Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 21, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | Dipexium Pharmaceuticals, Inc. | ||
Entity Central Index Key | 1,497,504 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 77,568,188 | ||
Entity Common Stock, Shares Outstanding | 10,351,613 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash | $ 5,234,953 | $ 27,040,325 |
Short-term Investments | 26,977,362 | |
Prepaid Expenses | 146,145 | 120,128 |
TOTAL CURRENT ASSETS | 32,358,460 | 27,160,453 |
OTHER ASSETS | ||
Security Deposit | 49,385 | 49,385 |
TOTAL OTHER ASSETS | 49,385 | 49,385 |
TOTAL ASSETS | 32,407,845 | 27,209,838 |
CURRENT LIABILITIES | ||
Accounts Payable and Accrued Expenses | 1,606,307 | 1,260,598 |
TOTAL LIABILITIES | $ 1,606,307 | $ 1,260,598 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY | ||
Common Stock : $.001 par value, 30,000,000 shares authorized, 10,301,114 and 8,538,329 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively | $ 10,301 | $ 8,538 |
Additional paid-in capital | 71,852,692 | 48,259,451 |
Accumulated deficit | (41,061,455) | (22,318,749) |
TOTAL SHAREHOLDERS' EQUITY | 30,801,538 | 25,949,240 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 32,407,845 | $ 27,209,838 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
BALANCE SHEETS | ||
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 30,000,000 | 30,000,000 |
Common Stock, shares issued | 10,301,114 | 8,538,329 |
Common Stock, shares outstanding | 10,301,114 | 8,538,329 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
OPERATING EXPENSES | ||
Research and Development Expenses | $ 11,286,236 | $ 8,898,280 |
Selling, General and Administrative Expenses | 7,478,527 | 4,684,497 |
TOTAL OPERATING EXPENSES | 18,764,763 | 13,582,777 |
LOSS FROM OPERATIONS | (18,764,763) | (13,582,777) |
Interest Income | 22,057 | 1,793 |
NET LOSS | $ (18,742,706) | $ (13,580,984) |
LOSS PER SHARE | ||
Basic and diluted net loss per common share (in dollars per share) | $ (1.99) | $ (1.73) |
Weighted average common shares/units outstanding basic and diluted | 9,432,705 | 7,850,350 |
STATEMENTS OF CHANGES IN MEMBER
STATEMENTS OF CHANGES IN MEMBERS' & SHAREHOLDERS' EQUITY - USD ($) | Class A Membership Interests | Common StockIPO | Common Stock | Additional Paid-in CapitalIPO | Additional Paid-in Capital | Accumulated Deficit | IPO | Total |
Balance at Dec. 31, 2013 | $ 3,206,231 | $ 3,206,231 | ||||||
Balance (in units) at Dec. 31, 2013 | 735,588 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of Restricted Membership Interest Awards (in shares) | 1,000 | |||||||
Issuance of Restricted Membership Interest to Vendors | $ 380,200 | $ 69,812 | 450,012 | |||||
Issuance of Restricted Membership Interest to Vendors (in units) | 7,604 | |||||||
Issuance of Membership Interest for Warrant conversion (in shares) | 23,719 | |||||||
Corporate Conversion | $ (3,586,431) | $ 5,375 | 12,318,821 | $ (8,737,765) | ||||
Corporate Conversion (in shares) | (767,911) | 5,375,377 | ||||||
Issuance of Common Stock, net of issuance costs | $ 3,163 | $ 34,452,506 | $ 34,455,669 | |||||
Issuance of Common Stock, net of issuance costs (in shares) | 3,162,500 | |||||||
Share-Based Compensation | 1,418,312 | 1,418,312 | ||||||
Cashless Exercise of Warrants (in shares) | 452 | |||||||
Net Loss | (13,580,984) | (13,580,984) | ||||||
Balance at Dec. 31, 2014 | $ 8,538 | 48,259,451 | (22,318,749) | $ 25,949,240 | ||||
Balance (in shares) at Dec. 31, 2014 | 8,538,329 | 8,538,329 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of Common Stock, net of issuance costs | $ 1,702 | 19,742,183 | $ 19,743,885 | |||||
Issuance of Common Stock, net of issuance costs (in shares) | 1,702,000 | |||||||
Share Based Payments to Vendors | $ 44 | 575,167 | 575,211 | |||||
Share Based Payments to Vendors (in shares) | 43,953 | |||||||
Share-Based Compensation | $ 14 | 3,275,894 | 3,275,908 | |||||
Share-Based Compensation (in shares) | 14,000 | |||||||
Cashless Exercise of Warrants | $ 3 | (3) | ||||||
Cashless Exercise of Warrants (in shares) | 2,832 | |||||||
Net Loss | (18,742,706) | (18,742,706) | ||||||
Balance at Dec. 31, 2015 | $ 10,301 | $ 71,852,692 | $ (41,061,455) | $ 30,801,538 | ||||
Balance (in shares) at Dec. 31, 2015 | 10,301,114 | 10,301,114 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities: | ||
Net Loss | $ (18,742,706) | $ (13,580,984) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share Based Compensation | 3,275,908 | 1,418,312 |
Share Based Payments to Vendors | 575,211 | 450,012 |
Amortization of short-term investment interest income | (20,621) | |
(Increase) / Decrease In: | ||
Prepaid Expenses | (26,017) | (74,034) |
Security Deposit | (49,385) | |
Accounts Payable and Accrued Expenses | 345,708 | 559,590 |
Net Cash Used In Operating Activities | (14,592,517) | (11,276,489) |
Investing Activities: | ||
Proceeds from Sale of Short-term Investments | 4,000,000 | |
Purchase of Short -term Investments | (30,956,740) | |
Net Cash Used In Investing Activities | (26,956,740) | |
Financing Activities: | ||
Proceeds from issuance of Common Stock, net of issuance costs | 19,743,885 | 34,455,669 |
Net Cash Provided By Financing Activities | 19,743,885 | 34,455,669 |
Net Increase (Decrease) In Cash | (21,805,372) | 23,179,180 |
Cash at Beginning of Year | 27,040,325 | 3,861,145 |
Cash at End of Year | $ 5,234,953 | $ 27,040,325 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
NATURE OF OPERATIONS | |
NATURE OF OPERATIONS | NOTE 1—NATURE OF OPERATIONS Business Dipexium Pharmaceuticals, Inc. (the "Company"), a Delaware corporation, is a late stage pharmaceutical company focused on the development and commercialization of Locilex® (pexiganan cream 0.8%). The Company was formed on January 14, 2010. On March 12, 2014, the Company completed a corporate conversion from a limited liability company to a corporation in conjunction with an initial public offering ("IPO") of common stock. As a result of the corporate conversion, holders of the Class A Membership Interests and warrants in Dipexium Pharmaceuticals, LLC, became holders of common stock and warrants of Dipexium Pharmaceuticals, Inc. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. The Company has needed to raise capital from sales of its securities to sustain operations. In March 2014, the Company completed an IPO of common stock with proceeds, net of issuance costs, of approximately $34.5 million. In June 2015, the Company completed an additional public offering of common stock with net proceeds of approximately $19.7 million. As of December 31, 2015, the Company had cash and short-term investments totaling approximately $32.2 million. Based on the Company's projected expenditures for 2016 and 2017, management currently believes that its current cash balances should be sufficient to fund the Company's operations through 2017. However, if the Company's assumptions underlying its estimated expenses prove to be wrong, it may have to raise additional capital sooner than anticipated. There can be no assurance that the Company's research and development will be successfully completed or that any Company product will be approved or commercially viable. The Company is subject to risks common to companies in the biopharmaceutical industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, development of sales and marketing infrastructure and compliance with Food and Drug Administration ("FDA") and other governmental regulations and approval requirements. