Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Processa Pharmaceuticals, Inc. | |
Entity Central Index Key | 0001533743 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,565,566 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | |
Current Assets | |||
Cash and cash equivalents | $ 325,428 | $ 691,536 | |
Due from related party | 7,605 | ||
Prepaid expenses and other | 42,855 | 315,605 | |
Total Current Assets | [1] | 375,888 | 1,007,141 |
Property and Equipment | |||
Property and equipment, net | 2,596 | 8,930 | |
Other Assets | |||
Operating lease right-of-use assets, net of accumulated amortization | 159,199 | 219,074 | |
Intangible assets, net of accumulated amortization | 9,045,958 | 9,642,454 | |
Security deposit | 5,535 | 5,535 | |
Total Other Assets | 9,210,692 | 9,867,063 | |
Total Assets | 9,589,176 | 10,883,134 | |
Current Liabilities | |||
Senior convertible notes, net of debt issuance costs | 762,229 | 802,503 | |
Line of credit payable - related party | 700,000 | ||
Note payable - Paycheck Protection Program, current portion | 90,329 | ||
Current maturities of operating lease liability | 79,765 | 77,992 | |
Accrued interest | 89,704 | 21,902 | |
Accounts payable | 427,451 | 75,612 | |
Due to related parties | 110,796 | 316 | |
Accrued expenses | 397,598 | 213,239 | |
Total Current Liabilities | 2,657,872 | 1,191,564 | |
Non-current Liabilities | |||
Note payable - Paycheck Protection Program | 72,130 | ||
Non-current operating lease liability | 86,736 | 147,390 | |
Net deferred tax liability | 1,245,209 | 1,531,630 | |
Total Liabilities | 4,061,947 | 2,870,584 | |
Commitments and Contingencies | |||
Stockholders' Equity | |||
Common stock, par value $0.0001, 30,000,000 and 100,000,000 shares authorized; 5,765,566 and 5,486,595 issued and outstanding at September 30, 2020 and December 31, 2019 | 577 | 549 | |
Additional paid-in capital | 21,187,697 | 18,994,008 | |
Common stock deemed dividend payable: 28,971 shares at par value | 3 | ||
Accumulated deficit | (15,661,045) | (10,982,010) | |
Total Stockholders' Equity | 5,527,229 | 8,012,550 | |
Total Liabilities and Stockholders' Equity | $ 9,589,176 | $ 10,883,134 | |
[1] | As described in Note 17, on October 6, 2020, we closed an underwritten public offering of 4,800,000 shares of common stock for a public offering price of $4.00 per share. Net proceeds from the offering were approximately $17.1 million. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Oct. 06, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 30,000,000 | 100,000,000 | |
Common stock, shares issued | 5,765,566 | 5,486,595 | |
Common stock, shares outstanding | 5,765,566 | 5,486,595 | |
Common stock, shares deemed dividend payable | 28,971 | ||
Public Offering [Member] | Subsequent Event [Member] | |||
Number of common stock for public offering | 4,800,000 | ||
Price per share | $ 4 | ||
Proceeds from offering | $ 17,100,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Operating Expenses | ||||
Research and development expenses | $ 532,587 | $ 584,979 | $ 1,461,416 | $ 1,804,169 |
Acquisition of in-process research and development | 2,000,000 | 2,000,000 | ||
General and administrative expenses | 422,958 | 419,028 | 1,282,239 | 1,219,329 |
Total operating expenses | 2,955,545 | 1,004,007 | 4,743,655 | 3,023,498 |
Operating Loss | (2,955,545) | (1,004,007) | (4,743,655) | (3,023,498) |
Other Income (Expense) (Note 5) | (186,197) | (768) | (221,801) | (2,087) |
Net Operating Loss Before Income Tax Benefit | (3,141,742) | (1,004,775) | (4,965,456) | (3,025,585) |
Income Tax Benefit | 70,457 | 141,251 | 286,421 | 442,152 |
Net Loss | $ (3,071,285) | $ (863,524) | $ (4,679,035) | $ (2,583,433) |
Net Loss per Common Share - Basic and Diluted | $ (0.55) | $ (0.16) | $ (0.84) | $ (0.47) |
Weighted Average Common Shares Used to Compute Net Loss Applicable to Common Shares - Basic and Diluted | 5,594,370 | 5,525,009 | 5,542,026 | 5,531,097 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Subscription Receivable [Member] | Common Stock Dividend Payable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 552 | $ 19,124,600 | $ (1,800,000) | $ (7,624,134) | $ 9,701,018 | |
Balance, shares at Dec. 31, 2018 | 5,525,128 | |||||
Stock-based compensation | 58,559 | 58,559 | ||||
Payments made directly by investor for clinical trial costs | 115,000 | 115,000 | ||||
Net loss | (750,832) | (750,832) | ||||
Balance at Mar. 31, 2019 | $ 552 | 19,183,159 | (1,685,000) | (8,374,966) | 9,123,745 | |
Balance, shares at Mar. 31, 2019 | 5,525,128 | |||||
Balance at Dec. 31, 2018 | $ 552 | 19,124,600 | (1,800,000) | (7,624,134) | 9,701,018 | |
Balance, shares at Dec. 31, 2018 | 5,525,128 | |||||
Net loss | (2,583,433) | |||||
Balance at Sep. 30, 2019 | $ 549 | 18,877,697 | (10,207,567) | 8,670,679 | ||
Balance, shares at Sep. 30, 2019 | 5,486,595 | |||||
Balance at Mar. 31, 2019 | $ 552 | 19,183,159 | (1,685,000) | (8,374,966) | 9,123,745 | |
Balance, shares at Mar. 31, 2019 | 5,525,128 | |||||
Stock-based compensation | 66,476 | 66,476 | ||||
Payments made directly by investor for clinical trial costs | 280,927 | 280,927 | ||||
Net loss | (969,077) | (969,077) | ||||
Balance at Jun. 30, 2019 | $ 552 | 19,249,635 | (1,404,073) | (9,344,043) | 8,502,071 | |
Balance, shares at Jun. 30, 2019 | 5,525,128 | |||||
Stock-based compensation | 269,129 | 269,129 | ||||
Conversion of Senior convertible notes for common stock and stock purchase warrants | $ 2 | 258,928 | 258,930 | |||
Conversion of Senior convertible notes for common stock and stock purchase warrants, shares | 18,107 | |||||
Payments/reimbursements made by investor for clinical trial costs | 504,073 | 504,073 | ||||
Pledged shares of common stock forfeited upon revised agreement with clinical trial investor | $ (5) | (899,995) | 900,000 | |||
Pledged shares of common stock forfeited upon revised agreement with clinical trial investor, shares | (56,640) | |||||
Net loss | (863,524) | (863,524) | ||||
Balance at Sep. 30, 2019 | $ 549 | 18,877,697 | (10,207,567) | 8,670,679 | ||
Balance, shares at Sep. 30, 2019 | 5,486,595 | |||||
Balance at Dec. 31, 2019 | $ 549 | 18,994,008 | $ 3 | (10,982,010) | 8,012,550 | |
Balance, shares at Dec. 31, 2019 | 5,486,595 | |||||
Stock-based compensation | 98,663 | 98,663 | ||||
Transaction costs related to anticipated 2020 offering | (2,806) | (2,806) | ||||
Net loss | (874,336) | (874,336) | ||||
Balance at Mar. 31, 2020 | $ 549 | 19,089,865 | 3 | (11,856,346) | 7,234,071 | |
Balance, shares at Mar. 31, 2020 | 5,486,595 | |||||
Balance at Dec. 31, 2019 | $ 549 | 18,994,008 | 3 | (10,982,010) | 8,012,550 | |
Balance, shares at Dec. 31, 2019 | 5,486,595 | |||||
Net loss | (4,679,035) | |||||
Balance at Sep. 30, 2020 | $ 577 | 21,187,697 | (15,661,045) | 5,527,229 | ||
Balance, shares at Sep. 30, 2020 | 5,765,566 | |||||
Balance at Mar. 31, 2020 | $ 549 | 19,089,865 | 3 | (11,856,346) | 7,234,071 | |
Balance, shares at Mar. 31, 2020 | 5,486,595 | |||||
Stock-based compensation | 93,869 | 93,869 | ||||
Transaction costs related to anticipated 2020 offering | (1,506) | (1,506) | ||||
Stock dividend distributed due to full-ratchet anti-dilution adjustment | $ 3 | (3) | ||||
Stock dividend distributed due to full-ratchet anti-dilution adjustment, shares | 28,971 | |||||
Net loss | (733,414) | (733,414) | ||||
Balance at Jun. 30, 2020 | $ 552 | 19,182,228 | (12,589,760) | 6,593,020 | ||
Balance, shares at Jun. 30, 2020 | 5,515,566 | |||||
Stock-based compensation | 164,507 | 164,507 | ||||
Transaction costs related to anticipated 2020 offering | (356,416) | (356,416) | ||||
Shares issued in connection with Yuhan license agreement | $ 25 | 1,999,975 | 2,000,000 | |||
Shares issued in connection with Yuhan license agreement, shares | 250,000 | |||||
Fair value of warrants issued in the sale of our 2019 Senior Notes | 197,403 | 197,403 | ||||
Net loss | (3,071,285) | (3,071,285) | ||||
Balance at Sep. 30, 2020 | $ 577 | $ 21,187,697 | $ (15,661,045) | $ 5,527,229 | ||
Balance, shares at Sep. 30, 2020 | 5,765,566 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows From Operating Activities | ||
Net loss | $ (4,679,035) | $ (2,583,433) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 6,334 | 6,334 |
Non-cash lease expense for right-of-use assets | 59,875 | 55,012 |
Non-cash acquisition of in-process research and development | 2,000,000 | |
Amortization of debt issuance costs (Note 5) | 157,129 | |
Amortization of intangible asset | 596,496 | 596,496 |
Deferred income tax benefit | (286,421) | (442,152) |
Stock-based compensation | 357,039 | 394,164 |
Net changes in operating assets and liabilities: | ||
Prepaid expenses and other | 272,750 | 37,552 |
Operating lease liability | (58,881) | (58,999) |
Accrued interest | 67,802 | 8,587 |
Accounts payable | 351,839 | (227,241) |
Due (from) to related parties | 102,875 | 46,647 |
Accrued expenses | 184,359 | 30,374 |
Net cash used in operating activities | (867,839) | (2,136,659) |
Cash Flows From Financing Activities | ||
Proceeds received in satisfaction of stock subscription receivable | 900,000 | |
Borrowings on line of credit from a related party | 700,000 | |
Proceeds received from our Paycheck Protection Program note payable | 162,459 | |
Transaction costs related to subsequent common stock offering | (360,728) | |
Net cash provided by financing activities | 501,731 | 900,000 |
Net Decrease in Cash | (366,108) | (1,236,659) |
Cash and Cash Equivalents - Beginning of Period | 691,536 | 1,740,961 |
Cash and Cash Equivalents - End of Period | 325,428 | 504,302 |
Non-Cash Investing and Financing Activities | ||
Right-of-use asset obtained in exchange for operating lease liability | (293,198) | |
Reduction in deferred lease liability | (9,963) | |
Operating lease liability | 303,161 | |
Net | ||
Issuance of 250,000 shares of common stock for the acquisition of in-process research and development in connection with the Yuhan License Agreement | 2,000,000 | |
Issuance of 28,971 shares of common stock due to triggering, in December 2019, the full ratchet anti-dilution provision of common stock sold in our 2018 Private Placement Transactions | $ 3 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - 2018 Private Placement Transactions [Member] | 9 Months Ended |
Sep. 30, 2020shares | |
Issuance of shares of acquisitions | 250,000 |
Issuance of shares of commmon stock | 28,971 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1 – Organization and Summary of Significant Accounting Policies Business Activities and Organization We are a clinical stage biopharmaceutical company focused on the development of drug products that are intended to improve the survival and/or quality of life for patients who have a high unmet medical need condition or who have no alternative treatment. Our most advanced product candidate, PCS499, is an oral tablet that is a deuterated analog of one of the major metabolites of pentoxifylline (PTX or Trental ® PCS499 Our lead product, PCS499, is an oral tablet that is a deuterated analog of one of the major metabolites of pentoxifylline (PTX or Trental ® The degeneration of tissue occurring at the NL lesion site may be caused by a number of pathophysiological changes which has made it extremely difficult to develop effective treatments for this condition. Because PCS499 and its metabolites affect a number of biological pathways, several of which could contribute to the pathophysiology associated with NL, PCS499 may provide a novel treatment solution for NL, a condition for which there are currently no FDA-approved treatments. On June 18, 2018, the FDA granted orphan-drug designation for PCS499 for the treatment of NL. On September 28, 2018, the IND for PCS499 in NL was made effective by the FDA, such that we could move forward with a Phase 2A trial multicenter, open-label prospective trial designed to determine the safety and tolerability of PCS499 in patients with NL. The study initially had a six-month treatment phase and a six-month optional extension phase. In December 2019, we informed patients and sites that the study would conclude after the treatment phase and there would no longer be an extension phase. The first enrolled NL patient in this Phase 2A clinical trial was dosed on January 29, 2019 and the study completed enrollment on August 23, 2019. The last patient visit took place in February 2020. Due to COVID-19 related restrictions at certain sites, study closeout and database lock did not occur until October 2020. We are currently finalizing the data results and clinical study report. The main objective of the trial was to evaluate the safety and tolerability of PCS499 in patients with NL and to use the collected safety and efficacy data to design future clinical trials. Based on toxicology studies and healthy human volunteer studies, Processa and the FDA agreed that a PCS499 dose of 1.8 grams/day would be the highest dose administered to NL patients in this Phase 2A trial. As anticipated, the PCS499 dose of 1.8 grams/day, 50% greater than the maximum tolerated dose of PTX, appeared to be well tolerated with no serious adverse events reported. All adverse events reported in the study were mild in severity. As expected, gastrointestinal symptoms were the most noted adverse events and reported in four patients, all of which were mild in severity and resolved within 1-2 weeks of starting dosing. Two of the twelve patients in the study presented with more severe ulcerated NL and had ulcers for more than two months prior to dosing. At baseline, the reference ulcer in one of the two patients measured 3.5 cm 2 2 On March 25, 2020, we met with the FDA and discussed the clinical program, as well as the nonclinical and clinical pharmacology plans to ultimately support the submission of the PCS499 New Drug Application (NDA) in the U.S. for the treatment of ulcers in NL patients. With input from the FDA, we will be designing the next trial as a randomized, placebo-controlled trial to