Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 10, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Entity File Number | 001-37990 | |
Entity Registrant Name | LEAP THERAPEUTICS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-4412575 | |
Entity Address, Address Line One | 47 Thorndike St, Suite B1-1 | |
Entity Address, City or Town | Cambridge | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02141 | |
City Area Code | 617 | |
Local Phone Number | 714-0360 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | LPTX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 119,410,992 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001509745 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 102,038 | $ 65,500 |
Research and development incentive receivable | 2,071 | 2,099 |
Prepaid expenses and other current assets | 590 | 351 |
Total current assets | 104,699 | 67,950 |
Property and equipment, net | 16 | 20 |
Right of use assets, net | 569 | 669 |
Research and development incentive receivable, net of current portion | 272 | |
Deferred costs | 576 | |
Other long term assets | 15 | 30 |
Deposits | 976 | 1,108 |
Total assets | 106,547 | 70,353 |
Current liabilities: | ||
Accounts payable | 5,498 | 5,657 |
Accrued expenses | 4,388 | 5,152 |
Lease liability - current portion | 425 | 416 |
Total current liabilities | 10,311 | 11,225 |
Non current liabilities: | ||
Lease liability, net of current portion | 152 | 262 |
Series X preferred stock warrant liability | 40 | |
Total liabilities | 10,503 | 11,487 |
Mezzanine equity: | ||
Series X Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 136,248 and 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 67,715 | |
Stockholders' equity: | ||
Common stock, $0.001 par value; 240,000,000 shares authorized; 119,410,992 and 99,021,376 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 119 | 99 |
Additional paid-in capital | 387,886 | 376,807 |
Accumulated other comprehensive income | 355 | 128 |
Accumulated deficit | (360,031) | (318,168) |
Total stockholders' equity | 28,329 | 58,866 |
Total liabilities, mezzanine equity and stockholders' equity | $ 106,547 | $ 70,353 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 240,000,000 | 240,000,000 |
Common stock, issued shares | 119,410,992 | 99,021,376 |
Common stock, outstanding shares | 119,410,992 | 99,021,376 |
Series X Convertible Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Series X Convertible Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Series X Convertible Preferred Stock,, shares issued | 136,248 | 0 |
Series X Convertible Preferred Stock,, shares outstanding | 136,248 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating expenses: | ||
Research and development | $ 38,942 | $ 7,784 |
General and administrative | 3,784 | 2,848 |
Total operating expenses | 42,726 | 10,632 |
Loss from operations | (42,726) | (10,632) |
Interest income | 848 | 5 |
Interest expense | (21) | |
Australian research and development incentives | 272 | 37 |
Foreign currency gain (loss) | (307) | 235 |
Change in fair value of Series X preferred stock warrant liability | 50 | |
Net loss attributable to common stockholders | $ (41,863) | $ (10,376) |
Net loss per share | ||
Basic | $ (0.32) | $ (0.09) |
Diluted | $ (0.32) | $ (0.09) |
Weighted average common shares outstanding | ||
Basic | 129,344,272 | 113,248,937 |
Diluted | 129,344,272 | 113,248,937 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Net loss | $ (41,863) | $ (10,376) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 227 | (158) |
Comprehensive loss | $ (41,636) | $ (10,534) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital. | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Series X Non Voting Convertible Preferred Stock | Total |
Balance at the beginning of the period (in shares) at Dec. 31, 2021 | 88,318,454 | |||||
Balance at the beginning of the period at Dec. 31, 2021 | $ 88 | $ 371,638 | $ (267) | $ (263,572) | $ 107,887 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Foreign currency translation adjustment | (158) | (158) | ||||
Stock-based compensation | 1,204 | 1,204 | ||||
Net loss | (10,376) | (10,376) | ||||
Balance at the end of the period at Mar. 31, 2022 | $ 88 | 372,842 | (425) | (273,948) | 98,557 | |
Balance at the end of the period (in shares) at Mar. 31, 2022 | 88,318,454 | |||||
Balance at the beginning of the period (in shares) at Dec. 31, 2022 | 99,021,376 | |||||
Balance at the beginning of the period at Dec. 31, 2022 | $ 99 | 376,807 | 128 | (318,168) | 58,866 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Foreign currency translation adjustment | 227 | 227 | ||||
Stock-based compensation | 1,310 | 1,310 | ||||
Net loss | (41,863) | (41,863) | ||||
Balance at the end of the period at Mar. 31, 2023 | 119 | 387,886 | $ 355 | $ (360,031) | $ 28,329 | |
Beginning balance (in shares) at Dec. 31, 2022 | 0 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of Series X Preferred Stock in connection with Flame merger | $ 67,715 | |||||
Issuance of Series X Preferred Stock in connection with Flame merger (in shares) | 136,248 | |||||
Issuance of common stock in connection with Flame merger | $ 19 | 9,786 | $ 9,805 | |||
Issuance of common stock in connection with Flame merger (in shares) | 19,729,010 | |||||
Issuance of common stock warrants in connection with Flame merger | 13 | 13 | ||||
Redemption of 2019 Warrants | (29) | (29) | ||||
Issuance of common stock upon vest of restricted stock units | $ 1 | $ (1) | ||||
Issuance of common stock upon vest of restricted stock units (in shares) | 660,606 | |||||
Ending balance at Mar. 31, 2023 | $ 67,715 | $ 67,715 | ||||
Ending balance (in shares) at Mar. 31, 2023 | 119,410,992 | 136,248 | 136,248 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (41,863) | $ (10,376) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
In-process research and development costs acquired in connection with the acquistion of Flame | 29,582 | |
Depreciation expense | 4 | 4 |
Amortization of right-of-use assets | 100 | 104 |
Stock-based compensation expense | 1,310 | 1,204 |
Foreign currency transaction (gain) loss | 307 | (235) |
Change in fair value of warrant liability | (50) | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (239) | 277 |
Research and development incentive receivable | (278) | (38) |
Accounts payable and accrued expenses | (2,196) | (2,368) |
Lease liability | (100) | (106) |
Other assets | 723 | 16 |
Net cash used in operating activities | (12,700) | (11,518) |
Cash flows from investing activities: | ||
Cash acquired in connection with the acquisition of Flame | 50,362 | |
Payment of direct and incremental costs of the asset acquisition | (1,045) | |
Net cash provided by investing activities | 49,317 | |
Cash flows from financing activities: | ||
Payment of redemption of 2019 warrants | (29) | |
Payment of deferred costs | (210) | |
Net cash used in financing activities | (29) | (210) |
Effect of exchange rate changes on cash and cash equivalents | (50) | 32 |
Net increase (decrease) in cash and cash equivalents | 36,538 | (11,696) |
Cash and cash equivalents at beginning of period | 65,500 | 114,916 |
Cash and cash equivalents at end of period | 102,038 | $ 103,220 |
Supplemental disclosure of non-cash financing activities: | ||
Issuance of Series X Preferred Stock in connection with acquisition of Flame | 67,715 | |
Issuance of warrants to purchase convertible Series X preferred stock in connection with the acquisition of Flame | 90 | |
Issuance of common stock in connection with the acquisition of Flame | 9,805 | |
Issuance of warrants for the purchase of common stock in connection with the acquisition of Flame | 13 | |
Direct and incremental costs of the asset acquisition recorded in accounts payable | 348 | |
Issuance of common stock up on the vesting of restricted stock units | 1 | |
Net liabilities assumed from acquisition of Flame | $ 928 |
Nature of Business, Basis of Pr
Nature of Business, Basis of Presentation and Liquidity | 3 Months Ended |
Mar. 31, 2023 | |
Nature of Business, Basis of Presentation and Liquidity | |
Nature of Business, Basis of Presentation and Liquidity | 1. Nature of Business, Basis of Presentation and Liquidity Nature of Business Leap Therapeutics, Inc. was incorporated in the state of Delaware on January 3, 2011. During 2015, HealthCare Pharmaceuticals Pty Ltd. (“HCP Australia”) was formed and is a wholly owned subsidiary of the Company. On December 15, 2021, Leap Securities Corp. was formed and is a wholly owned subsidiary of the Company. On January 17, 2023, the Company entered into a merger agreement with Flame Biosciences, Inc., a privately held, biotechnology corporation (“Flame”), whereby Flame became a wholly owned subsidiary of the Company under the name Flame Biosciences, LLC. The Company is a biopharmaceutical company developing novel biomarker-targeted antibody therapies designed to treat patients with cancer by inhibiting fundamental tumor-promoting pathways, targeting cancer-specific cell surface molecules, and harnessing the immune system to attack cancer cells. The Company’s strategy is to identify, acquire, and develop molecules that will rapidly translate into high impact therapeutics that generate durable clinical benefit and enhanced patient outcomes. The Company’s lead clinical stage program is DKN-01, a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1. The Company is currently studying DKN-01 in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer. Its second clinical stage program is FL-301, a monoclonal antibody that targets cells that express Claudin18.2 on their cell surface. The Company also has two preclinical antibody programs, FL-302 and FL-501. In January 2020, the Company entered into an Option and License Agreement with BeiGene, Ltd., or BeiGene, which granted BeiGene an option to obtain an exclusive license from the Company that would grant to BeiGene the right to develop and commercialize DKN-01 in Asia (excluding Japan), Australia, and New Zealand. In March 2023, BeiGene notified the Company that it did not intend to exercise its option, and the agreement is continuing as a clinical collaboration. The Company intends to apply its extensive experience identifying and developing transformational products to build a pipeline of programs that have the potential to change the practice of cancer medicine. Basis of Presentation The accompanying condensed consolidated financial statements as of March 31, 2023, and for the three months ended March 31, 2023 and 2022 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2023. The condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments which are necessary for the fair presentation of the Company’s financial position as of March 31, 2023, statements of operations and statements of comprehensive loss for the three months ended March 31, 2023, and 2022 and statements of cash flows for the three months ended March 31, 2023 and 2022. Such adjustments are of a normal and recurring nature. