earn-out | Elusys Therapeutics | Future revenue projections | Discounted cash flow analysis | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 325.9 | |
Contract deferred consideration | Elusys Therapeutics | Discount rate | Discounted cash flow analysis | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 0.15 | |
Contract deferred consideration | Elusys Therapeutics | Future revenue projections | Discounted cash flow analysis | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 7.6 | |
Minimum | Contingent Consideration | Pelican Therapeutics, Inc. | Probability of occurrence | Probability weighted income approach | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 0.049 | |
Maximum | Contingent Consideration | Pelican Therapeutics, Inc. | Probability of occurrence | Probability weighted income approach | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Contingent Consideration | 0.55 |
Short-Term Investments (Details
Short-Term Investments (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Mutual funds | ||
Estimated fair value | $ 43.8 | $ 88.3 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Prepaid Expenses And Other Current Assets | ||
Prepaid preclinical and clinical expenses | $ 1,097,594 | $ 1,158,560 |
Prepaid manufacturing expense | 727,995 | 563,280 |
Other prepaid expenses and current assets | 476,659 | 460,030 |
Prepaid insurance | 128,245 | 704,650 |
Prepaid expenses and other current assets | $ 2,430,493 | $ 2,886,520 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property and Equipment | |||||
Total | $ 22,983,527 | $ 22,983,527 | $ 3,662,215 | ||
Accumulated depreciation | (2,253,010) | (2,253,010) | (1,503,736) | ||
Property and equipment, net | 20,730,517 | 20,730,517 | 2,158,479 | ||
Depreciation expense | 442,497 | $ 115,251 | $ 749,274 | $ 292,960 | |
Minimum | |||||
Property and Equipment | |||||
Estimated useful lives | 3 years | ||||
Maximum | |||||
Property and Equipment | |||||
Estimated useful lives | 8 years | ||||
Lab equipment | |||||
Property and Equipment | |||||
Total | 17,530,993 | $ 17,530,993 | 3,178,855 | ||
Construction in progress | |||||
Property and Equipment | |||||
Total | 2,291,007 | 2,291,007 | 309,620 | ||
Furniture and fixtures | |||||
Property and Equipment | |||||
Total | 235,346 | 235,346 | 66,106 | ||
Computers | |||||
Property and Equipment | |||||
Total | 453,822 | 453,822 | 85,071 | ||
Leasehold Improvements | |||||
Property and Equipment | |||||
Total | 2,427,797 | 2,427,797 | $ 22,563 | ||
Vehicles | |||||
Property and Equipment | |||||
Total | $ 44,562 | $ 44,562 |
Goodwill and other intangible_3
Goodwill and other intangible assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2017 | |
Goodwill and other intangible assets | |||||
Balance of finite-lived intangible assets | $ 9,033,125 | $ 3,500,000 | $ 9,033,125 | ||
In-process research and development impairment | 3,500,000 | $ 3,500,000 | |||
Estimated useful life | 80 months | ||||
Fair value of contract deferred consideration liability | 4,900,000 | $ 4,900,000 | |||
Fair value of the intangible assets recognized | 9,700,000 | 9,700,000 | |||
Increase (decrease) in fair value of contract deferred consideration | (1,600,000) | ||||
Increase (decrease) in goodwill and intangibles assets | $ (1,500,000) | ||||
In-process R&D. | |||||
Goodwill and other intangible assets | |||||
Balance of finite-lived intangible assets | 3,500,000 | $ 5,900,000 | |||
Intangible assets fair value | 3,500,000 | ||||
In-process research and development impairment | $ 2,400,000 | $ 0 | $ 3,500,000 | ||