evaluate the ability of PCS499 to completely close ulcers in patients with NL. We initially planned to begin recruiting for the randomized, placebo-controlled trial in the fourth quarter of 2020, but we now expect to begin recruiting patients in 2021 due to delays in fundraising efforts. This PCS499 NL study will be a randomized, placebo-controlled Phase 2B study to better understand the potential response of NL patients on drug and on placebo. After obtaining the results from this Phase 2B study, we expect to meet with FDA to discuss our Phase 2B drug and placebo response findings while further discussing the next steps to obtain approval. PCS12852 On August 19, 2020, we entered into a License Agreement (“Yuhan License Agreement”) with Yuhan Corporation (“Yuhan”), pursuant to which we acquired an exclusive license to develop, manufacture and commercialize PCS12852 (formerly known as YH12852) globally, excluding South Korea. We accounted for the Yuhan License Agreement as an asset acquisition since it did not meet the definition of a business, and therefore recorded the intangible asset at fair value, equal to the consideration paid of $2 million in the form of 500,000 shares of our common stock (see Note 12). Because the intangible asset represents in-process research and development with no alternative future use, we immediately expensed the fair value in the Statement of Operations. At September 30, 2020, only 250,000 shares had been issued. PCS12852 is a novel, potent and highly selective 5-hydroxytryptamine 4 (5-HT4) receptor agonist. Other 5-HT receptor agonists with less 5-HT4 selectivity have been shown to successfully treat gastrointestinal (GI) motility disorders such as chronic constipation, constipation-predominant irritable bowel syndrome, functional dyspepsia and gastroparesis. Less selective 5-HT4 agonists, such as cisapride, have been either removed from the market or not approved because of the cardiovascular side effects associated with the drugs binding to other receptors, especially 5-HT receptors other than 5-HT4. We plan to meet with the FDA in early 2021 to further define the clinical development program required for the PCS12852 product and discuss a Phase 2A proof of concept randomized, placebo-controlled study for PCS12852 in a gastrointestinal (GI) motility dysfunction disorder (e.g., gastroparesis, post-operative ileus also called gastrointestinal dysfunction (POGD), opioid induced constipation, chronic idiopathic constipation). The purpose of the Phase 2A trial would be to better define a dosage regimen of PCS128552 that could be potentially efficacious and safe in a larger pivotal study. The patients with these types of conditions have an abnormal pattern of GI motility in the absence of mechanical obstruction. For example, gastroparesis is characterized by postprandial fullness (early satiety), nausea, vomiting and bloating. It is known to occur in more than 4 million people in the US, but many still do not have access to medications that work or can be tolerated by the patients. The only FDA-approved product for gastroparesis is a dopamine D2 Antagonist metoclopramide (Gimoti®), which includes an FDA “Black Box” warning for tardive dyskinesia (TD), a serious movement disorder that is often irreversible. Because of this adverse effect, the treatment is limited to no more than 12 weeks. POGD is characterized by nausea, vomiting, abdominal distension and/or delated passage of flatus or stool, following surgery (most commonly with abdominal surgery). It is the most common cause of prolonged length of stay in hospital following GI surgery, leading to an increase in healthcare costs. The only FDA-approved drug to treat POGD is a mu-opioid receptor antagonist alvimopan (Entereg®), which is only available through a restricted program for short-term use due to the potential risk of myocardial infarction with long-term use. Two clinical studies have been previously conducted by Yuhan with PCS12852. In the first-in-human clinical trial (Protocol YH12852-101), the initial safety and tolerability of PCS12852 were evaluated after single and multiple oral doses in healthy subjects. PCS12852 increased stool frequency with faster onset when compared to prucalopride, an FDA approved drug for the treatment of chronic idiopathic constipation. Compared to the group receiving prucalopride, the PCS12852 dose groups showed higher stool frequency for 24 hours following single dosing and had faster onset of spontaneous bowel movements (SBMs) with comparable or relatively higher Bristol Stool Form Scale score (lower stool consistency) for 24 hours following first dosing. In addition, based on an increase of ≥ 1 SBM/week from baseline during 7-day multiple dosing, the PCS12852 dose group had a higher percent of patients with an increase than the prucalopride group. All doses of PCS12852 were safe and well tolerated and no serious adverse events (SAE) occurred during the study. The most frequently reported adverse events (AEs) were headache, nausea and diarrhea which were temporal, manageable, and reversible within 24 hours. There were no clinically significant changes in platelet aggregation or ECG parameters including no sign of QTc prolongation in the study. The second study conducted was a Phase 1/2A clinical trial (Protocol YH12852-102) to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of PCS12852 immediate release (IR) formulation and delayed release (DR) formulation after multiple oral dosing. PCS12852 was safe and well tolerated after single and multiple administrations. The most frequent AEs for both the IR and DR formulations of PCS12852 were headache, nausea and diarrhea, but the incidences of these AEs were comparable with those of the prucalopride 2 mg group. These AEs, which were transient and mostly mild in severity, are also commonly observed with other 5-HT4 agonists. Both formulations of PCS12852 also showed pharmacologic activity as assessed using various pharmacodynamic parameters for stool assessment. In this study, PCS12852 also showed an enhanced gastric emptying rate in patients assessed by the Gastric Emptying Breath Test (GEBT). The change from baseline in gastric emptying rate increased in both 0.1 mg and 0.05 mg PCS12852 groups and showed a statistically significant change from baseline in the 0.1 mg group. Yuhan had also conducted extensive toxicological studies for the product that demonstrated that the product is safe for use and can be moved quickly into Phase 2 studies. PCS6422 On August 23, 2020, we entered into a License Agreement (“Elion License Agreement”) with Elion Oncology, Inc. (“Elion”), pursuant to which we acquired an exclusive contingent license to develop, manufacture and commercialize PCS6422 globally. On October 6, 2020, in connection with the closing of our underwritten offering and listing on the Nasdaq Capital Market, the contingencies related to this license were met. We have not accounted for the Elion License Agreement at September 30, 2020 since the contingency was not met until we closed our underwritten public offering and up-listed our common stock to the Nasdaq stock market, which occurred on October 6, 2020. We believe this license agreement represents an asset acquisition since it did not meet the definition of a business, and we plan to record the intangible asset acquired at fair value equal to the consideration paid of $3.3 million in the form of 825,000 shares of our common stock and $100,000 cash. Because the intangible assets represent in-process research and development with no alternative future use, we will immediately expense the fair value in the fourth quarter in our statement of operations. Elion acquired the eniluracil (PCS6422) product from Fennec Pharmaceuticals (formerly known as Adherex Technologies) in 2016. PCS6422 is an oral, potent, selective, and irreversible inhibitor of dihydropyrimidine dehydrogenase (DPD), the enzyme that rapidly metabolizes 5-FU, a common chemotherapy drug, to inactive metabolites, such as α-fluoro-β-alanine (F-Bal). F-Bal is thought to cause the neurotoxicity and Hand–Foot Syndrome (HFS) associated with 5-FU, and greater formation of F-Bal appears to be associated with a decrease in the antitumor activity of 5-FU. HFS can affect daily living activities, quality of life, and requires dose interruptions/adjustments and even therapy discontinuation resulting in suboptimal tumor effects. We believe that the inhibition of DPD by PCS6422 may significantly improve exposure to 5-FU and reduce 5-FU side effects related to F-Bal. One dose of PCS6422 irreversibly blocks DPD activity for up to two weeks until DPD levels recover via de novo synthesis of the DPD enzyme. Thus, we believe inhibition of tumor DPD will result in higher 5-FU intra-tumoral concentration and potentially better tumor response along with the decrease in F-Bal. Fluoropyrimidines (e.g., 5-FU) are still the cornerstone of treatment for many different types of cancers, either as monotherapy or in combination with other chemotherapy agents by an estimated two million patients annually. Xeloda ® Elion evaluated the potential for the combination of PCS6422 with capecitabine (Xeloda®, and, together with PCS6422, known as ECAPE) as a treatment of advanced gastrointestinal (GI) tumors. Nonclinical efficacy data indicated that in colorectal cancer models, pretreatment with PCS6422 enhanced the antitumor activity of capecitabine. PCS6422 increased the antitumor potency of capecitabine while not increasing the toxicity. The antitumor efficacy of the combination of PCS6422 and capecitabine was tested in several xenograft animal models with human breast, pancreatic and colorectal cancer cells. These preclinical xenograft models demonstrate that PCS6422 potentiates the antitumor activity of capecitabine and significantly reduces the dose of capecitabine required to be efficacious. Elion met with the FDA in 2019 and agreed upon the clinical development program required for the combination of PCS6422 and capecitabine as first-line therapy for metastatic colorectal cancer when treatment with fluoropyrimidine therapy alone is preferred. Subsequently, an IND has been granted safe to proceed by FDA on May 17, 2020, for the Phase 1B study. This Phase 1B study will evaluate the safety and tolerability of several dose combinations of PCS6422 and capecitabine in advanced GI tumor patients and should be initiated in the first half of 2021. Other DPD enzyme inhibitors (e.g. Gimeracil used in Teysuno® approved only outside the US) act as competitive reversible inhibitors. These agents must be present when 5-FU or capecitabine are administered to inhibit 5-FU breakdown by DPD in order to improve the efficacy and safety profiles of 5-FU. Given the reversible nature of their effect on DPD, over time 5-FU metabolism to F-Bal will return, decreasing the amount of 5-FU in the cancer cells and decreasing the potential cytotoxicity on the cancer cells. There is also evidence that administering DPD inhibitors directly with 5-FU may also decrease the antitumor effect of the 5-FU. Because PCS6422 is an irreversible inactivator of DPD, it can be dosed the day before capecitabine administration and its effect on DPD can last longer than the reversible DPD inhibitors and beyond the time 5-FU exists in the cancer cell. We believe this can optimize the potential cytotoxic effect and minimize the metabolism of 5-FU. Prior to Elion’s involvement, two multicenter Phase 3 studies were conducted in patients with colorectal cancer (CRC) with PCS6422 administered in 10-fold excess to 5-FU. Unfortunately, we believe the dose of PCS6422 during these trials was not optimal, and that PCS6422 was not administered early enough to irreversibly affect the DPD enzyme, thus the regimen tended to produce less antitumor benefit than the control arm with the standard regimen of 5-FU/leucovorin (LV) without PCS6422. Later preclinical work suggested that when PCS6422 was present at the same time as and in excess to 5-FU, it diminished the antitumor activity of 5-FU, which we believe supports the proposal of exploring clinically dosing PCS6422 several hours before 5-FU to allow its clearance before the administration of 5-FU. PCS11T On May 24, 2020, we entered into an exclusive License Agreement with Aposense, Ltd., (“Aposense”), pursuant to which we were granted a contingent license in Aposense’s patent rights and know-how to develop and commercialize their next generation irinotecan cancer drug, PCS11T (formerly known as ATT-11T). The grant of license was conditioned on (i) our closing of an equity financing and successful up-listing to Nasdaq which we completed on October 6, 2020 and (ii) Aposense obtaining the approval of the Israel Innovation Authority for the consummation of the transactions contemplated by the agreement, which was obtained on August 24, 2020. We have not accounted for the License Agreement with Aposense at September 30, 2020 since the contingency was not met until we closed our underwritten public offering and up-listed our common stock to the Nasdaq stock market, which occurred on October 6, 2020. We believe this license agreement represents an asset acquisition since it did not meet the definition of a business, and we plan to record the intangible asset acquired at fair value equal to the consideration paid of $2.5 million in the form of 625,000 shares of our common stock. Because the intangible assets represent in-process research and development with no alternative future use, we will immediately expense the fair value in the fourth quarter in our statement of operations. PCS11T is a novel lipophilic anti-cancer pro-drug that is being developed for the treatment of the same solid tumors as prescribed for irinotecan. This pro-drug is a conjugate of a specific proprietary Aposense molecule connected to SN-38, the active metabolite of irinotecan. The proprietary molecule in PCS11T has been designed to allow PCS11T to bind to cell membranes