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Cash, Cash Equivalents, and Short-Term Investments The Company considers all highly-liquid instruments purchased with a maturity of three months or less to be cash equivalents. Instruments with maturities greater than three months, but less than twelve months are included in short-term investments. The Company purchases United States Treasury bills with maturities ranging from six to twelve months which are classified as being held to maturity and are carried at amortized cost. Securities classified as held to maturity securities are those securities that management has the intent and ability to hold to maturity. The Company maintains its cash balance in one financial institution. The balance is insured up to the maximum allowable by the Federal Deposit Insurance Company ("FDIC"). The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk of loss on cash. At times, the cash balance may exceed the maximum limit of the FDIC. Guaranteed Payments to Members Guaranteed payments to members of the Company prior to the March 2014 corporate conversion, that were designated to represent reasonable compensation for services rendered, were accounted for as Company expenses rather than an allocation of the Company's net income. Research and Development In accordance with Accounting Standards Codification ("ASC") 730, Accounting for Research and Development Costs , the Company expenses research and development costs when incurred. At times, the Company may make cash advances for research and development services. These amounts are capitalized and expensed in the period the service is provided. The Company incurred net research and development expenses in the amounts of $11,286,236 and $8,898,280 for the years ended December 31, 2015 and 2014, respectively. Although the Company manages the conduct of its clinical trials, it relies on third parties to conduct its clinical and preclinical studies and to provide services, including data management, statistical analysis and electronic compilation for clinical trials, as well as for the manufacture of clinical trial supplies. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that are considered in preparing these estimates include the number of subjects enrolled in studies, milestones achieved and other criteria related to the efforts of the vendors. These estimates are subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company records net prepaid or accrued expenses related to these costs. Share-Based Compensation The Company accounts for the cost of services performed by officers and directors received in exchange for an award of Company membership interests, common stock, or stock options, based on the grant-date fair value of the award. In accordance with ASC 718, Stock Compensation , the Company recognizes compensation expense, net of estimated forfeitures, on a straight-line basis over the service period. Share-Based Payments to Vendors The Company accounts for the cost of services performed by vendors in exchange for an award of Company membership interests or common stock based on the grant-date fair value of the award or fair value of the services rendered, whichever is more readily determinable and adjusted to fair value at each reporting date. Such fair value is measured as of the earlier of the date the other party becomes committed to provide goods or services or the date performance by the other party is complete. The Company recognizes the expense in the same period and in the same manner as if the Company had paid cash for the services. Income Taxes Prior to the Company's corporate conversion in March 2014, the Company was organized as a limited liability company. As such, the Company was not a tax paying entity for Federal income tax purposes and, therefore, no income tax expense had been recorded in the financial statements. Income or loss of the Company was passed through to members for inclusion in their respective income tax returns. Subsequent to the corporate conversion in March 2014, the Company became a taxable entity. As such, the Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the financial statements in the period of enactment. The measurement of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The Company had no material amounts recorded for uncertain tax positions, interest or penalties in the accompanying financial statements. The Company currently estimates an annual effective tax rate of 0% as the Company incurred losses for the years ended December 31, 2015and 2014 for both financial statement and tax purposes. Therefore, no Federal or state income tax expense has been recorded in the financial statements. Based on the Company's history of generating operating losses and its anticipation of operating losses continuing in the foreseeable future, the Company has determined that it is more likely than not that the tax benefits from these net operating losses would not be realized and a full valuation allowance against all deferred tax assets has been recorded at December 31, 2015 and 2014, respectively. In the event the Company becomes profitable for a period of two or more years, with future expectations at that time of profitability for future years prior to any significant change in its equity capitalization, the Company would have an opportunity to realize benefit from the deferred tax asset at such time in the future. Fair value of financial instruments The carrying amount of certain of the Company's financial instruments, including cash and accounts payable, is shown at cost, which approximates fair value. Short-term investments with maturities ranging from six to twelve months are classified as being held to maturity and are carried at amortized cost. The age of gross unrealized gains and the fair value of related securities at December 31, 2015 were as follows: Total (maturities within 12 months) Cost Unrealized Gain Fair Value Held to Maturity: Debt Securities: United States Government sponsored bonds $ $ $ For the year ended December 31, 2015, the amount of total amortized interest income was $20,621. The carrying value of $26,977,362 as of December 31, 2015, is equal to the amortized cost plus the amortized interest income of $19,148 on the remaining bonds held at December 31, 2015. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 3—ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at December 31, 2015 and 2014 are as follows: December 31, 2015 December 31, 2014 Accrued compensation expense $ $ Accrued research and development Accrued professional fees Other accounts payable and accrued expenses Totals $ $ |
ISSUANCE OF MEMBERSHIP INTEREST
ISSUANCE OF MEMBERSHIP INTERESTS and COMMON STOCK | 12 Months Ended |