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2023. Liquidity Since inception, the Company has been engaged in organizational activities, including raising capital, and research and development activities. The Company does not yet have a product that has been approved by the FDA, has not generated any product sales revenues and has not yet achieved profitable operations, nor has it ever generated positive cash flows from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, the Company’s future operations are dependent on the success of the Company’s efforts to raise additional capital, its research and commercialization efforts, regulatory approval, and, ultimately, the market acceptance of the Company’s products. In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of March 31, 2023, the Company had cash and cash equivalents of $102,038. Additionally, the Company had an accumulated deficit of $360,031 at March 31, 2023, and during the three months ended March 31, 2023, the Company incurred a net loss of $41,863. The Company expects to continue to generate operating losses for the foreseeable future. In connection with the merger with Flame and pursuant to the Certificate of Designation of the Series X non-voting convertible preferred stock (the “Series X Preferred Stock”), if stockholder approval for the conversion of the Series X Preferred Stock to common stock (the “Stockholder Approval”) is not obtained from the holders of the Company’s common stock within six months from the date of issuance of the Series X Preferred Stock, the holders of Series X Preferred Stock may require the Company to settle all of the then-outstanding shares of Series X Preferred Stock for cash at fair value. The Company fully expects the vote to pass and for the Series X Preferred Stock to convert into common stock. However, there can be no assurance that the Stockholder Approval will be received. If the Company fails to receive Stockholder Approval within six months from the date of issuance of the Series X Preferred Stock and the Company is required to settle then-outstanding shares of Series X Preferred Stock for cash at fair value, the Company’s financial position would be materially adversely affected and the Company would be forced to seek additional funding, which may not be available on acceptable terms or at all, or reduce or eliminate certain clinical trials, programs and operating expenses, which would adversely affect its business prospects. The Company believes that its cash and cash equivalents of $102,038 as of March 31, 2023 will be sufficient to fund its operating expenses for at least the next 12 months from issuance of these financial statements. In addition, to support its future operations, the Company will likely seek additional funding through public or private equity financings or government programs and will seek funding or development program cost-sharing through collaboration agreements or licenses with larger pharmaceutical or biotechnology companies. If the Company does not obtain additional funding or development program cost-sharing, or exceeds its current spending forecasts or fails to receive the research and development tax incentive payment, the Company has the ability and would be forced to delay, reduce or eliminate certain clinical trials or research and development programs, reduce or eliminate discretionary operating expenses, and delay company and pipeline expansion, any of which could adversely affect its business prospects. The inability to obtain funding, as and when needed, could have a negative impact on the Company’s financial condition and ability to pursue its business strategies. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Use of Estimates The presentation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Research and development incentive income and receivable The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met. Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time. Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed. The percentage was 43.5% for the year ended December 31, 2022 and for the three months ended March 31, 2023. The research and development incentive receivable represents an amount due in connection with the above program. The Company recorded a research and development incentive receivable of $ 2,343 and $ 2,099 as of March 31, 2023 and December 31, 2022, respectively, in the condensed consolidated balance sheets and other income from Australian research and development incentives of $272 and $37 , respectively, for the three months ended March 31, 2023 and 2022. The following table shows the change in the research and development incentive receivable from January 1, 2022 to March 31, 2023 (in thousands): Balance at January 1, 2022 $ 1,189 Australian research and development incentive income, net 2,051 Cash received for 2021 eligible expenses (1,064) Foreign currency translation (77) Balance at December 31, 2022 2,099 Australian research and development incentive income, net 272 Foreign currency translation (28) Balance at March 31, 2023 $ 2,343 Foreign Currency Translation The financial statements of the Company’s Australian subsidiary are measured using the local currency as the functional currency. Assets and liabilities of this subsidiary are translated into U.S. dollars at an exchange rate as of the consolidated balance sheet date. Equity is translated at historical exchange rates. Revenues and expenses are translated into U.S. dollars at average rates of exchange in effect during the period. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders’ equity. Realized and unrealized foreign currency transaction gains and losses are included in the results of operations. Concentration of Credit Risk Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents. All cash and cash equivalents are held in United States or Australian financial institutions and money market funds. At times, the Company may maintain cash balances in excess of the federally insured amount of $250 per depositor, per insured bank, for each account ownership category. Although the Company currently believes that the financial institutions with whom it does business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so. The Company has not experienced any credit losses associated with its balances in such accounts for the year ended December 31, 2022 or for the three months ended March 31, 2023. Deposits As of March 31, 2023 and December 31, 2022, there were $976 and $1,108, respectively, of deposits made by the Company with certain service providers that are to be applied to future payments due under the service agreements or returned to the Company if not utilized, which were recorded in the condensed consolidated balance sheets. Warrants The Company will recognize on a prospective basis the value of the effect of the down round feature in the warrants to purchase shares of common stock that were issued in a private placement in November 2017 (the “2017 Warrants”) and in the warrants that were issued in a private placement in March 2020 (the “March 2020 Coverage Warrants”) when it is triggered (i.e., when the exercise price is adjusted downward). This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price. The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation. The Company classifies the warrants that are exercisable for shares for Series X non-voting convertible preferred stock (the “January 2023 Series X Preferred Stock Warrants”) as a liability on its condensed consolidated balance sheet. The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on January 17, 2023, and the warrant liability will be subsequently remeasured to fair value at each reporting date until the Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock is obtained. Changes in the fair value of the warrant liability are recognized as gains (losses) in the Company’s condensed consolidated statement of operations. Fair Value of Financial Instruments Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands): Total Level 1 Level 2 Level 3 March 31, 2023 Assets: Cash equivalents $ 70,704 $ 70,704 $ — $ — Total assets $ 70,704 $ 70,704 $ — $ — Liabilities: Series X Preferred Stock warrant liability $ 40 $ — $ — $ 40 Total liabilities $ 40 $ — $ — $ 40 December 31, 2022 Assets: Cash equivalents $ 62,074 $ 62,074 $ — $ — Total assets $ 62,074 $ 62,074 $ — $ — Cash equivalents of $70,704 and $62,074 as of March 31, 2023 and December 31, 2022, respectively, consisted of overnight investments and money market funds which are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The carrying values of the research and development incentive receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these assets and liabilities. A roll-forward of the recurring fair value measurements of the warrant liability categorized with Level 3 inputs are as follows (in thousands): Balance at January 17, 2023 $ 90 Change in fair value (50) Balance at March 31, 2023 $ 40 The warrant liability in the table above is composed of the fair value of the January 2023 Series X Preferred Stock Warrants. The fair value of the warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company utilized the Black-Scholes option valuation model to fair value the warrant liability. The expected life was estimated to be the term from the valuation date to the warrant expiry date. The expected volatility was based on the historical volatility of the Company. The risk-free interest rate was based on the continuous rates provided by the U.S. Treasury with a term approximating the expected life of the option. The expected dividend yield was Leases The Company accounts for leases in accordance with Accounting Standards Codification, or ASC, Topic 842, Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The Company has determined that the rate implicit in the lease is not determinable and the Company does not have borrowings with similar terms and collateral. Therefore, the Company considered a variety of factors, including observable debt yields from comparable companies and the volatility in the debt market for securities with similar terms, in determining that 8% was reasonable to use as the incremental borrowing rate for purposes of the calculation of lease liabilities. In accordance with the guidance in Topic 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating right-of-use asset being recorded on the consolidated balance sheets and amortized such that lease expense is recorded on a straight line basis over the term of the lease. Net Loss per Share Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements please refer to Note 2, “Summary of Significant Accounting Policies.” in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2022. |
Acquisition of Flame Bioscience