to form an inactive pro-drug depot on the cell with SN-38 preferentially accumulating in the membrane of tumors cells and the tumor core. This unique characteristic may make the therapeutic window of PCS11T wider than other irinotecan products such that the antitumor effect of PCS11T could occur at a much lower dose with a milder adverse effect profile than irinotecan. Despite the widespread use of commercially marketed irinotecan products in the treatment of metastatic colorectal cancer and other cancers resulting in peak annual sales of approximately $1.1 billion, irinotecan has a narrow therapeutic window and includes an FDA “Black Box” warning for both neutropenia and severe diarrhea. There is, therefore, a substantial unmet need to overcome the limitations of the current commercially marketed irinotecan products, improving efficacy and reducing the severity of treatment emergent adverse events. We believe the potential wider therapeutic window of PCS11T will likely lead to more patients responding with less side effects when on PCS11T compared to other irinotecan products. Pre-clinical studies conducted to date showed that PCS11T demonstrated tumor eradication at much lower doses than irinotecan across various tumor xenograft models. PCS11T does not affect acetyl choline esterase (AChE) activity in human and rat plasma in vitro, which would suggest that PCS11T will show an improved safety profile, compared to irinotecan, which is known for its cholinergic-related side effects. We are currently planning to manufacture the product at a GMP facility, conduct the toxicological studies required to file the IND and initiate the Phase 1B study in oncology patients with solid tumors in 2022-2023. PCS100 On August 29, 2019, we entered into an exclusive license agreement with Akashi Therapeutics, Inc. (“Akashi”) to develop and commercialize an anti-fibrotic, anti-inflammatory drug, PCS100 (formerly known as HT-100), which also promotes healthy muscle fiber regeneration. In previous clinical trials in Duchenne Muscular Dystrophy (DMD), PCS100 showed promising improvement in the muscle strength of non-ambulant pediatric patients. Although the FDA placed a full clinical hold on the DMD trial after a serious adverse event in a pediatric patient, the FDA has partially removed the clinical hold and defined how PCS100 can resume clinical trials in DMD. At the present time, we are evaluating the potential GMP manufacturing facilities and the potential indications for PCS100. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. Liquidity On October 6, 2020, we closed an underwritten public offering of 4,800,000 shares of common stock for a public offering price of $4.00 per share. Net proceeds from the offering were approximately $17.1 million. We believe these funds, along with our existing cash on that day will provide us with sufficient capital to meet our anticipated operating and capital expenditure requirements into the fourth quarter of 2022. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Our ultimate success depends on the outcome of our planned clinical trials and our research and development activities, as disclosed above. We expect to incur additional losses in the future and we anticipate the need to raise additional capital to fully implement our business plan if the cost of our planned clinical trials are greater than we expect or they take longer than anticipated. We also expect to incur increased general and administrative expenses at least through 2022 due in part to planned increased research and development activities as we conduct a Phase 2B trial for PCS499, a Phase 1B trial for PCS6422, and a Phase 2A clinical trial for PCS12852. In addition, there may be costs we incur as we develop these drug products that we do not currently anticipate requiring us to need additional capital sooner than currently expected. Use of Estimates In preparing our condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, we make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to: stock-based compensation, determining the fair value of acquired assets and assumed liabilities, intangible assets, and income taxes. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While we believe the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangibles with a finite useful life are amortized using the straight-line method unless the pattern in which the economic benefits of the intangible assets are consumed or used up are reliably determinable. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to our future cash flows. The useful life is based on the duration of the expected use of the asset by us and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. We evaluate the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. If an income approach is used to measure the fair value of an intangible asset, we consider the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to us, the useful life is considered indefinite. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. Impairment of Long-Lived Assets and Intangibles Other Than Goodwill We account for the impairment of long-lived assets in accordance with ASC 360 , Property, Plant and Equipment Intangibles – Goodwill and Other, Stock-based Compensation Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, Compensation-Stock Compensation Net Loss Per Share Basic net loss per share is computed by dividing our net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted net loss per share is computed by dividing our net loss available to common stockholders by the diluted weighted average number of shares of common stock during the period. Since we experienced a net loss for all periods presented, basic and diluted net loss per share are the same. As such, diluted loss per share for the nine months ended September 30, 2020 and 2019 excludes the impact of 1,146,112 and 662,443 potentially dilutive common stock, respectively, related to outstanding stock options and warrants and the conversion of our 2017 and 2019 Senior Notes and line of credit agreement since those shares would have an anti-dilutive effect on loss per share. Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). We have implemented all new accounting pronouncements that are in effect and that may impact our condensed consolidated financial statements. We have evaluated recently issued accounting pronouncements and determined that there is no material impact on our financial position or results of operations. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 2 – Intangible Assets Intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 Gross intangible assets $ 11,059,429 $ 11,059,429 Less: accumulated amortization (2,013,471 ) (1,416,975 ) Total intangible assets, net $ 9,045,958 $ 9,642,454 Amortization expense was $198,832 for both three months ended September 30, 2020 and 2019, and $596,496 for both nine months ended September 30, 2020 and 2019. Amortization expense is included within research and development expense in the accompanying condensed consolidated statements of operations. Our estimated annual amortization expense in future periods will be approximately $790,000 per year. The capitalized costs for the license rights to PCS499 included the $8 million purchase price, $1,782 in transaction costs and $3,037,147 associated with the initial recognition of an offsetting deferred tax liability related to the acquired temporary difference for an asset purchased that is not a business combination and has a tax basis of $1,782 in accordance with ASC 740-10-25-51 Income Taxes Research and Development |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 3 – Income Taxes We account for income taxes in accordance with ASC Topic 740, Income Taxes. A deferred tax liability was recorded on March 19, 2018 when we received CoNCERT’s license and “Know-How” in exchange for Processa stock that had been issued in the Internal Revenue Code Section 351 Transaction. The Section 351 Transaction treats the acquisition of the license and Know-How for stock as a tax-free exchange. As a result, under ASC 740-10-25-51 Income Taxes Under ASC 740-270 Income Taxes – Interim Reporting In September 2020, we acquired PCS12852 from Yuhan Corporation for an initial purchase price of $2 million. We also acquired PCS6422 from Elion Oncology, Inc. for an initial purchase price of $3.4 million and PCS11T from Aposense Ltd. for $2.5 million during the fourth quarter of 2020. Our total acquired research and development for 2020 is expected to be $7.9 million. The assets acquired were determined to represent in-process research and development with no alternative future use, so we immediately expensed the full $7.9 million for book purposes and capitalized the amount for tax purposes, creating deferred tax assets. We also established a full valuation allowance against these deferred tax assets. Under ASC 350-30-35-17A, a research and development asset acquired must be considered an indefinite-lived intangible asset until completion or abandonment of the R&D efforts. Only at that time can one accurately determine the useful life of the research and development asset and begin amortization. Due to their current indefinite lives, we did not offset the acquired in-process research and development assets against our existing deferred tax liability from the CoNCERT transaction explained above. We will determine the useful life of the R&D assets when the research and development efforts are complete. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Note 4 – Stock-based Compensation On August 5, 2020, we granted 324,360 restricted stock awards under the 2019 Omnibus Incentive Plan to our employees and directors, of which restricted stock awards for 214,078 shares of common stock vested on October 6, 2020 when we successfully completed our underwritten public offering, and the remaining 110,282 shares of common stock vest over two years. During the nine months ended September 30, 2019, we granted 129,919 stock options to employees and non-employees under the 2019 Omnibus Incentive Plan. At September 30, 2020, we had outstanding options to purchase 169,329 shares of our common stock, of which options for the purchase of 63,272 shares of our common stock were vested. We recorded stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019 as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Research and development $ 40,715 $ 88,707 $ 64,170 $ 92,111 General and administrative 123,791 180,422 292,869 302,053 Total $ 164,507 $ 269,129 $ 357,039 $ 394,164 |
2019 Senior 8% Convertible Note
2019 Senior 8% Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
2019 Senior 8% Convertible Notes Payable | Note 5 – 2019 Senior 8% Convertible Notes Payable During the fourth quarter of 2019, accredited investors purchased $805,000 of 8% Senior Convertible Notes (“2019 Senior Notes”) from us. For every $1,000 principal amount purchased, the note holders received 70 warrants to purchase our common stock. As a result, we granted 56,350 warrants to purchase our common stock at an exercise price of $19.04, which expire on December 19, 2023. The 2019 Senior Notes bear interest at 8% per year and if converted, the interest is payable in kind (in common stock). The 2019 Senior Notes mature on December 15, 2020. At September 30, 2020 and December 31, 2019, we had $805,000 of 2019 Senior Notes outstanding. As a result of the underwritten public offering in October 2020, the 2019 Senior Notes are currently convertible by the holder. If the 2019 Senior Notes are not paid or converted prior to their maturity date, the principal and any accrued interest will be automatically or mandatorily converted into our common stock. The 2019 Senior Notes, plus any accrued interest, is convertible into shares of our common stock at a conversion price equal to $3.60 per share. The 2019 Senior Notes provide the holders with (a) the option of receiving 110% of principal plus accrued interest in the event there is a change of control prior to conversion of the 2019 Senior Notes; (b) weighted-average anti-dilution protection in event of any sale of securities at a net consideration per share that is less than the applicable conversion price per share to the holder until we have raised an additional $14 million from the sale of certain securities; and (c) certain preemptive rights pro rata to their respective interests through December 31, 2021. The 2019 Senior Notes contains negative covenants that do not permit us to incur additional indebtedness or liens on property or assets owned, repurchase common stock, pay dividends, or enter into any transaction with affiliates of ours that would require disclosure in a public filing with the Securities and Exchange Commission. Upon an event of default, the outstanding principal amount of the Senior Notes, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become immediately due and payable in cash at the holder’s election, if not cured within the cure period. We incurred $201,683 in debt issuance costs related to the 2019 Senior Notes – $4,280 in professional fees and $197,403 related to the warrants’ calculated fair value. At the time the Senior Notes were issued, management believed the warrants were to be issued to the holders only if the notes were converted into shares of common stock. However, on September 4, 2020, we discovered the warrants should have been issued at the same time as the notes were issued and have subsequently been issued. We calculated the impact using the Black-Scholes valuation model and determined $197,403 should have been allocated to the warrants in December 2019. As such, we recorded $42,771 in unamortized debt issuance costs and $154,632 in interest expense related to the warrants for the nine months ended September 30, 2020. We amortized $154,989 and $157,129 in debt issuance costs for the three and nine months ended September 30, 2020. The debt issuance costs are amortized to interest expense using straight line amortization over the term of the 2019 Senior Notes. We did not have a similar expense during the same periods in 2019. |