Dec. 31, 2015 | |
ISSUANCE OF MEMBERSHIP INTERESTS and COMMON STOCK | |
ISSUANCE OF MEMBERSHIP INTERESTS and COMMON STOCK | NOTE 4—ISSUANCE OF MEMBERSHIP INTERESTS and COMMON STOCK On March 18, 2014, the Company completed an IPO issuing 3,162,500 shares of common stock at a price of $12 per share, resulting in net proceeds of $34,455,669 after deducting underwriting discounts of $2,656,500 and offering costs $837,831. The then outstanding Class A Membership Interests were converted to shares of common stock using a conversion ratio of 7 to 1, resulting in the conversion of 767,911 Class A Membership Interests into an aggregate of 5,375,377 shares of common stock. On June 30, 2015, the Company completed a stock offering issuing 1,702,000 shares of common stock at a price of $12.50 per share, resulting in net proceeds of approximately $19.7 million after deducting underwriting discounts of $1.3 million and offering costs of approximately $0.3 million. |
SHARE-BASED COMPENSATION and ST
SHARE-BASED COMPENSATION and STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2015 | |
SHARE-BASED COMPENSATION and STOCK OPTIONS | |
SHARE-BASED COMPENSATION and STOCK OPTIONS | NOTE 5—SHARE-BASED COMPENSATION and STOCK OPTIONS Prior to the corporate conversion in March 2014, the Company granted awards of restricted Class A Membership Interests to board members in exchange for services. These membership interests awards were originally scheduled to vest over a period of either 3 or 4 years, with the first year beginning on the date the member joined the board. In each case, these membership interests involved accelerated vesting upon a change of control or other business combination. The fair value of the membership interests granted was equal to the per-membership interest value of the most recent private placement ($50 per membership interest). Total compensation expense in the amount of $100,000 and $125,000 has been recognized as director fees for the years ended December 31, 2015 and 2014, respectively. The following table summarizes the non-vested Class A Membership Interests at December 31, 2015 giving effect to the corporate conversion and the associated activity: Class A Membership Interests converted to Common Stock 7:1 ratio Nonvested at January 1, 2014 Granted — Forfeited ) Vested ) Nonvested at December 31, 2014 Granted — Forfeited — Vested ) Nonvested at December 31, 2015 In December 2013, 1,000 Membership Interests were issued to a member of the board of directors and vested in February 2014. As of December 31, 2015, there was $120,833 of total unrecognized compensation cost related to these awards. That cost is expected to be recognized over a weighted average period of 1.25 years. In November 2013, the board of directors adopted the 2013 Equity Incentive Plan. The plan became effective as of the completion of the corporate conversion and the closing of the IPO. The 2013 Equity Incentive Plan currently reserves 2,141,169 common shares available for issuance. The purpose of the plan is to attract and retain directors, officers, and employees whose services are considered valuable to the Company. In March 2014, effective at the closing of the Company's IPO, the Company granted stock options to purchase 853,787 common shares (10% of the common stock outstanding) to its four executives. The options were issued pursuant to the 2013 Equity Incentive Plan at an exercise price of $13.93 and vest over thirty-six (36) equal monthly installments. In April 2014, a new employee received 7,500 stock options at an exercise price of $10.46 vesting over a three (3) year period. In January 2015, the Company granted stock options to purchase 251,000 common shares to its five employees, outside directors, and certain non-employee consultants. The options were issued pursuant to the 2013 Equity Incentive Plan at an exercise price of $11.35, with one-half of the options vesting upon issuance and the balance vesting evenly over the subsequent 24 months. A portion of the January stock option grant, 35,000 options, was granted to non-employees for services rendered. As such, the Company expensed $353,150, the entire portion of those non-employee grants, at the grant date. Compensation expense associated with these awards is recognized over the vesting period based on the fair value of the option at the grant date determined based on the Black-Scholes model. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company's employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. Because there is no public market for the Company's stock options and very little historical experience with the Company's stock, similar public companies were used for comparison and expectations as to the price volatility assumptions required for fair value computation using the Black-Scholes methodology. The Company determined the fair value of the option awards using the Black-Scholes option pricing model and the following weighted average assumptions: Year Ended December 31, 2015 Year Ended December 31, 2014 Expected term 5.65 years 4.3 years Volatility Dividend yield Risk free interest rate ASC 718 requires stock compensation expense to be recorded net of estimated forfeitures. The Company currently estimates there will be no forfeitures of options. A summary of the Company's stock option activity is as follows: Number of Options Weighted Average Exercise Price Outstanding at January 1, 2014 — Granted $ Forfeited — Outstanding at December 31, 2014 $ Granted $ Forfeited — Outstanding and expected to vest at December 31, 2015 $ Compensation expense relating to options for the years ended December 31, 2015 and 2014 was $3,175,908 and $1,322,479, respectively. The total compensation expense not yet recognized as of December 31, 2015 was $2,473,027. The weighted average vesting period over which the total compensation expense will be recorded related to unvested options not yet recognized as of December 31, 2015 was approximately 1.2 years. The weighted average grant date fair values were $7.61 and $5.88 for 2015 and 2014, respectively. The intrinsic value of the stock options was $0 as of December 31, 2015 and 2014, with a remaining weighted average contractual life of 5.4 years and 5.74 years as of December 31, 2015 and 2014, respectively. Total options excercisable at December 31, 2015 were 657,314. |
SHARE-BASED PAYMENTS TO VENDORS
SHARE-BASED PAYMENTS TO VENDORS | 12 Months Ended |
Dec. 31, 2015 | |
SHARE-BASED PAYMENTS TO VENDORS | |