Pelican Therapeutics, Inc. | In-process R&D. | |||||
Goodwill and other intangible assets | |||||
Finite-lived intangible assets acquired | $ 5,900,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Carrying amount of goodwill and intangible assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | |
Goodwill | ||||
Acquisition | $ 5,067,748 | |||
Acquisition fair value adjustment | (1,600,000) | |||
Goodwill ending balance | $ 3,467,748 | 3,467,748 | ||
Intangible Assets | ||||
Intangible assets beginning balance | 3,500,000 | |||
Impairment loss | (3,500,000) | (3,500,000) | ||
Amortization of intangible assets | (316,875) | (666,875) | ||
Intangible assets, ending balance | 9,033,125 | $ 3,500,000 | 9,033,125 | |
In-process R&D. | ||||
Intangible Assets | ||||
Intangible assets beginning balance | 5,900,000 | 3,500,000 | ||
Impairment loss | (2,400,000) | $ 0 | (3,500,000) | |
Intangible assets, ending balance | $ 3,500,000 | $ 5,900,000 | ||
Intangible Assets | ||||
Intangible Assets | ||||
Acquisition | 11,200,000 | |||
Acquisition fair value adjustment | (1,500,000) | |||
Amortization of intangible assets | (666,875) | |||
Intangible assets, ending balance | $ 9,033,125 | $ 9,033,125 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Liabilities | ||
Income tax payable | $ 1,092,558 | |
Accrued preclinical and clinical trial expenses | 721,923 | $ 955,013 |
Other expenses | 725,723 | 631,312 |
Compensation and related benefits | 313,526 | 459,178 |
Accrued manufacturing expenses | 959,443 | 179,173 |
Accrued franchise tax | 10,000 | 195,000 |
Accrued expenses and other current liabilities | $ 3,823,173 | $ 2,419,676 |
Stockholders' Equity - ATM Offe
Stockholders' Equity - ATM Offerings (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Proceeds from the issuance of common stock | $ 26,304,282 | |||
At The Market Offering | ||||
Issuance of common stock (in shares) | 0 | 2,106,027 | 0 | |
Average price of common stock | $ 12.18 | |||
Proceeds from the issuance of common stock | $ 25,646,099 | |||
Percentage of commission for common stock sold | 3% |
Stockholders' Equity - Changes
Stockholders' Equity - Changes in Outstanding Warrants (Details) - Common stock warrants - $ / shares | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | |||
Warrants to purchase common stock | 747,383 | 747,383 | |
Weighted-average exercise price | $ 11.06 | $ 11.06 | |
Outstanding, beginning balance | 758,939 | ||
Issued | 31,000 | ||
Expired | (42,556) | ||
Outstanding, ending balance | 747,383 |
Stockholders' Equity - Equity C
Stockholders' Equity - Equity Compensation Plan - Narrative (Details) - shares | 9 Months Ended | |
Aug. 02, 2021 | Sep. 30, 2022 | |
Stockholders' Equity | ||
Granted | 204,050 | |
Subsidiaries Stock Incentive Plan | CEO | Skunkworx Bio, Inc. | ||
Stockholders' Equity | ||
Granted | 10,526 | |
Subsidiaries Stock Incentive Plan | CEO | Scorpion Biological Services, Inc. | ||
Stockholders' Equity | ||
Granted | 10,638 | |
Subsidiaries Stock Incentive Plan | CEO | Abacus Biotech, Inc. | ||
Stockholders' Equity | ||
Granted | 10,526 | |
Subsidiaries Stock Incentive Plan | CEO | Blackhawk Bio Inc. | ||
Stockholders' Equity | ||
Granted | 10,526 | |
Subsidiaries Stock Incentive Plan | CFO | ||
Stockholders' Equity | ||
Granted | 2,127 |
Stockholders' Equity - Accounti
Stockholders' Equity - Accounting for Stock-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stockholders' Equity | ||||
Stock-based compensation | $ 700,000 | $ 900,000 | $ 2,430,389 | $ 4,376,588 |