Acquisition of Flame Biosciences | 3 Months Ended |
Mar. 31, 2023 | |
Acquisition of Flame Biosciences | |
Acquisition of Flame Biosciences | 3. Acquisition of Flame Biosciences Merger On January 17, 2023 (the “Effective Date”), Leap acquired 100% of the outstanding equity of Flame, in accordance with the terms of the Agreement and Plan of Merger, dated as of the Effective Date (the “Merger Agreement”), by and among Leap, Fire Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Leap (“First Merger Sub”), Flame Biosciences LLC, a Delaware limited liability company and wholly owned subsidiary of Leap (“Second Merger Sub”), Flame, and the Stockholder Representative named therein. Pursuant to the Merger Agreement, First Merger Sub merged with and into Flame, and Flame was the surviving corporation of such merger and became a wholly owned subsidiary of Leap (the “First Merger”). Immediately following the First Merger, Flame merged with and into Second Merger Sub, and Second Merger Sub was the surviving entity of such merger (together with the First Merger, the “Merger”). Pursuant to the Merger, Leap issued to the stockholders of Flame (the “Flame Stockholders”) 19,729,010 shares of common stock, and 136,248 shares of Series X non-voting convertible preferred stock (the “Series X Preferred Stock”), which was a newly designated series of preferred stock that is intended to have economic rights equivalent to the common stock, but with limited voting rights, and issued to the warrant holders of Flame (the “Flame Warrant Holders”) the right to acquire 65,301 shares of common stock (the “January 2023 Common Stock Warrants”) and 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock, subject to the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. Under the terms of the Merger Agreement, Leap held back approximately 15,604 shares (the “Holdback Shares”) out of the aggregate number of shares of Series X Preferred Stock that the Flame Stockholders otherwise would be entitled to receive pursuant to the Merger so that Leap can have recourse to the Holdback Shares for purposes of satisfying certain claims for indemnification that Leap may have against the Flame Stockholders in connection with the Merger. The Company accounted for the acquisition of Flame as an asset acquisition allocating the purchase price under GAAP of $79,016 to net assets acquired. Although there is a presumption under SEC Rule 11-01(d) (“11-01(d)”) that when a legal entity is acquired, it represents a business acquisition, the Company concluded that in this case, the transaction did not represent the acquisition of a business. After considering the criteria set forth in 11-01(d), the Company concluded that the acquisition of Flame by the Company was an acquisition of assets and not an acquisition of a business in accordance 11-01(d). Specifically, the Company concluded that 1) the entity did not generate revenue and 2) there was not sufficient continuity of Flame’s operations prior to and following the transaction, in that no facilities, employees, sales force, distribution system, customer base, trade names or production techniques remained with the entity after the acquisition. Leap primarily acquired cash of $50,362 , certain working capital items ($928) and a portfolio of clinical- and pre-clinical-stage intellectual property, in connection with the acquisition of Flame. The Company accounted for the acquisition of Flame by recording the cash and any other assets and liabilities of Flame on its condensed consolidated balance sheet at their historical carrying values, which approximates fair values. The remaining fair value of the consideration transferred was allocated to the in-process research and development (“IPR&D”) assets acquired. Certain transaction costs that were not deemed to meet the criteria of costs directly attributable to the issuance of securities were capitalized in accordance with ASC 805-50-30-1 and recognized as part of fair value of assets acquired. As the Company concluded that such IPR&D does not have an alternative future use, the relative fair value allocated to acquired IPR&D of $29,582 was expensed in research and development expenses within the Company’s condensed consolidated statement of operations during the three months ended March 31, 2023. The following table summarizes the net assets acquired based on their estimated fair values as of January 17, 2023 (in thousands): Acquired IPR&D $ 29,582 Cash and cash equivalents 50,362 Accounts payable and accrued liabilities (928) Total acquisition value $ 79,016 The fair value assigned to each component of the purchase consideration, including direct costs of the acquisition of $1,393, as of the Effective Date is set forth in the table below (in thousands, except share and per share amounts): Equivalent common Number of shares shares Fair Value Leap common stock (par value $0.0001 per share) 19,729,010 19,729,010 $ 9,805 Leap Series X Preferred Stock (1000:1) 136,248 136,248,000 67,715 Warrants on Leap common stock 65,301 65,301 13 Warrants on Leap Series X Preferred Stock (1000:1) 443 443,000 90 Direct and incremental costs of the asset acquisition 1,393 Total 156,485,311 $ 79,016 In addition, subject to and upon the terms and conditions set forth in the Merger Agreement, the Company may also (i) pay Contingent Merger Consideration (as defined in the Merger Agreement) that may become payable if, and only if, certain assets of Flame related to Flame’s FL-101 program and/or FL-103 program are sold after the consummation of the Merger pursuant to the FL-101/103 Disposition Agreement (as defined in the Merger Agreement), which Contingent Merger Consideration shall be 80% of the after-tax net proceeds of such sale, if any, and the payment thereof is subject to the terms and conditions set forth in the Merger Agreement and (ii) issue pursuant to the Merger additional shares of Series X Preferred Stock or common stock as a result of any applicable post-closing purchase price adjustment in the event that Flame’s actual Company Net Cash (as defined in the Merger Agreement) as of the Effective Date is determined to be greater than Flame’s estimated Company Net Cash as of the closing. Series X Preferred Stock Pursuant to the Merger, the Company issued 136,248 shares of Series X Preferred Stock to Flame Stockholders and January 2023 Series X Preferred Stock Warrants for 443 shares of Series X Preferred Stock to Flame Warrant Holders. Subject to and upon the requisite approval of the stockholders of Leap, each issued share of Series X Preferred Stock and each share of Series X Preferred Stock issuable pursuant to the January 2023 Series X Preferred Stock Warrants shall convert into 1,000 shares of common stock, subject to the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. In the event that stockholder approval is not obtained, the Company must also include a proposal to approve the conversion of the Series X Preferred Stock to common stock at a meeting of stockholders (“Special Meeting”), to be held no less than once in each subsequent six-month period beginning on the date of the Special Meeting until such approval is obtained. If stockholders have not approved the conversion of the Series X Preferred Stock into common stock by July 17, 2023 (six months from the Effective Date), then, holders of Series X Preferred Stock may thereafter require the Company to repurchase the Series X Preferred Stock at the then-current fair value of the underlying common stock. Conversion Subject to stockholder approval and the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors, the Series X Preferred Stock is convertible into common stock at a rate of approximately 1,000 shares of common stock for every one share of Series X Preferred Stock that is converted. On the second business day following stockholder approval, each share of Series X Preferred Stock then outstanding shall automatically convert into 1,000 shares of common stock, subject to the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. Voting Rights Except as otherwise required by law, the Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series X Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series X Preferred Stock, (b) alter or amend the Series X Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series X Preferred Stock, (d) issue shares of Series X Preferred Stock (other than pursuant to, and in accordance with, the Merger Agreement), or increase the number of authorized shares of Series X Preferred Stock, or decrease the number of authorized shares of Series X Preferred Stock below an aggregate number of shares of Series X Preferred Stock then outstanding plus the total number of shares of Series X Preferred Stock issuable pursuant to the Merger Agreement that have not then previously been issued, (e) prior to the requisite approval of the conversion of the Series X Preferred Stock to common stock by the stockholders of Leap, consummate a Fundamental Transaction or any merger or consolidation of Leap with or into another entity or any stock sale to, or other business combination in which the stockholders of Leap immediately before such transaction do not hold at least a majority of the capital stock of Leap immediately after such transaction, or (f) enter into any agreement with respect to any of the foregoing. The Series X Preferred Stock shall rank, as to distributions of assets upon liquidation, as follows: (i) senior to any class or series of capital stock of Leap created after the closing date specifically ranking by its terms junior to the common stock (“Junior Securities”); (ii) on parity with the common stock and any other class or series of capital stock of Leap created after the closing date specifically ranking by its terms on parity with the Series X Preferred Stock or the common stock (“Parity Securities”); and (iii) junior to any class or series of capital stock of Leap created after the closing specifically ranking by its terms senior to the common stock (“Senior Securities”). Dividends Holders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the common stock. Liquidation and Dissolution Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (“Liquidation”), each holder of Series X Preferred Stock shall be entitled to receive, in preference to any distributions to the holders of the Junior Securities, pari passu with any distributions to the holders of the Parity Securities, and subject and junior to the prior and superior rights of the holders of any Senior Securities to receive any distributions, an equivalent amount of distributions as would be paid on the common stock underlying such holder’s shares of Series X Preferred Stock, determined on an as-converted to common stock basis by treating all then outstanding shares of Series X Preferred Stock as if they had been converted to common stock (without regard to the Beneficial Ownership Limitation) and all then outstanding Parity