SHARE-BASED PAYMENTS TO VENDORS | NOTE 6—SHARE-BASED PAYMENTS TO VENDORS In January 2014, the Company entered into a Product Development Agreement with RRD International, LLC ("RRD"), pursuant to which RRD provides certain strategic product development services to the Company during the term of the agreement which was calendar year 2014. These product development services include the management of the Company's ongoing Phase 3 clinical trials, developing, planning and execution of a fully integrated product development strategy and implementation of that strategy either directly or with third party vendors. As consideration for services rendered, the Company agreed to pay RRD partially in cash and by issuing 7,604 of the Company's Class A Membership Interests. The Company expensed the fair value of the Class A Membership Interests, $50 per Class A Membership Interest, based on the most recent private placement. In January 2015, the Company entered into a new amendment to the Product Development Agreement with RRD dated January 2014, pursuant to which RRD will continue to provide certain strategic product development services to the Company for an additional six-month term. As consideration for services rendered, the Company has agreed to pay RRD a total of $600,000, consisting of $450,000 in cash and $150,000 in restricted shares of the Company's common stock (12,346 shares). The Company recorded research and development expense relating to this six-month agreement of $608,495, including the cash payments and stock issuance. In July 2015, the Company entered into two new amendments to the Product Development Agreement with RRD dated January 2014, pursuant to which RRD will continue to provide certain strategic product development services to the Company for an additional six-month term. These services include management of the Company's ongoing Phase 3 clinical trials, developing, planning, and execution of a fully integrated product development strategy and implementation of that strategy either directly or with third party vendors. The services also include activities to support the initiation and the preparation of the New Drug Application ("NDA") Amendment. As consideration for the services rendered, the Company has agreed to pay RRD approximately $1.7 million, consisting of approximately $1.27 million in cash and approximately $423,000 in restricted common stock (31,607 shares). Terms of the services to be provided after December 2015, if any, will be negotiated at a later date. The Company recognizes the costs incurred in connection with this agreement as research and development expenses as services are rendered. The Company recorded research and development expense relating to this agreement of $1,686,965, including cash and stock issuance, for the year ended December 31, 2015. In January 2016, the Company entered into two new amendments to the Product Development Agreement with RRD dated January 2014, pursuant to which RRD will continue to provide certain strategic product development services to the Company for an additional six-month term. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 7—INCOME TAXES The Company has $25.5 million of net operating loss carryforwards and $1.2 million of research tax credit carryforwards as of December 31, 2015. The net operating loss carryforwards and research tax credit carryforwards begin to expire in 2034 and will be utilized for tax purposes at such time the Company generates taxable income. The utilization of these net operating loss carryforwards may also be limited to the extent the Company has certain ownership changes pursuant to section 382 of the Internal Revenue Code. The components of the net deferred income tax asset at December 31, 2015 and 2014 are as follows: 2015 2014 Deferred tax assets: Net operating loss carryforwards $ $ Share-based compensation Research and development credit carryforwards Gross deferred tax assets Less valuation allowance ) ) Net deferred tax asset $ — $ — In assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against their net deferred tax assets at December 31, 2015 because the Company has determine that it is more-likely-than-not that these assets will not be fully realized. The Company reserves 100% of the deferred tax asset pursuant to applicable GAAP accounting rules. In the event the Company becomes profitable for a period of two or more years, with future expectations at that time of profitability for future years prior to any significant change in its equity capitalization, the Company would have an opportunity to realize benefit from the deferred tax asset at such time in the future. The Company did not have unrecognized tax benefits as of December 31, 2015, and does not expect this to change significantly over the next twelve months. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2015, the Company has not accrued interest or penalties related to any uncertain tax positions. A reconciliation of income tax expense (benefit) at the statutory Federal income tax rate and income taxes as reflected in the financial statements for both years ending December 31, 2015 and 2014 is as follows: Federal income tax expense at statutory rate )% State income tax, net of federal benefit — Permanent differences Change in valuation allowance Effective income tax rate — % The Company has generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position for these years. A full valuation allowance has been provided against research and development credits and, if an adjustment is required, this adjustment to the deferred tax asset established for the research and development credit carryforwards would be offset by an adjustment to the valuation allowance. The Company files income tax returns in the U.S. Federal jurisdiction, and various state and local jurisdictions. |
LEASE OF OFFICE SPACE
LEASE OF OFFICE SPACE | 12 Months Ended |
Dec. 31, 2015 | |
LEASE OF OFFICE SPACE | |
LEASE OF OFFICE SPACE | NOTE 8—LEASE OF OFFICE SPACE Effective May 2014, the Company entered into a sublease agreement for office space with current monthly payments of $13,098. The term of the sublease ends on March 30, 2016 with inflationary escalations in 2015 and the first three months of 2016. Total minimum sublease payments for the remaining term of the sublease from December 31, 2015 to March 30, 2016 are $39,294. In January 2016, the Company entered into a lease for office space commencing in March 2016 with current monthly payments of $18,857 subject to inflationary escalations and adjustments thereafter. The term of the lease is for five years and five months with total minimum lease payments of approximately $1.28 million. The future minimum lease payments under this lease are as follows: Year ending December 31: 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ Thereafter $ Total $ |
LEGAL MATTERS
LEGAL MATTERS | 12 Months Ended |
Dec. 31, 2015 | |
LEGAL MATTERS | |