Related Party Line of Credit Ag
Related Party Line of Credit Agreements | 9 Months Ended |
Sep. 30, 2020 | |
Unamortized Debt Issuance Cost [Member] | |
Related Party Line of Credit Agreements | Note 6 – Related Party Line of Credit Agreements On September 20, 2019, we entered into two separate LOC Agreements (“LOC Agreements”) with DKBK Enterprises, LLC (“DKBK”) and CorLyst, LLC (“CorLyst”, and, together with DKBK, collectively, “Lenders”), both related parties, which provide a revolving commitment of up to $700,000 each ($1.4 million total). Under the LOC Agreements, all funds borrowed bear interest at an annual rate of 8%. The promissory notes issued in connection with the LOC Agreements provide that the Lenders have the right to convert all or any portion of the principal and accrued and unpaid interest into our common stock on the same terms as our 2019 Senior Convertible Notes. Our Chief Executive Officer (CEO) is also the CEO and Managing Member of both lenders. As of September 30, 2020, DKBK directly held 16,166 shares of our common stock and CorLyst beneficially owned 1,095,649 shares of our common stock. In April and June 2020, we drew $500,000 under the LOC Agreement with DKBK. On July 21, 2020, we drew an additional $200,000, bringing the total amount drawn under the LOC Agreement with DKBK to $700,000. On October 6, 2020, in connection with the closing of our underwritten public offering, DKBK converted the $700,000 principal amount and related interest outstanding under the LOC Agreement into 199,537 shares of our common stock at a conversion price of $3.60 per share, which, pursuant to the LOC Agreement, is a 10% discount on the underwritten public offering price. |
Paycheck Protection Program Loa
Paycheck Protection Program Loan | 9 Months Ended |
Sep. 30, 2020 | |
Paycheck Protection Program Loan | |
Paycheck Protection Program Loan | Note 7 – Paycheck Protection Program Loan In May 2020, we entered into a $162,459 Paycheck Protection Promissory Note (the “PPP Loan”) with the Bank of America. The PPP Loan was made under, and is subject to the terms and conditions of, the PPP which was established under the CARES Act and is administered by the U.S. Small Business Administration. The current terms of the loan is two years with a maturity date of May 5, 2022 and it contains a favorable fixed annual interest rate of 1.00%. Payments of principal and interest on the PPP Loan is deferred for the first six months of the term of the PPP Loan until November 5, 2020. Principal and interest are payable monthly and may be prepaid by us at any time prior to maturity with no prepayment penalties. Under the terms of the CARES Act, recipients can apply for and receive forgiveness for all, or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs, mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”), and on the maintenance of employee and compensation levels during a certain time period following the funding of the PPP Loan. We have used the proceeds of our PPP Loan for payroll costs. However, no assurance is provided that we will be able to obtain forgiveness of the PPP Loan in whole or in part. As of September 30, 2020, $90,329 of the total $162,459 PPP-related debt is classified as a current liability on our condensed consolidated balances sheets. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8 – Stockholders’ Equity On September 30, 2019, our Pledge Agreement with PoC Capital was amended to reduce the committed funds under this Agreement from $1.8 million to $900,000, which was paid in full as of December 31, 2019. As part of the Pledge Agreement amendment, PoC Capital forfeited the pledged collateral (56,640 shares of our common stock and warrants to purchase 56,640 shares of our common stock) in the amended agreement. The forfeited shares of our common stock and stock purchase warrants have been returned to us. We determined the sale of the 2019 Senior Notes in late 2019 which are convertible into common stock at a conversion rate of $14.28 per share, triggered the full ratchet anti-dilution provision of common stock we sold in our 2018 Private Placement Transactions. As a result, those stockholders were entitled to 28,971 shares of common stock in the fourth quarter of 2019, which we issued on June 18, 2020. We accounted for these shares at December 31, 2019 as a deemed dividend payable at their par value. On June 25, 2020, we amended our Certificate of Incorporation reducing the number of authorized shares of our common stock from 100,000,000 to 30,000,000. We believe 100,000,000 authorized shares of common stock was disproportionately large in relation to the Company’s outstanding common stock and our anticipated future needs, and the reduction will reduce our future Delaware franchise tax. On October 6, 2020, we closed an underwritten public offering of 4,800,000 shares of common stock for a public offering price of $4.00 per share. Net proceeds from this offering were approximately $17.1 million. As a result of this offering, we also issued an additional 3,270,095 shares as described in Note 17 – Subsequent Events. There were no issued or outstanding shares of preferred stock at September 30, 2020 or December 31, 2019. |
Net Loss Per Share of Common St
Net Loss Per Share of Common Stock | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share of Common Stock | Note 9 – Net Loss per Share of Common Stock Basic net loss per share is computed by dividing net loss by the weighted average common stock outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average common stock outstanding, which includes potentially dilutive effect of stock options, warrants and senior convertible notes. Since we experienced a loss for both periods presented, including any dilutive common stock outstanding would have an anti-dilutive impact on diluted net loss per share, and as shown below were excluded from the computation. The treasury-stock method is used to determine the dilutive effect of our stock options and warrants grants, and the if-converted method is used to determine the dilutive effect of the Senior Notes. The computation of net loss per share for the nine months ended September 30, 2020 and 2019 was as follows: Nine months ended September 30, 2020 2019 Basic and diluted net loss per share: Net loss $ (4,679,035 ) $ (2,583,433 ) Weighted average number of common stock-basic and diluted 5,542,026 5,531,097 Basic and diluted net loss per share $ (0.84 ) $ (0.47 ) The following potentially dilutive securities were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods presented. 2020 2019 Stock options and purchase warrants 703,288 662,443 Shares of common stock that would be issued on the conversion of our 2019 Senior Notes and LOC Agreement with DKBK, plus related accrued interest 442,824 - 1,146,112 662,443 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 10 – Leases We lease our office space under an operating lease agreement. This lease does not have significant rent escalation, concessions, leasehold improvement incentives, or other build-out clauses. Further, the lease does not contain contingent rent provisions. We also lease office equipment under an operating lease. Our office space lease includes both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs), which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. Our leases do not provide an implicit rate and, as such, we have used our incremental borrowing rate of 8% in determining the present value of the lease payments based on the information available at the lease commencement date. Lease costs included in our condensed consolidated statement of operations totaled $24,029 and $24,319 for the three months ended September 30, 2020 and 2019, respectively, and $72,230 and $73,621 for the nine months ended September 30, 2020 and 2019, respectively. The weighted average remaining lease terms and discount rate for our operating leases were as follows at September 30, 2020: Weighted average remaining lease term (years) for our facility and equipment leases 2 Weighted average discount rate for our facility and equipment leases 8.00 % Maturities of our lease liabilities for all operating leases were as follows as of September 30, 2020: 2020 $ 22,416 2021 90,495 2022 69,741 Total lease payments 182,652 Less: Interest (16,151 ) Present value of lease liabilities 166,501 Less: current maturities (79,765 ) Non-current lease liability $ 86,736 |
License Agreement with Aposense
License Agreement with Aposense, Ltd. | 9 Months Ended |
Sep. 30, 2020 | |
Percentage of common stock holdings | |
License Agreement with Aposense, Ltd. | Note 11 – License Agreement with Aposense, Ltd. On May 24, 2020, we executed a condition precedent License Agreement (“Aposense Agreement”) with Aposense under which they will provide us with an exclusive worldwide license (excluding China) to research, develop and commercialize products comprising or containing PCS11T. The grant of license is conditioned on the following being satisfied within 9 months of May 24, 2020 (or the Aposense Agreement shall terminate): (i) our closing of an equity financing and successful up-listing to Nasdaq and (ii) Aposense obtaining the approval of the Israel Innovation Authority for the consummation of the transactions contemplated by the Aposense Agreement. On October 6, 2020, we satisfied the conditions and are currently working with Aposense to issue 625,000 shares of our common stock, which was determined by dividing $2.5 million by the $4.00 per share price in our underwritten public offering. Such shares will be subject to a lock-up, with 40% of such shares released from such lock up after six months and the remaining two 30% tranches to be released upon completion of the next two subsequent quarters. As additional consideration, we will pay Aposense development and regulatory milestone payments (up to $3.0 million per milestone) upon the achievement of certain milestones, which primarily consist of having a drug indication approved by a regulatory authority in the United States or another country. In addition, we must pay Aposense one-time sales milestone payments based on the achievement during a calendar year of one or more thresholds for annual sales for products made and pay royalties based on annual licensing sales. We are also required to split any milestone payments we receive with Aposense based on any sub-license agreement we may enter into. We are required to use commercially reasonable efforts, at our sole cost and expense, to research, develop and commercialize products in one or more countries, including meeting specific diligence milestones that consist of (i) submitting an IND for a drug indication within 30 months following the satisfaction of the license conditions above; (ii) dosing of a first patient with a product within 42 months following the satisfaction of the license conditions above; (iii) dosing of a first patient with a product in a pivotal clinical trial within 72 months following the satisfaction of the license conditions above and (iv) an NDA submission within 120 months following the satisfaction of the license conditions above. Either party may terminate the Aposense Agreement in the event of a material breach of the license agreement that has not been cured following written notice and a 90-day opportunity to cure such breach (which is shortened to 15 days for a payment breach). |
License Agreement with Yuhan Co
License Agreement with Yuhan Corporation | 9 Months Ended |
Sep. 30, 2020 | |
License Agreement With Yuhan Corporation | |
License Agreement with Yuhan Corporation | Note 12 – License Agreement with Yuhan Corporation On August 19, 2020, we entered into a License Agreement (the “Yuhan License Agreement”) with Yuhan, pursuant to which we acquired an exclusive license to develop, manufacture and commercialize PCS12852 globally, excluding South Korea. As consideration for the Yuhan License Agreement, we issued to Yuhan 250,000 shares of common stock (based upon an $8.00 per share price). Per the Yuhan License Agreement and related Share Issuance Agreement, we will issue an additional 250,000 shares based on the $4.00 per share price in the underwritten public offering, which closed on October 6, 2020. As additional consideration, we will pay Yuhan development and regulatory milestone payments (a portion of which are payable in shares of our common stock based on the volume weighted average trading price during the period prior to such achievement and a portion of which are payable in cash) upon the achievement of certain milestones, which primarily consist of dosing a patient in pivotal trials or having a drug indication approved by a regulatory authority in the United States or another country. The amount of future development and regulatory milestone payments payable to Yuhan is based on a Yuhan affiliate purchasing 750,000 shares of common stock for $3,000,000 in our underwritten public offering. In addition, we must pay Yuhan one-time sales milestone payments based on the achievement during a calendar year of one or more thresholds for annual sales for products made and pay royalties based on annual licensing sales. We are also required to split any milestone payments received with Yuhan based on any sub-license agreement we may enter into. We are required to use commercially reasonable efforts, at our sole cost and expense, in conjunction with a joint Processa-Yuhan Board to oversee such commercialization efforts, to research, develop and commercialize products in one or more countries, including meeting specific diligence milestones that consist of: (i) preparing a first draft of the product development plan within 90 days; (ii) requesting an FDA pre-IND meeting for a product within 6 months; (iii) dosing a first patient in a Phase 2A clinical trial with a product within 24 months; and (iv) dosing a first patient with a product in a Phase 2B clinical trial, Phase 3 clinical trial or other pivotal clinical trial with a product within 48 months. Either party may terminate the agreement in the event of a material breach of the agreement that has not been cured following written notice and a 60-day opportunity to cure such breach (which is shortened to 15 days for a payment breach). |
