Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 16, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Cerecor Inc. | ||
Entity Central Index Key | 1,534,120 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 31,379,778 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 5,882,756 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 2,472,187 | $ 5,127,958 |
Accounts receivable, net | 3,252,212 | 132,472 |
Other receivables | 427,241 | 0 |
Escrowed cash receivable | 3,752,390 | 0 |
Inventory, net | 382,153 | 0 |
Prepaid expenses and other current assets | 703,225 | 391,253 |
Restricted cash—current portion | 1,959 | 11,111 |
Total current assets | 10,991,367 | 5,662,794 |
Property and equipment, net | 44,612 | 43,243 |
Intangibles assets, net | 17,664,480 | 0 |
Goodwill | 14,292,282 | 0 |
Restricted cash, net of current portion | 131,353 | 62,828 |
Total assets | 43,124,094 | 5,768,865 |
Current liabilities: | ||
Term debt, net of discount | 0 | 2,353,667 |
Accounts payable | 1,298,980 | 1,010,209 |
Accrued expenses and other current liabilities | 7,848,309 | 947,987 |
Income taxes payable | 2,259,148 | 0 |
Total current liabilities | 11,406,437 | 4,311,863 |
Contingent consideration | 2,576,633 | 0 |
Deferred tax liability | 7,144 | 0 |
License obligations | 1,250,000 | 1,250,000 |
Long term liabilities - other | 24,272 | 0 |
Total liabilities | 15,264,486 | 5,561,863 |
Stockholders’ equity: | ||
Preferred stock—$0.001 par value; 5,000,000 and zero shares authorized at December 31, 2017 and 2016, respectively; zero shares issued and outstanding at December 31, 2017 and 2016 | 0 | 0 |
Common stock—$0.001 par value; 200,000,000 shares authorized at December 31, 2017 and 2016; 31,266,989 and 9,434,141 shares issued and outstanding at December 31, 2017 and 2016, respectively | 31,268 | 9,434 |
Additional paid-in capital | 83,338,136 | 70,232,651 |
Contingently issuable shares | 2,655,464 | 0 |
Accumulated deficit | (58,165,260) | (70,035,083) |
Total stockholders’ equity | 27,859,608 | 207,002 |
Total liabilities and stockholders’ equity | $ 43,124,094 | $ 5,768,865 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 0 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 31,266,989 | 9,434,141 |
Common stock, shares outstanding (in shares) | 31,266,989 | 9,434,141 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | |||
License and other revenue | $ 25,000,000 | $ 0 | $ 0 |
Product revenue, net | 1,910,403 | 0 | 0 |
Sales force revenue | 278,165 | 0 | 0 |
Grant revenue | 624,569 | 1,152,987 | 0 |
Total revenues, net | 27,813,137 | 1,152,987 | 0 |
Operating expenses: | |||
Cost of product sales | 635,648 | 0 | 0 |
Research and development | 4,372,578 | 10,149,879 | 6,587,183 |
General and administrative | 7,941,584 | 7,083,155 | 4,422,764 |
Sales and marketing | 973,345 | 0 | 0 |
Total operating expenses | 13,923,155 | 17,233,034 | 11,009,947 |
Income (loss) from operations | 13,889,982 | (16,080,047) | (11,009,947) |
Other income (expense): | |||
Change in fair value of warrant liability, unit purchase option liability and investor rights obligation | (29,624) | 72,625 | 1,313,049 |
Interest expense, net | (24,016) | (464,181) | (793,205) |
Total other (expense) income | (53,640) | (391,556) | 519,844 |
Net income (loss) before taxes | 13,836,342 | (16,471,603) | (10,490,103) |
Income tax expense | 1,966,519 | 0 | 0 |
Net income (loss) after taxes | 11,869,823 | (16,471,603) | (10,490,103) |
Net income (loss) attributable to common stockholders | $ 7,772,084 | $ (16,471,603) | $ (10,490,103) |
Net income (loss) per share of common stock, basic (in dollars per share) | $ 0.42 | $ (1.87) | $ (4.71) |
Net income (loss) per share of common stock, diluted (in dollars per share) | $ 0.42 | $ (1.87) | $ (4.71) |
Weighted average shares of common stock outstanding, basic (in shares) | 18,410,005 | 8,830,396 | 2,226,023 |
Weighted average number of shares of common stock outstanding, diluted (in shares) | 18,754,799 | 8,830,396 | 2,226,023 |
Consolidated Statements of Conv
Consolidated Statements of Convertible Preferred Stock and Stockholder's Equity (Deficit) - USD ($) | Total | Common stock | Additional paid in capital | Contingently Issuable Common Stock | Accumulated deficit | Redeemable Convertible Preferred Stock | Common stock |
Balance at the beginning (in shares) at Dec. 31, 2014 | 99,139,637 | ||||||
Balance at the beginning at Dec. 31, 2014 | $ 28,345,531 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Issuance of common stock for conversion of preferred stock upon closing of initial public offering (in shares) | (99,139,637) | ||||||
Issuance of common stock for conversion of preferred stock upon closing of initial public offering | $ (28,345,531) | ||||||
Balance at the end (in shares) at Dec. 31, 2015 | 0 | ||||||
Balance at the end at Dec. 31, 2015 | $ 0 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2014 | 649,721 | ||||||
Balance at the beginning at Dec. 31, 2014 | $ (26,330,664) | $ 650 | $ 16,742,063 | $ (43,073,377) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock (in shares) | 4,020,000 | ||||||
Issuance of stock | 21,165,589 | $ 4,020 | 21,161,569 | ||||
Issuance of common stock for conversion of preferred stock (in shares) | 3,980,422 | ||||||
Issuance of common stock for conversion of preferred stock | 28,344,157 | 28,340,177 | $ 3,980 | ||||
Issuance of shares in acquisition of TRx | 0 | ||||||
Contingently issuable stock in acquisition of TRx | 0 | ||||||
Stock-based compensation | 394,748 | 394,748 | |||||
Net income (loss) | (10,490,103) | (10,490,103) | |||||
Balance at the end (in shares) at Dec. 31, 2015 | 8,650,143 | ||||||
Balance at the end at Dec. 31, 2015 | 13,083,727 | $ 8,650 | 66,638,557 | (53,563,480) | |||
Balance at the end (in shares) at Dec. 31, 2016 | 0 | ||||||
Balance at the end at Dec. 31, 2016 | $ 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock (in shares) | 763,998 | ||||||
Issuance of stock | 1,899,987 | $ 764 | 1,899,223 | ||||
Issuance of shares in acquisition of TRx | 0 | ||||||
Contingently issuable stock in acquisition of TRx | 0 | ||||||
Shares purchased through employee stock purchase plan | 0 | (20) | $ 20 | ||||
Shares purchased through employee stock purchase plan (in shares) | 20,000 | ||||||
Stock-based compensation | 1,694,891 | 1,694,891 | |||||
Net income (loss) | (16,471,603) | (16,471,603) | |||||
Balance at the end (in shares) at Dec. 31, 2016 | 9,434,141 | ||||||
Balance at the end at Dec. 31, 2016 | 207,002 | $ 9,434 | 70,232,651 | (70,035,083) | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Issuance of preferred and common stock to Armistice Capital, net of offering costs | 4 | ||||||
Conversion of Armistice Capital preferred to common stock | $ (4) | ||||||
Balance at the end (in shares) at Dec. 31, 2017 | 0 | ||||||
Balance at the end at Dec. 31, 2017 | $ 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock (in shares) | 2,301,598 | ||||||
Issuance of stock | 1,502,593 | $ 2,302 | 1,500,291 | ||||
Issuance of common stock to Armistice Capital (in shares) | 2,345,714 | ||||||
Issuance of preferred and common stock to Armistice Capital, net of offering costs | 4,561,654 | $ 2,346 | 4,559,308 | ||||
Issuance of common stock for conversion of preferred stock (in shares) | 11,940,000 | ||||||
Issuance of common stock for conversion of preferred stock | 4 | (11,936) | $ 11,940 | ||||
Issuance of shares in acquistion of TRx (in shares) | 5,184,920 | ||||||
Issuance of shares in acquisition of TRx | 5,858,955 | $ 5,185 | 5,853,770 | ||||
Contingently issuable stock in acquisition of TRx | 2,655,464 | $ 2,655,464 | |||||
Shares purchased through employee stock purchase plan | 46,861 | $ 61 | 46,800 | ||||
Shares purchased through employee stock purchase plan (in shares) | 60,616 | ||||||
Stock-based compensation | 1,157,252 | 1,157,252 | |||||
Net income (loss) | 11,869,823 | 11,869,823 | |||||
Balance at the end (in shares) at Dec. 31, 2017 | 31,266,989 | ||||||
Balance at the end at Dec. 31, 2017 | $ 27,859,608 | $ 31,268 | $ 83,338,136 | $ 2,655,464 | $ (58,165,260) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating activities | |||
Net income (loss) | $ 11,869,823 | $ (16,471,603) | $ (10,490,103) |
Adjustments to reconcile net income (loss) provided by (used in) to net cash used in operating activities: | |||
Depreciation and amortization | 425,476 | 26,856 | 23,508 |
Stock-based compensation expense | 1,157,252 | 1,694,891 | 394,748 |
Deferred taxes | (832,629) | 0 | 0 |
Amortization of inventory fair value adjustment associated with acquisition of TRx | 137,900 | 0 | 0 |
Change in inventory reserve | 178,346 | 0 | 0 |
Non-cash interest expense | 20,364 | 162,270 | 293,748 |
Change in fair value of warrant liability, unit purchase option liability and investor rights obligation | 29,624 | (72,625) | (1,313,049) |
Changes in assets and liabilities: | |||
Accounts receivable, net | (247,195) | (132,472) | 0 |
Other receivables | (427,241) | 0 | 0 |
Inventory, net | (202,622) | 0 | 0 |
Prepaid expenses and other assets | (177,691) | 22,047 | (41,243) |
Escrowed cash receivable | (3,752,390) | 0 | 0 |
Restricted cash | (59,373) | (15,107) | 116,666 |
Accounts payable | 96,065 | 332,100 | (268,709) |
Income taxes payable | 2,259,148 | 0 | 0 |
Accrued expenses and other liabilities | 2,044,548 | (119,495) | 1,121,054 |
Net cash provided by (used in) operating activities | 12,519,405 | (14,573,138) | (10,163,380) |
Investing activities | |||
Acquisition of business, net of cash acquired | (18,888,932) | 0 | 0 |
Purchase of property and equipment | (23,325) | (34,883) | (19,984) |
Net cash used in investing activities | (18,912,257) | (34,883) | (19,984) |
Financing activities | |||
Proceeds from ESPP stock sales | 46,861 | 0 | 0 |
Proceeds from Armistice Capital transaction | 4,649,996 | 0 | 0 |
Proceeds from sale of shares under common stock purchase agreement | 1,693,498 | 2,003,182 | |
Principal payments on term debt | (2,374,031) | (3,314,225) | (1,811,744) |
Payment of fractional shares upon conversion of preferred stock to common stock | 4 | 0 | (1,373) |
Proceeds from initial public offering, including over-allotment, net of underwriting discounts, commissions and expenses | 0 | 0 | 23,685,270 |
Payment of offering costs | (279,247) | (114,945) | (2,269,171) |
Net cash provided by (used in) financing activities | 3,737,081 | (1,425,988) | 19,602,982 |
(Decrease) increase in cash and cash equivalents | (2,655,771) | (16,034,009) | 9,419,618 |
Cash and cash equivalents at beginning of period | 5,127,958 | 21,161,967 | 11,742,349 |
Cash and cash equivalents at end of period | 2,472,187 | 5,127,958 | 21,161,967 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest | 72,526 | 348,888 | 568,299 |
Cash paid for taxes | 540,000 | 0 | 0 |
Supplemental disclosures of non-cash financing activities | |||
Issuance of common stock in TRx acquisition | 5,858,955 | 0 | 0 |
Contingently issuable shares in TRx acquisition | $ 2,655,464 | $ 0 | $ 0 |
Business
Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business We are a biopharmaceutical company with the near-term goal of becoming a self-sustained, integrated pharmaceutical company that is focused on pediatric healthcare. We have a diverse portfolio of products and product candidates in development with a focus on patients with rare neurological and psychiatric disorders. The Company's pipeline is led by CERC-301, which Cerecor currently intends to explore as a novel treatment for orphan neurological indications. The Company is also developing three preclinical stage compounds, CERC-611,CERC-406 and CERC-425. We were incorporated in 2011 and commenced operations in the second quarter of 2011.In August 2017, we sold our worldwide rights to CERC-501 to Janssen Pharmaceuticals, Inc. (“Janssen”) in exchange for initial gross proceeds of $25 million , of which $3.75 million was deposited into a twelve -month escrow to secure certain indemnification obligations to Janssen, as well as a potential future $20 million regulatory milestone payment. The terms of the agreement provide that Janssen will assume ongoing clinical trials and be responsible for any new development and commercialization of CERC-501. On November 17, 2017, we acquired TRx Pharmaceuticals, LLC (“TRx”) and its wholly-owned subsidiaries (see Acquisition of TRx Pharmaceuticals for a description of the transaction). On February 16, 2018, we purchased and acquired all rights to Avadel Pharmaceuticals PLC’s (“Advadel's)”) marketed pediatric products (the “Acquired Products”) for the assumption of certain of Avadel's financial obligations to Deerfield CSF, LLC, which includes a $15 million loan due in January 2021 and its related interest payments as well as a 15% annual royalty on net sales of the Acquired Products through February 2026. Liquidity For the year ended December 31, 2017, the Company generated net income of $11.9 million and positive cash flows from operations of $12.5 million . Prior to the year ended December 31, 2017, the Company had incurred recurring operating losses since inception. As a result of the TRx and Avadel acquisitions, our commercial operations are expected to generate positive cash flows from product sales. As of December 31, 2017, the Company had an accumulated deficit of $58.2 million and a balance of $2.5 million in cash and cash equivalents. The Company anticipates generating positive cash flows from our commercial operations to offset costs related to its preclinical programs, additional clinical development of its product candidates, business development and costs associated with its organizational infrastructure. We apply a disciplined decision making methodology as we evaluate the optimal allocation of our resources between investing in our current commercial product line, our development portfolio and acquisitions or in-licensing of new assets.The Company, however, may require additional financing to continue to execute its clinical development strategy. The Company plans to meet its capital requirements primarily through a combination of equity or debt financings, collaborations, or out-licensing arrangements, strategic alliances, federal and private grants, marketing, distribution or licensing arrangements and in the longer term, revenue from product sales to the extent its product candidates receive marketing approval and are commercialized. The Company expects its cash on hand at December 31, 2017 and its cash flows from operations to fund future expenses through at least April 2, 2019. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Principles of Consolidation The consolidated financial statements include the accounts of Cerecor Inc. and its wholly-owned subsidiaries after elimination of all intercompany balances and transactions. Variable Interest Entities The primary beneficiary of a variable interest entity (VIE) must consolidate the related assets and liabilities. Certain disclosures are required by sponsors, significant interest holders in VIE’s and potential VIE’s. The Company regularly assesses its relationships with contractual third party and other entities for potential VIE’s. In making this assessment, the Company considers the potential that its contracts or other arrangements provide subordinated financial support, absorb losses or rights to residual returns of the entity and the ability to directly or indirectly make decisions about the entities’ activities. Based on the Company’s assessments performed, management concluded that there were no relationships that constitute a VIE for which the Company was determined to be the primary beneficiary at December 31, 2017. If the Company’s management makes the determination that it is the primary beneficiary of a VIE, the Company will consolidate the statements of operations and financial condition of the VIE into its consolidated financial statements. Fair Value Measurements Fair value is a market-based measurement, not an entity-specific measurement. The objective of a fair value measurement is to estimate the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Such transactions to sell an asset or transfer a liability are assumed to occur in the principal market for that asset or liability, or in the absence of the principal market, the most advantageous market for the asset or liability. Assets and liabilities subject to fair value measurement disclosures are required to be classified according to a three-level fair value hierarchy with respect to the inputs (or assumptions) used to determine fair value. The level in which an asset or liability is disclosed within the fair value hierarchy is based on the lowest level input that is significant to the related fair value measurement in its entirety. The guidance under the fair value measurement framework applies to other existing accounting guidance in the Financial Accounting Standards Board (FASB) codification that requires or permits fair value measurements. Refer to related disclosures in Note 5-Fair Value Measurements. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including estimates related to but not limited to, revenue recognition, share-based compensation, fair value measurements (including those relating to contingent consideration), income taxes, goodwill and other intangible assets, and clinical trial accruals. The Company bases its estimates on historical experience and other market‑specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. Net Income (Loss) per Share, Basic and Diluted Earnings per share are computed using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the unexercised warrants issued in the Armistice Private Placement transaction are considered participating securities because these warrants contain a non-forfeitable right to dividends irrespective of whether the warrants are ultimately exercised. Under the two-class method, earnings per common share for the common stock and participating warrants are computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of shares of Common stock and participating warrants outstanding for the period. In applying the two-class method, undistributed earnings are allocated to common stock and participating warrants based on the weighted-average shares outstanding during the period. Diluted net income (loss) per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive. Common stock equivalents include: (i) outstanding stock options issued under the Company's Long-Term Incentive Plans which are included under the "treasury stock method" when dilutive, (ii) common stock to be issued upon the assumed conversion of the Company's unit purchase option shares, which are included under the "if-converted method" when dilutive, (iii) the contingently issuable shares in the TRx acquisition if contingencies would have been satisfied if the end of the contingency period were as of the balance sheet date under the “if converted method” when dilutive, and (iv) common stock to be issued upon the exercise of outstanding warrants which are included under the "treasury stock method" when dilutive. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses. In addition, net losses are not allocated to the participating securities. Contingently issuable shares are included in the calculation of basic income (loss) per share as of the beginning of the period in which all the necessary conditions have been satisfied. Contingently issuable shares are included in diluted net income (loss) per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents are valued at cost, which approximates their fair value. Escrowed Cash Receivable On August 14. 