LEGAL MATTERS | NOTE 9—LEGAL MATTERS The Company and its two original executives were three of some 30 defendants in a lawsuit filed by a former stockholder of Genaera Corporation, which was the predecessor of the Genaera Liquidating Trust, the party from which the Company purchased the worldwide rights to pexiganan, the active ingredient of the Product Locilex® on April 8, 2010. The complaint was filed on June 8, 2012 in the United States District Court for the Eastern District of Pennsylvania (Civil Action No. 12-3265) by Alan W. Schmidt, individually and on behalf of former Genaera Corporation shareholders. Among others, the suit was filed against the Company, as well as John A. Skolas and Argyce, LLC, who were responsible for the administration of the Trust and who sold pexiganan to the Company via a public auction. The defendants listed in the complaint included several individuals and companies formerly associated with Genaera Corporation, the Trust and/or Argyce, LLC. Also included in the defendant group were several other pharmaceutical companies that were involved in acquiring the former drug-related assets of the Genaera Corporation. The complaint alleged, among other things, the Company and its two executives aided and abetted a breach of fiduciary duty alleged to have been committed by the former director and officers of Genaera Corporation before it was approved for dissolution by its shareholders and also Argyce, LLC, the trustee of the Liquidating Trust. Plaintiff claims that the Company, and its executives, aided and abetted a breach of the duties of the board of directors and the trustee under common law and under a certain trust agreement allegedly signed between Argyce, LLC, as the trustee, and the Liquidating Trust. With regard to the claims made against the Company and two executives, the plaintiff alleged, in pertinent part, that the Company's acquisition of the pexiganan rights was for alleged inadequate consideration, and that the Company and its management aided and abetted a breach of fiduciary duty by the Genaera Corporation defendants who were formerly associated with Genaera Corporation and/or the Trust. The Company and its two executives filed a motion to dismiss the complaint within the prescribed time period. All of the other defendants in this litigation also filed motions to dismiss, and a court order by the Federal District Court granted each and every motion to dismiss, with prejudice, without leave to refile, on August 12, 2013 based on the argument that Plaintiff's claims were time barred. A subsequent motion to reconsider such dismissal was denied by the Federal District Court. Plaintiff appealed the dismissal to the United States Third Circuit Court of Appeals seeking reversal of the dismissal and the Third Circuit Court granted Plaintiff's appeal. On October 17, 2014, the Third Circuit Appellate Court, in a 2-1 decision with a strong dissenting opinion, reversed the trial court's dismissal of Plaintiff's claims based on the expiration of the applicable statutes of limitation. In a 2-1 decision, the Third Circuit held that more information was necessary to determine when Plaintiff should have been on notice of his claims to determine the applicability of the discovery rule, which could serve to extend the time frame in which Plaintiff could bring his claims. Due to the strong dissent, all Defendants filed the necessary documents requesting a petition for rehearing en banc, by the majority of the Third Circuit justices who are in active service. The Third Circuit denied the request for en banc hearing and remanded this case to District Court. Upon remand to the Federal District Court, all Defendants moved to dismiss the complaint for reasons other than being time barred. The Company and the executives moved for dismissal based on Plaintiff's inability to make a case for aiding and abetting a breach of fiduciary duty because there was no underlying breach and such an aiding and abetting claim requires an element of knowing participation in the fiduciary breach which cannot be established by Plaintiff. The District Court held a hearing on this in September 2015 and the District Court delivered an Order on November 10, 2015 pursuant to which the District Court granted the Motion to Dismiss filed by each and every defendant including the Company and its executives. In December 2015, Plaintiff appealed the Federal District Court's decision to the Third Circuit Appellate Court and the Company anticipates a decision on whether to grant Plaintiff's appeal by the Third Circuit Appellate Court in 2016. The Company will continue to vigorously defend against Plaintiff's claims on the factual record, which it believes will prove that the Company is not liable to the Plaintiff in any regard. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 10—RELATED PARTY TRANSACTIONS The individual employed as the Company's Vice President, Finance and Corporate Development as of the closing of the initial public offering, is the owner of Aumoe Partners, LLC ("Aumoe"), which was engaged in January 2012 to perform certain financial advisory services. The Company incurred $0 and $22,500 in fees to Aumoe for the years ended December 31, 2015 and 2014, respectively, which were recorded in general and administrative expenses. The Company engaged the consulting services of Drug Development Advisors ("DDA") pursuant to which DDA performed detailed analysis on a number of the Company's preclinical studies in connection with the NDA process. DDA is owned and operated by a member of the Company's board of directors. The Company incurred expenses for services provided by DDA in the amounts of $24,550 and $30,734 for the years ended December 31, 2015 and 2014, respectively, which were recorded in research and development expenses. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
NET LOSS PER SHARE | |
NET LOSS PER SHARE | NOTE 11—NET LOSS PER SHARE Basic and diluted net loss per common share for the years ended December 31, 2015 and 2014, respectively, were determined by dividing net loss by the weighted average common shares outstanding during the period. The Company's potentially dilutive shares, which include 1,112,287 of stock options, 28,000 unvested common shares, and 24,500 warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be antidilutive. On March 12, 2014, the Company completed a corporate conversion from a limited liability company to a corporation (the "Conversion"). Accordingly, the outstanding Class A Membership Interests were converted to shares of common stock using a conversion ratio of 7 to 1, resulting in the conversion of its 767,911 Class A Membership Interests into an aggregate of 5,375,377 shares of common stock. The effects of this Conversion on the Company's net loss per share have been reflected for all periods presented retroactively. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 12—RECENT ACCOUNTING PRONOUNCEMENTS In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements—Going Concern , which requires management of an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. This update will become effective beginning January 1, 2017, with early adoption permitted. The Company is currently evaluating the provisions of this amendment. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), which requires that all deferred income tax assets and liabilities be presented as noncurrent in the statement of financial position. The pronoucement is effective for financial statements issued for annual periods beginning after December 15, 2018 with early application permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which includes amendments that require lessees to recognize a lease liability for all long-term leases (lease terms more than 12 months) at the commencement date. The lease liability is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis. The amendments also require lessees to recognize a right-of-use asset for all long-term leases. The right-of-use asset is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset to not recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The amendments in this ASU require qualitative disclosures along with specific quantitative disclosures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. The Company is currently evaluating the provisions of this amendment. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. |