Securities that are entitled to receive distributions on substantially the same terms as the Series X Preferred Stock as if such then outstanding Parity Securities had been converted to common stock (without regard to any beneficial ownership limitation similar to the Beneficial Ownership Limitation), plus, without duplication, an additional amount equal to any dividends declared but unpaid on such holder’s shares of Series X Preferred Stock, before any distributions to holders of any class of any Junior Securities. If, upon any such Liquidation, the assets of the Company shall be insufficient to pay the holders of shares of the Series X Preferred Stock the amount required under the preceding sentence, then all remaining assets of the Company available for distribution to the stockholders of the Company shall be distributed ratably to the holders and the holders of Parity Securities in accordance with the respective amounts that would be payable on all outstanding Series X Preferred Stock and all outstanding Parity Securities if all amounts payable thereon upon any such Liquidation were paid in full. Redemption If Stockholder Approval is not obtained within six months from the date of issuance of the Series X Preferred Stock and the Series X Preferred Stock becomes eligible to be settled in cash, the Company will be required to recognize changes in the redemption value immediately as it occurs and then subsequently adjust the carrying amount of the Series X Preferred Stock to equal the redemption value at the end of each reporting period as if the end of the reporting period were also the redemption date for the Series X Preferred Stock. The change in fair value of the Series X Preferred Stock would be recognized as a deemed dividend, which adjusts retained earnings and earnings available to common stockholders in computing basic and diluted earnings per share. Upon cash settlement, if the fair value of the consideration transferred is greater than the carrying amount of the Series X Preferred Stock surrendered, (1) retained earnings should be reduced by the difference and (2) earnings available to common stockholders would be reduced by the difference in accordance with ASC 260-10, Earnings Per Share. January 2023 Common Stock Warrants and January 2023 Series X Preferred Stock Warrants In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 65,301 shares of Leap’s common stock (the “January 2023 Common Stock Warrants”). The January 2023 Common Stock Warrants have an exercise price of Also in January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Each share of Series X Preferred Stock is convertible into 1,000 shares of Common Stock, subject to the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. The January 2023 Series X Preferred Stock Warrants have an exercise price of The Company classifies the January 2023 Series X Preferred Stock Warrants as a liability on its consolidated balance sheet. The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on the Effective Date and the warrant liability will be subsequently remeasured to fair value at each reporting date until the Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock (from mezzanine equity into permanent equity) is obtained. Changes in the fair value of the warrant liability are recognized as gains (losses) in the Company’s consolidated statement of operations. During the three months ended March 31, 2023, the Company recorded a gain of $50 in its condensed consolidated statement of operations. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses | |
Accrued Expenses | 4. Accrued Expenses Accrued expenses consist of the following: March 31, December 31, 2023 2022 Clinical trials $ 2,374 $ 2,093 Professional fees 398 533 Payroll and related expenses 1,616 2,526 Accrued expenses $ 4,388 $ 5,152 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Leases | 5. Leases The Company has operating leases for real estate in the United States and does not have any finance leases. The Company’s leases may contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s consolidated balance sheets are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to not exercise. The Company’s existing lease includes variable lease and non-lease components that are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred. Such payments primarily include common area maintenance charges and increases in rent payments that are driven by factors such as future changes in an index (e.g., the Consumer Price Index). In calculating the present value of future lease payments, the Company utilized its incremental borrowing rate based on the lease term. The Company has elected to account for each lease component and its associated non-lease components as a single lease component and has allocated all of the contract consideration across lease components only. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was not applied. The Company has existing net leases in which the non-lease components (e.g. common area maintenance, maintenance, consumables, etc.) are paid separately from rent based on actual costs incurred and therefore are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred. During the year ended December 31, 2022, the Company extended the term of its operating lease and recorded an additional right-of-use asset and lease liability of $609 . As of March 31, 2023, a right-of-use asset of $ 569 and lease liability of $577 are reflected on the condensed consolidated balance sheets. The Company recorded rent expense of $114 and $ 108 , respectively, during the three months ended March 31, 2023 and 2022. Future lease payments under non-cancelable operating leases as of March 31, 2023 are detailed as follows: Future Operating Lease Payments 2023 339 2024 268 Total Lease Payments 607 Less: imputed interest (30) Total operating lease liabilities $ 577 |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2023 | |
Warrants | |
Warrants | 6. Warrants As of March 31, 2023, the number of shares of common stock and Series X Preferred Stock issuable upon the exercise of outstanding warrants, consisted of the following: March 31, 2023 Number of Common Shares Description Issuable Number of Series X Preferred Shares Issuable Exercise Price Expiration Date January 23 2017 Warrants 54,516 — $ 0.01 Upon M&A Event 2017 Warrants 2,502,382 — $ 1.055 November 2024 2019 Warrants 6,908,257 — $ 1.95 February 2026 March 2020 Pre-funded Warrants 8,247,170 — $ 0.001 No Expiry March 2020 Coverage Warrants 25,945,035 — $ 2.11 Jan - March 2027 September 2021 Pre-funded Warrants 5,916,030 — $ 0.001 No Expiry January 2023 Common Stock Warrants 65,301 — $ 0.680 February 2025 January 2023 Series X Preferred Stock Warrants (Convertible 1000 to 1) — 443 $ 678.48 February 2025 49,638,691 443 2017 Warrants The 2017 Warrants contain full ratchet anti-dilution protection provisions. The Company will recognize on a prospective basis the value of the effect of the down round feature in the 2017 Warrants when it is triggered (i.e., when the exercise price is adjusted downward). This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price. The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation. 2019 Warrants On February 5, 2019, in connection with the 2019 Public Offering, the Company issued immediately exercisable warrants (the “2019 Warrants”) to purchase 7,557,142 shares of common stock to investors. The 2019 Warrants have an exercise price of $1.95 per share and expire on February 5, 2026. The 2019 Warrants qualify for equity classification. During the three months ended March 31, 2023, the Company redeemed 100,000 of the 2019 Warrants at a purchase price of $0.29 per share. March 2020 Warrants On January 3, 2020, the Company entered into a Securities Purchase Agreement with investors, providing for a private placement transaction exempt from the Securities Act of 1933, as amended, pursuant to which the Company issued and sold 1,421,801 shares of its Series A Preferred Stock, at a purchase price of $10.54 per share, and 1,137,442 shares of its Series B Preferred Stock at a purchase price of $10.55 per share, and one share of the Company’s Special Voting Stock entitling the purchaser of Series A Preferred Stock to elect one member of the Company’s Board of Directors. On March 5, 2020, the Company’s stockholders approved the conversion of the Series A Preferred Stock into a pre-funded warrant to purchase 14,413,902 shares of common stock at an exercise price of $0.001 (the “March 2020 Pre-funded Warrants”) and the conversion of the Series B Preferred Stock into 11,531,133 shares of common stock. Each investor also received a warrant to purchase an equal number of shares of common stock at an exercise price of $2.11 per share (the “March 2020 Coverage Warrants”). The March 2020 Pre-funded Warrants and the March 2020 Coverage Warrants qualify for equity classification. The March 2020 Coverage Warrants contain full ratchet anti-dilution protection provisions, relating to the issuance of “Convertible Securities”, as defined therein. The Company will recognize on a prospective basis the value of the effect of the down round feature in the Coverage Warrants when it is triggered (i.e., when the exercise price is adjusted downward). This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price. The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation. During the year ended December 31, 2022, there were cashless exercises of 6,166,732 March 2020 Pre-funded Warrants, exercise price $0.001 per share, resulting in the issuance of 6,161,000 shares of the Company’s common stock. June 2020 Warrants On June 22, 2020, the Company completed a public offering (the “2020 Public Offering”) whereby the Company issued 20,250,000 shares of its common stock, at $2.00 per share and, in lieu of common stock, offered pre-funded warrants (the “June 2020 Pre-funded Warrants”) to purchase up to 2,250,000 shares of its common stock to certain investors. The June 2020 Pre-funded Warrants have an exercise price of $0.001 per share and qualify for equity classification. During the year ended December 31, 2022, there were cashless exercises of 1,690,137 June 2020 Pre-funded Warrants, exercise price $0.001 per share, resulting in the issuance of 1,688,571 shares of the Company’s common stock. September 2021 Warrants On September 24, 2021, the Company completed a public offering (the “2021 Public Offering”) whereby the Company issued 27,568,072 shares of its common stock, at $2.85 per share and, in lieu of common stock, offered pre-funded warrants (the “September 2021 Pre-funded Warrants”) to purchase up to 8,771,928 shares of its common stock to certain investors. The September 2021 Pre-funded Warrants have an exercise price of $0.001 per share and qualify for equity classification. During the year ended December 31, 2022, there were cashless exercises of 2,855,898 September 2021 Pre-funded Warrants, exercise price $0.001 per share, resulting in the issuance of 2,853,351 shares of the Company's common stock. January 2023 Common Stock Warrants In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 65,301 shares of Leap’s common stock (the “January 2023 Common Stock Warrants”). The January 2023 Common Stock Warrants have an exercise price of January 2023 Series X Preferred Stock Warrants In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders also became exercisable for 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock, subject to Stockholder Approval and the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. The January 2023 Series X Preferred Stock Warrants have an exercise price of The Company classifies the January 2023 Series X Preferred Stock Warrants as a liability on its consolidated balance sheet. The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on the Effective Date and the warrant liability will be subsequently remeasured to fair value at each reporting date until the Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock (from mezzanine equity into permanent equity) is obtained. Changes in the fair value of the warrant liability are recognized as gains (losses) in the Company’s consolidated statement of operations. During the three months ended March 31, 2023, the Company recorded a gain of $50 in its condensed consolidated statement of operations. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2023 | |