2017, the Company sold all of its rights to CERC-501 to Janssen in exchange for initial gross proceeds of $25.0 million , of which $3.75 million was deposited into a twelve month escrow to secure certain indemnification obligations to Janssen Pharmaceuticals, Inc. The Company evaluates its escrowed cash receivable balance each reporting period and establishes a reserve for amounts deemed uncollectible. No reserve was recorded as of December 31, 2017. Restricted Cash The Company established the Employee Stock Purchase Plan in 2016. Eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the Plan administrator. At December 31, 2017, approximately $2,000 of deposits had been made by employees for potential future stock purchases. In 2016 the Company entered into a bank services pledge agreement with Silicon Valley Bank. In exchange for receiving business credit card services from Silicon Valley Bank, the Company deposited $50,000 as collateral with Silicon Valley Bank. This amount will remain deposited with Silicon Valley Bank for the duration the business credit card services are used by the Company. In addition, the Company has deposited $13,000 with the landlord of the Company's office space as a security deposit. These deposits are recorded as restricted cash, net of current portion on the balance sheet at December 31, 2017 and 2016. Accounts Receivable, net Accounts receivable at December 31, 2017 are comprised of amounts due from customers in the ordinary course of business. Management considers all accounts receivable to be fully collectible at December 31, 2017, and accordingly, no allowance for doubtful accounts has been recorded. Bad debt expense is charged to operations as amounts are determined to be uncollectible. Accounts receivable are written off when deemed uncollectible and recoveries of receivables previously written off are recorded when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than the payment terms negotiated with the customer. The Company generally negotiates payment terms of 30 days. The Company offers wholesale distributors a prompt payment discount, which is typically 2% as an incentive to remit payment within this timeframe. Accounts receivable are stated net of the estimated prompt pay discount which has a balance of $57,705 at December 31, 2017. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company maintains a portion of its cash and cash equivalent balances in the form of a money market account with a financial institution that management believes to be creditworthy. The Company has no financial instruments with off‑balance sheet risk of loss. Inventory Inventory consists of finished goods acquired through the Purchase Agreement with TRx on November 17, 2017, and is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company reviews the composition of inventory at each reporting period in order to identify obsolete, slow-moving, quantities in excess of expected demand, or otherwise non-saleable items. If non-saleable items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the decline in value is first recognized. These valuation adjustments are recorded based upon various factors for the Company’s products, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected product demand, the expected shelf life of the product and firm inventory purchase commitments. Shipping, Handling, and Freight The Company includes the cost of shipping, handling, and freight associated with product sales as part of cost of goods sold. Debt and Equity Issuance Costs The Company may record debt and equity discounts in connection with raising funds through the issuance of convertible notes or equity instruments. These discounts may arise from (i) the receipt of proceeds less than the face value of the convertible notes or equity instruments, (ii) allocation of proceeds to beneficial conversion features and/or (iii) recording derivative liabilities related to embedded features. For debt instruments, these costs are amortized over the life of the debt to interest expense utilizing the effective interest method. For equity instruments, these costs are netted against the gross proceeds received from the issuance of the equity. Property and Equipment Property and equipment consists of computers, office equipment, and furniture and is recorded at cost. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred. Property and equipment are depreciated on a straight‑line basis over their estimated useful lives. The Company uses a life of four years for computers and software, and five years for equipment and furniture. Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Goodwill Goodwill relates to the amount that arose in connection with the acquisition of TRx. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations. Goodwill is not amortized but is evaluated for impairment on an annual basis or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of the Company's reporting unit below its carrying amount. Intangible Assets Intangible assets with definite useful lives are amortized over their estimated useful lives and reviewed for impairment if certain events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. Impairment losses are measured and recognized to the extent the carrying value of such assets exceeds their fair value. The Company recorded no impairment losses during the year ended December 31, 2017. Contingent Consideration The Company’s TRx acquisition involves the potential for future payment of consideration that is contingent upon the achievement of operational and commercial milestones. The preliminary fair value of contingent consideration liabilities was determined at the acquisition date using unobservable level 3 inputs. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and the risk-adjusted discount rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is remeasured at current fair value with changes recorded in the consolidated statements of operations. Changes in any of the inputs may result in a significantly different fair value adjustment. License and Other Revenue The Company recognizes revenues from collaboration, license or other research or sale arrangements when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue from potential future milestones, if substantive, is recognized when the milestone is achieved and the payment is due and collectible. The sale of the CERC-501 license to Janssen Pharmaceuticals, Inc. in August 2017 was the sole source of license and other revenue. Grant Revenue The Company recognizes grant revenue when there is (i) reasonable assurance of compliance with the conditions of the grant and (ii) reasonable assurance that the grant will be received. In April 2016, the Company received a research and development grant from the National Institute on Drug Abuse ("NIDA") at the National Institutes of Health ("NIH") to provide additional resources for the period of May 2016 through April 2017 for the Company’s now completed Phase 2 clinical trial for CERC-501, “ A Randomized, Double-Blind, Placebo-Controlled, Crossover Design Study of CERC-501 in a Human Laboratory Model of Smoking Behavior .” The amount of the NIDA award was $1.02 million . Additionally, in July 2016, the Company received a research and development grant from the National Institute on Alcohol Abuse and Alcoholism ("NIAAA") at the NIH to provide additional resources for the period of July 2016 through June 2017 to progress the development of CERC-501 for the treatment of alcohol use disorder. The amount of the NIAAA award was $1.0 million . The Company recognizes revenue under grants in earnings on a systemic basis in the period the related expenditures for which the grants are intended to compensate are incurred. As such, the Company recognized revenue in the amounts of $0.6 million for the year ended December 31, 2017 for the NIAAA award and $1.02 million and $132,000 for the year ended December 31, 2016 for the NIDA award and NIAAA award, respectively. As of December 31, 2016, the Company had received the full $1.02 million of the revenue earned under the NIDA award. Product Revenues, net Product sales revenue is recognized when title has transferred to the customer and the customer has assumed the risks and rewards of ownership, which is typically on delivery to the customer and collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (i) the seller’s price to the buyer is substantially fixed or determinable at the date of sale, (ii) the buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product, (iii) the buyer’s obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product, (iv) the buyer acquiring the product for resale has economic substance apart from that provided by the seller, (v) the seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (vi) the amount of future returns can be reasonably estimated. Revenues from sales of products are recorded net of estimated allowances for returns, wholesaler fees, prompt payment discounts, customer coupon redemptions, government rebates, and rebates under managed care plans. Provisions for returns, specialty distributor fees, wholesaler fees, government rebates, and rebates under managed care plans are included within current liabilities in the consolidated balance sheet. Provisions for prompt payment discounts are generally shown as a reduction in accounts receivable. Calculating these items involves estimates and judgments based on sales or invoice data, contractual terms, historical utilization rates, new information regarding changes in these programs’ regulations and guidelines that would impact the amount of the actual rebates, our expectations regarding future utilization rates for these programs, and channel inventory data. Sales Force Revenue Pursuant to a Marketing Agreement with Pharmaceutical Associates, Inc . (“PAI ”), the Company receives a monthly marketing fee to promote, market and sell certain products on behalf of PAI. The Company also receives a matching fee payment for each month of the term of the Marketing Agreement if certain provisions calculated in accordance with the terms and inputs set forth in the Marketing Agreement are met. Marketing fees and any matching payments are recognized as sale force revenue when all the performance obligations have been satisfied and earned. The Company and PAI also share the net revenues from sales of certain products, after reimbursing certain expenditures, in a manner designed to achieve a 50/50 split of net revenues above a “break even” point, calculated in accordance with the terms and inputs set forth in the agreement. We recognize these revenue sharing payments as earned under the terms of the agreement when collectability is reasonably assured. Cost of Product Sales Cost of product sales is comprised of (i) costs to acquire products sold to customers; (ii) royalty, license payments and other agreements granting the Company rights to sell related products; (iii) distribution costs incurred in the sale of products; and (iv) the value of any write-offs of obsolete or damaged inventory that cannot be sold. The Company acquired the rights to sell certain of its commercial products through license and assignment agreements with the original developers or other parties with interests in these products. These agreements obligate the Company to make payments under varying payment structures based on its net revenue from related products. Concentration with Customer The Company sells its prescription pharmaceutical products in the United States primarily through wholesale distributors and a specialty contracted pharmacy. Wholesale distributors account for substantially all of the Company’s net product revenues and trade receivables. In addition, the Company earns revenue from sales of its prescription pharmaceutical products directly to retail pharmacies and research and development grants. In August 2017, the Company sold all of its licensing rights for a prior product candidate, CERC-501, to a third party. For the year ended December 31, 2017, the Company’s three largest customers accounted for approximately 40% , 25% and 22% , respectively, of the Company’s total net product revenues from sale of prescription pharmaceutical products. At December 31, 2017, these top three customers represented, in the aggregate, approximately 42% , 26% and 21% , respectively, of the Company’s consolidated accounts receivable balance. The Company did not generate any product revenue for the year ended December 31, 2016. Concentrations of Products and Sales The Company’s five prescription pharmaceutical product lines accounted for 100% of the Company’s total product revenue, net for the year ended December 31, 2017. The Company did not generate any product revenue for the year ended December 31, 2016. Concentration with Vendor The Company’s top five vendors accounted for approximately 60% and 70% of the Company’s accounts payable at December 31, 2017 and December 31, 2016, respectively. Research and Development Research and development costs are expensed as incurred. These costs include, but are not limited to, employee‑related expenses, including salaries, benefits and stock‑based compensation of research and development personnel; expenses incurred under agreements with contract research organizations and investigative sites that conduct clinical trials and preclinical studies; the cost of acquiring, developing and manufacturing clinical trial materials; other supplies; facilities, depreciation and other expenses, which include direct and allocated expenses for rent, utilities and insurance; and costs associated with preclinical activities and regulatory operations. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to the Company by its vendors, such as clinical research organizations, with respect to their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be. Sales and Marketing Expenses Sales and marketing expenses consist primarily of professional fees, advertising and marketing cost and salaries, benefits and related costs for sales and sales support personnel, including stock‑based compensation and travel expenses. Sales and marketing expense also includes amortization of marketing rights intangible assets acquired in the acquisition of TRx. Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non‑owner sources. Comprehensive loss was equal to net loss for all periods presented. Income Taxes The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Deferred tax assets primarily include net operating loss and tax credit carryforwards, accrued expenses not currently deductible and the cumulative temporary differences related to certain research and patent costs. Certain tax attributes, including net operating losses and research and development credit carryforwards, may be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code (the "Code"). See Note 15 for further information. The portion of any deferred tax asset for which it is more likely than not that a tax benefit will not be realized must then be offset by recording a valuation allowance. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. The amount for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2017, the Company does not believe any material uncertain tax positions are present. On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act,” or TCJA, that significantly reforms the Internal Revenue Code of 1986, as amended. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. See the tax footnote below for further discussion related to the tax impact to the Company. Stock‑Based Compensation The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock‑based awards made to employees and non‑employees, including employee stock options, in the statements of operations. For stock options issued to employees and members of the board of directors for their services on the board of directors, the Company estimates the grant date fair value of each option using the Black‑Scholes option pricing model. The use of the Black‑Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk‑free interest rates and expected dividend yields of the common stock. For awards subject to service‑based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock‑based compensation expense equal to the grant date fair value of stock options on a straight‑line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised. For stock options issued to non‑employees, the Company initially measures the options at their grant date fair values and revalues as the underlying equity instruments vest and are recognized as expense over the earlier of the period ending with the performance commitment date or the date the services are completed in accordance with the provisions of ASC 718 and ASC 505‑50, Equity‑Based Payments to Non‑Employees (“ASC 505‑50”). Clinical Trial Expense Accruals As part of the process of preparing its financial statements, the Company is required to estimate its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate trial expenses in its financial statements by matching those expenses with the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by subject progression and the timing of various aspects of the trial. The Company determines accrual estimates by taking into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of trials, or the services completed. During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third‑party vendors. Although the Company does not expect its estimates to be materially different from amounts actually incurred, its understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in it reporting amounts that are too high or too low for any particular period. For the years ended December 31, 2017 and December 31, 2016 , there were no material adjustments to the Company’s prior period estimates of accrued expenses for clinical trials. Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision‑making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is currently represented by the Company's management team which consists of our Chief Executive Officer, Chief Business Officer and Chief Financial Officer. The Company and the management team view the Company’s operations and manage its business as one operating segment. All long‑lived assets of the Company reside in the United States. Recently Adopted Accounting Pronouncements In October 2016, the FASB issued ASU No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control , which amends the consolidation guidance on how a reporting entity that is a single decision maker of a variable interest entity should treat indirect interest in the entity held through related parties that are under common control. This guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods, with early adoption permitted. We adopted this standard in connection with our acquisition of TRx. The adoption of this standard did not have a material impact on our financial statements. In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting . The guidance is intended to simplify several areas of accounting for share-based compensation, classification on the statement of cash flows and forfeitures. The new standard was adopted by the Company effective January 1, 2017 and its adoption will have no impact on its financial position, results of operations or cash flows. Consistent with the update, the Company accounts for forfeitures as they occur as opposed to being estimated at the time of grant and revised . In connection with adoption, the Company has elected to account for forfeitures as they occur as opposed to being estimated at the time of grant and revised. In July 2015, the FASB issued ASU No. 2015-11, “ Simplifying the Measurement of Inventory ” (ASU 2015-11). ASU 2015-11 states that an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. For public entities, ASU 2015-11is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this standard in connection with our acquisition of TRx. The adoptio |