Cash, Cash Equivalents, and Short-Term Investments | Cash, Cash Equivalents, and Short-Term Investments The Company considers all highly-liquid instruments purchased with a maturity of three months or less to be cash equivalents. Instruments with maturities greater than three months, but less than twelve months are included in short-term investments. The Company purchases United States Treasury bills with maturities ranging from six to twelve months which are classified as being held to maturity and are carried at amortized cost. Securities classified as held to maturity securities are those securities that management has the intent and ability to hold to maturity. The Company maintains its cash balance in one financial institution. The balance is insured up to the maximum allowable by the Federal Deposit Insurance Company ("FDIC"). The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk of loss on cash. At times, the cash balance may exceed the maximum limit of the FDIC. |
Guaranteed Payments to Members | Guaranteed Payments to Members Guaranteed payments to members of the Company prior to the March 2014 corporate conversion, that were designated to represent reasonable compensation for services rendered, were accounted for as Company expenses rather than an allocation of the Company's net income. |
Research and Development | Research and Development In accordance with Accounting Standards Codification ("ASC") 730, Accounting for Research and Development Costs , the Company expenses research and development costs when incurred. At times, the Company may make cash advances for research and development services. These amounts are capitalized and expensed in the period the service is provided. The Company incurred net research and development expenses in the amounts of $11,286,236 and $8,898,280 for the years ended December 31, 2015 and 2014, respectively. Although the Company manages the conduct of its clinical trials, it relies on third parties to conduct its clinical and preclinical studies and to provide services, including data management, statistical analysis and electronic compilation for clinical trials, as well as for the manufacture of clinical trial supplies. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that are considered in preparing these estimates include the number of subjects enrolled in studies, milestones achieved and other criteria related to the efforts of the vendors. These estimates are subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company records net prepaid or accrued expenses related to these costs. |
Share-Based Compensation | Share-Based Compensation The Company accounts for the cost of services performed by officers and directors received in exchange for an award of Company membership interests, common stock, or stock options, based on the grant-date fair value of the award. In accordance with ASC 718, Stock Compensation , the Company recognizes compensation expense, net of estimated forfeitures, on a straight-line basis over the service period. |
Share-Based Payments to Vendors | Share-Based Payments to Vendors The Company accounts for the cost of services performed by vendors in exchange for an award of Company membership interests or common stock based on the grant-date fair value of the award or fair value of the services rendered, whichever is more readily determinable and adjusted to fair value at each reporting date. Such fair value is measured as of the earlier of the date the other party becomes committed to provide goods or services or the date performance by the other party is complete. The Company recognizes the expense in the same period and in the same manner as if the Company had paid cash for the services. |
Income Taxes | Income Taxes Prior to the Company's corporate conversion in March 2014, the Company was organized as a limited liability company. As such, the Company was not a tax paying entity for Federal income tax purposes and, therefore, no income tax expense had been recorded in the financial statements. Income or loss of the Company was passed through to members for inclusion in their respective income tax returns. Subsequent to the corporate conversion in March 2014, the Company became a taxable entity. As such, the Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the financial statements in the period of enactment. The measurement of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The Company had no material amounts recorded for uncertain tax positions, interest or penalties in the accompanying financial statements. The Company currently estimates an annual effective tax rate of 0% as the Company incurred losses for the years ended December 31, 2015and 2014 for both financial statement and tax purposes. Therefore, no Federal or state income tax expense has been recorded in the financial statements. Based on the Company's history of generating operating losses and its anticipation of operating losses continuing in the foreseeable future, the Company has determined that it is more likely than not that the tax benefits from these net operating losses would not be realized and a full valuation allowance against all deferred tax assets has been recorded at December 31, 2015 and 2014, respectively. In the event the Company becomes profitable for a period of two or more years, with future expectations at that time of profitability for future years prior to any significant change in its equity capitalization, the Company would have an opportunity to realize benefit from the deferred tax asset at such time in the future. |
Fair Value of Financial Instruments | Fair value of financial instruments The carrying amount of certain of the Company's financial instruments, including cash and accounts payable, is shown at cost, which approximates fair value. Short-term investments with maturities ranging from six to twelve months are classified as being held to maturity and are carried at amortized cost. The age of gross unrealized gains and the fair value of related securities at December 31, 2015 were as follows: Total (maturities within 12 months) Cost Unrealized Gain Fair Value Held to Maturity: Debt Securities: United States Government sponsored bonds $ $ $ For the year ended December 31, 2015, the amount of total amortized interest income was $20,621. The carrying value of $26,977,362 as of December 31, 2015, is equal to the amortized cost plus the amortized interest income of $19,148 on the remaining bonds held at December 31, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Gross unrealized gains and fair value of related securities | Total (maturities within 12 months) Cost Unrealized Gain Fair Value Held to Maturity: Debt Securities: United States Government sponsored bonds $ $ $ |