Common Stock | |
Common Stock | 7. Common Stock Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Board of Directors, if any, subject to the preferential dividend rights of the preferred stockholders. Through March 31, 2023, no dividends have been declared for shares of common stock. Acquisition of Flame – January 2023 On January 17, Leap acquired 100% of the outstanding equity of Flame. Pursuant to the Merger, Leap issued to Flame Stockholders 19,729,010 shares of common stock. The Company also issued Series X Preferred Stock to Flame Stockholders pursuant to the Merger (see Note 3). In accordance with Nasdaq listing rules, holders of shares of common stock issued by the Company as consideration for the acquisition of Flame are not entitled to vote any of such shares at any shareholder meeting on the approval of the conversion of the Series X Preferred Stock into common stock. |
Equity Incentive Plans
Equity Incentive Plans | 3 Months Ended |
Mar. 31, 2023 | |
Equity Incentive Plans | |
Equity Incentive Plans | 8. Equity Incentive Plans Equity Incentive Plans In September 2012, the Company adopted the 2012 Equity Incentive Plan, as amended, which provides designated employees of the Company and its affiliates, certain consultants and advisors who perform services for the Company and its affiliates, and nonemployee members of the Board of Directors of the Company and its affiliates with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards. During the year ended December 31, 2022, the 2012 Equity Plan expired. On January 20, 2017, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). Beginning on January 1, 2018, the number of shares of common stock authorized for issuance pursuant to the 2016 Plan was increased each January 1 by an amount equal to On June 16, 2022, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for a total of 7,500,000 new shares of the Company’s common stock to be granted. As of March 31, 2023, there were 1,190,949 shares available for grant under the Company’s equity incentive plans. A summary of stock option activity under the Equity Plans is as follows: Weighted Average Weighted Aggregate Exercise Price Average Remaining Intrinsic Options Per Share Life in Years Value Outstanding at December 31, 2022 11,917,331 3.59 7.47 — Granted 8,235,000 0.34 Forfeited (64,173) 1.90 Outstanding at March 31, 2023 20,088,158 2.27 8.33 — Options exercisable at March 31, 2023 8,247,158 4.49 6.35 — Options vested and expected to vest at March 31, 2023 20,088,158 2.27 8.33 — The grant date fair value of the options granted during the three months ended March 31, 2023 and 2022 was estimated at the date of grant using the Black-Scholes option valuation model. The expected life was estimated using the “simplified” method as defined by the SEC’s Staff Accounting Bulletin 107, Share-Based Payment. The expected volatility was based on the historical volatility of the Company. The risk-free interest rate was based on the continuous rates provided by the U.S. Treasury with a term approximating the expected life of the option. The expected dividend yield was 0% because the Company does not expect to pay any dividends for the foreseeable future. The Company elected the straight-line attribution method in recognizing the grant date fair value of options issued over the requisite service periods of the awards, which are generally the vesting periods. The weighted average grant date fair value for the stock options granted during the three months ended March 31, 2023 and 2022 was $0.25 and $1.39 per share, respectively. The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors during the three months ended March 31, 2023 and 2022 were as follows, presented on a weighted average basis: Three Months Three Months Ended March 31, Ended March 31, 2023 2022 Expected volatility 89.99 % 82.70 % Weighted average risk-free interest rate 3.56 % 1.67 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 6.42 6.01 Stock options generally vest over a three Restricted Stock Units During the three months ended March 31, 2022, the Company granted 2,575,000 Restricted Stock Units (“RSUs”) to employees that will cliff vest and will be settled after three years of continuous service, or upon a change of control of the Company, whichever is earlier, pursuant to the 2016 Plan. The Company did not grant any RSUs during the three months ended March 31, 2023. The following table presents RSU activity under the 2016 Plan during the three months ended March 31, 2023: Weighted Average Grant Number of Shares Date Fair Value Outstanding at December 31, 2022 3,585,606 $ 1.89 Vested (660,606) $ 1.42 Outstanding at March 31, 2023 2,925,000 $ 2.00 As of March 31, 2023, there were 2,925,000 shares outstanding covered by RSUs that are expected to vest with a weighted average grant date fair value of $2.00 per share and an aggregate grant date fair value of approximately $5,850. As of March 31, 2023, there was approximately $3,353 of unrecognized compensation costs related to RSUs granted to employees, which are expected to be recognized as expense over a remaining weighted average period of 1.8 years. The Company recognized stock-based compensation expense related to the issuance of stock option awards and RSUs to employees and non-employees in the condensed consolidated statements of operations during the three months ending March 31, 2023 and 2022 as follows: Stock Based Compensation Expense Three Months Ended March 31, 2023 2022 Research and development $ 704 $ 554 General and administrative 606 650 Total $ 1,310 $ 1,204 |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Net Loss Per Share | |
Net Loss Per Share | 9. Net Loss Per Share Basic and diluted net loss per share for the three months ended March 31, 2023 and 2022 was calculated as follows (in thousands except share and per share amounts). Three Months Ended March 31, 2023 2022 Numerator: Net loss $ (41,863) $ (10,376) Net loss attributable to common stockholders for basic and diluted loss per share $ (41,863) $ (10,376) Denominator: Weighted average number of common shares outstanding – basic and diluted 129,344,272 113,248,937 Net loss per share attributable to common stockholders – basic and diluted $ (0.32) $ (0.09) Included within weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 are 14,217,716 and 24,930,483, respectively, common shares issuable upon the exercise of the pre-funded warrants and penny warrants, as the warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders. All warrants and shares of Series X Preferred Stock issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the board of directors, on the Company’s common stock. For purposes of computing EPS, these warrants are considered to participate with common stock in earnings of the Company. Therefore, the Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. No income was allocated to the warrants and Series X Preferred Stock for the three months ended March 31, 2023 and 2022, as results of operations were a loss for the period. The Company’s potentially dilutive securities include RSUs, stock options and warrants. These securities were excluded from the computations of diluted net loss per share for the three months ended March 31, 2023 and 2022, as the effect would be to reduce the net loss per share. The following table includes the potential shares of common stock, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: Three Months Ended March 31, 2023 2022 Restricted stock units to purchase common stock 2,925,000 3,510,606 Options to purchase common stock 20,088,158 9,101,507 Warrants to purchase common stock 35,420,975 35,455,674 58,434,133 48,067,787 Pursuant to the Merger, the Company issued 136,248 shares of Series X Preferred Stock to Flame Stockholders. As of March 31, 2023, the number of potentially dilutive shares of the Company’s common stock into which these Series X preferred shares can be converted into is 136,248,000, and is not included in diluted earnings per share since the shares are contingently convertible. Subject to and upon the requisite approval of the stockholders of Leap, each issued share of Series X Preferred Stock shall convert into 1,000 shares of common stock, subject to the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. In the event that stockholder approval is not obtained, the Company must also include a proposal to approve the conversion of the Series X Preferred Stock into common stock at a meeting of stockholders (“Special Meeting”), to be held no less than once in each subsequent six |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Manufacturing Agreements License and Service Agreement License Agreement Legal Proceedings Indemnification Agreements |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. |