License Agreement with Elion On
License Agreement with Elion Oncology, Inc. | 9 Months Ended |
Sep. 30, 2020 | |
License Agreement With Elion Oncology Inc. | |
License Agreement with Elion Oncology, Inc. | Note 13 – License Agreement with Elion Oncology, Inc. On August 23, 2020, we entered into the Elion License Agreement with Elion, pursuant to which we acquired an exclusive license to develop, manufacture and commercialize PCS6422 globally. The grant of license was conditioned on the closing of our underwritten public offering and successful up-listing to Nasdaq, which closed on October 6, 2020. Following the satisfaction of the conditions, we paid Elion $100,000 and will issue Elion 825,000 shares of our common stock, based on the $4.00 per share price in our underwritten public offering. Such shares will be subject to a lock-up, with 50% of such shares released from such lock up after six months and the remaining 25% tranches to be released following 9 months and 12 months, respectively. As additional consideration, we will pay Elion development and regulatory milestone payments (a portion of which are payable in shares of our common stock and a portion of which are payable in cash) upon the achievement of certain milestones, which include the first two annual anniversaries of the effective date of the agreement, FDA or other regulatory approval and dosing a patient. In addition, we must pay Elion one-time sales milestone payments based on the achievement during a calendar year of one or more thresholds for annual sales for products made and pay royalties based on annual licensing sales. We are also required to split any milestone payments received with Elion based on any sub-license agreement we may enter into. We are required to use commercially reasonable efforts, at our sole cost and expense to research, develop and commercialize products in one or more countries, including meeting specific diligence milestones that consist of: (i) dosing a first patient in a Phase 1B clinical trial with a product within 12 months; and (ii) dosing a first patient with a product in a Phase 2 or 3 clinical trial within 48 months. Either party may terminate the agreement in the event of a material breach of the agreement that has not been cured following written notice and a 90-day opportunity to cure such breach (which is shortened to 15 days for a payment breach). |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 14 – Related Party Transactions CorLyst reimburses us for shared costs related to payroll, health care insurance and rent based on actual costs incurred, which are recognized as a reduction of our general and administrative operating expenses being reimbursed in our condensed consolidated statement of operations. We recorded $76,979 and $79,058 of reimbursements during the nine months ended September 30, 2020 and 2019, respectively. No amounts were due from CorLyst at September 30, 2020 and December 31, 2019. In September 2020, CorLyst prepaid shared expenses to us for the fourth quarter of 2020 through the second quarter of 2021. Similarly, in August 2019, CorLyst prepaid us for shared expenses for Q4 2019. At September 30, 2020, we recognized $110,796 in prepaid reimbursements as due to related parties in the accompanying condensed consolidated balance sheet. At September 30, 2020, we had approximately $7,600 due from certain employees for health insurance contributions. We did not have comparable a similar receivable at December 31, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 15 – Commitments and Contingencies Purchase Obligations We enter into contracts in the normal course of business with contract research organizations and subcontractors to further develop our products. The contracts are cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, we would only be obligated for products or services that we received as of the effective date of the termination and any applicable cancellation fees. We had no purchase obligations at September 30, 2020. |
Impact of COVID-19
Impact of COVID-19 | 9 Months Ended |
Sep. 30, 2020 | |
Impact Of Covid-19 | |
Impact of COVID-19 | Note 16 – Impact of COVID-19 In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing the Coronavirus Disease 2019, also known as COVID-19, was reported to have surfaced in Wuhan. Since then, the SARS-CoV-2 virus has spread to multiple countries worldwide, including the United States, where we have planned and have ongoing preclinical studies and clinical trials. On March 11, 2020, the World Health Organization declared the outbreak of the SARS-CoV-2 virus to be a global pandemic. Our clinical development timelines and plans could be affected by the SARS-CoV-2 virus pandemic. Site initiation and patient enrollment could be delayed or suspended due to prioritization of hospital resources toward the SARS-CoV-2 virus pandemic. In addition, some patients may not be able to comply with clinical trial protocols and the ability to conduct follow up visits with treated patients may be limited if quarantines impede patient movement or interrupt healthcare services. We cannot assure the SARS-CoV-2 virus will not have an adverse impact on our future planned clinical trials. Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to SARS-CoV-2 virus pandemic could be adversely impacted. If the SARS-CoV-2 virus pandemic |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 – Subsequent Events On October 6, 2020, we closed on our underwritten public offering of 4,800,000 shares of common stock for a public offering price of $4.00 per share. Net proceeds from the offering were approximately $17.1 million. In addition to closing our underwritten public offering, the following additional transactions occurred subsequent to September 30, 2020: ● As a result of closing our public offering, we triggered the full ratchet anti-dilution provision of shares sold in PIPE transactions in 2018, and as a result we will issue 1,156,480 shares of common stock to those stockholders. The full ratchet anti-dilution provisions expired following closing of the offering. ● DKBK, our line of credit lender, converted $700,000 principal amount outstanding and related accrued interest into 199,537 shares of common stock on October 6, 2020. ● The conditions for finalizing our agreements with Aposense and Elion were met upon the close of our public offering and up-list to the Nasdaq Capital Market. We made a payment of $100,000 to Elion and issued 625,000 and 825,000 shares of common stock to Aposense and Elion, respectively, pursuant to the agreements. ● We issued an additional 250,000 number of shares of common stock to Yuhan pursuant to the agreement we entered into with them. ● Restricted stock awards for 214,078 shares of our common stock vested on the completion of our public offering and up-list to the Nasdaq Capital Market on October 6, 2020. The following pro forma table shows the number of issued and outstanding shares of our common stock as a result of the underwritten offering, which closed on October 6, 2020 as if the shares were all issued and outstanding as of September 30, 2020: September 30, 2020 Actual shares issued and outstanding 5,765,566 Shares sold in the underwritten common stock offering which closed on October 6, 2020 4,800,000 Conversion of the $700,000 LOC with DKBK and related accrued interest on October 6, 2020 199,537 Shares to be issued as a result of triggering the anti-dilution provision of previously issued shares of common stock 1,156,480 Shares to be issued to Yuhan Corporation, Elion Oncology, Inc. and Aposense Ltd. in connection with the respective license agreements. 1,700,000 Restricted stock awards that vested on the completion of our underwritten offering and up-list to the Nasdaq Capital Market on October 6, 2020 214,078 Pro forma shares issued and outstanding 13,835,661 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Activities and Organization | Business Activities and Organization We are a clinical stage biopharmaceutical company focused on the development of drug products that are intended to improve the survival and/or quality of life for patients who have a high unmet medical need condition or who have no alternative treatment. Our most advanced product candidate, PCS499, is an oral tablet that is a deuterated analog of one of the major metabolites of pentoxifylline (PTX or Trental ® PCS499 Our lead product, PCS499, is an oral tablet that is a deuterated analog of one of the major metabolites of pentoxifylline (PTX or Trental ® The degeneration of tissue occurring at the NL lesion site may be caused by a number of pathophysiological changes which has made it extremely difficult to develop effective treatments for this condition. Because PCS499 and its metabolites affect a number of biological pathways, several of which could contribute to the pathophysiology associated with NL, PCS499 may provide a novel treatment solution for NL, a condition for which there are currently no FDA-approved treatments. On June 18, 2018, the FDA granted orphan-drug designation for PCS499 for the treatment of NL. On September 28, 2018, the IND for PCS499 in NL was made effective by the FDA, such that we could move forward with a Phase 2A trial multicenter, open-label prospective trial designed to determine the safety and tolerability of PCS499 in patients with NL. The study initially had a six-month treatment phase and a six-month optional extension phase. In December 2019, we informed patients and sites that the study would conclude after the treatment phase and there would no longer be an extension phase. The first enrolled NL patient in this Phase 2A clinical trial was dosed on January 29, 2019 and the study completed enrollment on August 23, 2019. The last patient visit took place in February 2020. Due to COVID-19 related restrictions at certain sites, study closeout and database lock did not occur until October 2020. We are currently finalizing the data results and clinical study report. The main objective of the trial was to evaluate the safety and tolerability of PCS499 in patients with NL and to use the collected safety and efficacy data to design future clinical trials. Based on toxicology studies and healthy human volunteer studies, Processa and the FDA agreed that a PCS499 dose of 1.8 grams/day would be the highest dose administered to NL patients in this Phase 2A trial. As anticipated, the PCS499 dose of 1.8 grams/day, 50% greater than the maximum tolerated dose of PTX, appeared to be well tolerated with no serious adverse events reported. All adverse events reported in the study were mild in severity. As expected, gastrointestinal symptoms were the most noted adverse events and reported in four patients, all of which were mild in severity and resolved within 1-2 weeks of starting dosing. Two of the twelve patients in the study presented with more severe ulcerated NL and had ulcers for more than two months prior to dosing. At baseline, the reference ulcer in one of the two patients measured 3.5 cm 2 2 On March 25, 2020, we met with the FDA and discussed the clinical program, as well as the nonclinical and clinical pharmacology plans to ultimately support the submission of the PCS499 New Drug Application (NDA) in the U.S. for the treatment of ulcers in NL patients. With input from the FDA, we will be designing the next trial as a randomized, placebo-controlled trial to evaluate the ability of PCS499 to completely close ulcers in patients with NL. We initially planned to begin recruiting for the randomized, placebo-controlled trial in the fourth quarter of 2020, but we now expect to begin recruiting patients in 2021 due to delays in fundraising efforts. This PCS499 NL study will be a randomized, placebo-controlled Phase 2B study to better understand the potential response of NL patients on drug and on placebo. After obtaining the results from this Phase 2B study, we expect to meet with FDA to discuss our Phase 2B drug and placebo response findings while further discussing the next steps to obtain approval. PCS12852 On August 19, 2020, we entered into a License Agreement (“Yuhan License Agreement”) with Yuhan Corporation (“Yuhan”), pursuant to which we acquired an exclusive license to develop, manufacture and commercialize PCS12852 (formerly known as YH12852) globally, excluding South Korea. We accounted for the Yuhan License Agreement as an asset acquisition since it did not meet the definition of a business, and therefore recorded the intangible asset at fair value, equal to the consideration paid of $2 million in the form of 500,000 shares of our common stock (see Note 12). Because the intangible asset represents in-process research and development with no alternative future use, we immediately expensed the fair value in the Statement of Operations. At September 30, 2020, only 250,000 shares had been issued. PCS12852 is a novel, potent and highly selective 5-hydroxytryptamine 4 (5-HT4) receptor agonist. Other 5-HT receptor agonists with less 5-HT4 selectivity have been shown to successfully treat gastrointestinal (GI) motility disorders such as chronic constipation, constipation-predominant irritable bowel syndrome, functional dyspepsia and gastroparesis. Less selective 5-HT4 agonists, such as cisapride, have been either removed from the market or not approved because of the cardiovascular side effects associated with the drugs binding to other receptors, especially 5-HT receptors other than 5-HT4. We plan to meet with the FDA in early 2021 to