ACCOUNTS PAYABLE AND ACCRUED 21
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
Schedule of accounts payable and accrued expenses | December 31, 2015 December 31, 2014 Accrued compensation expense $ $ Accrued research and development Accrued professional fees Other accounts payable and accrued expenses Totals $ $ |
SHARE-BASED COMPENSATION and 22
SHARE-BASED COMPENSATION and STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SHARE-BASED COMPENSATION and STOCK OPTIONS | |
Summary of the non-vested Class A Membership Interests which were converted to Common Stock at a conversion ratio of seven to one, and the associated activity | The following table summarizes the non-vested Class A Membership Interests at December 31, 2015 giving effect to the corporate conversion and the associated activity: Class A Membership Interests converted to Common Stock 7:1 ratio Nonvested at January 1, 2014 Granted — Forfeited ) Vested ) Nonvested at December 31, 2014 Granted — Forfeited — Vested ) Nonvested at December 31, 2015 |
Schedule of weighted average assumptions used in determining the fair value of the option awards using the Black-Scholes option pricing model | Year Ended December 31, 2015 Year Ended December 31, 2014 Expected term 5.65 years 4.3 years Volatility Dividend yield Risk free interest rate |
Summary of stock option activity | Number of Options Weighted Average Exercise Price Outstanding at January 1, 2014 — Granted $ Forfeited — Outstanding at December 31, 2014 $ Granted $ Forfeited — Outstanding and expected to vest at December 31, 2015 $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
Components of net deferred income tax assets | The components of the net deferred income tax asset at December 31, 2015 and 2014 are as follows: 2015 2014 Deferred tax assets: Net operating loss carryforwards $ $ Share-based compensation Research and development credit carryforwards Gross deferred tax assets Less valuation allowance ) ) Net deferred tax asset $ — $ — |
Reconciliation of income tax expense (benefit) at the statutory federal income tax rate | A reconciliation of income tax expense (benefit) at the statutory Federal income tax rate and income taxes as reflected in the financial statements for both years ending December 31, 2015 and 2014 is as follows: Federal income tax expense at statutory rate )% State income tax, net of federal benefit — Permanent differences Change in valuation allowance Effective income tax rate — % |
LEASE OF OFFICE SPACE (Tables)
LEASE OF OFFICE SPACE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
LEASE OF OFFICE SPACE | |
Future minimum lease payments | Year ending December 31: 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ Thereafter $ Total $ |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) - USD ($) | Jun. 30, 2015 | Mar. 18, 2014 | Jun. 30, 2015 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
NATURE OF OPERATIONS | ||||||
Proceeds from initial public offering of common stock, net of transaction costs | $ 19,700,000 | $ 34,455,669 | $ 19,700,000 | $ 34,500,000 | $ 19,743,885 | $ 34,455,669 |
Cash, Cash Equivalents, and Short-term Investments | $ 32,200,000 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Concentration of Credit Risk | ||
Number of financial institutions in which the entity maintains its cash balance | item | 1 | |
Research and Development | ||
Net research and development expenses | $ 11,286,236 | $ 8,898,280 |
Income Taxes | ||
Income tax expense | $ 0 | |
Estimated annual effective tax rate (as a percent) | 0.00% | 0.00% |
Current federal income tax expense | $ 0 | |
Current state income tax expense | $ 0 | |
Minimum | ||
Concentration of Credit Risk | ||
Maturity period treasury bills | 6 months | |
Maximum | ||
Concentration of Credit Risk | ||
Maturity period treasury bills | 12 months |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - FAIR VALUE (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Fair Value of Financial Instruments | |
Carrying value | $ 26,977,362 |
Interest income amortized | 20,621 |
Interest Income Amortized on Remaining Bonds | 19,148 |
US Government sponsored bonds | |
Fair Value of Financial Instruments | |
Amortized Cost | 26,958,214 |
Unrealized Gains | 4,646 |
Fair Value | $ 26,962,860 |
ACCOUNTS PAYABLE AND ACCRUED 28
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accrued compensation expense | $ 663,404 | $ 511,769 |
Accrued research and development | 859,053 | 641,997 |
Accrued professional fees | 55,787 | 23,901 |
Other accounts payable and accrued expenses | 28,063 | 82,931 |
Total | $ 1,606,307 | $ 1,260,598 |
ISSUANCE OF MEMBERSHIP INTERE29
ISSUANCE OF MEMBERSHIP INTERESTS and COMMON STOCK (Details) | Jun. 30, 2015USD ($)$ / sharesshares | Mar. 18, 2014USD ($)$ / sharesshares | Mar. 12, 2014shares | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
ISSUANCE OF MEMBERSHIP INTERESTS and COMMON STOCK | |||||||
Stock Issued During Period, Shares, New Issues | shares | 1,702,000 | 3,162,500 | |||||
Share price of common stock (in dollars per share) | $ / shares | $ 12.50 | $ 12 | $ 12.50 | ||||
Net proceeds from IPO | $ | $ 19,700,000 | $ 34,455,669 | $ 19,700,000 | $ 34,500,000 | $ 19,743,885 | $ 34,455,669 | |
Underwriting discounts | $ | 1,300,000 | 2,656,500 | |||||
Offering costs | $ | $ 300,000 | $ 837,831 | |||||
Conversion ratio | 7 | 7 | |||||
Membership interests converted into shares of common stock | shares | 767,911 | 767,911 | |||||
Shares of common stock issued upon conversion of membership interests | shares | 5,375,377 |
SHARE-BASED COMPENSATION and 30
SHARE-BASED COMPENSATION and STOCK OPTIONS - RESTRICTED MEMBERSHIP INTERESTS (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Nov. 30, 2013 | |
Share-based compensation and stock options | |||||
Vesting period | 24 months | ||||
Total compensation expense recorded as director fees | $ 353,150 | ||||
Additional disclosures | |||||
Common shares available for issuance under Equity Incentive Plan | 2,141,169 | ||||
Restricted Class A Membership Interests | |||||
Share-based compensation and stock options | |||||
Fair value of the membership interests granted (in dollars per share) | $ 50 | ||||
Total compensation expense recorded as director fees | $ 100,000 | $ 125,000 | |||
Non-vested Class A Membership interests converted to common stock at a conversion ratio and the associated activity | |||||
Nonvested at the beginning of the period (in shares) | 42,000 | 42,000 | 77,000 | ||
Forfeited (in shares) | (21,000) | ||||
Vested (in shares) | (14,000) | (14,000) | |||
Nonvested at the end of the period (in shares) | 77,000 | 28,000 | 42,000 | ||
Additional disclosures | |||||
Number of Membership Interests issued but not vested | 1,000 | ||||
Total unrecognized compensation cost | $ 120,833 | ||||
Weighted average period over which total unrecognized compensation cost is expected to be recognized | 1 year 3 months | ||||
Restricted Class A Membership Interests | Minimum | |||||
Share-based compensation and stock options | |||||