Net Income (Loss) Per Share Of
Net Income (Loss) Per Share Of Common Stock, Basic And Diluted | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share of Common Stock, Basic and Diluted | Net Income (Loss) Per Share of Common Stock, Basic and Diluted The following table sets forth the computation of basic and diluted net loss per share of common stock for the years ended December 31, 2017 , 2016 and 2015 which includes both classes of participating securities: Year ended December 31, Net income (loss) per share, basic and diluted calculation: 2017 2016 2015 Basic income (loss) per share Net income (loss) $ 11,869,823 $ (16,471,603 ) $ (10,490,103 ) Undistributable earnings (loss) allocable to common shares $ 7,772,084 $ (16,471,603 ) $ (10,490,103 ) Undistributable earnings (loss) allocable to participating warrants $ 4,097,739 $ — $ — Weighted average shares, basic Common stock 18,410,005 8,830,396 2,226,023 Participating warrants 9,706,458 — — 28,116,463 8,830,396 2,226,023 Basic income (loss) per share: Common stock $ 0.42 $ (1.87 ) $ (4.71 ) Participating warrants $ 0.42 $ — $ — Diluted income (loss) per share: Net income (loss) attributable to common shares $ 7,772,084 $ (16,471,603 ) $ (10,490,103 ) Net income (loss) reallocated 49,642 — — Undistributed earnings (loss) allocable to common shares $ 7,821,726 $ (16,471,603 ) $ (10,490,103 ) Weighted average number of shares attributable to common shareholders - basic 18,410,005 8,830,396 2,226,023 Effect of dilutive securities: Stock options 61,510 — — Contingently issuable shares 283,284 — — Potentially dilutive shares 344,794 — — Weighted average number of shares - diluted 18,754,799 8,830,396 2,226,023 Diluted income (loss) per share $ 0.42 $ (1.87 ) $ (4.71 ) The following outstanding securities at December, 31, 2017 , 2016 and 2015 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive: December 31, 2017 2016 2015 Stock options 2,812,006 1,849,359 959,188 Non-participating warrants on common stock 4,661,145 7,400,934 7,400,934 Underwriters' unit purchase option 40,000 40,000 40,000 |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On November 17, 2017, Cerecor Inc. (the “Company”) entered into, and consummated the transactions contemplated by, an Equity Interest Purchase Agreement (the “Purchase Agreement”) by and among the Company, TRx Pharmaceuticals, LLC, a North Carolina limited liability company (“TRx”), Fremantle Corporation and LRS International LLC, the selling members of TRx (collectively, the “Sellers”) which agreement provided for the purchase of all of the equity and ownership interests of TRx by the Company. The consideration for the acquisition consists of $18.9 million in cash, as adjusted for Estimated Working Capital, Estimated Cash on Hand, Estimated Indebtedness and Estimated Transaction Expenses, as well as 7,534,884 shares of the Company’s common stock having an aggregate value on the Closing Date of $8.5 million and certain Contingent Payments, if any become payable. Upon closing, the Company issued 5,184,920 shares of our common stock. Pursuant to the Purchase Agreement, the issuance of the remaining 2,349,968 shares as a part of the Equity Consideration is subject to stockholder approval and entirely contingent upon gaining such stockholder approval. These shares have been recorded within stockholder's equity on the consolidating balance sheet date. As a result of the TRx acquisition, the Company recorded goodwill of $14.3 million , of which $9.2 million was deducible for income taxes. The acquisition-date fair value of the consideration transferred is as follows: At November 17, 2017 Cash $ 18,900,000 Common stock (including contingently issuable shares) 8,514,419 Contingent payments 2,576,633 Total consideration transferred $ 29,991,052 The transaction was accounted for as a business combination under the acquisition method of accounting. Accordingly, the tangible and identifiable intangible assets acquired and liabilities assumed were recorded at fair value as of the date of acquisition, with the remaining purchase price recorded as goodwill. The goodwill recognized is attributable primarily to strategic opportunities related to leveraging TRx’s R&D, intellectual property, and processes. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition: At November 17, 2017 Fair value of assets acquired: Current assets: Cash and cash equivalents $ 11,068 Accounts receivable, net 2,872,545 Inventory 495,777 Prepaid expenses and other current assets 134,281 Identifiable intangible assets Acquired product marketing rights - Metafolin 10,465,000 PAI sales and marketing agreement 2,334,000 Acquired product marketing rights - Millipred 4,714,000 Acquired product marketing rights - Ulesfia 555,000 Total assets acquired 21,581,671 Fair value of liabilities assumed: Accounts payable 192,706 Accrued expenses and other current liabilities 4,850,422 Deferred tax liability 839,773 Total liabilities assumed 5,882,901 Total identifiable net assets 15,698,770 Fair value of consideration transferred 29,991,052 Goodwill $ 14,292,282 Based on valuation estimates utilizing the income approach, a step-up in the value of inventory of $0.2 million was recorded in the opening balance sheet, of which approximately $138,000 was charged to cost of goods sold during the post-acquisition period, November 18, 2017 through December 31, 2017. The purchase price allocation has been prepared on a preliminary basis and is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the November 17, 2017 acquisition date. The intangible assets acquired included a sales and marketing agreement with an estimated useful life of two years; and the product marketing rights to Metafolin, Millipred, and Ulesfia, which are estimated to have useful lives of fifteen , four , and three years, respectively. The fair values of intangible assets, including product marketing rights, were determined using variations of the income approach, specifically the multi-period excess earnings method. Varying discount rates were also applied to the projected net cash flows. The Company believes the assumptions are representative of those a market participant would use in estimating fair value. The preliminary fair value of intangible assets includes the following: At November 17, 2017 Acquired product marketing rights - Metafolin $ 10,465,000 PAI Sales & Marketing Agreement 2,334,000 Acquired product marketing rights - Millipred 4,714,000 Acquired product marketing rights - Ulesfia 555,000 Fair value of identified intangible assets $ 18,068,000 Pro Forma Impact of Business Combinations The following supplemental unaudited pro forma information presents Cerecor's financial results as if the acquisition of TRx had occurred on January 1, 2016: Years Ended December 31, 2017 2016 Total revenues, net $ 43,602,212 $ 19,586,923 Net income $ 14,564,584 $ (19,499,137 ) |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three‑level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: • Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market. • Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model‑derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. • Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability. At December 31, 2017 and 2016 , the Company’s financial instruments included cash and cash equivalents, restricted cash, accounts payable, accrued expenses and other current liabilities, long term debt, the term loan warrant liability and the underwriters’ unit purchase option liability. The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, accounts payable, and accrued expenses and other current liabilities approximate their respective fair values because of the short-term nature of these accounts. The estimated fair value of the Company’s debt of $2.4 million as of December 31, 2016 was based on current interest rates for similar types of borrowings and is in Level 2 of the fair value hierarchy. The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s assets and liabilities that are measured at fair value on a recurring basis: December 31, 2017 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 471,183 $ — $ — Liabilities Contingent consideration $ — $ — $ 2,576,633 Warrant liability $ — $ — $ 8,185 Unit purchase option liability $ — $ — $ 26,991 December 31, 2016 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 4,758,539 $ — $ — Liabilities Warrant liability $ — $ — $ 5,501 Unit purchase option liability $ — $ — $ 51 *Investments in money market funds are reflected in cash and cash equivalents on the accompanying Balance Sheets. Level 3 Valuation The Company’s TRx acquisition (see Note 4) involves the potential for future payment of consideration that is contingent upon the achievement of operational and commercial milestones. The fair value of contingent consideration is determined using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and the risk-adjusted discount rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is remeasured at current fair value with changes recorded in the Company’s consolidated statements of operations. Changes in any of the inputs may result in a significantly different fair value adjustment. The warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded to other income (expense) in the accompanying statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The fair value of the warrant liability is estimated using a Black-Scholes option-pricing model. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of December 31, 2017 , include (i) volatility of 55% , (ii) risk free interest rate of 1.96% , (iii) strike price ($8.40) , (iv) fair value of common stock ($3.20) , and (v) expected life of 2.8 years. The underwriters’ unit purchase option (the “UPO”) was issued to the underwriters of the Company's initial public offering ("IPO") in 2015 and provides the underwriters the option to purchase up to a total of 40,000 units. The units underlying the UPO will be, immediately upon exercise, separated into shares of common stock, underwriters’ Class A warrants and underwriters’ Class B warrants (such warrants together referred to as the Underwriters’ Warrants). The Underwriters’ Warrants are warrants to purchase shares of common stock (see Note 9 for additional information on the UPO). The Company classifies the UPO as a liability as it is a freestanding marked-to-market derivative instrument that is precluded from being classified in stockholders’ equity. The UPO liability is marked-to-market each reporting period with the change in fair value recorded to other income (expense) in the accompanying statements of operations until the UPO is exercised, expires or other facts and circumstances lead the UPO to be reclassified to stockholders’ equity. The fair value of the UPO liability is estimated using a Black-Scholes option-pricing model within a Monte Carlo simulation model framework. The significant assumptions used in preparing the simulation model for valuing the UPO as of December 31, 2017 , include (i) volatility range of 40% to 50% , (ii) risk free interest rate range of 1.28% to 2.17% , (iii) unit strike price ($7.48) , (iv) underwriters’ Class A warrant strike price ($5.23) , (v) underwriters’ Class B warrant strike price ($4.49) , (vi) fair value of underlying equity ($3.20) , and (vii) optimal exercise point of immediately prior to the expiration of the underwriters’ Class B warrants, which occurred on April 20, 2017. The investor rights obligation expired in October 2015 upon the closing of the Company’s IPO. While outstanding, the investor rights obligation was remeasured at each reporting period and changes in fair value were recorded as a component of other income (expense) in the Company’s statements of operations. The fair value of the investor rights obligation was determined using a valuation model, which considered the probability of achieving certain milestones, the entity’s cost of capital, the estimated period the rights were to be outstanding, consideration received for the instrument with the rights, the number of shares to be issued to satisfy the rights, the price of such shares and any changes in the fair value of the underlying instrument. The tables presented below are a summary of changes in the fair value of the Company’s Level 3 valuations for the warrant liability, unit purchase option liability and investor rights obligation for the years ended December 31, 2017 and 2016 : Warrant Unit purchase Contingent liability option liability consideration Total Balance at December 31, 2016 $ 5,501 $ 51 $ — $ 5,552 Issuance of contingent consideration — — 2,576,633 2,576,633 Change in fair value 2,684 26,940 — 29,624 Balance at December 31, 2017 $ 8,185 $ 26,991 $ 2,576,633 $ 2,611,809 Warrant Unit purchase Investor rights liability option liability obligation Total Balance at December 31, 2015 $ 27,606 $ 50,571 $ — $ 78,177 Change in fair value (22,105 ) (50,520 ) — (72,625 ) Balance at December 31, 2016 $ 5,501 $ 51 $ — $ 5,552 No other changes in valuation techniques or inputs occurred during the years ended December 31, 2017 and 2016 . No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the years ended December 31, 2017 and 2016 . There was no change in the fair value of contingent consideration between date of the TRx acquisition and December 31, 2017. At December 31, 2017, the fair value of the contingent consideration is unchanged as there were no significant changes in the assumptions from the period between November 17, 2017 and December 31, 2017. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory consists of finished goods acquired through the Purchase Agreement with TRx on November 17, 2017, and is stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis . As of December 31, 2017 the Company’s finished goods inventory totaled $382,153 which is net of reserves for excess and obsolete inventory totaling $178,346 . During the year ended December 31, 2017, the Company recorded a related charge to cost of goods sold for obsolete inventory of $178,346 . The Company did not record any reserves for excess and obsolete inventory during the year ended December 31, 2016. |
Property And Equipment
Property And Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 Furniture and equipment $ 58,126 $ 58,126 Computers and software 96,133 72,808 Total property and equipment 154,259 130,934 Less accumulated depreciation (109,647 ) (87,691 ) Property and equipment, net $ 44,612 $ 43,243 Depreciation expense was $21,956 and $26,856 for the years ended December 31, 2017 and December 31, 2016 , respectively. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The below table reflects Goodwill acquired through the Purchase Agreement with TRx on November 17, 2017. Changes in the carrying amount of goodwill for the year ended December 31, 2017 was as follows: Goodwill balance at December 31, 2016 $ — Goodwill from acquisition of TRx Pharmaceuticals 14,292,282 Goodwill balance at December 31, 2017 $ 14,292,282 There were no accumulated impairment losses to goodwill at December 31, 2017. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The below table reflects intangible assets acquired through the Purchase Agreement with TRx on November 17, 2017. For the year ended December 31, 2017, changes in the gross carrying amount of intangible assets consisted of the following: Intangible assets at December 31, 2016 $ 0 Intangible assets from acquisition of TRx Pharmaceuticals 18,068,000 Intangible assets at December 31, 2017 $ 18,068,000 The following is a summary intangible assets held by the Company at: December 31, 2017 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Avg.Remaining Life (in years) Acquired product marketing rights $ 15,734,000 $ 257,645 $ 15,476,355 11.2 Sales and marketing agreement 2,334,000 145,875 2,188,125 1.9 Total Intangible Assets $ 18,068,000 $ 403,520 $ 17,664,480 Amortization expense was $403,520 for the year ended December 31, 2017. There was no amortization expense for the year ended December 31, 2016 The estimated aggregate amortization of intangible assets based on the preliminary values assigned as of December 31, 2017, for each of the five succeeding years and thereafter is as follows: Estimated Amortization For the Years Ending December 31, Expense 2018 $ 3,228,167 2019 3,082,292 2020 2,038,030 2021 1,728,867 2022 697,667 Thereafter 6,889,457 Total amortization expense $ 17,664,480 |
Accrued Expenses And Other Curr
Accrued Expenses And Other Current Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 Sales returns and allowances $ 4,146,217 $ — Compensation and benefits 1,401,514 272,601 General and administrative 1,001,454 160,116 Royalties payable 743,010 — Research and development expenses 299,480 315,937 Other 256,634 — Accrued interest — 193,781 Total accrued expenses and other current liabilities $ 7,848,309 $ 942,435 |
License Agreements
License Agreements | 12 Months Ended |
Dec. 31, 2017 | |
ASSET ACQUISITION AND LICENSE AGREEMENTS | |