Use of Estimates | Use of Estimates The presentation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Research and development incentive income and receivable | Research and development incentive income and receivable The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met. Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time. Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed. The percentage was 43.5% for the year ended December 31, 2022 and for the three months ended March 31, 2023. The research and development incentive receivable represents an amount due in connection with the above program. The Company recorded a research and development incentive receivable of $ 2,343 and $ 2,099 as of March 31, 2023 and December 31, 2022, respectively, in the condensed consolidated balance sheets and other income from Australian research and development incentives of $272 and $37 , respectively, for the three months ended March 31, 2023 and 2022. The following table shows the change in the research and development incentive receivable from January 1, 2022 to March 31, 2023 (in thousands): Balance at January 1, 2022 $ 1,189 Australian research and development incentive income, net 2,051 Cash received for 2021 eligible expenses (1,064) Foreign currency translation (77) Balance at December 31, 2022 2,099 Australian research and development incentive income, net 272 Foreign currency translation (28) Balance at March 31, 2023 $ 2,343 |
Foreign Currency Translation | Foreign Currency Translation The financial statements of the Company’s Australian subsidiary are measured using the local currency as the functional currency. Assets and liabilities of this subsidiary are translated into U.S. dollars at an exchange rate as of the consolidated balance sheet date. Equity is translated at historical exchange rates. Revenues and expenses are translated into U.S. dollars at average rates of exchange in effect during the period. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders’ equity. Realized and unrealized foreign currency transaction gains and losses are included in the results of operations. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents. All cash and cash equivalents are held in United States or Australian financial institutions and money market funds. At times, the Company may maintain cash balances in excess of the federally insured amount of $250 per depositor, per insured bank, for each account ownership category. Although the Company currently believes that the financial institutions with whom it does business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so. The Company has not experienced any credit losses associated with its balances in such accounts for the year ended December 31, 2022 or for the three months ended March 31, 2023. |
Deposits | Deposits As of March 31, 2023 and December 31, 2022, there were $976 and $1,108, respectively, of deposits made by the Company with certain service providers that are to be applied to future payments due under the service agreements or returned to the Company if not utilized, which were recorded in the condensed consolidated balance sheets. |
Warrants | Warrants The Company will recognize on a prospective basis the value of the effect of the down round feature in the warrants to purchase shares of common stock that were issued in a private placement in November 2017 (the “2017 Warrants”) and in the warrants that were issued in a private placement in March 2020 (the “March 2020 Coverage Warrants”) when it is triggered (i.e., when the exercise price is adjusted downward). This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price. The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation. The Company classifies the warrants that are exercisable for shares for Series X non-voting convertible preferred stock (the “January 2023 Series X Preferred Stock Warrants”) as a liability on its condensed consolidated balance sheet. The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on January 17, 2023, and the warrant liability will be subsequently remeasured to fair value at each reporting date until the Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock is obtained. Changes in the fair value of the warrant liability are recognized as gains (losses) in the Company’s condensed consolidated statement of operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands): Total Level 1 Level 2 Level 3 March 31, 2023 Assets: Cash equivalents $ 70,704 $ 70,704 $ — $ — Total assets $ 70,704 $ 70,704 $ — $ — Liabilities: Series X Preferred Stock warrant liability $ 40 $ — $ — $ 40 Total liabilities $ 40 $ — $ — $ 40 December 31, 2022 Assets: Cash equivalents $ 62,074 $ 62,074 $ — $ — Total assets $ 62,074 $ 62,074 $ — $ — Cash equivalents of $70,704 and $62,074 as of March 31, 2023 and December 31, 2022, respectively, consisted of overnight investments and money market funds which are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The carrying values of the research and development incentive receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these assets and liabilities. A roll-forward of the recurring fair value measurements of the warrant liability categorized with Level 3 inputs are as follows (in thousands): Balance at January 17, 2023 $ 90 Change in fair value (50) Balance at March 31, 2023 $ 40 The warrant liability in the table above is composed of the fair value of the January 2023 Series X Preferred Stock Warrants. The fair value of the warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company utilized the Black-Scholes option valuation model to fair value the warrant liability. The expected life was estimated to be the term from the valuation date to the warrant expiry date. The expected volatility was based on the historical volatility of the Company. The risk-free interest rate was based on the continuous rates provided by the U.S. Treasury with a term approximating the expected life of the option. The expected dividend yield was |
Leases | Leases The Company accounts for leases in accordance with Accounting Standards Codification, or ASC, Topic 842, Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The Company has determined that the rate implicit in the lease is not determinable and the Company does not have borrowings with similar terms and collateral. Therefore, the Company considered a variety of factors, including observable debt yields from comparable companies and the volatility in the debt market for securities with similar terms, in determining that 8% was reasonable to use as the incremental borrowing rate for purposes of the calculation of lease liabilities. In accordance with the guidance in Topic 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating right-of-use asset being recorded on the consolidated balance sheets and amortized such that lease expense is recorded on a straight line basis over the term of the lease. |
Net Loss per Share | Net Loss per Share Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants. |
Subsequent Events | Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements For a discussion of recent accounting pronouncements please refer to Note 2, “Summary of Significant Accounting Policies.” in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2022. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of change in the research and development incentive receivable | The following table shows the change in the research and development incentive receivable from January 1, 2022 to March 31, 2023 (in thousands): Balance at January 1, 2022 $ 1,189 Australian research and development incentive income, net 2,051 Cash received for 2021 eligible expenses (1,064) Foreign currency translation (77) Balance at December 31, 2022 2,099 Australian research and development incentive income, net 272 Foreign currency translation (28) Balance at March 31, 2023 $ 2,343 |
Schedule of assets and liabilities carried at fair value in accordance with the hierarchy | A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands): Total Level 1 Level 2 Level 3 March 31, 2023 Assets: Cash equivalents $ 70,704 $ 70,704 $ — $ — Total assets $ 70,704 $ 70,704 $ — $ — Liabilities: Series X Preferred Stock warrant liability $ 40 $ — $ — $ 40 Total liabilities $ 40 $ — $ — $ 40 December 31, 2022 Assets: Cash equivalents $ 62,074 $ 62,074 $ — $ — Total assets $ 62,074 $ 62,074 $ — $ — |
Schedule of the recurring fair value measurements of the warrant derivative liability categorized with Level 3 inputs | Balance at January 17, 2023 $ 90 Change in fair value (50) Balance at March 31, 2023 $ 40 |
Acquisition of Flame Bioscien_2
Acquisition of Flame Biosciences (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Acquisition of Flame Biosciences | |
Summary of net assets acquired based on their estimated fair values as of acquisition date | The following table summarizes the net assets acquired based on their estimated fair values as of January 17, 2023 (in thousands): Acquired IPR&D $ 29,582 Cash and cash equivalents 50,362 Accounts payable and accrued liabilities (928) Total acquisition value $ 79,016 |
Schedule of fair value assigned to each component of the purchase consideration, including direct costs of the acquisition of $1,393, as of the Effective Date | Equivalent common Number of shares shares Fair Value Leap common stock (par value $0.0001 per share) 19,729,010 19,729,010 $ 9,805 Leap Series X Preferred Stock (1000:1) 136,248 136,248,000 67,715 Warrants on Leap common stock 65,301 65,301 13 Warrants on Leap Series X Preferred Stock (1000:1) 443 443,000 90 Direct and incremental costs of the asset acquisition 1,393 Total 156,485,311 $ 79,016 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses | |
Schedule of accrued expenses | March 31, December 31, 2023 2022 Clinical trials $ 2,374 $ 2,093 Professional fees 398 533 Payroll and related expenses 1,616 2,526 Accrued expenses $ 4,388 $ 5,152 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Schedule of future lease payments | Future lease payments under non-cancelable operating leases as of March 31, 2023 are detailed as follows: Future Operating Lease Payments 2023 339 2024 268 Total Lease Payments 607 Less: imputed interest (30) Total operating lease liabilities $ 577 |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Warrants | |
Schedule of warrants | March 31, 2023 Number of Common Shares Description Issuable Number of Series X Preferred Shares Issuable Exercise Price Expiration Date January 23 2017 Warrants 54,516 — $ 0.01 Upon M&A Event 2017 Warrants 2,502,382 — $ 1.055 November 2024 2019 Warrants 6,908,257 — $ 1.95 February 2026 March 2020 Pre-funded Warrants 8,247,170 — $ 0.001 No Expiry March 2020 Coverage Warrants 25,945,035 — $ 2.11 Jan - March 2027 September 2021 Pre-funded Warrants 5,916,030 — $ 0.001 No Expiry January 2023 Common Stock Warrants 65,301 — $ 0.680 February 2025 January 2023 Series X Preferred Stock Warrants (Convertible 1000 to 1) — 443 $ 678.48 February 2025 49,638,691 443 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity Incentive Plans | |
Schedule of stock option activity under the Equity Plans | Weighted Average Weighted Aggregate Exercise Price Average Remaining Intrinsic Options Per Share Life in Years Value Outstanding at December 31, 2022 11,917,331 3.59 7.47 — Granted 8,235,000 0.34 Forfeited (64,173) 1.90 Outstanding at March 31, 2023 20,088,158 2.27 8.33 — Options exercisable at March 31, 2023 8,247,158 4.49 6.35 — Options vested and expected to vest at March 31, 2023 20,088,158 2.27 8.33 — |