Compensation expenses capitalized | $ 0 | $ 0 | $ 0 | $ 0 |
Employee stock options | ||||
Stockholders' Equity | ||||
Vesting period | 4 years | |||
Expiration term | 10 years | 10 years | ||
Employee stock options | Maximum | ||||
Stockholders' Equity | ||||
Expiration term | 10 years |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Valuation Assumptions (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Stockholders' Equity | ||
Dividend yield | 0% | 0% |
Expected volatility | 102.75% | 102.15% |
Risk-free interest rate | 2.51% | 0.67% |
Expected lives (years) | 6 years | 5 years 7 months 6 days |
Weighted average grant date fair value (in dollars per share) | $ 2.25 | $ 4.41 |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Shares | |
Stock options outstanding at beginning of period | shares | 2,954,315 |
Granted | shares | 204,050 |
Expired | shares | (40,375) |
Forfeited | shares | (111,022) |
Stock options outstanding at end of period | shares | 3,006,968 |
Stock options exercisable at end of period | shares | 1,580,965 |
Weighted Average Exercise Price | |
Stock options outstanding at beginning of period (in dollars per share) | $ / shares | $ 7.62 |
Granted (in dollars per share) | $ / shares | 2.79 |
Expired (in dollars per share) | $ / shares | 12.72 |
Forfeited | $ / shares | 4.71 |
Stock options outstanding at end of period (in dollars per share) | $ / shares | 7.34 |
Stock options exercisable at end of period | $ / shares | $ 10 |
Aggregate Intrinsic Value | |
Stock options outstanding at end of period | $ | $ 42,330 |
Stock options exercisable at end of period | $ | $ 42,330 |
Weighted Average Remaining Contractual Life | |
Stock options outstanding at end of period | 8 years 3 months 18 days |
Stock options exercisable at end of period | 7 years 7 months 6 days |
Unrecognized stock-based compensation expense | $ | $ 3,700,000 |
Unrecognized stock-based compensation expense, recognition period | 1 year 3 months 18 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Restricted stock | |
Shares | |
Restricted stock at beginning of period | 370,170 |
Vested | (323,311) |
Restricted stock at end of period | 46,859 |
Weighted Average Fair Value | |
Restricted stock at beginning of period | $ / shares | $ 4.71 |
Vested | $ / shares | 4.92 |
Restricted stock at end of period | $ / shares | $ 3.28 |
RSU's | |
Shares | |
Restricted stock at beginning of period | 0 |
Restricted stock at end of period | 0 |
RSU's | Vest on grant date | |
Stockholders' Equity | |
Vesting percentage | 25% |
RSU's | Vest on each anniversary thereafter | |
Stockholders' Equity | |
Vesting percentage | 25% |
Revenue (Details)
Revenue (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 76 Months Ended | |||||||||
Apr. 19, 2022 USD ($) item | Jan. 07, 2020 USD ($) | Dec. 31, 2019 USD ($) | Oct. 31, 2017 USD ($) | May 31, 2017 USD ($) | Jun. 30, 2016 USD ($) | May 31, 2016 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Grant Revenue | |||||||||||||
Revenue | $ 6,039,853 | $ 501,567 | $ 6,303,252 | $ 1,499,706 | |||||||||
Grant receivable | 1,524,522 | 1,524,522 | $ 1,524,522 | $ 1,318,359 | |||||||||
Allowable expenses incurred under NIH grant | 40,000 | 0 | 40,000 | 30,000 | |||||||||
Grant revenue | |||||||||||||
Grant Revenue | |||||||||||||
Revenue | 58,860 | 501,567 | 322,259 | $ 1,499,706 | |||||||||
Allowable expenses incurred under NIH grant | 40,470 | $ 0 | |||||||||||
Grant revenue | Maximum | |||||||||||||
Grant Revenue | |||||||||||||
Amount Awarded From NIH Grant | $ 224,713 | ||||||||||||