License Agreements | License Agreements Lilly CERC-611 License On September 22, 2016, the Company entered into an exclusive license agreement with Eli Lilly and Company (“Lilly”) pursuant to which the Company received exclusive, global rights to develop and commercialize CERC-611, previously referred to as LY3130481, a potent and selective Transmembrane AMPA Receptor Regulatory Proteins (“TARP”) ã-8-dependent á-amino-3-hydroxy-5-methyl-4- isoxazolepropionic acid (“AMPA”) receptor antagonist. The terms of the license agreement provide for an upfront payment of $2.0 million , of which $750,000 was due within 30 days of the effective date of the license agreement, and the remaining balance of $1.25 million is due after the first subject is dosed with CERC-611 in a multiple ascending dose study and is recorded as license obligations on the balance sheet at December 31, 2017. Additional payments may be due upon achievement of development and commercialization milestones, including the first commercial sale. Upon commercialization, the Company is obligated to pay Lilly milestone payments and a royalty on net sales. Merck CERC-301 License In 2013, the Company entered into an exclusive license agreement with Merck & Co., Inc. (“Merck”) pursuant to which Merck granted the Company rights relating to certain small molecule compounds. In consideration of the license, the Company paid an initial payment of $750,000 , and upon achievement of acceptance by the United States Food and Drug Administration, or FDA, of Merck pre-clinical data and FDA approval of a Phase 3 clinical trial the Company will pay an additional $750,000 . Additional payments may be due upon achievement of development and regulatory milestones, including the first commercial sale. Upon commercialization, the Company is obligated to pay Merck milestone payments and royalties on net sales. Merck CERC-406 In 2013, the Company entered into a separate exclusive license agreement with Merck pursuant to which Merck granted the Company certain rights in small molecule compounds which are known to inhibit the activity of COMT. In consideration of the license, the Company made a $200,000 upfront payment to Merck. Additional payments may be due upon the achievement of development and regulatory milestones. Upon commercialization of a COMT product, the Company is required to pay Merck royalties on net sales. Poly-Vi-Flor and Tri-Vi-Flor Related Contracts Supply and License Agreement, effective December 1, 2014, by and between TRx and Merck & Cie (“Merck”) On December 1, 2014 TRx entered into a Supply and License Agreement with Merck. The initial term of the agreement expires on December 31, 2020, and the agreement will automatically continue for subsequent one year terms thereafter until terminated in accordance with its terms. Pursuant to the agreement, Merck agrees to supply a specific compound called Metafolin® to TRx for use in dietary supplements within a defined market, and TRx agrees to purchase 100% of its Metafolin requirements from Merck. Under the agreement, TRx has an exclusive license under a number of U.S. and international patents, as well as related trade secrets, know-how and trademark rights, to make and sell TRx products positioned in the pediatric market (i.e., targeted for children 0 - 3 years of age) in the U.S. Under the agreement, TRx also has a non-exclusive license under the same intellectual property rights to make and sell TRx dietary supplement products within the U.S. outside of certain specified fields, including products containing Metafolin in combination with folic acid or any other folate, products positioned for type II diabetes, pharmaceutical drugs, and medical, fortified, and special dietary foods. TRx must pay Merck a royalty of two-percent ( 2% ) of net sales from TRx products in the pediatric field that contain Metafolin. The royalty payment does not apply to net sales of TRx products marketed as pre-or postnatal vitamins. The royalty payment will continue to apply throughout the initial term and any automatic renewal periods. The minimum annual order quantity for the compound is 1 kg. Payments of royalties are made by TRx within 45 days following the end of each calendar quarter. Settlement and License Agreement, dated February 28, 2011, by and between TRx and Mead Johnson and Company LLC, as amended TRx entered into a Settlement and License Agreement with Mead Johnson and Company LLC, and the parties subsequently entered into an amendment to such agreement on October 6, 2011. Pursuant to the agreement, Mead Johnson granted TRx an exclusive license to the “Poly-Vi-Flor” and “Tri-ViFlor” trademarks and agreed not to oppose TRx’s seeking the marks Poly-Vi-Flor and Tri-ViFlor in the United States and in any other countries where Mead Johnson does not have an active rregistration for such marks. As consideration for such licenses, TRx agreed to pay a royalty to Mead Johnson in the amount of 10% of net revenues received by TRx with respect to products sold under the PolyVi-Flor and Tri-Vi-Flor trademarks during the term of the agreement. The term of the agreement is indefinite and will continue unless terminated pursuant to the provisions of the agreement. Payments are made by TRx in arrears on a quarterly basis within 45 days after the end of a given calendar quarter. Redemption Agreement with Additional Poly-Vi-Flor Royalty Obligation TRx and the Selling Members entered into an Agreement to Redeem Membership Interest on May 31, 2011 with a former Member, Presmar Associates, Inc. Pursuant to the agreement, TRx and the Selling Members agreed to pay to Presmar Associates a royalty payment of 5% of gross sales for Poly-Vi-Flor branded or authorized generic product and, upon the sale of the Poly-Vi-Flor trademark to a third party, to pay to Presmar Associates 5% of the cash proceeds from such sale transaction. Any future sale of the Poly-Vi-Flor trademark to a third party would require that 5% of the sale proceeds be paid to Presmar Associates. Payments are made by TRx in arrears on a quarterly basis within 45 days after the end of a given calendar quarter. Millipred and Veripred Related Contracts Marketing Agreement between Pharmaceutical Associates, Inc. (“PAI”), and TRx and TRx Corp., effective April 1, 2017 TRx entered into a Marketing Agreement with PAI, effective April 1, 2017. Under the agreement, TRx will promote, market and sell PSP 10 and PSP 20 on behalf of PAI. TRx agrees to maintain the size of its current sales force, 16 salespersons, to perform the services under the agreement. Assuming a sales force of 16 salespeople, PAI will pay a monthly fee and a matching fee of $62,500 each to TRx. PAI and TRx also agree to share the net revenues from sales of the products, after reimbursing certain expenditures, in a manner designed to achieve a 50/50 split of net revenues above the “break even” point, calculated in accordance with the terms and inputs set forth in the agreement. The revenue sharing continues for a period of six months after termination of the agreement, unless the agreement is terminated due to a breach. The agreement has an initial six -month term, which automatically renews for additional six -month terms, unless terminated. Either party may terminate at any time with 90 days ’ written notice. Amounts received under this agreement are included as Sales force revenue in the Company’s Consolidated Statements of Operations. The Company recorded revenues from revenue sharing payments of approximately $90,000 for the year-ended December 31, 2017 which are included in sales force revenue on the statement of operations. . License and Supply Agreement between TRx and Watson Laboratories, Inc. TRx entered into a License and Supply Agreement with Watson Laboratories, Inc. on May 19, 2008, and the parties subsequently entered into amendments of the agreement on July 19, 2013 and April 1, 2016. Pursuant to the most recent amendment, the term of the agreement was extended for an additional five -year period expiring on April 1, 2021. However, TRx has the option to terminate the agreement following the first commercial sale of a generic product which occurred in April of 2017. If neither party terminates the agreement prior to April 1, 2021, then the agreement will automatically renew for successive one year periods. The amended agreement provides that the company make license payments of $75,000 in February and August of each year through April 2021. Ulesfia Related Contracts First Amended and Restated Exclusive Ulesfia Distribution Agreement, dated December 18, 2015, by and between Zylera and Lachlan Pharmaceuticals (“Lachlan”) Zylera entered into the First Amended and Restated Distribution Agreement with Lachlan, effective December 18, 2015. The agreement amends, restates and supersedes all previous agreements between the parties with respect to the Ulesfia (benzyl alcohol) lotion 5%. Pursuant to the agreement, Lachlan named Zylera as its exclusive distributor of Ulesfia in the U.S. and agreed to supply Ulesfia to Zylera exclusively for marketing and sale in the U.S. The agreement provides that all trademark rights used in connection with Ulesfia will remain the intellectual property of Lachlan, and all goodwill associated with the use of the trademarks for the marketing and sale of Ulesfia in the territory will inure to the sole benefit of Lachlan. The agreement also requires that Zylera make a royalty payment to Lachlan in the amount of 15% of net sales so long as net sales remain below $50 million annually. For annual net sales above $50 million , Zylera will owe Lachlan a royalty payment of 20% of net sales, and for annual net sales over $100 million , Zylera will owe Lachlan a royalty payment of 25% of net sales. Additionally, in the event Zylera’s annual net sales of the product are less than $20 million , other than as a result of a “Market Change,” Zylera shall pay Lachlan an amount sufficient to make total product payments equal to the amount that would have been paid if the net sales had been equal to $20 million . The practical effect of this provision is that there is a minimum annual royalty payment of $3,000,000 . Zylera has asserted that a “Market Change” has occurred pursuant to the terms of this agreement and litigation is pending with respect to that assertion. There are also certain milestone payments which become payable upon the achievement of certain cumulative net sales milestones. Upon the achievement of cumulative net sales amounting to $90,000,000 ; $180,000,000 ; $270,000,000 ; and $400,000,000 , Zylera will owe Lachlan payments of $3,000,000 ; $3,500,000 ; $4,000,000 ; and $5,000,000 , respectively. Zylera is obligated to purchase a minimum of 20,000 units per year, or approximately $1,117,700 worth of product; however, the minimum purchase requirements are void upon the earliest of: (i) Lachlan’s failure to fulfill Zylera’s purchase orders for two consecutive quarters or any three quarters in a 12 -month period; (ii) the first commercial sale of a generic version of the product, or (iii) termination of the agreement. Lachlan entered into a First Amended and Restated Exclusive Distribution Agreement with Concordia on January 1, 2014, and the agreement is substantively similar to the First Amended and Restated Exclusive Distribution Agreement between Lachlan and Zylera discussed above (with the exception of the parties thereto, the agreements are substantially identical. On December 10, 2016, Zylera informed Lachlan that a market change had occurred due to the introduction of Arbor Pharmaceutical’s lice product, Sklice®. According to the terms of the distribution agreement if there is a market change, the minimum purchase obligation is void. On June 5, 2017, Lachlan and Zylera entered into joint legal representation along with other unrelated third parties in negotiation and arbitration of dispute with Summers Laboratory, Inc regarding the an ongoing arbitration proceeding with the ultimate recipient of the royalties over whether a Market Change has occurred. The Company has not made any payments to Lachlan in 2017 under the Lachlan Agreement (from the acquisition date through year-end). |
Term Loan
Term Loan | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Term Loan | Term Loan In August 2014, the Company received a $7.5 million secured term loan from a finance company. The loan was secured by a lien on the Company’s assets, excluding intellectual property, which is subject to a negative pledge. The loan contained certain additional nonfinancial covenants. In connection with the loan agreement, the Company’s cash and investment accounts were subject to account control agreements with the finance company that give the finance company the right to assume control of the accounts in the event of a loan default. Loan defaults are defined in the loan agreement and include, among others, the finance company’s determination that there is a material adverse change in the Company’s operations, notwithstanding adverse results of clinical trials. Interest on the loan was at a rate of the greater of 7.95% , or 7.95% plus the prime rate as reported in The Wall Street Journal minus 3.25% . On August 1, 2017, the term loan matured and the Company made a final payment of $494,231 which included a termination fee of $187,500 . Debt consisted of the following as of December 31, 2017 and 2016 : December 31, December 31, 2017 2016 Term loan $ — $ 2,374,031 Less: debt discount — (20,364 ) Term Loan, net of debt discount — 2,353,667 Less: current portion, net of debt discount — (2,353,667 ) Long term debt, net of current portion and debt discount $ — $ — Interest expense, which includes amortization of a discount and the accrual of a termination fee, was approximately $95,000 and $489,000 for the years ended December 31, 2017 and 2016 , respectively, and is included in interest income (expense), net on the accompanying statements of operations. Upon issuance of the term loan, the Company paid lender fees of $110,000 and was required to pay a one‑time fee at maturity of $187,500 . The lender fees were recorded as a discount to the carrying amounts of the current and long term portions of the term loan. Amortization of the debt discount was $23,000 and $106,000 during the years ended December 31, 2017 and 2016 , respectively. Accretion of the one‑time fee was $12,000 and $56,000 during the years ended December 31, 2017 and 2016 , respectively. The amortization of the debt discount and the accretion of the one-time fee are reflected as a components of interest expense within the accompanying statements of operations. |
Capital Structure
Capital Structure | 12 Months Ended |
Dec. 31, 2017 | |
CAPITAL STRUCTURE | |
Capital Structure | Capital Structure On October 20, 2015, the Company filed an amended and restated certificate of incorporation in connection with the closing of its IPO. The amended and restated certificate of incorporation authorizes the Company to issue two classes of stock, common stock and preferred stock, and eliminates all references to the previously existing series of preferred stock. At December 31, 2017 , the total number of shares of capital stock the Company was authorized to issue was 205,000,000 of which 200,000,000 was common stock and 5,000,000 was preferred stock. All shares of common and preferred stock have a par value of $0.001 per share. On April 27, 2017, the Company further amended its amended and restated certificate of incorporation in connection with the closing of the Armistice Private Placement with the filing of a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (“Series A Preferred Stock”) of Cerecor Inc. (the “Certificate of Designation”). The Certificate of Designation authorized the issuance of 4,179 shares of Series A Preferred Stock to Armistice with a stated value of $1,000 per share, convertible into 11,940,000 shares of the Company’s common stock at a conversion price of $0.35 per share. On July 6, 2017, Armistice converted all of its outstanding shares of Series A Preferred Stock into common stock. Subsequent to the conversion of Armistice’s Series A Preferred Stock into common stock, Armistice has a majority voting control over the Company. Common Stock IPO On October 20, 2015, the Company closed its IPO of its units. Each unit consisted of one share of common stock, one Class A warrant to purchase one share of common stock at an exercise price of $4.55 per share and one Class B warrant to purchase one-half share of common stock at an exercise price of $3.90 per full share (the “units”). The Class A warrants expire on October 20, 2018 and the Class B warrants expired on April 20, 2017 (the "Class B Expiration Date."). The closing of the IPO resulted in the sale of 4,000,000 units at an initial public offering price of $6.50 per unit for gross proceeds of $26.0 million . The net proceeds of the IPO, after underwriting discounts, commissions and expenses, and before offering expenses, to the Company were approximately $23.6 million . On November 13, 2015, the units separated into common stock, Class A warrants and Class B warrants and began trading separately on the NASDAQ Capital Market. On the Class B Expiration Date, the Class B warrants ceased trading on the NASDAQ Capital Market. No Class B warrants were exercised prior to the Class B Expiration Date. On November 23, 2015, the underwriter of the IPO exercised its over-allotment option for 20,000 shares of common stock, 551,900 Class A warrants to purchase one share of common stock and 551,900 Class B warrants to purchase one-half share of common stock for additional gross proceeds of $135,319 . The common stock and accompanying Class A warrants and Class B warrants have been classified to stockholders’ equity (deficit) in the Company’s balance sheet. Underwriter’s Unit Purchase Option The underwriter of the IPO received, for $100 in the aggregate, the right to purchase up to a total of $40,000 units (or 1.0% of the units sold in the IPO) exercisable at $7.48 per unit (or 115% of the public offering price per unit in the IPO). The units underlying the UPO will be, immediately upon exercise, separated into shares of common stock and the Underwriters’ Warrants such that, upon exercise, the holder of a UPO will not receive actual units but will instead receive the shares of common stock and Underwriters’ Warrants, to the extent that any portion of the Underwriters’ Warrants underlying such units have not otherwise expired. The exercise prices of the underwriters’ Class A warrants and underwriter’s Class B warrants underlying the UPO are $5.23 and $4.49 , respectively. The UPO may be exercised for cash or on a cashless basis, at the holder’s option, and expires on October 14, 2020; however, following the expiration of underwriters’ Class B warrants on April 20, 2017, the UPO is exercisable only for shares of common stock and underwriters’ Class A warrants at an exercise price of $7.475 per unit; provided further, that, following the expiration of underwriters’ Class A warrants on October 20, 2018, the UPO will be exercisable only for shares of common stock at an exercise price of $7.47 . The Company classified the UPO as a liability as it is a freestanding marked-to-market derivative instrument that is precluded from being classified in stockholders’ equity. The fair value of the UPO is re-measured each reporting period and the change in fair value is recognized in the statement of operations (see Note 5). The Aspire Capital Transaction On September 8, 2016, the Company entered into a common stock purchase agreement (the “Purchase Agreement”) with Aspire Capital Fund, LLC ("Aspire Capital"), pursuant to which Aspire Capital committed to purchase up to an aggregate of $15.0 million of shares of the Company’s common stock over the 30 -month term of the Purchase Agreement. Under the Purchase Agreement, on any trading day selected by the Company on which the closing price of the Company’s common stock exceeds $0.50 , the Company may, in its sole discretion, present a purchase notice directing Aspire Capital to purchase up to 50,000 shares of common stock per day, up to $15.0 million of the Company’s common stock in the aggregate at a per share price calculated by references to the prevailing market price of the Company’s common stock. Upon execution of the Purchase Agreement, the Company issued and sold to Aspire Capital 250,000 shares of common stock at a price per share of $4.00 , for gross proceeds of $1.0 million , and concurrently entered into a registration rights agreement with Aspire Capital registering the shares of the Company’s common stock that have been and may be issued to Aspire Capital under the Purchase Agreement. Additionally, as consideration for Aspire Capital entering into the Purchase Agreement, the Company issued 175,000 shares of common stock as a commitment fee. The net proceeds of the Aspire Capital transaction, after offering expenses, to the Company were approximately $1.9 million for the year ended December 31, 2016. During the twelve months ended December 31, 2017, the Company sold an additional 965,165 shares of common stock to Aspire Capital under the terms of the Purchase Agreement for gross proceeds of approximately $789,000 . As of the date of this Annual Report on Form 10-K, the Company does not have any remaining shares available to issue under the purchase agreement. The Company may not issue any additional shares of common stock to Aspire Capital under the Purchase Agreement unless shareholder approval is obtained. The Board of Directors approved a board resolution to terminate this agreement on January 20, 2018. The Maxim Group Equity Distribution Agreement On January 27, 2017, the Company entered into an Equity Distribution Agreement with Maxim Group LLC ("Maxim"), as sales agent, pursuant to which the Company may offer and sell, from time to time, through Maxim, up to $12,075,338 in shares of its common stock. The Company has no obligation