Schedule of assumptions used to determine grant-date fair value of stock options | Three Months Three Months Ended March 31, Ended March 31, 2023 2022 Expected volatility 89.99 % 82.70 % Weighted average risk-free interest rate 3.56 % 1.67 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 6.42 6.01 |
Schedule of RSU activity under the 2016 Plan | Weighted Average Grant Number of Shares Date Fair Value Outstanding at December 31, 2022 3,585,606 $ 1.89 Vested (660,606) $ 1.42 Outstanding at March 31, 2023 2,925,000 $ 2.00 |
Schedule of recognized stock-based compensation expense related to the issuance of stock option awards and RSUs to employees and non-employees in the condensed consolidated statements of operations | Three Months Ended March 31, 2023 2022 Research and development $ 704 $ 554 General and administrative 606 650 Total $ 1,310 $ 1,204 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Net Loss Per Share | |
Schedule of basic and diluted net loss per share | Basic and diluted net loss per share for the three months ended March 31, 2023 and 2022 was calculated as follows (in thousands except share and per share amounts). Three Months Ended March 31, 2023 2022 Numerator: Net loss $ (41,863) $ (10,376) Net loss attributable to common stockholders for basic and diluted loss per share $ (41,863) $ (10,376) Denominator: Weighted average number of common shares outstanding – basic and diluted 129,344,272 113,248,937 Net loss per share attributable to common stockholders – basic and diluted $ (0.32) $ (0.09) |
Schedule of potentially anti-dilutive securities excluded from calculation of diluted net loss per share | Three Months Ended March 31, 2023 2022 Restricted stock units to purchase common stock 2,925,000 3,510,606 Options to purchase common stock 20,088,158 9,101,507 Warrants to purchase common stock 35,420,975 35,455,674 58,434,133 48,067,787 |
Nature of Business, Basis of _2
Nature of Business, Basis of Presentation and Liquidity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Liquidity | |||
Cash and cash equivalents | $ 102,038 | $ 65,500 | |
Accumulated deficit | (360,031) | $ (318,168) | |
Net loss | $ (41,863) | $ (10,376) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Research and development incentive income and receivable | |||
Research and development expenses reimbursed (as a percent) | 43.50% | 43.50% | |
Research and development incentive receivable | $ 2,071 | $ 2,099 | |
Research and development incentive income and receivable | |||
Balance at the beginning of the period | 2,099 | $ 1,189 | 1,189 |
Australian research and development incentive income, net | 272 | $ 37 | (2,051) |
Cash received for eligible expenses | (1,064) | ||
Foreign currency translation | (28) | (77) | |
Balance at the end of the period | 2,343 | 2,099 | |
Deferred Offering Costs | |||
Deferred costs | 576 | ||
Other Assets | |||
Deposits | $ 976 | 1,108 | |
Incremental borrowing rate | 8% | ||
License and Service | |||
Other Assets | |||
Deposits | $ 976 | $ 1,108 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) $ in Thousands | 2 Months Ended | |
Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Assets: | ||
Cash equivalents | $ 70,704 | $ 62,074 |
Total assets | 70,704 | 62,074 |
Liabilities: | ||
Series X Preferred Stock warrant liability | 40 | |
Total liabilities | $ 40 | |
Measurement Input, Expected Dividend Rate [Member] | ||
Fair value measurements of the warrant liability | ||
Warrants and Rights Outstanding, Measurement Input | 0 | |
Level 1 | ||
Assets: | ||
Cash equivalents | $ 70,704 | 62,074 |
Total assets | 70,704 | $ 62,074 |
Level 3 | ||
Liabilities: | ||
Series X Preferred Stock warrant liability | 40 | |
Total liabilities | 40 | |
Warrant Liability | Level 3 | ||
Fair value measurements of the warrant liability | ||
Beginning Balance | 90 | |
Loss (gain) on change in fair value | (50) | |
Change in fair value | (50) | |
Ending Balance | $ 40 |
Acquisition of Flame Bioscien_3
Acquisition of Flame Biosciences (Details) | 1 Months Ended | 3 Months Ended | ||
Jan. 17, 2023 USD ($) shares | Jan. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) | |
Asset Acquisition [Table] | ||||
Cash | $ 102,038,000 | $ 65,500,000 | ||
Period to held to special meeting | 6 months | |||
Change in fair value of warrant liability | $ 50,000 | |||
January 2023 Common Stock Warrants | ||||
Asset Acquisition [Table] | ||||
Shares issuable upon exercise of warrants | shares | 65,301 | |||
Exercise price per share | $ / shares | $ 0.68 | $ 0.680 | ||
Series X Preferred Stock | ||||
Asset Acquisition [Table] | ||||
Shares issuable upon exercise of warrants | shares | 443 | |||
Conversion ratio | 1,000 | |||
Series X Preferred Stock | January 2023 Series X Preferred Stock Warrants | ||||
Asset Acquisition [Table] | ||||
Shares issuable upon exercise of warrants | shares | 443 | 443 | ||
Conversion ratio | 1,000 | 1,000 | ||
Exercise price per share | $ / shares | $ 678.48 | $ 678.48 | ||
Flame | ||||
Asset Acquisition [Table] | ||||
Percentage of outstanding ordinary shares acquired | 100% | |||
Number of shares issued | shares | 19,729,010 | |||
Holdback shares | 15,604 | |||
Purchase price | $ 79,016,000 | |||
Working capital items | 928,000 | |||
Acquired I P R & D | (29,582,000) | |||
Cash | 50,362,000 | $ 29,582,000 | ||
Direct and incremental costs of the asset acquisition | $ 1,393,000 | |||
Percentage of contingent merger consideration on after tax net proceeds | 80% | |||
Period to held to special meeting | 6 months | |||
Period for obtaining stockholder approval from the date of issuance | 6 months | |||
Flame | January 2023 Common Stock Warrants | ||||
Asset Acquisition [Table] | ||||
Shares issuable upon exercise of warrants | shares | 65,301 | |||
Adjustment for amortization | $ 0.68 | |||
Flame | January 2023 Series X Preferred Stock Warrants | ||||
Asset Acquisition [Table] | ||||
Conversion ratio | 1,000 | |||
Flame | Series X Non Voting Convertible Preferred Stock | ||||
Asset Acquisition [Table] | ||||
Number of shares issued | shares | 136,248 | |||
Flame | Series X Preferred Stock | ||||
Asset Acquisition [Table] | ||||
Conversion ratio | 1,000 | 1,000 | 1,000 | |
Flame | Series X Preferred Stock | January 2023 Common Stock Warrants | ||||
Asset Acquisition [Table] | ||||
Shares issuable upon exercise of warrants | shares | 65,301 | |||
Flame | Series X Preferred Stock | January 2023 Series X Preferred Stock Warrants | ||||
Asset Acquisition [Table] | ||||
Shares issuable upon exercise of warrants | shares | 443 | 443 | ||
Exercise price per share | $ / shares | $ 678.48 |
Acquisition of Flame Bioscien_4
Acquisition of Flame Biosciences - Net assets acquired (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jan. 17, 2023 | Dec. 31, 2022 |
Acquisition of Flame Biosciences | |||
Cash and cash equivalents | $ 102,038 | $ 65,500 | |
Flame | |||
Acquisition of Flame Biosciences | |||
Acquired I P R & D | $ 29,582 | ||
Cash and cash equivalents | $ 29,582 | 50,362 | |
Accounts payable and accrued liabilities | (928) | ||
Total acquisition value | $ 79,016 |
Acquisition of Flame Bioscien_5
Acquisition of Flame Biosciences - Fair value assigned to each component of the purchase consideration (Details) $ / shares in Units, $ in Thousands | Jan. 17, 2023 USD ($) shares | Mar. 31, 2023 $ / shares | Jan. 31, 2023 | Dec. 31, 2022 $ / shares |
Acquisition of Flame Biosciences | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Series X Preferred Shares | ||||
Acquisition of Flame Biosciences | ||||
Conversion ratio | 1,000 | |||
Flame | ||||
Acquisition of Flame Biosciences | ||||
Equivalent common shares | 156,485,311 | |||
Direct and incremental costs of the asset acquisition | $ | $ 1,393 | |||
Total | $ | $ 79,016 | |||
Flame | Warrant Liability | ||||
Acquisition of Flame Biosciences | ||||
Number of shares | 65,301 | |||
Equivalent common shares | 65,301 | |||
Fair Value (in thousands) | $ | $ 13 | |||
Flame | Common stock | ||||
Acquisition of Flame Biosciences | ||||
Number of shares | 19,729,010 | |||
Equivalent common shares | 19,729,010 | |||
Fair Value (in thousands) | $ | $ 9,805 | |||
Flame | Series X Preferred Shares | ||||
Acquisition of Flame Biosciences | ||||
Number of shares | 136,248 | |||
Equivalent common shares | 136,248,000 | |||
Fair Value (in thousands) | $ | $ 67,715 | |||
Conversion ratio | 1,000 | 1,000 | 1,000 | |
Flame | Series X Preferred Shares | Warrant Liability | ||||
Acquisition of Flame Biosciences | ||||
Number of shares | 443 | |||
Equivalent common shares | 443,000 | |||
Fair Value (in thousands) | $ | $ 90 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses | ||
Clinical trials | $ 2,374 | $ 2,093 |
Professional fees | 398 | 533 |
Payroll and related expenses | 1,616 | 2,526 |
Accrued expenses | $ 4,388 | $ 5,152 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Leases | |||
Right of use assets, net | $ 569 | $ 669 | |
Lease liability | 577 | ||
Additional right of use asset | 609 | ||
Additional operating lease liability | $ 609 | ||
Rent expense | $ 114 | $ 108 |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Leases | |
2023 | $ 339 |
2024 | 268 |
Total Lease Payments | 607 |
Less: imputed interest | (30) |
Total operating lease liabilities | $ 577 |
Warrants (Details)
Warrants (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Sep. 24, 2021 $ / shares shares | Jun. 22, 2020 $ / shares shares | Mar. 05, 2020 $ / shares shares | Jan. 03, 2020 Vote item $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 $ / shares shares | Jan. 31, 2023 $ / shares shares | Feb. 05, 2019 $ / shares shares | |
Warrants | ||||||||
Number of Shares Issuable | 49,638,691 | |||||||
Change in fair value of warrant liability | $ | $ 50 | |||||||
Series X Preferred Stock | ||||||||
Warrants | ||||||||
Warrant to purchase shares of common stock | 443 | |||||||
Conversion ratio | 1,000 | |||||||
January 23 2017 Warrants | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 0.01 | |||||||
Number of Shares Issuable | 54,516 | |||||||
March 2020 Pre-funded Warrants | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 0.001 | |||||||
Number of Shares Issuable | 8,247,170 | |||||||
March 2020 Coverage Warrants | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 2.11 | |||||||
Number of Shares Issuable | 25,945,035 | |||||||
January 2023 Common Stock Warrants | ||||||||
Warrants | ||||||||
Warrant to purchase shares of common stock | 65,301 | |||||||
Exercise price of warrant | $ / shares | $ 0.680 | $ 0.68 | ||||||
Number of Shares Issuable | 65,301 | |||||||
January 2023 Series X Preferred Stock Warrants | Series X Preferred Stock | ||||||||
Warrants | ||||||||
Warrant to purchase shares of common stock | 443 | 443 | ||||||
Exercise price of warrant | $ / shares | $ 678.48 | $ 678.48 | ||||||
Conversion ratio | 1,000 | 1,000 | ||||||
Feb 2019 warrants | ||||||||
Warrants | ||||||||
Purchase price per share | $ / shares | $ 0.29 | |||||||