ANTHIM Vials | |||||||||||||
Grant Revenue | |||||||||||||
Number of vials to be delivered | item | 3,000 | ||||||||||||
Contract award | $ 6,000,000 | ||||||||||||
Bad debt expense | 0 | ||||||||||||
ANTHIM Vials | Accounts receivable | |||||||||||||
Grant Revenue | |||||||||||||
Contract with customer, receivable, after allowance for credit loss, current | $ 6,000,000 | ||||||||||||
Pelican Therapeutics, Inc. | |||||||||||||
Grant Revenue | |||||||||||||
Amount awarded from CPRIT grant | $ 15,200,000 | ||||||||||||
Pelican Therapeutics, Inc. | Grant revenue | |||||||||||||
Grant Revenue | |||||||||||||
Revenue | 15,200,000 | ||||||||||||
Remaining grant amount receivable | 1,500,000 | 1,500,000 | 1,500,000 | ||||||||||
Amount the company is required to match of each dollar of grant | 0.50 | 0.50 | 0.50 | ||||||||||
Threshold amount for match of grant | 1 | 1 | 1 | ||||||||||
Contribution to be made by Pelican | $ 7,600,000 | $ 7,600,000 | $ 7,600,000 | ||||||||||
Pelican Therapeutics, Inc. | Grant revenue | Maximum | |||||||||||||
Grant Revenue | |||||||||||||
Amount awarded from CPRIT grant | $ 15,200,000 | ||||||||||||
Royalty percentage after threshold is met | 1% | ||||||||||||
Pelican Therapeutics, Inc. | Grant revenue | Tranche 1 | |||||||||||||
Grant Revenue | |||||||||||||
Revenue | $ 1,800,000 | ||||||||||||
Pelican Therapeutics, Inc. | Grant revenue | Tranche 2 | |||||||||||||
Grant Revenue | |||||||||||||
Revenue | $ 6,500,000 | ||||||||||||
Pelican Therapeutics, Inc. | Grant revenue | Tranche 3 | |||||||||||||
Grant Revenue | |||||||||||||
Revenue | $ 5,400,000 |
Net Loss Per Share - Reconcilia
Net Loss Per Share - Reconciliation of Net Loss (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Loss Per Share | ||||
Net loss | $ (13,094,771) | $ (7,548,225) | $ (31,548,479) | $ (21,791,941) |
Net loss: Non-controlling interest | (89,421) | (115,505) | (265,256) | (283,846) |
Net loss attributable to Heat Biologics, Inc. | $ (13,005,350) | $ (7,432,720) | $ (31,283,223) | $ (21,508,095) |
Weighted-average common shares outstanding, basic (in shares) | 25,613,316 | 25,137,628 | 25,603,481 | 24,828,438 |
Weighted-average common shares outstanding, diluted (in shares) | 25,613,316 | 25,137,628 | 25,603,481 | 24,828,438 |
Net loss per share, basic (in dollars per share) | $ (0.51) | $ (0.30) | $ (1.22) | $ (0.87) |
Net loss per share, diluted (in dollars per share) | $ (0.51) | $ (0.30) | $ (1.22) | $ (0.87) |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Employee stock options | ||
Net Loss Per Share | ||
Potentially dilutive securities | 3,006,968 | 1,890,174 |
Restricted stock subject to forfeiture and restricted stock units | ||
Net Loss Per Share | ||
Potentially dilutive securities | 46,859 | 259,874 |
Common stock warrants | ||
Net Loss Per Share | ||
Potentially dilutive securities | 747,383 | 747,383 |
Income Tax (Details)
Income Tax (Details) | 3 Months Ended | |
Sep. 30, 2021 USD ($) item | Sep. 30, 2022 USD ($) | |
Income Tax | ||
Number of ownership changes over 50% | item | 5 | |
Federal | ||
Income Tax | ||
Net operating loss carryforwards | $ 170,426,581 | |
NOLs that will expire unutilized | $ 58,182,000 | |
R&D credits that will expire unutilized | $ 2,935,000 | |
Federal | Pelican Therapeutics, Inc. | ||
Income Tax | ||
Net operating loss carryforwards | $ 3,027,284 |
Leases - Facility Lease (Detail
Leases - Facility Lease (Details) | 1 Months Ended | ||||
Sep. 15, 2022 USD ($) item | Oct. 31, 2021 ft² | Jun. 30, 2021 USD ($) ft² item | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Leases | |||||