to sell any of the Shares, and may at any time suspend offers under the Equity Distribution Agreement. As of December 31, 2017, the Company had sold 1,336,433 shares of its common stock through Maxim under the Equity Distribution Agreement for total gross proceeds of $905,000 , including $33,000 of issuance costs. After the filing of this Annual Report, the amount of additional securities that were eligible to be sold under the registration statement on Form S-3 would have been approximately $2.9 million . This agreement expired on January 16, 2018. Armistice Private Placement On April 27, 2017, the Company entered into a securities purchase agreement with Armistice, pursuant to which Armistice purchased $5.0 million of the Company’s securities, consisting of 2,345,714 shares of the Company’s common stock at a purchase price of $0.35 per share and 4,179 shares of Series A Preferred Stock at a price of $1,000 per share. The Company received $4.65 million in net proceeds from the Armistice Private Placement. The number of shares of common stock that were purchased in the private placement constituted approximately 19.99% of the Company’s outstanding shares of common stock immediately prior to the closing of the Armistice Private Placement. Armistice also received warrants to purchase up to 14,285,714 shares of the Company’s common stock at an exercise price of $0.40 per share. Under the terms of the securities purchase agreement, the Series A Preferred Stock were not convertible into common stock, and the warrants were not exercisable until the Company received approval of the private placement by the Company’s shareholders as required by the rules and regulations of the NASDAQ Capital Market. The Company received shareholder approval for this transaction on June 30, 2017, at which time the warrants became exercisable and the Series A Preferred Stock became convertible into common stock. As multiple instruments were issued in a single transaction, the Company initially allocated the issuance proceeds among the preferred stock, common stock and warrants using the relative allocation method. As the warrants were determined to be indexed to the Company’s stock, and would only be settled in common shares, entirely in the control of the Company, the warrant instrument was accounted for as an equity instrument. Fair value of the warrants was initially determined upon issuance using the Black-Scholes Model (level 3 fair value measurement). Armistice converted all of the Series A Preferred Stock into 11,940,000 shares of common stock on July 6, 2017. Contingently Issuable Shares Under the terms of TRx acquisition noted above in Note 4, the Company is required to issues common stock having an aggregate value as calculated in the Purchase Agreement on the Closing Date of $8.1 million (the “Equity Consideration”). Upon closing, the Company issued 5,184,920 shares of our common stock. Pursuant to the Purchase Agreement, the issuance of the remaining 2,349,968 shares as a part of the Equity Consideration is subject to stockholder approval and entirely contingent upon gaining such stockholder approval. Voting Common stock is entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors, and does not have cumulative voting rights. Accordingly, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election. Dividends The holders of common stock are entitled to receive dividends, if any, as may be declared from time to time by the board of directors out of legally available funds. Liquidation In the event of the Company’s liquidation, dissolution or winding up, holders of the Company’s common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all debts and other liabilities. Rights and Preferences Holders of the Company’s common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Company’s common stock. Common Stock Warrants At December 31, 2017 , the following common stock warrants were outstanding: Number of shares Exercise price Expiration underlying warrants per share date 80,966 $ 28.00 August 2018 4,551,900 $ 4.55 October 2018 40,000* $ 5.23 October 2018 3,571 $ 28.00 December 2018 22,328* $ 8.40 October 2020 2,380* $ 8.68 May 2022 14,285,714 $ 0.40 June 2022 18,986,859 *Accounted for as a liability instrument (see Note 5) Warrants Issued to Term Loan Lender In August 2014, warrants to purchase 625,208 shares of Series B convertible preferred stock, at an exercise price equal to $0.2999 per share, were issued to the term loan lender in conjunction with the loan of $7.5 million (see Note 12). Upon the closing of the Company’s IPO, these warrants to purchase 625,208 shares of Series B convertible preferred stock became warrants to purchase 22,328 shares of common stock at an exercise price of $8.40 per share, in accordance with their terms. These warrants represent a freestanding financing instrument indexed to an obligation of the Company and as such is accounted for as a liability in accordance with ASC 480. The Company adjusts the carrying value of the liability, which appears as “warrant liability” on the accompanying balance sheets, to its estimated fair value at each reporting date (see Note 5). |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Equity Incentive Plan On April 5, 2016, the Company’s board of directors adopted the 2016 Equity Incentive Plan (the “2016 Plan”) as the successor to the 2015 Omnibus Plan (the “2015 Plan”). The 2016 Plan was approved by the Company’s stockholders and became effective on May 18, 2016 (the “2016 Plan Effective Date”). As of the 2016 Plan Effective Date, no additional grants will be made under the 2015 Plan or the 2011 Stock Incentive Plan (the “2011 Plan”), which was previously succeeded by the 2015 Plan effective October 13, 2015. Outstanding grants under the 2015 Plan and 2011 Plan will continue according to their terms as in effect under the applicable plan. Upon the 2016 Plan Effective Date, the 2016 Plan reserved and authorized up to 600,000 additional shares of common stock for issuance, as well as 464,476 unallocated shares remaining available for grant of new awards under the 2015 Plan. During the term of the 2016 Plan, the share reserve will automatically increase on the first trading day in January of each calendar year, beginning in 2017, by an amount equal to 4% of the total number of outstanding shares of common stock of the Company on the last trading day in December of the prior calendar year. As of December 31, 2017, there were 41,448 shares available for future issuance under the 2016 Plan. On January 1, 2018, an additional 1,250,679 shares were made available for issuance. Option grants to employees and directors expire after ten years. Employee options typically vest over four years. Options granted to directors typically vest over three years. Directors may elect to receive stock options in lieu of board compensation which vest immediately. For stock options granted to employees and non-employee directors, the estimated grant date fair market value of the Company’s stock-based awards is amortized ratably over the individuals’ service periods, which is the period in which the awards vest. For stock options issued to non‑employees, the Company measures the options at their fair value on the date at which the related service is complete. Expense is recognized over the period during which services are rendered by such non-employees until completed. At the end of each financial reporting period prior to the completion of the service, the fair value of the awards is remeasured using the then current fair market value of the Company's common stock and updated assumptions in the Black-Scholes option pricing model. Stock-based compensation expense includes stock options and ESPPP shares. The amount of stock based compensation expense recognized for the years ending December 31, 2017 , 2016 and 2015 was as follows: Year Ended December 31, 2017 2016 2015 Research and development $ 156,047 $ 141,247 $ 67,021 General and administrative 1,001,205 1,553,644 327,727 Total stock-based compensation $ 1,157,252 $ 1,694,891 $ 394,748 During the first quarter of 2016, the Company modified stock options of its former chief executive officer by extending the life of the awards, which were set to expire in March 2016, to coincide with their original life. This modification resulted in the recording of approximately $781,000 of compensation expense, which is included in general and administrative expenses for the year ended December 31, 2016 in the accompanying statement of operations. During the fourth quarter of 2017 two members of the Company's board of directors resigned. The Company modified the stock options of the directors by extending the life of the awards, which were set to expire in January, 2017, to August 15, 2018. Also, during the fourth quarter of 2017, the Company modified stock options of a former executive officer by extending the life of the awards, which were set to expire in February 2018, to May 2019. These modifications resulted in recording approximately $67,000 of compensation expense. A summary of option activity for the years ended December 31, 2017 and 2016 is as follows: Options Outstanding Number of shares Weighted average exercise price Grant date fair value of options Weighted average remaining contractual term (in years) Balance, January 1, 2016 959,188 $ 7.68 7.51 Granted 915,242 $ 3.35 $ 2,155,234 Forfeited (25,071 ) $ 5.04 Balance, December 31, 2016 1,849,359 $ 5.57 8.44 Granted 1,020,377 $ 0.94 $ 669,816 Forfeited (46,247 ) $ 3.57 Balance, December 31, 2017 2,823,489 $ 3.93 7.29 Vested and expected to vest at December 31, 2017 2,823,489 $ 3.93 7.29 Exercisable at December 31, 2017 1,762,908 $ 5.02 6.16 The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of December 31, 2017 , the aggregate intrinsic value of options outstanding, vested and expected to vest was $2.4 million. The total grant date fair value of shares which vested during the years ended December 31, 2017 , 2016 and 2015 was $2.9 million , $0.4 million and $0.7 million , respectively. The per‑share weighted‑average grant date fair value of the options granted during 2017 , 2016 and 2015 was estimated at $0.66 , $2.35 and $2.80 , respectively. There were 997,902 options that vested during the year ended December 31, 2017 with a weighted average grant date fair value of $2.98 . There were no options exercised during the years ended December 31, 2017, 2016 and 2015. The assumptions used to determine the grant date fair value of stock options granted to employees and non-employee directors are as follows: Year Ended December 31, 2017 2016 2015 Risk-free interest rate 1.85 % — 2.38 % 1.01 % — 1.93 % 1.64 % — 1.97 % Expected term of options (in years) 5.0 — 6.25 5.0 — 6.25 5.00 — 6.25 Expected stock price volatility 55 % — 100.0 % 80.00 % — 100.0 % 70.0 % Expected annual dividend yield — % — — % — % — — % — % — — % The valuation assumptions were determined as follows: • Risk‑free interest rate: The Company bases the risk‑free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term. • Expected term of options: Due to lack of sufficient historical data, the Company estimates the expected life of its stock options granted to employees and members of the board of directors as the arithmetic average of the vesting term and the original contractual term of the option. The Company estimates the expected life of its stock options granted to consultants and nonemployees to be the contractual term of the options. • Expected stock price volatility: The Company estimated the expected volatility based on actual historical volatility of the stock price of other publicly‑traded biotechnology companies engaged in lines of business that are the same or similar to the Company’s. The Company calculated the historical volatility of the selected companies by using daily closing prices over a period of the expected term of the associated award. The companies were selected based on their enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected term of the associated award. A decrease in the selected volatility would decrease the fair value of the underlying instrument. • Expected annual dividend yield: The Company estimated the expected dividend yield based on consideration of its historical dividend experience and future dividend expectations. The Company has not historically declared or paid dividends to stockholders. Moreover, it does not intend to pay dividends in the future, but instead expects to retain any earnings to invest in the continued growth of the business. Accordingly, the Company assumed and expected dividend yield of 0.0% . The Company considered numerous objective and subjective factors in the assessment of fair value of its common stock for grants made prior to the date the Company’s common stock began trading separately on the NASDAQ Capital Market, which was November 13, 2015, and includes all grants made to date. The factors considered include the price for the Company’s convertible preferred stock that was sold to investors and the rights, preferences and privileges of the convertible preferred stock and common stock, the trading price of the Company’s units between the IPO date and November 13, 2015, the Company’s financial condition and results of operations during the relevant periods, including the status of the development of the Company’s product candidates, and the status of strategic initiatives. These estimates involve a significant level of judgment. As of December 31, 2017 , there was approximately $1,342,072 of total unrecognized compensation expense related to unvested options granted under the Plan to be recognized as follows: Year ending December 31, 2018 $ 732,441 2019 352,657 2020 188,351 2021 68,623 $ 1,342,072 Employee Stock Purchase Plan On April 5, 2016, the Company’s board of directors approved the 2016 Employee Stock Purchase Plan (the “ESPP”). The ESPP was approved by the Company’s stockholders and became effective on May 18, 2016 (the “ESPP Effective Date”). Under the ESPP, eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the administrator. The ESPP is administered by the compensation committee of the Company’s board of directors. Under the ESPP, eligible employees may purchase stock at 85% of the lower of the fair market value of a share of the Company’s common stock (i) on the first day of an offering period or (ii) on the purchase date. Eligible employees may contribute up to 15% of their earnings during the offering period. The Company’s board of directors may establish a maximum number of shares of the Company’s common stock that may be purchased by any participant, or all participants in the aggregate, during each offering or offering period. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 of the fair market value of the Company’s common stock for each calendar year in which such right is outstanding. Upon the ESPP Effective Date, the Company reserved and authorized up to 500,000 shares of common stock for issuance under the ESPP. On January 1 of each calendar year, the aggregate number of shares that may be issued under the ESPP shall automatically increase by a number equal to the lesser of (i) 1% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, and (ii) 500,000 shares of the Company’s common stock, or (iii) a number of shares of the Company’s common stock as determined by the Company’s board of directors or compensation committee. As of December 31, 2016, 480,000 shares remained available for issuance. In accordance with the guidance in ASC 718-50, the ability to purchase shares of the Company’s common stock at the lower of the offering date price or the purchase date price represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value and is recognized over the requisite service period of the option. The Company used the Black-Scholes valuation model and recognized stock-based compensation expense of $76,305 for the year ended December 31, 2017, which is included in the table above with stock-based compensation from stock options. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740 (Topic 740, Income Taxes). ASC 740 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected tax consequences or events that have been recognized in the financial statements or tax returns. ASC Topic 740 also clarifies the accounting for uncertainty in income taxes recognized in the financial statement. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded in the financial statements for the calendar year 2017. Tax years beginning in 2014 are generally subject to examination by taxing authorities, although net operating losses from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. ASC Topic 740 provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for calendar year 2017. It is the Company's policy to treat interest and penalties, to the extent they arise, as a component of income taxes. The income tax provision consisted of the following for the years ending December 31, 2017, 2016 and 2015: 2017 2016 2015 Current: Federal $ 2,309,285 $ — $ — State 489,863 — — 2,799,148 — — Deferred: Federal (789,274 ) — — State (43,355 ) — — (832,629 ) — — Net Income Tax Expense $ 1,966,519 $ — $ — The net deferred tax liabilities consisted of the following for the years ending December 31, 2017 and 2016: December 31, 2017 2016 Deferred tax assets: Net operating losses $ 716,819 $ 20,587,955 Research and development credits — 1,840,505 Deferred rent 4,051 11,902 Accrued compensation 271,437 90,936 Stock-based compensation 1,291,230 2,169,070 Other reserves 72,881 — Basis difference in tangible and intangible assets 2,554,924 6,174,163 Total deferred tax assets 4,911,342 30,874,531 Deferred tax liabilities: Basis difference in intangible assets (535,652 ) — Installment sale (358,844 ) — Total deferred tax liabilities (894,496 ) — Deferred tax asset, net 4,016,846 30,874,531 Less valuation allowance (4,023,990 ) (30,874,531 ) Net deferred taxes $ (7,144 ) $ — As of December 31, 2017, the Company has approximately $3,012,000 of gross net operating losses for Federal and State purposes that will begin to expire in 2031. The income tax expense for the years ended December 31, 2017 and 2016 differed from the amounts computed by applying the U.S. federal income tax rate of 34% as follows: December 31, 2017 2016 2015 Federal statutory rate 34.00 % 34.00 % 34.00 % Permanent differences 0.02 % (0.02 )% (0.02 )% Warrants 0.07 % 0.15 % 4.26 % Acquisition costs 0.08 % — % — % Built in loss 1.52 % — % — % State taxes 27.91 % 3.44 % 5.12 % Research and development credit (1.04 )% 2.18 % 2.69 % Change in statutory rate due to Tax Cuts and Job Act 15.82 % — % — % NOL adjustment per § 382 126.82 % — % — % Other 0.04 % — % 0.03 % Change in valuation allowance (191.03 )% (39.75 )% (46.08 )% Effective income tax rate 14.21 % — % — % The valuation allowance recorded by the Company as of December 31, 2017 and 2016 resulted from the uncertainties of the future utilization of deferred tax assets relating from net operating loss carry forwards for federal and state income tax purposes. Realization of the NOL carry forwards is contingent on future taxable earnings. The net deferred tax asset was reviewed for expected utilization using a “more likely than not” approach by assessing the available positive and negative evidence surrounding its recoverability. Accordingly, a full valuation allowance continues to be recorded against the Company’s net deferred tax asset as of December 31, 2017 and 2016, as it was determined based upon past and projected future losses that it was “more likely than not” that the Company’s net deferred tax assets would not be realized. In future years, if the net deferred tax assets are determined by management to be “more likely than not” to be realized, the recognized tax benefits relating to the reversal of the valuation allowance as of December 31, 2017 and 2016 will be recorded. The Company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately as such time when it is determined that the “more likely than not” criteria is satisfied. Sections 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event of certain ownership changes, as defined. The Company has undergone an ownership change study and has determined that a "change in ownership" as defined by IRC Section 382 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, did occur in February 2012, July 2014, and April 2017. Accordingly, about $52,170,000 of the Company's NOL carryforwards are limited. Based on the Company having undergone multiple ownership changes throughout their history these NOLs are subject to limitation at varying rates each year. Approximately, $2,800,000 of these NOLs can be utilized before the 2017 ownership change and $46,000,000 of NOLs and R&D Credits are expected to expire unused. The deferred tax assets associated with the attributes that will expire without utilization have been written-off. There are $107,702 of NOLs available for use after the April 2017 change in 2017. In subsequent years, the NOLs available from the April 2017 change under section 382 are $158,513 , annually. On December 22, 2017, H.R. 1 (also, known as the Tax Cuts and Jobs Act (the “Act”)) was signed into law. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. federal corporate tax rate from 35% to 21%. As a result, the Company believes that the most significant impact on its consolidated financial statements is the reduction of approximately $2,200,000 in deferred tax assets and liabilities related to net operating losses and other assets. Such reduction is largely offset by changes to the Company’s valuation allowance. The Company is reporting the impacts of the Act provisionally based upon reasonable estimates. In addition, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Act ("SAB 118") which allows the Company to record provisional amounts during a measurement period not to extend beyond one year from the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, ongoing guidance and accounting interpretation are expected over the next year, and significant data and analysis is required to finalize amounts recorded pursuant to the Tax Act, the Company considers the accounting for the deferred tax re-measurements and other items to be incomplete due to the forthcoming guidance and its ongoing analysis of final year-end data and tax positions. The Company expects to complete its analysis within the measurement period in accordance with SAB 118. |