2017 Warrants | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 1.055 | |||||||
Number of Shares Issuable | 2,502,382 | |||||||
2019 Warrants | ||||||||
Warrants | ||||||||
Warrant to purchase shares of common stock | 7,557,142 | |||||||
Exercise price of warrant | $ / shares | $ 1.95 | $ 1.95 | ||||||
Number of shares redeemed | $ | $ 100,000 | |||||||
Number of Shares Issuable | 6,908,257 | |||||||
March 2020 Warrants | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 0.001 | |||||||
Number of warrants or rights exercised | 6,166,732 | |||||||
March 2020 Warrants | Series A Preferred Stock | ||||||||
Warrants | ||||||||
Warrant to purchase shares of common stock | 14,413,902 | |||||||
Exercise price of warrant | $ / shares | $ 0.001 | |||||||
Common stock issued | 1,421,801 | |||||||
Purchase price | $ / shares | $ 10.54 | |||||||
Number of special voting stock | Vote | 1 | |||||||
Number of members to elect of board of directors | item | 1 | |||||||
March 2020 Warrants | Series B Preferred Stock | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 2.11 | |||||||
Common stock issued | 1,137,442 | |||||||
Purchase price | $ / shares | $ 10.55 | |||||||
Conversion of stock, shares issued | 11,531,133 | |||||||
March 2020 Warrants | Common Stock | ||||||||
Warrants | ||||||||
Number of shares issued upon exercise of warrants | 6,161,000 | |||||||
September 2021 | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Common stock issued | 8,771,928 | |||||||
Number of warrants or rights exercised | 2,855,898 | |||||||
Number of Shares Issuable | 5,916,030 | |||||||
September 2021 | Common Stock | ||||||||
Warrants | ||||||||
Common stock issued | 27,568,072 | |||||||
Purchase price | $ / shares | $ 2.85 | |||||||
Number of shares issued upon exercise of warrants | 2,853,351 | |||||||
June 2020 | ||||||||
Warrants | ||||||||
Exercise price of warrant | $ / shares | $ 0.001 | $ 0.001 | ||||||
Number of warrants or rights exercised | 1,690,137 | |||||||
Number of Shares Issuable | 2,250,000 | |||||||
June 2020 | Common Stock | ||||||||
Warrants | ||||||||
Common stock issued | 20,250,000 | |||||||
Purchase price | $ / shares | $ 2 | |||||||
Number of shares issued upon exercise of warrants | 1,688,571 |
Warrants - January 2023 Common
Warrants - January 2023 Common Stock Warrants and January 2023 Series X Preferred Stock Warrants (Details) | Mar. 31, 2023 $ / shares shares | Jan. 31, 2023 $ / shares shares |
Series X Preferred Shares | ||
Class of Warrant or Right [Line Items] | ||
Shares issuable upon exercise of warrants | 443 | |
Conversion ratio | 1,000 | |
January 2023 Common Stock Warrants | ||
Class of Warrant or Right [Line Items] | ||
Shares issuable upon exercise of warrants | 65,301 | |
Exercise price per share | $ / shares | $ 0.680 | $ 0.68 |
January 2023 Series X Preferred Stock Warrants | Series X Preferred Shares | ||
Class of Warrant or Right [Line Items] | ||
Shares issuable upon exercise of warrants | 443 | 443 |
Exercise price per share | $ / shares | $ 678.48 | $ 678.48 |
Conversion ratio | 1,000 | 1,000 |
Common stock (Details)
Common stock (Details) $ in Thousands | 3 Months Ended | |
Jan. 17, 2023 shares | Mar. 31, 2023 USD ($) Vote | |
Number of vote on common shares | Vote | 1 | |
Dividend declared | $ | $ 0 | |
Flame | ||
Percentage of outstanding ordinary shares acquired | 100% | |
Number of shares issued | shares | 19,729,010 |
Equity Incentive Plans (Details
Equity Incentive Plans (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Jan. 20, 2017 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Jun. 16, 2022 | |
Options | |||||
Outstanding balance at the beginning of the period (in shares) | 11,917,331 | ||||
Granted (in shares) | 8,235,000 | ||||
Forfeited (in shares) | (64,173) | ||||
Outstanding balance at the end of the period (in shares) | 20,088,158 | 11,917,331 | |||
Options exercisable at the end of the period (in shares) | 8,247,158 | ||||
Options vested and expected to vest at end of period (in shares) | 20,088,158 | ||||
Weighted Average Exercise Price Per Share | |||||
Outstanding balance at the beginning of the period (in dollars per share) | $ 3.59 | ||||
Granted (in dollars per share) | 0.34 | ||||
Forfeited (in dollars per share) | 1.90 | ||||
Outstanding balance at the end of the period (in dollars per share) | 2.27 | $ 3.59 | |||
Options exercisable at the end of the period (in dollars per share) | 4.49 | ||||
Options vested and expected to vest at end of the period (in dollars per share) | $ 2.27 | ||||
Weighted Average Remaining Life in Years | |||||
Outstanding balance | 8 years 3 months 29 days | 7 years 5 months 19 days | |||
Options exercisable at end of period | 6 years 4 months 6 days | ||||
Options vested and expected to vest at end of the period | 8 years 3 months 29 days | ||||
Assumptions used to determine grant-date fair value | |||||
Expected Volatility | 89.99% | 82.70% | |||
Weighted average risk-free interest rate | 3.56% | 1.67% | |||
Expected dividend yield | 0% | 0% | |||
Expected term (in years) | 6 years 5 months 1 day | 6 years 3 days | |||
Options unvested at end of period (in dollars per share) | $ 0.25 | $ 1.39 | |||
Expiration period | 10 years | ||||
unrecognized compensation cost related to non-vested stock options | $ 5,866,000 | ||||
Weighted average period for recognition of compensation cost | 2 years 3 months 14 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value | |||||
Outstanding at end(in dollars per share) | $ 0.25 | $ 1.39 | |||
Minimum | |||||
Assumptions used to determine grant-date fair value | |||||
Vesting period | 3 years | ||||
Maximum | |||||
Assumptions used to determine grant-date fair value | |||||
Vesting period | 4 years | ||||
2016 Plan | |||||
Assumptions used to determine grant-date fair value | |||||
Annual increase in authorized shares (as a percent) | 4% | ||||
Number of options or stock awards available for grant under the Plan | 1,190,949 | ||||
2022 Plan | |||||
Assumptions used to determine grant-date fair value | |||||
Number of options or stock awards available for grant under the Plan | 7,500,000 | ||||
Options to purchase common stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value | |||||
Stock-based compensation expense | $ 1,310,000 | $ 1,204,000 | |||
Options to purchase common stock [Member] | Research and development | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value | |||||
Stock-based compensation expense | 704,000 | 554,000 | |||
Options to purchase common stock [Member] | General and administrative | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value | |||||
Stock-based compensation expense | $ 606,000 | $ 650,000 | |||
Restricted stock units to purchase common stock | |||||
Assumptions used to determine grant-date fair value | |||||
Weighted average period for recognition of compensation cost | 1 year 9 months 18 days | ||||
Vested | $ 5,850,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Vested | (5,850,000) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value | |||||
unrecognized compensation costs related to RSUs granted to employees | $ 3,353,000 | ||||
Restricted stock units to purchase common stock | Executive Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Awarded | 2,575,000 | ||||
Restricted stock units to purchase common stock | 2016 Plan | |||||
Assumptions used to determine grant-date fair value | |||||
Options unvested at end of period (in dollars per share) | $ 2 | $ 1.89 | |||
Vested | $ 660,606 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Outstanding at the beginning | 3,585,606 | ||||
Vested | $ (660,606) | ||||
Outstanding at the end | 2,925,000 | 3,585,606 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value | |||||
Outstanding at beginning( in dollars per share) | $ 1.89 | ||||
Vested(in dollars per share) | 1.42 | ||||
Outstanding at end(in dollars per share) | $ 2 | $ 1.89 |
Net Loss Per Share - Basic and
Net Loss Per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net loss | $ (41,863) | $ (10,376) |
Net loss attributable to common stockholders for basic loss per share | (41,863) | (10,376) |
Net loss attributable to common stockholders for diluted loss per share | $ (41,863) | $ (10,376) |
Denominator: | ||
Weighted average number of common shares outstanding - basic | 129,344,272 | 113,248,937 |
Weighted average number of common shares outstanding - diluted | 129,344,272 | 113,248,937 |
Net loss per share attributable to common stockholders - basic | $ (0.32) | $ (0.09) |
Net loss per share attributable to common stockholders - diluted | $ (0.32) | $ (0.09) |
Exercise of the pre-funded warrants | 14,217,716 | 24,930,483 |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive (Details) | 3 Months Ended | |||
Jan. 17, 2023 shares | Mar. 31, 2023 shares | Mar. 31, 2022 shares | Jan. 31, 2023 | |
Securities excluded from computation of diluted net loss per share | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 58,434,133 | 48,067,787 | ||
Period to held to special meeting | 6 months | |||
Series X Preferred Stock | ||||
Securities excluded from computation of diluted net loss per share | ||||
Temporary Stock Convertible Conversion Ratio | 1,000 | |||
Flame Biosciences, Inc [Member] | ||||
Securities excluded from computation of diluted net loss per share | ||||
Number of shares issued | 19,729,010 | |||
Equivalent common shares | 156,485,311 | |||
Period to held to special meeting | 6 months | |||
Flame Biosciences, Inc [Member] | Series X Preferred Stock | ||||
Securities excluded from computation of diluted net loss per share | ||||
Equivalent common shares | 136,248,000 | |||
Temporary Stock Convertible Conversion Ratio | 1,000 | 1,000 | 1,000 | |
Flame Biosciences, Inc [Member] | Flame shareholders | Series X Preferred Stock | ||||
Securities excluded from computation of diluted net loss per share | ||||
Number of shares issued | 136,248 | |||
Equivalent common shares | 136,248,000 | |||
Restricted stock units to purchase common stock | ||||
Securities excluded from computation of diluted net loss per share | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 2,925,000 | 3,510,606 | ||
Options to purchase common stock | ||||
Securities excluded from computation of diluted net loss per share | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 20,088,158 | 9,101,507 | ||
Warrants to purchase common stock | ||||
Securities excluded from computation of diluted net loss per share | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 35,420,975 | 35,455,674 |
Commitments and Contingencies -
Commitments and Contingencies - Manufacturing, License and Service Agreements (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Commitments and Contingencies | |
Manufacturing commitments | $ 3,469 |
License and service agreements | |
Commitments and Contingencies | |
Royalties paid or accrued | 0 |
Licensing agreements | |
Commitments and Contingencies | |
Royalties paid or accrued | $ 0 |