further define the clinical development program required for the PCS12852 product and discuss a Phase 2A proof of concept randomized, placebo-controlled study for PCS12852 in a gastrointestinal (GI) motility dysfunction disorder (e.g., gastroparesis, post-operative ileus also called gastrointestinal dysfunction (POGD), opioid induced constipation, chronic idiopathic constipation). The purpose of the Phase 2A trial would be to better define a dosage regimen of PCS128552 that could be potentially efficacious and safe in a larger pivotal study. The patients with these types of conditions have an abnormal pattern of GI motility in the absence of mechanical obstruction. For example, gastroparesis is characterized by postprandial fullness (early satiety), nausea, vomiting and bloating. It is known to occur in more than 4 million people in the US, but many of these people still do not have access to medications that work or can be tolerated by the patients. The only FDA-approved product for gastroparesis is a dopamine D2 Antagonist metoclopramide (Gimoti®), which includes an FDA “Black Box” warning for tardive dyskinesia (TD), a serious movement disorder that is often irreversible. Because of this adverse effect, the treatment is limited to no more than 12 weeks. POGD is characterized by nausea, vomiting, abdominal distension and/or delated passage of flatus or stool, following surgery (most commonly with abdominal surgery). It is the most common cause of prolonged length of stay in hospital following GI surgery, leading to an increase in healthcare costs. The only FDA-approved drug to treat POGD is a mu-opioid receptor antagonist alvimopan (Entereg®), which is only available through a restricted program for short-term use due to the potential risk of myocardial infarction with long-term use. Two clinical studies have been previously conducted by Yuhan with PCS12852. In the first-in-human clinical trial (Protocol YH12852-101), the initial safety and tolerability of PCS12852 were evaluated after single and multiple oral doses in healthy subjects. PCS12852 increased stool frequency with faster onset when compared to prucalopride, an FDA approved drug for the treatment of chronic idiopathic constipation. Compared to the group receiving prucalopride, the PCS12852 dose groups showed higher stool frequency for 24 hours following single dosing and had faster onset of spontaneous bowel movements (SBMs) with comparable or relatively higher Bristol Stool Form Scale score (lower stool consistency) for 24 hours following first dosing. In addition, based on an increase of ≥ 1 SBM/week from baseline during 7-day multiple dosing, the PCS12852 dose group had a higher percent of patients with an increase than the prucalopride group. All doses of PCS12852 were safe and well tolerated and no serious adverse events (SAE) occurred during the study. The most frequently reported adverse events (AEs) were headache, nausea and diarrhea which were temporal, manageable, and reversible within 24 hours. There were no clinically significant changes in platelet aggregation or ECG parameters including no sign of QTc prolongation in the study. The second study conducted was a Phase 1/2A clinical trial (Protocol YH12852-102) to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of PCS12852 immediate release (IR) formulation and delayed release (DR) formulation after multiple oral dosing. PCS12852 was safe and well tolerated after single and multiple administrations. The most frequent AEs for both the IR and DR formulations of PCS12852 were headache, nausea and diarrhea, but the incidences of these AEs were comparable with those of the prucalopride 2 mg group. These AEs, which were transient and mostly mild in severity, are also commonly observed with other 5-HT4 agonists. Both formulations of PCS12852 also showed pharmacologic activity as assessed using various pharmacodynamic parameters for stool assessment. In this study, PCS12852 also showed an enhanced gastric emptying rate in patients assessed by the Gastric Emptying Breath Test (GEBT). The change from baseline in gastric emptying rate increased in both 0.1 mg and 0.05 mg PCS12852 groups and showed a statistically significant change from baseline in the 0.1 mg group. Yuhan had also conducted extensive toxicological studies for the product that demonstrated that the product is safe for use and can be moved quickly into Phase 2 studies. PCS6422 On August 23, 2020, we entered into a License Agreement (“Elion License Agreement”) with Elion Oncology, Inc. (“Elion”), pursuant to which we acquired an exclusive contingent license to develop, manufacture and commercialize PCS6422 globally. On October 6, 2020, in connection with the closing of our underwritten offering and listing on the Nasdaq Capital Market, the contingencies related to this license were met. We have not accounted for the Elion License Agreement at September 30, 2020 since the contingency was not met until we closed our underwritten public offering and up-listed our common stock to the Nasdaq stock market, which occurred on October 6, 2020. We believe this license agreement represents an asset acquisition since it did not meet the definition of a business, and we plan to record the intangible asset acquired at fair value equal to the consideration paid of $3.3 million in the form of 825,000 shares of our common stock and $100,000 cash. Because the intangible assets represent in-process research and development with no alternative future use, we will immediately expense the fair value in the fourth quarter in our statement of operations. Elion acquired the eniluracil (PCS6422) product from Fennec Pharmaceuticals (formerly known as Adherex Technologies) in 2016. PCS6422 is an oral, potent, selective, and irreversible inhibitor of dihydropyrimidine dehydrogenase (DPD), the enzyme that rapidly metabolizes 5-FU, a common chemotherapy drug, to inactive metabolites, such as α-fluoro-β-alanine (F-Bal). F-Bal is thought to cause the neurotoxicity and Hand–Foot Syndrome (HFS) associated with 5-FU, and greater formation of F-Bal appears to be associated with a decrease in the antitumor activity of 5-FU. HFS can affect daily living activities, quality of life, and requires dose interruptions/adjustments and even therapy discontinuation resulting in suboptimal tumor effects. We believe that the inhibition of DPD by PCS6422 may significantly improve exposure to 5-FU and reduce 5-FU side effects related to F-Bal. One dose of PCS6422 irreversibly blocks DPD activity for up to two weeks until DPD levels recover via de novo synthesis of the DPD enzyme. Thus, we believe inhibition of tumor DPD will result in higher 5-FU intra-tumoral concentration and potentially better tumor response along with the decrease in F-Bal. Fluoropyrimidines (e.g., 5-FU) are still the cornerstone of treatment for many different types of cancers, either as monotherapy or in combination with other chemotherapy agents by an estimated two million patients annually. Xeloda ® Elion evaluated the potential for the combination of PCS6422 with capecitabine (Xeloda®, and, together with PCS6422, known as ECAPE) as a treatment of advanced gastrointestinal (GI) tumors. Nonclinical efficacy data indicated that in colorectal cancer models, pretreatment with PCS6422 enhanced the antitumor activity of capecitabine. PCS6422 increased the antitumor potency of capecitabine while not increasing the toxicity. The antitumor efficacy of the combination of PCS6422 and capecitabine was tested in several xenograft animal models with human breast, pancreatic and colorectal cancer cells. These preclinical xenograft models demonstrate that PCS6422 potentiates the antitumor activity of capecitabine and significantly reduces the dose of capecitabine required to be efficacious. Elion met with the FDA in 2019 and agreed upon the clinical development program required for the combination of PCS6422 and capecitabine as first-line therapy for metastatic colorectal cancer when treatment with fluoropyrimidine therapy alone is preferred. Subsequently, an IND has been granted safe to proceed by FDA on May 17, 2020, for the Phase 1B study. This Phase 1B study will evaluate the safety and tolerability of several dose combinations of PCS6422 and capecitabine in advanced GI tumor patients and should be initiated in the first half of 2021. Other DPD enzyme inhibitors (e.g. Gimeracil used in Teysuno® approved only outside the US) act as competitive reversible inhibitors. These agents must be present when 5-FU or capecitabine are administered to inhibit 5-FU breakdown by DPD in order to improve the efficacy and safety profiles of 5-FU. Given the reversible nature of their effect on DPD, over time 5-FU metabolism to F-Bal will return, decreasing the amount of 5-FU in the cancer cells and decreasing the potential cytotoxicity on the cancer cells. There is also evidence that administering DPD inhibitors directly with 5-FU may also decrease the antitumor effect of the 5-FU. Because PCS6422 is an irreversible inactivator of DPD, it can be dosed the day before capecitabine administration and its effect on DPD can last longer than the reversible DPD inhibitors and beyond the time 5-FU exists in the cancer cell. We believe this can optimize the potential cytotoxic effect and minimize the metabolism of 5-FU. Prior to Elion’s involvement, two multicenter Phase 3 studies were conducted in patients with colorectal cancer (CRC) with PCS6422 administered in 10-fold excess to 5-FU. Unfortunately, we believe the dose of PCS6422 during these trials was not optimal, and that PCS6422 was not administered early enough to irreversibly affect the DPD enzyme, thus the regimen tended to produce less antitumor benefit than the control arm with the standard regimen of 5-FU/leucovorin (LV) without PCS6422. Later preclinical work suggested that when PCS6422 was present at the same time as and in excess to 5-FU, it diminished the antitumor activity of 5-FU, which we believe supports the proposal of exploring clinically dosing PCS6422 several hours before 5-FU to allow its clearance before the administration of 5-FU. PCS11T On May 24, 2020, we entered into an exclusive License Agreement with Aposense, Ltd., (“Aposense”), pursuant to which we were granted a contingent license in Aposense’s patent rights and know-how to develop and commercialize their next generation irinotecan cancer drug, PCS11T (formerly known as ATT-11T). The grant of license was conditioned on (i) our closing of an equity financing and successful up-listing to Nasdaq which we completed on October 6, 2020 and (ii) Aposense obtaining the approval of the Israel Innovation Authority for the consummation of the transactions contemplated by the agreement, which was obtained on August 24, 2020. We have not accounted for the License Agreement with Aposense at September 30, 2020 since the contingency was not met until we closed our underwritten public offering and up-listed our common stock to the Nasdaq stock market, which occurred on October 6, 2020. We believe this license agreement represents an asset acquisition since it did not meet the definition of a business, and we plan to record the intangible asset acquired at fair value equal to the consideration paid of $2.5 million in the form of 625,000 shares of our common stock. Because the intangible assets represent in-process research and development with no alternative future use, we will immediately expense the fair value in the fourth quarter in our statement of operations. PCS11T is a novel lipophilic anti-cancer pro-drug that is being developed for the treatment of the same solid tumors as prescribed for irinotecan. This pro-drug is a conjugate of a specific proprietary Aposense molecule connected to SN-38, the active metabolite of irinotecan. The proprietary molecule in PCS11T has been designed to allow PCS11T to bind to cell membranes to form an inactive pro-drug depot on the cell with SN-38 preferentially accumulating in the membrane of tumors cells and the tumor core. This unique characteristic may make the therapeutic window of PCS11T wider than other irinotecan products such that the antitumor effect of PCS11T could occur at a much lower dose with a milder adverse effect profile than irinotecan. Despite the widespread use of commercially marketed irinotecan products in the treatment of metastatic colorectal cancer and other cancers resulting in peak annual sales of approximately $1.1 billion, irinotecan has a narrow therapeutic window and includes an FDA “Black Box” warning for both neutropenia and severe diarrhea. There is, therefore, a substantial unmet need to overcome the limitations of the current commercially marketed irinotecan products, improving efficacy and reducing the severity of treatment emergent adverse events. We believe the potential wider therapeutic window of PCS11T will likely lead to more patients responding with less side effects when on PCS11T compared to other irinotecan products. Pre-clinical studies conducted to date showed that PCS11T demonstrated tumor eradication at much lower doses than irinotecan across various tumor xenograft models. PCS11T does not affect acetyl choline esterase (AChE) activity in human and rat plasma in vitro, which would suggest that PCS11T will show an improved safety profile, compared to irinotecan, which is known for its cholinergic-related side effects. We are currently planning to manufacture the product at a GMP facility, conduct the toxicological studies required to file the IND and initiate the Phase 1B study in oncology patients with solid tumors in 2022-2023. PCS100 On August 29, 2019, we entered into an exclusive license agreement with Akashi Therapeutics, Inc. (“Akashi”) to develop and commercialize an anti-fibrotic, anti-inflammatory drug, PCS100 (formerly known as HT-100), which also promotes healthy muscle fiber regeneration. In previous clinical trials in Duchenne Muscular Dystrophy (DMD), PCS100 showed promising improvement in the muscle strength of non-ambulant pediatric patients. Although the FDA placed a full clinical hold on the DMD trial after a serious adverse event in a pediatric patient, the FDA has partially removed the clinical hold and defined how PCS100 can resume clinical trials in DMD. At the present time, we are evaluating the potential GMP manufacturing facilities and the potential indications for PCS100. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. |