Commitments And Contingencies
Commitments And Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Office Lease In 2013, the Company entered into a lease for new corporate office space location in Baltimore, Maryland. The lease provides for three months of rent abatement and includes escalating rent payments. Rent expense is recognized on a straight‑line basis over the term of the lease. Rent expense under the lease amounted to approximately $142,000 for the years ended December 31, 2017 and 2016 . Pursuant to the terms of such lease, the Company’s future lease obligation is as follows: Year ending December 31, 2018 $ 158,716 2019 — $ 158,716 Obligations to Contract Research Organizations and External Service Providers The Company has entered into agreements with contract research organizations and other external service providers for services, primarily in connection with the clinical trials and development of the Company’s product candidates. The Company was contractually obligated for up to approximately $1.9 million of future services under these agreements as of December 31, 2017 , for which amounts have not been accrued as services have not been performed. The Company’s actual contractual obligations will vary depending upon several factors, including the progress and results of the underlying services. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |
Selected Quarterly Financial Information (Unaudited) | Selected Quarterly Financial Data (Unaudited) The following table sets forth certain unaudited quarterly financial data for 2017 and 2016 . This unaudited information has been prepared on the same basis as the audited information included elsewhere in this Annual Report on Form 10-K and includes all adjustments necessary to present fairly the information set forth therein. Three Months Ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017 (in thousands, except per share data) License and other revenue $ — $ — $ 25,000 $ — Product revenue, net — — — 1,911 Sales force revenue — — — 278 Grant revenue 384 158 38 45 Operating expenses: Cost of product sales — — — 636 Research and development 953 494 965 1,961 General and administrative 1,330 1,439 2,152 3,021 Sales and marketing — — — 973 Change in fair value of warrant liability and unit purchase option liability (4 ) 2 — (28 ) Interest (expense) income, net (58 ) (26 ) 29 31 Net (loss) income after taxes $ (1,961 ) $ (1,799 ) $ 18,721 $ (3,091 ) Net (loss) income per share of common stock, basic $ (0.19 ) $ (0.14 ) $ 0.52 $ (0.11 ) Net (loss) income per share of common stock, diluted $ (0.19 ) $ (0.14 ) $ 0.52 — $ (0.11 ) Three Months Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 (in thousands, except per share data) Operating expenses: Research and development $ 2,293 $ 2,502 $ 4,582 $ 773 General and administrative 2,649 1,636 1,703 1,095 Change in fair value of warrant liability, unit purchase option liability and investor rights obligation (47 ) 91 (101 ) 130 Interest income (expense), net (151 ) (127 ) (104 ) (83 ) Net loss $ (5,140 ) $ (3,524 ) $ (6,169 ) $ (1,639 ) Net loss per share of common stock, basic and diluted $ (0.59 ) $ (0.41 ) $ (0.70 ) $ (0.18 ) |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In November 2017, the Company acquired Zylera Pharmaceuticals, LLC. Each of Zylera's previous owners beneficially own more than 5% of the outstanding common stock of the Company. In addition both individuals serve on the Company’s Board of Directors and one of the individuals served through March 27, 2018 as the Company’s President and COO. Zylera, entered into the First Amended and Restated Distribution Agreement (the “Lachlan Agreement”) with Lachlan Pharmaceuticals, an Irish company controlled by Zylera's previous owners (“Lachlan”), effective December 18, 2015. Pursuant to the Lachlan Agreement, Lachlan named Zylera as its exclusive distributor of Ulesfia in the U.S. and agreed to supply Ulesfia to Zylera exclusively for marketing and sale in the U.S. The Lachlan Agreement provides that all trademark rights used in connection with Ulesfia will remain the intellectual property of Lachlan, and all goodwill associated with the use of the trademarks for the marketing and sale of Ulesfia in the territory will inure to the sole benefit of Lachlan. The Lachlan Agreement term continues as long as (i) there exists an issued and unexpired patent right for the product in the United States, or (ii) no generic version of the product is being sold in the United States. The Lachlan Agreement can be terminated by Zylera upon the introduction of a generic product in the territory or upon the expiration or invalidity of all patent rights for the product in the territory. Zylera is obligated to purchase a minimum of 20,000 units per year, or approximately $ 1,177,000 of product, from Lachlan, subject to certain termination rights. The Lachlan Agreement also requires that Zylera make certain cumulative net sales milestone payments and royalty payments to Lachlan with a $3,000,000 annual minimum payment unless and until there has been a “Market Change” involving a new successful competitive product. Zylera has asserted that a “Market Change” has occurred pursuant to the terms of this agreement and litigation is pending with respect to that assertion). Lachlan is obligated to pay identical amounts to an unrelated third party from which it obtained rights to Ulesfia, and there is an ongoing arbitration proceeding with the ultimate recipient of the royalties over whether a Market Change has occurred. Additionally, Zylera must pay Lachlan management and handling fees that were equal to $3.66 per unit of fully packaged Ulesfia in 2018 and escalate at a rate of 10% annually, as well as reimburse Lachlan for all product liability insurance fees incurred by Lachlan. The aggregate gross amount the Company paid to Lachlan in 2017 under the Lachlan Agreement (from the acquisition date through year-end) was $0 . TRx entered into a Master Quality Agreement with Concordia and Lachlan Pharma Holdings, Ltd., effective January 1, 2014 (the date the First Amended and Restated Exclusive Distribution Agreement between Concordia and Lachlan was effective). The purpose of the agreement is to specify the regulatory, quality, and current good manufacturing practices responsibilities of the respective parties in relation to the maintenance of NDA 22-129 for the supply and marketing of Ulesfia® (benzyl alcohol) 5% lotion pursuant to the First Amended and Restated Exclusive Distribution Agreement between Concordia and Lachlan (the “EDA”). The agreement continues in effect for the term of the EDA, but Concordia or Lachlan may terminate the agreement upon thirty days written notice to the other party, following early termination or expiration of the EDA. On December 10, 2016, Zylera informed Lachlan that a market change had occurred due to the introduction of Arbor Pharmaceutical’s lice product, Sklice®. According to the terms of the distribution agreement if there is a market change, the minimum purchase obligation is void. On June 5, 2017, Lachlan and Zylera entered into joint legal representation along with other unrelated third parties in negotiation and arbitration of dispute with Summers Laboratory, Inc regarding the an ongoing arbitration proceeding with the ultimate recipient of the royalties over whether a Market Change has occurred. The Company has not made any payments to Lachlan in 2017 under the Lachlan Agreement (from the acquisition date through year-end). |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On February 12, 2018, the Company closed an acquisition with Avadel U.S. Holdings, Inc., and certain of its subsidiaries (“Avadel”), to purchase and acquire all rights to Avadel's marketed pediatric products. The acquired products consist of Karbinal™ ER, AcipHex® Sprinkle™, Cefaclor for Oral Suspension, and Flexichamber™. Additionally, Avadel Ireland will develop and provide the Company with four stable product formulations of the Company's choosing utilizing its proprietary LiquiTime™ and Micropump® technology. Under the terms of the asset purchase agreement, the Company purchased Avadel’s interest in the Avadel pediatric assets for nominal cash payment and assumed certain of Avadel’s financial obligations to Deerfield CSF, LLC, which include a $15 million loan due in January 2021 and certain royalty obligations through February 2026. Trailing twelve-month net sales for the acquired products were approximately $8 million . Management is in the process of verifying data related to the Avadel transaction including the valuation and recording of identifiable assets, intangible assets, liabilities assumed and the resulting effects on the value of goodwill, if any. |
Significant Accounting Polici26
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Cerecor Inc. and its wholly-owned subsidiaries after elimination of all intercompany balances and transactions. |
Variable Interest Entities | Variable Interest Entities The primary beneficiary of a variable interest entity (VIE) must consolidate the related assets and liabilities. Certain disclosures are required by sponsors, significant interest holders in VIE’s and potential VIE’s. The Company regularly assesses its relationships with contractual third party and other entities for potential VIE’s. In making this assessment, the Company considers the potential that its contracts or other arrangements provide subordinated financial support, absorb losses or rights to residual returns of the entity and the ability to directly or indirectly make decisions about the entities’ activities. Based on the Company’s assessments performed, management concluded that there were no relationships that constitute a VIE for which the Company was determined to be the primary beneficiary at December 31, 2017. If the Company’s management makes the determination that it is the primary beneficiary of a VIE, the Company will consolidate the statements of operations and financial condition of the VIE into its consolidated financial statements. |
Fair Value Measurements | Fair Value Measurements Fair value is a market-based measurement, not an entity-specific measurement. The objective of a fair value measurement is to estimate the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Such transactions to sell an asset or transfer a liability are assumed to occur in the principal market for that asset or liability, or in the absence of the principal market, the most advantageous market for the asset or liability. Assets and liabilities subject to fair value measurement disclosures are required to be classified according to a three-level fair value hierarchy with respect to the inputs (or assumptions) used to determine fair value. The level in which an asset or liability is disclosed within the fair value hierarchy is based on the lowest level input that is significant to the related fair value measurement in its entirety. The guidance under the fair value measurement framework applies to other existing accounting guidance in the Financial Accounting Standards Board (FASB) codification that requires or permits fair value measurements. Refer to related disclosures in Note 5-Fair Value Measurements. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including estimates related to but not limited to, revenue recognition, share-based compensation, fair value measurements (including those relating to contingent consideration), income taxes, goodwill and other intangible assets, and clinical trial accruals. The Company bases its estimates on historical experience and other market‑specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. |
Net Income (Loss) Per Share, Basic and Diluted | Net Income (Loss) per Share, Basic and Diluted Earnings per share are computed using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the unexercised warrants issued in the Armistice Private Placement transaction are considered participating securities because these warrants contain a non-forfeitable right to dividends irrespective of whether the warrants are ultimately exercised. Under the two-class method, earnings per common share for the common stock and participating warrants are computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of shares of Common stock and participating warrants outstanding for the period. In applying the two-class method, undistributed earnings are allocated to common stock and participating warrants based on the weighted-average shares outstanding during the period. Diluted net income (loss) per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive. Common stock equivalents include: (i) outstanding stock options issued under the Company's Long-Term Incentive Plans which are included under the "treasury stock method" when dilutive, (ii) common stock to be issued upon the assumed conversion of the Company's unit purchase option shares, which are included under the "if-converted method" when dilutive, (iii) the contingently issuable shares in the TRx acquisition if contingencies would have been satisfied if the end of the contingency period were as of the balance sheet date under the “if converted method” when dilutive, and (iv) common stock to be issued upon the exercise of outstanding warrants which are included under the "treasury stock method" when dilutive. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses. In addition, net losses are not allocated to the participating securities. Contingently issuable shares are included in the calculation of basic income (loss) per share as of the beginning of the period in which all the necessary conditions have been satisfied. Contingently issuable shares are included in diluted net income (loss) per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents are valued at cost, which approximates their fair value. Escrowed Cash Receivable On August 14. 2017, the Company sold all of its rights to CERC-501 to Janssen in exchange for initial gross proceeds of $25.0 million , of which $3.75 million was deposited into a twelve month escrow to secure certain indemnification obligations to Janssen Pharmaceuticals, Inc. The Company evaluates its escrowed cash receivable balance each reporting period and establishes a reserve for amounts deemed uncollectible. No reserve was recorded as of December 31, 2017. |
Restricted Cash | Restricted Cash The Company established the Employee Stock Purchase Plan in 2016. Eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the Plan administrator. At December 31, 2017, approximately $2,000 of deposits had been made by employees for potential future stock purchases. In 2016 the Company entered into a bank services pledge agreement with Silicon Valley Bank. In exchange for receiving business credit card services from Silicon Valley Bank, the Company deposited $50,000 as collateral with Silicon Valley Bank. This amount will remain deposited with Silicon Valley Bank for the duration the business credit card services are used by the Company. In addition, the Company has deposited $13,000 with the landlord of the Company's office space as a security deposit. These deposits are recorded as restricted cash, net of current portion on the balance sheet at December 31, 2017 and 2016. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable at December 31, 2017 are comprised of amounts due from customers in the ordinary course of business. Management considers all accounts receivable to be fully collectible at December 31, 2017, and accordingly, no allowance for doubtful accounts has been recorded. Bad debt expense is charged to operations as amounts are determined to be uncollectible. Accounts receivable are written off when deemed uncollectible and recoveries of receivables previously written off are recorded when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than the payment terms negotiated with the customer. The Company generally negotiates payment terms of 30 days. The Company offers wholesale distributors a prompt payment discount, which is typically 2% as an incentive to remit payment within this timeframe. Accounts receivable are stated net of the estimated prompt pay discount which has a balance of $57,705 at December 31, 2017. |