Minimum amount of undiscounted lease payments | $ 1,911,886 | ||||
Finance lease right-of-use asset | 16,645,455 | $ 470,700 | |||
Finance lease liability | 6,866,934 | ||||
Lab equipment | |||||
Leases | |||||
Reimbursement of expenses, capitalized | $ 13,200,000 | ||||
Reimbursements, expensed | $ 900,000 | ||||
Morrisville, NC | |||||
Leases | |||||
Area of facility to be leased | ft² | 15,996 | ||||
Lease term | 8 years | ||||
Number of lease renewal terms | item | 1 | ||||
Lease renewal term | 5 years | ||||
Maximum amount of tenant improvements provided for under lease | $ 2,400,000 | ||||
Minimum amount of undiscounted lease payments | $ 4,700,000 | ||||
San Antonio, TX | |||||
Leases | |||||
Area of facility to be leased | ft² | 20,144 | ||||
Reimbursement of expenses to lessor | $ 24,300,000 | ||||
Lease term | 15 years | ||||
Number of lease renewal terms | item | 1 | ||||
Lease renewal term | 15 years | ||||
Number of lease subsequent renewal terms | item | 1 | ||||
Lease subsequent renewal term | 10 years | ||||
Maximum amount of tenant improvements provided for under lease | $ 2,400,000 | ||||
Reimbursements, expensed | 900,000 | ||||
Reimbursement included in finance lease right of use asset | 10,200,000 | ||||
Finance lease right-of-use asset | 16,100,000 | ||||
Finance lease liability | 6,100,000 | ||||
San Antonio, TX | Lab equipment | |||||
Leases | |||||
Reimbursement of expenses, capitalized | $ 13,200,000 |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | |||
Operating lease payments | $ 200,000 | ||
Effective interest rate | 6.65% | ||
Operating lease cost | $ 195,368 | $ 531,371 | |
Finance lease cost | |||
Amortization of lease assets | 170,492 | 296,214 | |
Interest on lease liabilities | 44,903 | 56,772 | |
Lease cost | $ 215,395 | $ 352,986 | |
Weighted average remaining lease term (years), Operating leases | 4 years 2 months 12 days | 4 years 2 months 12 days | 5 years 7 months 6 days |
Weighted average remaining lease term (years), Finance leases | 9 years 6 months | 9 years 6 months | 2 years 1 month 6 days |
Weighted average incremental borrowing rate, Operating leases | 5.25% | 5.25% | 6.44% |
Weighted average incremental borrowing rate, Finance leases | 6.65% | 6.65% | 5.63% |
Leases - Maturities of Operatin
Leases - Maturities of Operating and Finance Lease Liabilities (Details) | Sep. 30, 2022 USD ($) |
Maturities of operating lease liabilities | |
Years Ending December 31, 2022 (excluding the nine months ended September 30, 2022) | $ 179,752 |
2023 | 558,216 |
2024 | 403,966 |
2025 | 315,132 |
2026 | 245,606 |
2027 | 209,214 |
Total minimum lease payments | 1,911,886 |
Less: imputed interest | (188,718) |
Present value of operating lease liabilities | 1,723,168 |
Maturities of finance lease liabilities | |
Years Ending December 31, 2022 (excluding the nine months ended September 30, 2022) | 245,867 |
2023 | 700,292 |
2024 | 812,383 |
2025 | 715,782 |
2026 | 595,309 |
2027 | 615,269 |
Thereafter | 7,716,135 |
Total minimum lease payments | 11,401,037 |
Less: imputed interest | (4,534,103) |
Present value of lease liabilities | 6,866,934 |
Maturities of lease liabilities | |
Years Ending December 31, 2022 (excluding the nine months ended September 30, 2022) | 425,619 |
2023 | 1,258,508 |
2024 | 1,216,349 |
2025 | 1,030,914 |
2026 | 840,915 |
2027 | 824,483 |
Thereafter | 7,716,135 |
Total minimum lease payments | 13,312,923 |
Less: imputed interest | (4,722,821) |
Present value of lease liabilities | $ 8,590,102 |