Liquidity | Liquidity On October 6, 2020, we closed an underwritten public offering of 4,800,000 shares of common stock for a public offering price of $4.00 per share. Net proceeds from the offering were approximately $17.1 million. We believe these funds, along with our existing cash on that day will provide us with sufficient capital to meet our anticipated operating and capital expenditure requirements into the fourth quarter of 2022. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Our ultimate success depends on the outcome of our planned clinical trials and our research and development activities, as disclosed above. We expect to incur additional losses in the future and we anticipate the need to raise additional capital to fully implement our business plan if the cost of our planned clinical trials are greater than we expect or they take longer than anticipated. We also expect to incur increased general and administrative expenses at least through 2022 due in part to planned increased research and development activities as we conduct a Phase 2B trial for PCS499, a Phase 1B trial for PCS6422, and a Phase 2A clinical trial for PCS12852. In addition, there may be costs we incur as we develop these drug products that we do not currently anticipate requiring us to need additional capital sooner than currently expected. |
Use of Estimates | Use of Estimates In preparing our condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, we make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to: stock-based compensation, determining the fair value of acquired assets and assumed liabilities, intangible assets, and income taxes. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While we believe the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. |
Intangible Assets | Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangibles with a finite useful life are amortized using the straight-line method unless the pattern in which the economic benefits of the intangible assets are consumed or used up are reliably determinable. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to our future cash flows. The useful life is based on the duration of the expected use of the asset by us and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. We evaluate the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. If an income approach is used to measure the fair value of an intangible asset, we consider the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to us, the useful life is considered indefinite. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. |
Impairment of Long-Lived Assets and Intangibles Other Than Goodwill | Impairment of Long-Lived Assets and Intangibles Other Than Goodwill We account for the impairment of long-lived assets in accordance with ASC 360 , Property, Plant and Equipment Intangibles – Goodwill and Other, |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, Compensation-Stock Compensation |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing our net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted net loss per share is computed by dividing our net loss available to common stockholders by the diluted weighted average number of shares of common stock during the period. Since we experienced a net loss for all periods presented, basic and diluted net loss per share are the same. As such, diluted loss per share for the nine months ended September 30, 2020 and 2019 excludes the impact of 1,146,112 and 662,443 potentially dilutive common stock, respectively, related to outstanding stock options and warrants and the conversion of our 2017 and 2019 Senior Notes and line of credit agreement since those shares would have an anti-dilutive effect on loss per share. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). We have implemented all new accounting pronouncements that are in effect and that may impact our condensed consolidated financial statements. We have evaluated recently issued accounting pronouncements and determined that there is no material impact on our financial position or results of operations. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 Gross intangible assets $ 11,059,429 $ 11,059,429 Less: accumulated amortization (2,013,471 ) (1,416,975 ) Total intangible assets, net $ 9,045,958 $ 9,642,454 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | We recorded stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019 as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Research and development $ 40,715 $ 88,707 $ 64,170 $ 92,111 General and administrative 123,791 180,422 292,869 302,053 Total $ 164,507 $ 269,129 $ 357,039 $ 394,164 |
Net Loss Per Share of Common _2
Net Loss Per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share Basic and Diluted | The computation of net loss per share for the nine months ended September 30, 2020 and 2019 was as follows: Nine months ended September 30, 2020 2019 Basic and diluted net loss per share: Net loss $ (4,679,035 ) $ (2,583,433 ) Weighted average number of common stock-basic and diluted 5,542,026 5,531,097 Basic and diluted net loss per share $ (0.84 ) $ (0.47 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive securities were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods presented. 2020 2019 Stock options and purchase warrants 703,288 662,443 Shares of common stock that would be issued on the conversion of our 2019 Senior Notes and LOC Agreement with DKBK, plus related accrued interest 442,824 - 1,146,112 662,443 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Weighted Average Remaining Lease Terms and Discount Rate for Operating Leases | The weighted average remaining lease terms and discount rate for our operating leases were as follows at September 30, 2020: Weighted average remaining lease term (years) for our facility and equipment leases 2 Weighted average discount rate for our facility and equipment leases 8.00 % |
Schedule of Maturities of Lease Liabilities for All Operating Leases | Maturities of our lease liabilities for all operating leases were as follows as of September 30, 2020: 2020 $ 22,416 2021 90,495 2022 69,741 Total lease payments 182,652 Less: Interest (16,151 ) Present value of lease liabilities 166,501 Less: current maturities (79,765 ) Non-current lease liability $ 86,736 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Schedule of Pro Forma Table Shows the Number of Issued and Outstanding Shares | The following pro forma table shows the number of issued and outstanding shares of our common stock as a result of the underwritten offering, which closed on October 6, 2020 as if the shares were all issued and outstanding as of September 30, 2020: September 30, 2020 Actual shares issued and outstanding 5,765,566 Shares sold in the underwritten common stock offering which closed on October 6, 2020 4,800,000 Conversion of the $700,000 LOC with DKBK and related accrued interest on October 6, 2020 199,537 Shares to be issued as a result of triggering the anti-dilution provision of previously issued shares of common stock 1,156,480 Shares to be issued to Yuhan Corporation, Elion Oncology, Inc. and Aposense Ltd. in connection with the respective license agreements. 1,700,000 Restricted stock awards that vested on the completion of our underwritten offering and up-list to the Nasdaq Capital Market on October 6, 2020 214,078 Pro forma shares issued and outstanding 13,835,661 |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Oct. 06, 2020 | Sep. 30, 2020 | Aug. 23, 2020 | Aug. 19, 2020 | May 24, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Potentially dilutive common shares | 1,146,112 | 662,443 | |||||
Subsequent Event [Member] | Underwritten Public Offering [Member] | |||||||
Number of common stock issued during period | 4,800,000 | ||||||
Price per share | $ 4 | ||||||
Proceeds from offering | $ 17,100,000 | ||||||
Yuhan License Agreement [Member] | |||||||
Consideration paid | $ 2,000,000 | ||||||
Consideration paid in the form of shares | 500,000 | ||||||
Shares issued during period, acquisition | 250,000 | ||||||
Elion License Agreement [Member] | |||||||
Consideration paid | $ 3,300,000 | ||||||
Consideration paid in the form of shares | 825,000 | ||||||
Consideration paid in cash | $ 100,000 | ||||||
Aposense License Agreement [Member] | |||||||
Consideration paid | $ 2,500,000 | ||||||
Consideration paid in the form of shares | 625,000 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Mar. 19, 2018 | |
Amortization expense | $ 198,832 | $ 198,832 | $ 596,496 | $ 596,496 | |
Future amortization expense | $ 790,000 | $ 790,000 | |||
CoNCERT Pharmaceuticals, Inc [Member] | License Rights [Member] | |||||
Purchase price | $ 8,000,000 | ||||
Transaction cost | 1,782 | ||||
Recognition of deferred tax liability | 3,037,147 | ||||
Intangible asset, tax basis | $ 1,782 |
Intangible Assets - Summary of
Intangible Assets - Summary of Intangible Assets (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Gross intangible assets | $ 11,059,429 | $ 11,059,429 |
Less: accumulated amortization | (2,013,471) | (1,416,975) |
Total intangible assets, net | $ 9,045,958 | $ 9,642,454 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2020 | Sep. 30, 2020 | Mar. 19, 2018 | |
Deferred tax liability | $ 3,037,147 | |||
Intangible assets, financial reporting basis | 11,038,929 | |||
Intangible assets, tax basis | $ 1,782 | |||
Research and development description | Our total acquired research and development for 2020 is expected to be $7.9 million. The assets acquired were determined to represent in-process research and development with no alternative future, so we immediately expensed the full $7.9 million for book purposes and capitalized the amount for tax purposes, creating a deferred tax asset. We also established a full valuation allowance against these deferred tax assets. | |||
Yuhan Corporation [Member] | PCS12852 [Member] | ||||
Initial purchase price | $ 2,000,000 | |||
Elion Oncology, Inc. [Member] | PCS6422 [Member] | Forecast [Member] | ||||
Initial purchase price | $ 3,400,000 | |||
Aposense, Ltd. [Member] | PCS11T [Member] | Forecast [Member] | ||||
Initial purchase price | $ 2,500,000 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - shares | Oct. 06, 2020 | Aug. 05, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Number of stock option granted to employees or non-employees | ||||
Number of option to purchase shares | 169,329 | |||
Purchase of common stock shares vested | 63,272 | |||
Restricted Stock Award [Member] | Subsequent Event [Member] | ||||
Number of stock awards vested in period | 214,078 | |||
2019 Omnibus Incentive Plan [Member] | Employees and Directors [Member] | Restricted Stock Award [Member] | ||||
Number of stock award granted to employees or directors | 324,360 | |||
2019 Omnibus Incentive Plan [Member] | Employees and Directors [Member] | Restricted Stock Award [Member] | Subsequent Event [Member] | ||||
Number of stock awards vested in period | 214,078 | |||
Number of stock awards vested over the period | 110,282 | |||
Number of stock awards vesting period | 2 years | |||
2019 Omnibus Incentive Plan [Member] | Employees and Non-Employees [Member] | ||||
Number of stock option granted to employees or non-employees | 129,919 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation expense | $ 164,507 | $ 269,129 | $ 357,039 | $ 394,164 |
Research and Development [Member] | ||||
Stock-based compensation expense | 40,715 | 88,707 | 64,170 | 92,111 |
General and Administrative [Member] | ||||
Stock-based compensation expense | $ 123,791 | $ 180,422 | $ 292,869 | $ 302,053 |
2019 Senior 8% Convertible No_2
2019 Senior 8% Convertible Notes Payable (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Senior convertible notes, outstanding | $ 805,000 | $ 805,000 | $ 805,000 | $ 805,000 | ||
2019 Senior Notes [Member] | ||||||
Senior convertible notes, outstanding | $ 805,000 | |||||
Debt interest rate | 8.00% | |||||
Debt principal amount | $ 1,000 | |||||
Warrants to purchase shares of common stock | 70 | |||||
Debt instrument, conversion terms | The 2019 Senior Notes, plus any accrued interest, is convertible into shares of our common stock at a conversion price equal to $3.60 per share. | |||||
Debt issuance costs | 42,771 | $ 201,683 | 42,771 | 42,771 | ||
Professional fees | 4,280 | |||||
Fair value of calculated warrants | 197,403 | |||||
Impact of error using Black-Scholes valuation model | $ 197,403 | |||||
Amortized debt issuance costs | $ 154,989 | $ 157,129 | ||||
2019 Senior Notes [Member] | Warrant [Member] | ||||||
Debt discription | The 2019 Senior Notes provide the holders with (a) the option of receiving 110% of principal plus accrued interest in the event there is a change of control prior to conversion of the 2019 Senior Notes; (b) weighted-average anti-dilution protection in event of any sale of securities at a net consideration per share that is less than the applicable conversion price per share to the holder until we have raised an additional $14 million from the sale of certain securities; and (c) certain preemptive rights pro rata to their respective interests through December 31, 2021. | |||||
Proceeds from sale of securities | $ 14,000,000 | |||||
Interest expense | $ 154,632 | |||||
2019 Senior Notes [Member] | Warrants Granted [Member] | ||||||
Warrants to purchase shares of common stock | 56,350 | |||||
Warrants exercise price | $ 19.04 | |||||
Warrants expiry date | Dec. 19, 2023 |