Vesting period | 3 years | ||||
Restricted Class A Membership Interests | Maximum | |||||
Share-based compensation and stock options | |||||
Vesting period | 4 years |
SHARE-BASED COMPENSATION and 31
SHARE-BASED COMPENSATION and STOCK OPTIONS - STOCK OPTIONS (Details) | 1 Months Ended | 12 Months Ended | |||||
Jan. 31, 2015USD ($)employee$ / sharesshares | Apr. 30, 2014$ / sharesshares | Mar. 31, 2014item$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Apr. 30, 2014$ / shares | |
Weighted average assumptions used in determining the fair value of the option awards using the Black-Scholes option pricing model | |||||||
Expected term | 4 years 3 months 18 days | ||||||
Volatility (as a percent) | 59.60% | ||||||
Dividend yield (as a percent) | 0.00% | ||||||
Risk free interest rate (as a percent) | 1.23% | ||||||
Company's stock option activity | |||||||
Granted (in shares) | 251,000 | ||||||
Number of Employees Total | employee | 5 | ||||||
Compensation expense | $ | $ 353,150 | ||||||
Grant price (in dollars per share) | $ / shares | $ 11.35 | ||||||
Vesting percentage upon issuance | 1.00% | ||||||
Vesting period | 24 months | ||||||
Stock Options | |||||||
Share-based compensation and stock options | |||||||
Awards granted as percentage of common stock outstanding | 10.00% | ||||||
Number of executives to whom awards are granted | item | 4 | ||||||
Number of equal monthly installments in which awards issued under the 2013 Equity Incentive Plan will vest | item | 36 | ||||||
Weighted average assumptions used in determining the fair value of the option awards using the Black-Scholes option pricing model | |||||||
Expected term | 5 years 7 months 24 days | ||||||
Volatility (as a percent) | 62.10% | ||||||
Dividend yield (as a percent) | 0.00% | ||||||
Risk free interest rate (as a percent) | 1.58% | ||||||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 7.61 | $ 5.88 | |||||
Company's stock option activity | |||||||
Outstanding at the beginning of the period(in shares) | 861,287 | 853,787 | 861,287 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 13.90 | $ 13.93 | $ 13.90 | ||||
Granted (in shares) | 7,500 | 251,000 | 861,287 | ||||
Outstanding at the end of the period (in shares) | 853,787 | 1,112,287 | 861,287 | ||||
Compensation expense | $ | $ 3,175,908 | $ 1,322,479 | |||||
Total compensation expense not yet recognized | $ | 2,473,027 | ||||||
Weighted average vesting period over which the total compensation expense will be recorded | 1 year 2 months 12 days | ||||||
Intrinsic value | $ | $ 0 | $ 0 | |||||
Remaining weighted average contractual life | 5 years 4 months 24 days | 5 years 8 months 27 days | |||||
Exercise price (in dollars per share) | $ / shares | $ 13.90 | $ 13.93 | $ 13.93 | $ 13.90 | $ 13.90 | $ 13.32 | $ 10.46 |
Grant price (in dollars per share) | $ / shares | $ 11.35 | $ 13.90 | |||||
Vesting period | 3 years | ||||||
Options excercisable (in shares) | 657,314 | ||||||
Non Employee Member | |||||||
Company's stock option activity | |||||||
Granted (in shares) | 35,000 |
SHARE-BASED PAYMENTS TO VENDO32
SHARE-BASED PAYMENTS TO VENDORS (Details) - RRD | 1 Months Ended | |||
Jan. 31, 2016item | Jul. 31, 2015USD ($)itemshares | Jan. 31, 2015USD ($)shares | Jan. 31, 2014$ / sharesshares | |
Share-based payments to vendors | ||||
Membership Interests granted (in units) | shares | 31,607 | 12,346 | 7,604 | |
Value of recent private placement taken as fair value for the grant of the membership interests (in dollars per share) | $ / shares | $ 50 | |||
Consulting expense | $ 423,000 | $ 150,000 | ||
Term of services | 6 months | 6 months | 6 months | |
Number Of New Amendments To Product Development Agreement | item | 2 | 2 | ||
Business Development | $ 1,700,000 | $ 600,000 | ||
Cash portion | 1,270,000 | 450,000 | ||
Research and Development Expense | $ 1,686,965 | $ 608,495 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Net operating loss carry-forwards | $ 25,500,000 | |
Research tax credit carryforwards | 1,200,000 | |
Income Taxes | ||
Net operating loss carry-forwards | 11,353,162 | $ 4,797,498 |
Share-based compensation | 2,023,572 | 588,860 |
Research and development credit carry-forwards | 1,205,464 | 506,325 |
Gross deferred tax assets | 14,582,198 | 5,892,683 |
Less: valuation allowance | $ (14,582,198) | $ (5,892,683) |
Percentage of deferred tax asset reserved | 100 | |
Effective income tax expense (benefit) | ||
Federal income tax expense at statutory rate | (34.00%) | (34.00%) |
Permanent differences | 0.10% | 0.10% |
Change in valuation allowance | 33.90% | 33.90% |
Effective income tax rate | 0.00% | 0.00% |
Uncertain tax position | $ 0 | |
Minimum | ||
Income Taxes | ||
Period of profitability | 2 years |
LEASE OF OFFICE SPACE (Details)
LEASE OF OFFICE SPACE (Details) - USD ($) | 1 Months Ended | |||
Jan. 31, 2016 | May. 31, 2014 | Mar. 30, 2016 | Dec. 31, 2015 | |
LEASE OF OFFICE SPACE | ||||
Term of lease agreement | 5 years 5 months | |||
Monthly payments of lease under agreement | $ 18,857 | $ 13,098 | ||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2,016 | $ 169,713 | |||
2,017 | 231,534 | |||
2,018 | 238,004 | |||
2,019 | 244,658 | |||
2,020 | 251,522 | |||
Thereafter | 150,347 | |||
Total future minimum lease payments | $ 39,294 | $ 1,285,778 |
LEGAL MATTERS (Details)
LEGAL MATTERS (Details) - Genaera Lawsuit | Jun. 08, 2012item |
Legal matters | |
Number of defendants represented by original executives | 2 |
Number of defendants represented by executives and the Company | 3 |
Number of defendants in a lawsuit | 30 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Aumoe | ||
Related party transactions | ||
Fees for services rendered by the related party | $ 0 | $ 22,500 |
DDA | ||
Related party transactions | ||
Fees for services rendered by the related party | $ 24,550 | $ 30,734 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) | Mar. 18, 2014shares | Mar. 12, 2014shares | Dec. 31, 2015shares | Dec. 31, 2014shares |
Proforma net loss per share | ||||
Conversion ratio used to convert Class A Membership Interests on proforma basis to common shares to calculate the weighted average common shares | 7 | 7 | ||
Membership interests converted into shares of common stock | 767,911 | 767,911 | ||
Shares of common stock issued upon conversion of membership interests | 5,375,377 | |||
Class A Membership Interests | ||||
Proforma net loss per share | ||||
Shares of common stock issued upon conversion of membership interests | (767,911) | |||
Stock Options | ||||
Proforma net loss per share | ||||
Potentially dilutive shares not been included in the computation of diluted net loss per share as the result would be antidilutive | 1,112,287 | |||
Unvested Common Shares | ||||
Proforma net loss per share | ||||
Potentially dilutive shares not been included in the computation of diluted net loss per share as the result would be antidilutive | 28,000 | |||
Warrants | ||||
Proforma net loss per share | ||||
Potentially dilutive shares not been included in the computation of diluted net loss per share as the result would be antidilutive | 24,500 |