Related Party Line of Credit _2
Related Party Line of Credit Agreements (Details Narrative) - USD ($) | Oct. 06, 2020 | Sep. 30, 2020 | Jul. 21, 2020 | Jun. 30, 2020 | Sep. 20, 2019 |
DKBK Enterprises, LLC [Member] | |||||
Number of common stock shares owned | 16,166 | ||||
Corlyst [Member] | |||||
Number of common stock shares owned | 1,095,649 | ||||
LOC Agreements [Member] | CorLyst, LLC [Member] | |||||
Revolving line of credit commitment | $ 700,000 | ||||
LOC Agreements [Member] | DKBK Enterprises, LLC [Member] | |||||
Revolving line of credit commitment | 700,000 | ||||
Line of credit, additional drawn value | $ 200,000 | ||||
Line of credit, drawn value | $ 700,000 | $ 500,000 | |||
LOC Agreements [Member] | DKBK Enterprises, LLC [Member] | Underwritten Public Offering [Member] | Subsequent Event [Member] | |||||
Debt conversion principal amount and related interest | $ 700,000 | ||||
Debt conversion into shares | 199,537 | ||||
Debt conversion price per share | $ 3.60 | ||||
Discount percentage | 10.00% | ||||
Two LOC Agreements [Member] | Lenders [Member] | |||||
Revolving line of credit commitment | $ 1,400,000 | ||||
Line of credit annual interest rate | 8.00% |
Paycheck Protection Program L_2
Paycheck Protection Program Loan (Details Narrative) - USD ($) | 1 Months Ended | ||
May 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Note payable, current portion | $ 90,329 | ||
PPP Loan [Member] | |||
Proceeds from loans | $ 162,459 | ||
Debt interest rate | 1.00% | ||
Debt maturity date | May 5, 2022 | ||
Note payable, current portion | 90,329 | ||
PPP related debt | $ 162,459 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Oct. 06, 2020 | Jun. 18, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Jun. 25, 2020 | Jun. 24, 2020 | Dec. 31, 2019 |
Common stock, shares authorized | 30,000,000 | 30,000,000 | 100,000,000 | 100,000,000 | |||
Preferred stock, shares issued | |||||||
Preferred stock, shares outstanding | |||||||
Public Offering [Member] | Subsequent Event [Member] | |||||||
Number of common stock issued during period | 4,800,000 | ||||||
Price per share | $ 4 | ||||||
Proceeds from offering | $ 17,100,000 | ||||||
Follow on Public Offering [Member] | Subsequent Event [Member] | |||||||
Number of common stock issued during period | 3,270,095 | ||||||
Pledge Agreement with PoC [Member] | |||||||
Clinical trial funding commitment | $ 1,800,000 | ||||||
Reduced clinical trial funding commitment | $ 900,000 | ||||||
Number of pledged shares forfeited | 56,640 | ||||||
Warrants to purchase common stock, forfeited | 56,640 | ||||||
2018 Private Placement Transactions [Member] | |||||||
Debt conversion price per share | $ 14.28 | ||||||
Number of common stock issued during period | 28,971 | ||||||
2018 Private Placement Transactions [Member] | |||||||
Number of common stock issued during period | 28,971 |
Net Loss Per Share of Common _3
Net Loss Per Share of Common Stock - Schedule of Net Loss Per Share Basic and Diluted (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net loss | $ (3,071,285) | $ (733,414) | $ (874,336) | $ (863,524) | $ (969,077) | $ (750,832) | $ (4,679,035) | $ (2,583,433) |
Weighted average number of common stock-basic and diluted | 5,594,370 | 5,525,009 | 5,542,026 | 5,531,097 | ||||
Basic and diluted net loss per share | $ (0.55) | $ (0.16) | $ (0.84) | $ (0.47) |
Net Loss Per Share of Common _4
Net Loss Per Share of Common Stock - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive securities excluded from computation of earnings per share | 1,146,112 | 662,443 |
Stock Options and Purchase Warrants [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 703,288 | 662,443 |
2019 Senior Notes and LOC with DKBK, Plus Related Accrued Interest [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 442,824 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating leases incremental borrowing rate | 8.00% | 8.00% | ||
Lease costs | $ 24,029 | $ 24,319 | $ 72,230 | $ 73,621 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Remaining Lease Terms and Discount Rate for Operating Leases (Details) | Sep. 30, 2020 |
Leases [Abstract] | |
Weighted average remaining lease term (years) for our facility and equipment leases | 2 years |
Weighted average discount rate for our facility and equipment leases | 8.00% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities for All Operating Leases (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 | $ 22,416 | |
2021 | 90,495 | |
2022 | 69,741 | |
Total lease payments | 182,652 | |
Less: Interest | (16,151) | |
Present value of lease liabilities | 166,501 | |
Less: current maturities | (79,765) | $ (77,992) |
Non-current lease liability | $ 86,736 | $ 147,390 |
License Agreement with Aposen_2
License Agreement with Aposense, Ltd. (Details Narrative) - License Agreement [Member] - Aposense, Ltd. [Member] - USD ($) | Oct. 06, 2020 | May 24, 2020 |
Common stock, lock-up description | Such shares will be subject to a lock-up, with 40% of such shares released from such lock up after six months and the remaining two 30% tranches to be released upon completion of the next two subsequent quarters. As additional consideration, we will pay Aposense development and regulatory milestone payments (up to $3.0 million per milestone) upon the achievement of certain milestones, which primarily consist of having a drug indication approved by a regulatory authority in the United States or another country. | |
Milestone payments, description | In addition, we must pay Aposense one-time sales milestone payments based on the achievement during a calendar year of one or more thresholds for annual sales for products made and pay royalties based on annual licensing sales. We are also required to split any milestone payments we receive with Aposense based on any sub-license agreement we may enter into. | |
Performance of milestone conditions, description | Specific diligence milestones that consist of (i) submitting an IND for a drug indication within 30 months following the satisfaction of the license conditions above; (ii) dosing of a first patient with a product within 42 months following the satisfaction of the license conditions above; (iii) dosing of a first patient with a product in a pivotal clinical trial within 72 months following the satisfaction of the license conditions above and (iv) an NDA submission within 120 months following the satisfaction of the license conditions above. | |
Subsequent Event [Member] | ||
Number of common stock issued during period | 625,000 | |
Number of common stock issued during period value | $ 2,500,000 | |
Price per share | $ 4 | |
Maximum [Member] | ||
Development and regulatory milestone payments | $ 3,000,000 |
License Agreement with Yuhan _2
License Agreement with Yuhan Corporation (Details Narrative) - USD ($) | Oct. 06, 2020 | Aug. 19, 2020 |
Subsequent Event [Member] | Underwritten Public Offering [Member] | ||
Number of common stock issued during period | 4,800,000 | |
Price per share | $ 4 | |
Proceeds from offering | $ 17,100,000 | |
License Agreement [Member] | Yuhan Corporation [Member] | ||
Common stock, issuance description | As consideration for the Yuhan License Agreement, we issued to Yuhan 250,000 shares of common stock (based upon an $8.00 per share price). Per the Yuhan License Agreement, we will issue an additional 250,000 shares based on the $4.00 per share price in the underwritten public offering, which closed on October 6, 2020. | |
Number of common stock issued during period | 250,000 | |
Price per share | $ 8 | |
Milestone payments, description | In addition, we must pay Yuhan one-time sales milestone payments based on the achievement during a calendar year of one or more thresholds for annual sales for products made and pay royalties based on annual licensing sales. We are also required to split any milestone payments received with Yuhan based on any sub-license agreement we may enter into. | |
Performance of milestone conditions, description | Specific diligence milestones that consist of: (i) preparing a first draft of the product development plan within 90 days; (ii) requesting an FDA pre-IND meeting for a product within 6 months; (iii) dosing a first patient in a Phase 2A clinical trial with a product within 24 months; and (iv) dosing a first patient with a product in a Phase 2B clinical trial, Phase 3 clinical trial or other pivotal clinical trial with a product within 48 months. | |
License Agreement [Member] | Yuhan Corporation [Member] | Underwritten Public Offering [Member] | ||
Number of common stock issued during period | 750,000 | |
Proceeds from offering | $ 3,000,000 | |
License Agreement [Member] | Yuhan Corporation [Member] | Subsequent Event [Member] | ||
Number of common stock issued during period | 250,000 | |
Price per share | $ 4 |
License Agreement with Elion _2
License Agreement with Elion Oncology, Inc. (Details Narrative) - License Agreement [Member] - Elion Oncology, Inc. [Member] - USD ($) | Oct. 06, 2020 | Aug. 23, 2020 |
Common stock, lock-up description | The grant of license was conditioned on the closing of our underwritten public offering and successful up-listing to Nasdaq, which closed on October 6, 2020. Following the satisfaction of the conditions, we paid Elion $100,000 and will issue Elion 825,000 shares of our common stock, based on the $4.00 per share price in our underwritten public offering. Such shares will be subject to a lock-up, with 50% of such shares released from such lock up after six months and the remaining 25% tranches to be released following 9 months and 12 months, respectively. | |
Milestone payments, description | As additional consideration, we will pay Elion development and regulatory milestone payments (a portion of which are payable in shares of our common stock and a portion of which are payable in cash) upon the achievement of certain milestones, which include 100,000 shares of common stock due on the first two annual anniversaries of the effective date of the agreement, FDA or other regulatory approval and dosing a patient. We are also required to split any milestone payments received with Elion based on any sub-license agreement we may enter into. | |
Performance of milestone conditions, description | Specific diligence milestones that consist of: (i) dosing a first patient in a Phase 1B clinical trial with a product within 12 months; and (ii) dosing a first patient with a product in a Phase 2 or 3 clinical trial within 48 months. | |
Subsequent Event [Member] | ||
Payment for license grant | $ 100,000 | |
Number of common stock issued during period | 825,000 | |
Price per share | $ 4 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Amount due from related parties | $ 7,605 | ||
Due from employees for health insurance contributions | 7,600 | ||
Due to related parties | 110,796 | 316 | |
CorLyst, LLC [Member] | |||
Rent and other costs reimbursements received | 76,979 | $ 76,058 | |
Amount due from related parties |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase obligations |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 06, 2020 | Aug. 19, 2020 |
License Agreement [Member] | Yuhan Corporation [Member] | ||
Number of common stock issued during period | 250,000 | |
Price per share | $ 8 | |
Subsequent Event [Member] | Restricted Stock Award [Member] | ||
Number of stock awards vested in period | 214,078 | |
Subsequent Event [Member] | License Agreement [Member] | Aposense, Ltd. [Member] | ||
Number of common stock issued during period | 625,000 | |
Price per share | $ 4 | |
Subsequent Event [Member] | License Agreement [Member] | Elion Oncology, Inc. [Member] | ||
Number of common stock issued during period | 825,000 | |
Price per share | $ 4 | |
Payment for license grant | $ 100,000 | |
Subsequent Event [Member] | License Agreement [Member] | Yuhan Corporation [Member] | ||
Number of common stock issued during period | 250,000 | |
Price per share | $ 4 | |
Public Offering [Member] | Subsequent Event [Member] | ||
Number of common stock issued during period | 4,800,000 | |
Price per share | $ 4 | |
Proceeds from offering | $ 17,100,000 | |
Public Offering [Member] | Subsequent Event [Member] | Anti-Dilution Provision [Member] | ||
Number of common stock issued during period | 1,156,480 | |
Underwritten Public Offering [Member] | License Agreement [Member] | Yuhan Corporation [Member] | ||
Number of common stock issued during period | 750,000 | |
Proceeds from offering | $ 3,000,000 | |
Underwritten Public Offering [Member] | Subsequent Event [Member] | ||
Number of common stock issued during period | 4,800,000 | |
Price per share | $ 4 | |
Proceeds from offering | $ 17,100,000 | |
Number of stock awards vested in period | 214,078 | |
Underwritten Public Offering [Member] | Subsequent Event [Member] | LOC Agreements [Member] | DKBK Enterprises, LLC [Member] | ||
Debt conversion principal amount and related interest | $ 700,000 | |
Debt conversion into shares | 199,537 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Pro Forma Table Shows the Number of Issued and Outstanding Shares (Details) - Subsequent Event [Member] - Underwritten Public Offering [Member] | Oct. 06, 2020shares |
Actual shares issued and outstanding | 5,765,566 |
Shares sold in the underwritten common stock offering which closed on October 6, 2020 | 4,800,000 |
Shares to be issued as a result of triggering the anti-dilution provision of previously issued shares of common stock | 1,156,480 |
Shares to be issued to Yuhan Corporation, Elion Oncology, Inc. and Aposense Ltd. in connection with the respective license agreements. | 1,700,000 |
Restricted stock awards that vested on the completion of our underwritten offering and up-list to the Nasdaq Capital Market on October 6, 2020 | 214,078 |
Pro forma shares issued and outstanding | 13,835,661 |
DKBK Enterprises, LLC [Member] | LOC Agreement [Member] | |
Conversion of the $700,000 LOC with DKBK and related accrued interest on October 6, 2020 | 199,537 |