Concentration Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company maintains a portion of its cash and cash equivalent balances in the form of a money market account with a financial institution that management believes to be creditworthy. The Company has no financial instruments with off‑balance sheet risk of loss. Concentration with Customer The Company sells its prescription pharmaceutical products in the United States primarily through wholesale distributors and a specialty contracted pharmacy. Wholesale distributors account for substantially all of the Company’s net product revenues and trade receivables. In addition, the Company earns revenue from sales of its prescription pharmaceutical products directly to retail pharmacies and research and development grants. In August 2017, the Company sold all of its licensing rights for a prior product candidate, CERC-501, to a third party. For the year ended December 31, 2017, the Company’s three largest customers accounted for approximately 40% , 25% and 22% , respectively, of the Company’s total net product revenues from sale of prescription pharmaceutical products. At December 31, 2017, these top three customers represented, in the aggregate, approximately 42% , 26% and 21% , respectively, of the Company’s consolidated accounts receivable balance. The Company did not generate any product revenue for the year ended December 31, 2016. Concentrations of Products and Sales The Company’s five prescription pharmaceutical product lines accounted for 100% of the Company’s total product revenue, net for the year ended December 31, 2017. The Company did not generate any product revenue for the year ended December 31, 2016. Concentration with Vendor The Company’s top five vendors accounted for approximately 60% and 70% of the Company’s accounts payable at December 31, 2017 and December 31, 2016, respectively. |
Inventory | Inventory Inventory consists of finished goods acquired through the Purchase Agreement with TRx on November 17, 2017, and is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company reviews the composition of inventory at each reporting period in order to identify obsolete, slow-moving, quantities in excess of expected demand, or otherwise non-saleable items. If non-saleable items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the decline in value is first recognized. These valuation adjustments are recorded based upon various factors for the Company’s products, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected product demand, the expected shelf life of the product and firm inventory purchase commitments. |
Shipping, Handling, and Freight | Shipping, Handling, and Freight The Company includes the cost of shipping, handling, and freight associated with product sales as part of cost of goods sold. |
Debt Issuance Costs | Debt and Equity Issuance Costs The Company may record debt and equity discounts in connection with raising funds through the issuance of convertible notes or equity instruments. These discounts may arise from (i) the receipt of proceeds less than the face value of the convertible notes or equity instruments, (ii) allocation of proceeds to beneficial conversion features and/or (iii) recording derivative liabilities related to embedded features. For debt instruments, these costs are amortized over the life of the debt to interest expense utilizing the effective interest method. For equity instruments, these costs are netted against the gross proceeds received from the issuance of the equity. |
Property and Equipment | Property and Equipment Property and equipment consists of computers, office equipment, and furniture and is recorded at cost. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred. Property and equipment are depreciated on a straight‑line basis over their estimated useful lives. The Company uses a life of four years for computers and software, and five years for equipment and furniture. Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. |
Goodwill | Goodwill Goodwill relates to the amount that arose in connection with the acquisition of TRx. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations. Goodwill is not amortized but is evaluated for impairment on an annual basis or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of the Company's reporting unit below its carrying amount. |
Intangible Assets | Intangible Assets Intangible assets with definite useful lives are amortized over their estimated useful lives and reviewed for impairment if certain events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. Impairment losses are measured and recognized to the extent the carrying value of such assets exceeds their fair value. The Company recorded no impairment losses during the year ended December 31, 2017. |
Contingent Consideration | Contingent Consideration The Company’s TRx acquisition involves the potential for future payment of consideration that is contingent upon the achievement of operational and commercial milestones. The preliminary fair value of contingent consideration liabilities was determined at the acquisition date using unobservable level 3 inputs. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and the risk-adjusted discount rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is remeasured at current fair value with changes recorded in the consolidated statements of operations. Changes in any of the inputs may result in a significantly different fair value adjustment. |
Revenue Recognition | License and Other Revenue The Company recognizes revenues from collaboration, license or other research or sale arrangements when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue from potential future milestones, if substantive, is recognized when the milestone is achieved and the payment is due and collectible. The sale of the CERC-501 license to Janssen Pharmaceuticals, Inc. in August 2017 was the sole source of license and other revenue. Grant Revenue The Company recognizes grant revenue when there is (i) reasonable assurance of compliance with the conditions of the grant and (ii) reasonable assurance that the grant will be received. In April 2016, the Company received a research and development grant from the National Institute on Drug Abuse ("NIDA") at the National Institutes of Health ("NIH") to provide additional resources for the period of May 2016 through April 2017 for the Company’s now completed Phase 2 clinical trial for CERC-501, “ A Randomized, Double-Blind, Placebo-Controlled, Crossover Design Study of CERC-501 in a Human Laboratory Model of Smoking Behavior .” The amount of the NIDA award was $1.02 million . Additionally, in July 2016, the Company received a research and development grant from the National Institute on Alcohol Abuse and Alcoholism ("NIAAA") at the NIH to provide additional resources for the period of July 2016 through June 2017 to progress the development of CERC-501 for the treatment of alcohol use disorder. The amount of the NIAAA award was $1.0 million . The Company recognizes revenue under grants in earnings on a systemic basis in the period the related expenditures for which the grants are intended to compensate are incurred. As such, the Company recognized revenue in the amounts of $0.6 million for the year ended December 31, 2017 for the NIAAA award and $1.02 million and $132,000 for the year ended December 31, 2016 for the NIDA award and NIAAA award, respectively. As of December 31, 2016, the Company had received the full $1.02 million of the revenue earned under the NIDA award. Product Revenues, net Product sales revenue is recognized when title has transferred to the customer and the customer has assumed the risks and rewards of ownership, which is typically on delivery to the customer and collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (i) the seller’s price to the buyer is substantially fixed or determinable at the date of sale, (ii) the buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product, (iii) the buyer’s obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product, (iv) the buyer acquiring the product for resale has economic substance apart from that provided by the seller, (v) the seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (vi) the amount of future returns can be reasonably estimated. Revenues from sales of products are recorded net of estimated allowances for returns, wholesaler fees, prompt payment discounts, customer coupon redemptions, government rebates, and rebates under managed care plans. Provisions for returns, specialty distributor fees, wholesaler fees, government rebates, and rebates under managed care plans are included within current liabilities in the consolidated balance sheet. Provisions for prompt payment discounts are generally shown as a reduction in accounts receivable. Calculating these items involves estimates and judgments based on sales or invoice data, contractual terms, historical utilization rates, new information regarding changes in these programs’ regulations and guidelines that would impact the amount of the actual rebates, our expectations regarding future utilization rates for these programs, and channel inventory data. Sales Force Revenue Pursuant to a Marketing Agreement with Pharmaceutical Associates, Inc . (“PAI ”), the Company receives a monthly marketing fee to promote, market and sell certain products on behalf of PAI. The Company also receives a matching fee payment for each month of the term of the Marketing Agreement if certain provisions calculated in accordance with the terms and inputs set forth in the Marketing Agreement are met. Marketing fees and any matching payments are recognized as sale force revenue when all the performance obligations have been satisfied and earned. The Company and PAI also share the net revenues from sales of certain products, after reimbursing certain expenditures, in a manner designed to achieve a 50/50 split of net revenues above a “break even” point, calculated in accordance with the terms and inputs set forth in the agreement. We recognize these revenue sharing payments as earned under the terms of the agreement when collectability is reasonably assured. |
Cost of Product Sales | Cost of Product Sales Cost of product sales is comprised of (i) costs to acquire products sold to customers; (ii) royalty, license payments and other agreements granting the Company rights to sell related products; (iii) distribution costs incurred in the sale of products; and (iv) the value of any write-offs of obsolete or damaged inventory that cannot be sold. The Company acquired the rights to sell certain of its commercial products through license and assignment agreements with the original developers or other parties with interests in these products. These agreements obligate the Company to make payments under varying payment structures based on its net revenue from related products. |
Research and Development | Research and Development Research and development costs are expensed as incurred. These costs include, but are not limited to, employee‑related expenses, including salaries, benefits and stock‑based compensation of research and development personnel; expenses incurred under agreements with contract research organizations and investigative sites that conduct clinical trials and preclinical studies; the cost of acquiring, developing and manufacturing clinical trial materials; other supplies; facilities, depreciation and other expenses, which include direct and allocated expenses for rent, utilities and insurance; and costs associated with preclinical activities and regulatory operations. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to the Company by its vendors, such as clinical research organizations, with respect to their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be. |
Sales and Marketing Expense | Sales and Marketing Expenses Sales and marketing expenses consist primarily of professional fees, advertising and marketing cost and salaries, benefits and related costs for sales and sales support personnel, including stock‑based compensation and travel expenses. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non‑owner sources. Comprehensive loss was equal to net loss for all periods presented. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Deferred tax assets primarily include net operating loss and tax credit carryforwards, accrued expenses not currently deductible and the cumulative temporary differences related to certain research and patent costs. Certain tax attributes, including net operating losses and research and development credit carryforwards, may be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code (the "Code"). See Note 15 for further information. The portion of any deferred tax asset for which it is more likely than not that a tax benefit will not be realized must then be offset by recording a valuation allowance. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. The amount for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2017, the Company does not believe any material uncertain tax positions are present. On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act,” or TCJA, that significantly reforms the Internal Revenue Code of 1986, as amended. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. See the tax footnote below for further discussion related to the tax impact to the Company. |
Stock-Based Compensation | Stock‑Based Compensation The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock‑based awards made to employees and non‑employees, including employee stock options, in the statements of operations. For stock options issued to employees and members of the board of directors for their services on the board of directors, the Company estimates the grant date fair value of each option using the Black‑Scholes option pricing model. The use of the Black‑Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk‑free interest rates and expected dividend yields of the common stock. For awards subject to service‑based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock‑based compensation expense equal to the grant date fair value of stock options on a straight‑line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised. For stock options issued to non‑employees, the Company initially measures the options at their grant date fair values and revalues as the underlying equity instruments vest and are recognized as expense over the earlier of the period ending with the performance commitment date or the date the services are completed in accordance with the provisions of ASC 718 and ASC 505‑50, Equity‑Based Payments to Non‑Employees (“ASC 505‑50”). |
Clinical Trial Expense Accruals | Clinical Trial Expense Accruals As part of the process of preparing its financial statements, the Company is required to estimate its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate trial expenses in its financial statements by matching those expenses with the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by subject progression and the timing of various aspects of the trial. The Company determines accrual estimates by taking into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of trials, or the services completed. During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third‑party vendors. Although the Company does not expect its estimates to be materially different from amounts actually incurred, its understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in it reporting amounts that are too high or too low for any particular period. |
Segment Information | Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision‑making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is currently represented by the Company's management team which consists of our Chief Executive Officer, Chief Business Officer and Chief Financial Officer. The Company and the management team view the Company’s operations and manage its business as one operating segment. All long‑lived assets of the Company reside in the United States. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2016, the FASB issued ASU No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control , which amends the consolidation guidance on how a reporting entity that is a single decision maker of a variable interest entity should treat indirect interest in the entity held through related parties that are under common control. This guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods, with early adoption permitted. We adopted this standard in connection with our acquisition of TRx. The adoption of this standard did not have a material impact on our financial statements. In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting . The guidance is intended to simplify several areas of accounting for share-based compensation, classification on the statement of cash flows and forfeitures. The new standard was adopted by the Company effective January 1, 2017 and its adoption will have no impact on its financial position, results of operations or cash flows. Consistent with the update, the Company accounts for forfeitures as they occur as opposed to being estimated at the time of grant and revised . In connection with adoption, the Company has elected to account for forfeitures as they occur as opposed to being estimated at the time of grant and revised. In July 2015, the FASB issued ASU No. 2015-11, “ Simplifying the Measurement of Inventory ” (ASU 2015-11). ASU 2015-11 states that an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. For public entities, ASU 2015-11is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this standard in connection with our acquisition of TRx. The adoption of this standard did not have a material impact on our consolidated financial statements and accompanying notes. In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes . This ASU simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent amounts in the consolidated balance sheets. Such amounts were previously required to be classified as current and noncurrent assets and liabilities. The Company adopted ASU 2015-17 effective January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements and accompanying notes. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09 , Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. ASU 2014-09 provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additional disclosures are required regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In addition, ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. Under the new guidance, there are specific criteria to determine if a performance obligation should be recognized over time or at a point in time. In August 2015, the FASB issued ASU No. 2015-04, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with Customers . The update addresses the implementation guidance on principal versus agent considerations in ASU 2014-09 . The ASU clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. Subsequently, the FASB has issued the following updates related to ASU 2014-09 and ASU No. 2016-08: ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”); ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”); and, ASU 2017-05- Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05). The Company must adopt ASU 2016-10, ASU 2016-12, ASU 2016-20 and ASU 2017-05 with ASU 2014-09 (collectively, the “new revenue standards”) effective January 1, 2018 (the “effective date”) using either a “full retrospective” approach for all periods presented in the period of adoption or a “modified retrospective” approach. On January 1, 2018, the Company adopted the new revenue standards for all contracts not completed as of the adoption date using the modified retrospective method. The Company has completed an analysis of its existing contracts with customers and assessed the differences in accounting for such contracts under the new revenue standards compared with current revenue accounting standards. The Company has identified and implemented appropriate changes to its business policies, processes, and controls to support the adoption, recognition and disclosures under the new revenue standards. Based on the Company’s review of current customer contracts, the Company does not expect the implementation of the new revue standards to have a material quantitative impact on its consolidated financial statements as the timing of revenue recognition for product sales is not expected to significantly change. In addition, the Company does not expect a material cumulative effect adjustment to Retained earnings upon adoption of the new revenue standards on January 1, 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02'). This guidance revises existing practice related to accounting for leases under ASC 840, Leases (“ASC 840”) for both lessees and lessors. The new guidance in ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for nearly all leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating leases or capital leases. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while capital leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently evaluating the potential impact of the adoption of this standard on its financial statements. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which reduces existing diversity in the classification of certain cash receipts and cash payments on the statements of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted. The Company expects to adopt this standard on January 1, 2018 and does not expect its adoption will have a significant impact on the Company’s financial statements. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (" ASU 2016-18" ) . The guidance is intended to address the diversity that currently exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The new standard requires that entities show the changes in the total of cash and cash equivalents, restricted cash and restricted cash equivalents on the statement of cash flows and no longer present transfers between cash and cash equivalents, restricted cash and restricted cash equivalents on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. The Company expects to adopt this standard on January 1, 2018 and does not expect its adoption will have a significant impact on the Company’s financial statements. In October 2016, the FASB issued ASU 2016-16, “ Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory ,” which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company does not expect the adoption of ASU 2016-16 to have a significant impact on the Company’s financial statements. In January 2017, the FASB issued ASU No. 2017-04 (ASU 2017-04) “ Intangibles-Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment .” ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of this standard on its financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). The standard provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business. ASU 2017-01 is effective for fiscal periods beginning after December 15, 2017 (including interim periods within those periods) with early adoption permitted. The Company expects to adopt this standard on January 1, 2018 and does not expect its adoption will have a significant impact on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting (“ASU 2017-09”) to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for all companies for annual periods and interim periods within those annual periods, beginning on or after December 15, 2017. The Company expects to adopt this standard on January 1, 2018 and does not expect its adoption will have a significant impact on the Company’s financial statements. |
Net Loss Per Share Of Common St
Net Loss Per Share Of Common Stock, Basic And Diluted (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of the computation of basic and diluted net loss per share of Common Stock | The following table sets forth the computation of basic and diluted net loss per share of common stock for the years ended December 31, 2017 , 2016 and 2015 which includes both classes of participating securities: Year ended December 31, Net income (loss) per share, basic and diluted calculation: 2017 2016 2015 Basic income (loss) per share Net income (loss) $ 11,869,823 $ (16,471,603 ) $ (10,490,103 ) Undistributable earnings (loss) allocable to common shares $ 7,772,084 $ (16,471,603 ) $ (10,490,103 ) Undistributable earnings (loss) allocable to participating warrants $ 4,097,739 $ — $ — Weighted average shares, basic Common stock 18,410,005 8,830,396 2,226,023 Participating warrants 9,706,458 — — 28,116,463 8,830,396 2,226,023 Basic income (loss) per share: Common stock $ 0.42 $ (1.87 ) $ (4.71 ) Participating warrants $ 0.42 $ — $ — Diluted income (loss) per share: Net income (loss) attributable to common shares $ 7,772,084 $ (16,471,603 ) $ (10,490,103 ) Net income (loss) reallocated 49,642 — — Undistributed earnings (loss) allocable to common shares $ 7,821,726 $ (16,471,603 ) $ (10,490,103 ) Weighted average number of shares attributable to common shareholders - basic 18,410,005 8,830,396 2,226,023 Effect of dilutive securities: Stock options 61,510 — — Contingently issuable shares 283,284 — — Potentially dilutive shares 344,794 — — Weighted average number of shares - diluted 18,754,799 8,830,396 2,226,023 Diluted income (loss) per share $ 0.42 $ (1.87 ) $ (4.71 ) |
Schedule of anti-dilutive securities excluded from computation of diluted weighted shares outstanding | The following outstanding securities at December, 31, 2017 , 2016 and 2015 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive: December 31, 2017 2016 2015 Stock options 2,812,006 1,849,359 959,188 Non-participating warrants on common stock 4,661,145 7,400,934 7,400,934 Underwriters' unit purchase option 40,000 40,000 40,000 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of Consideration Transferred | The acquisition-date fair value of the consideration transferred is as follows: At November 17, 2017 Cash $ 18,900,000 Common stock (including contingently issuable shares) 8,514,419 Contingent payments 2,576,633 Total consideration transferred $ 29,991,052 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition: At November 17, 2017 Fair value of assets acquired: Current assets: Cash and cash equivalents $ 11,068 Accounts receivable, net 2,872,545 Inventory 495,777 Prepaid expenses and other current assets 134,281 Identifiable intangible assets Acquired product marketing rights - Metafolin 10,465,000 PAI sales and marketing agreement 2,334,000 Acquired product marketing rights - Millipred 4,714,000 Acquired product marketing rights - Ulesfia 555,000 Total assets acquired 21,581,671 Fair value of liabilities assumed: Accounts payable 192,706 Accrued expenses and other current liabilities 4,850,422 Deferred tax liability 839,773 Total liabilities assumed 5,882,901 Total identifiable net assets 15,698,770 Fair value of consideration transferred 29,991,052 Goodwill $ 14,292,282 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The preliminary fair value of intangible assets includes the following: At November 17, 2017 Acquired product marketing rights - Metafolin $ 10,465,000 PAI Sales & Marketing Agreement 2,334,000 Acquired product marketing rights - Millipred 4,714,000 Acquired product marketing rights - Ulesfia 555,000 Fair value of identified intangible assets $ 18,068,000 |
Business Acquisition, Pro Forma Information | The following supplemental unaudited pro forma information presents Cerecor's financial results as if the acquisition of TRx had occurred on January 1, 2016: Years Ended December 31, 2017 2016 Total revenues, net $ 43,602,212 $ 19,586,923 Net income $ 14,564,584 $ (19,499,137 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities that are measured at fair value on a recurring basis | The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s assets and liabilities that are measured at fair value on a recurring basis: December 31, 2017 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 471,183 $ — $ — Liabilities Contingent consideration $ — $ — $ 2,576,633 Warrant liability $ — $ — $ 8,185 Unit purchase option liability $ — $ — $ 26,991 December 31, 2016 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 4,758,539 $ — $ — Liabilities Warrant liability $ — $ — $ 5,501 Unit purchase option liability $ — $ — $ 51 *Investments in money market funds are reflected in cash and cash equivalents on the accompanying Balance Sheets. |
Summary of changes in the fair value of the Level 3 valuation for the Warrant Liability and the Investor Rights Obligation | The tables presented below are a summary of changes in the fair value of the Company’s Level 3 valuations for the warrant liability, unit purchase option liability and investor rights obligation for the years ended December 31, 2017 and 2016 : Warrant Unit purchase Contingent liability option liability consideration Total Balance at December 31, 2016 $ 5,501 $ 51 $ — $ 5,552 Issuance of contingent consideration — — 2,576,633 2,576,633 Change in fair value 2,684 26,940 — 29,624 Balance at December 31, 2017 $ 8,185 $ 26,991 $ 2,576,633 $ 2,611,809 Warrant Unit purchase Investor rights liability option liability obligation Total Balance at December 31, 2015 $ 27,606 $ 50,571 $ — $ 78,177 Change in fair value (22,105 ) (50,520 ) — (72,625 ) Balance at December 31, 2016 $ 5,501 $ 51 $ — $ 5,552 |
Property And Equipment (Tables)
Property And Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 Furniture and equipment $ 58,126 $ 58,126 Computers and software 96,133 72,808 Total property and equipment 154,259 130,934 Less accumulated depreciation (109,647 ) (87,691 ) Property and equipment, net $ 44,612 $ 43,243 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill for the year ended December 31, 2017 was as follows: Goodwill balance at December 31, 2016 $ — Goodwill from acquisition of TRx Pharmaceuticals 14,292,282 Goodwill balance at December 31, 2017 $ 14,292,282 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | For the year ended December 31, 2017, changes in the gross carrying amount of intangible assets consisted of the following: Intangible assets at December 31, 2016 $ 0 Intangible assets from acquisition of TRx Pharmaceuticals 18,068,000 Intangible assets at December 31, 2017 $ 18,068,000 |
Schedule of Finite-Lived Intangible Assets | The following is a summary intangible assets held by the Company at: December 31, 2017 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Avg.Remaining Life (in years) Acquired product marketing rights $ 15,734,000 $ 257,645 $ 15,476,355 11.2 Sales and marketing agreement 2,334,000 145,875 2,188,125 1.9 Total Intangible Assets $ 18,068,000 $ 403,520 $ 17,664,480 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated aggregate amortization of intangible assets based on the preliminary values assigned as of December 31, 2017, for each of the five succeeding years and thereafter is as follows: Estimated Amortization For the Years Ending December 31, Expense 2018 $ 3,228,167 2019 3,082,292 2020 2,038,030 2021 1,728,867 2022 697,667 Thereafter 6,889,457 Total amortization expense $ 17,664,480 |
Accrued Expenses And Other Cu33
Accrued Expenses And Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities as of December 31, 2017 and 2016 consisted of the following: December 31, 2017 2016 Sales returns and allowances $ 4,146,217 $ — Compensation and benefits 1,401,514 272,601 General and administrative 1,001,454 160,116 Royalties payable 743,010 — Research and development expenses 299,480 315,937 Other 256,634 — Accrued interest — 193,781 Total accrued expenses and other current liabilities $ 7,848,309 $ 942,435 |
Term Loan (Tables)
Term Loan (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Debt consisted of the following as of December 31, 2017 and 2016 : December 31, December 31, 2017 2016 Term loan $ — $ 2,374,031 Less: debt discount — (20,364 ) Term Loan, net of debt discount — 2,353,667 Less: current portion, net of debt discount — (2,353,667 ) Long term debt, net of current portion and debt discount $ — $ — |
Capital Structure (Tables)
Capital Structure (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CAPITAL STRUCTURE | |
Schedule of outstanding common stock warrants | At December 31, 2017 , the following common stock warrants were outstanding: Number of shares Exercise price Expiration underlying warrants per share date 80,966 $ 28.00 August 2018 4,551,900 $ 4.55 October 2018 40,000* $ 5.23 October 2018 3,571 $ 28.00 December 2018 22,328* $ 8.40 October 2020 2,380* $ 8.68 May 2022 14,285,714 $ 0.40 June 2022 18,986,859 *Accounted for as a liability instrument (see Note 5) |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
Schedule of stock-based compensation expense | Stock-based compensation expense includes stock options and ESPPP shares. The amount of stock based compensation expense recognized for the years ending December 31, 2017 , 2016 and 2015 was as follows: Year Ended December 31, 2017 2016 2015 Research and development $ 156,047 $ 141,247 $ 67,021 General and administrative 1,001,205 1,553,644 327,727 Total stock-based compensation $ 1,157,252 $ 1,694,891 $ 394,748 |
Summary of option activity | A summary of option activity for the years ended December 31, 2017 and 2016 is as follows: Options Outstanding Number of shares Weighted average exercise price Grant date fair value of options Weighted average remaining contractual term (in years) Balance, January 1, 2016 959,188 $ 7.68 7.51 Granted 915,242 $ 3.35 $ 2,155,234 Forfeited (25,071 ) $ 5.04 Balance, December 31, 2016 1,849,359 $ 5.57 8.44 Granted 1,020,377 $ 0.94 $ 669,816 Forfeited (46,247 ) $ 3.57 Balance, December 31, 2017 2,823,489 $ 3.93 7.29 Vested and expected to vest at December 31, 2017 2,823,489 $ 3.93 7.29 Exercisable at December 31, 2017 1,762,908 $ 5.02 6.16 |
Schedule of fair value assumptions for options | The assumptions used to determine the grant date fair value of stock options granted to employees and non-employee directors are as follows: Year Ended December 31, 2017 2016 2015 Risk-free interest rate 1.85 % — 2.38 % 1.01 % — 1.93 % 1.64 % — 1.97 % Expected term of options (in years) 5.0 — 6.25 5.0 — 6.25 5.00 — 6.25 Expected stock price volatility 55 % — 100.0 % 80.00 % — 100.0 % 70.0 % Expected annual dividend yield — % — — % — % — — % — % — — % |
Schedule of unrecognized compensation expense | As of December 31, 2017 , there was approximately $1,342,072 of total unrecognized compensation expense related to unvested options granted under the Plan to be recognized as follows: Year ending December 31, 2018 $ 732,441 2019 352,657 2020 188,351 2021 68,623 $ 1,342,072 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The income tax provision consisted of the following for the years ending December 31, 2017, 2016 and 2015: 2017 2016 2015 Current: Federal $ 2,309,285 $ — $ — State 489,863 — — 2,799,148 — — Deferred: Federal (789,274 ) — — State (43,355 ) — — (832,629 ) — — Net Income Tax Expense $ 1,966,519 $ — $ — |
Schedule of components of deferred tax assets | The net deferred tax liabilities consisted of the following for the years ending December 31, 2017 and 2016: December 31, 2017 2016 Deferred tax assets: Net operating losses $ 716,819 $ 20,587,955 Research and development credits — 1,840,505 Deferred rent 4,051 11,902 Accrued compensation 271,437 90,936 Stock-based compensation 1,291,230 2,169,070 Other reserves 72,881 — Basis difference in tangible and intangible assets 2,554,924 6,174,163 Total deferred tax assets 4,911,342 30,874,531 Deferred tax liabilities: Basis difference in intangible assets (535,652 ) — Installment sale (358,844 ) — Total deferred tax liabilities (894,496 ) — Deferred tax asset, net 4,016,846 30,874,531 Less valuation allowance (4,023,990 ) (30,874,531 ) Net deferred taxes $ (7,144 ) $ — |
Reconciliation of income tax expenses between federal statutory rate and effective income tax rate | The income tax expense for the years ended December 31, 2017 and 2016 differed from the amounts computed by applying the U.S. federal income tax rate of 34% as follows: December 31, 2017 2016 2015 Federal statutory rate 34.00 % 34.00 % 34.00 % Permanent differences 0.02 % (0.02 )% (0.02 )% Warrants 0.07 % 0.15 % 4.26 % Acquisition costs 0.08 % — % — % Built in loss 1.52 % — % — % State taxes 27.91 % 3.44 % 5.12 % Research and development credit (1.04 )% 2.18 % 2.69 % Change in statutory rate due to Tax Cuts and Job Act 15.82 % — % — % NOL adjustment per § 382 126.82 % — % — % Other 0.04 % — % 0.03 % Change in valuation allowance (191.03 )% (39.75 )% (46.08 )% Effective income tax rate 14.21 % — % — % |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future lease obligations | Pursuant to the terms of such lease, the Company’s future lease obligation is as follows: Year ending December 31, 2018 $ 158,716 2019 — $ 158,716 |
Selected Quarterly Financial 39
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |
Schedule of certain unaudited quarterly financial data | The following table sets forth certain unaudited quarterly financial data for 2017 and 2016 . This unaudited information has been prepared on the same basis as the audited information included elsewhere in this Annual Report on Form 10-K and includes all adjustments necessary to present fairly the information set forth therein. Three Months Ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017 (in thousands, except per share data) License and other revenue $ — $ — $ 25,000 $ — Product revenue, net — — — 1,911 Sales force revenue — — — 278 Grant revenue 384 158 38 45 Operating expenses: Cost of product sales — — — 636 Research and development 953 494 965 1,961 General and administrative 1,330 1,439 2,152 3,021 Sales and marketing — — — 973 Change in fair value of warrant liability and unit purchase option liability (4 ) 2 — (28 ) Interest (expense) income, net (58 ) (26 ) 29 31 Net (loss) income after taxes $ (1,961 ) $ (1,799 ) $ 18,721 $ (3,091 ) Net (loss) income per share of common stock, basic $ (0.19 ) $ (0.14 ) $ 0.52 $ (0.11 ) Net (loss) income per share of common stock, diluted $ (0.19 ) $ (0.14 ) $ 0.52 — $ (0.11 ) Three Months Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 (in thousands, except per share data) Operating expenses: Research and development $ 2,293 $ 2,502 $ 4,582 $ 773 General and administrative 2,649 1,636 1,703 1,095 Change in fair value of warrant liability, unit purchase option liability and investor rights obligation (47 ) 91 (101 ) 130 Interest income (expense), net (151 ) (127 ) (104 ) (83 ) Net loss $ (5,140 ) $ (3,524 ) $ (6,169 ) $ (1,639 ) Net loss per share of common stock, basic and diluted $ (0.59 ) $ (0.41 ) $ (0.70 ) $ (0.18 ) |
Business (Details)
Business (Details) | Feb. 16, 2018USD ($) | Aug. 14, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)product | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Feb. 12, 2018USD ($) | Dec. 31, 2014USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||
Number of products in development | product | 3 | |||||||||||||||
License and other revenue | $ 25,000,000 | $ 25,000,000 | $ 0 | $ 25,000,000 | $ 0 | $ 0 | $ 25,000,000 | $ 0 | $ 0 | |||||||
Escrowed cash receivable | $ 3,750,000 | $ 3,750,000 | 3,752,390 | $ 0 | 3,752,390 | 0 | ||||||||||
Escrow period | 12 months | 12 months | ||||||||||||||
Potential future regulatory milestone payment | $ 20,000,000 | |||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Net income (loss) | (3,091,000) | $ 18,721,000 | $ (1,799,000) | $ (1,961,000) | (1,639,000) | $ (6,169,000) | $ (3,524,000) | $ (5,140,000) | 11,869,823 | (16,471,603) | (10,490,103) | |||||
Cash flows from operations | 12,519,405 | (14,573,138) | (10,163,380) | |||||||||||||
Accumulated deficit | (58,165,260) | (70,035,083) | (58,165,260) | (70,035,083) | ||||||||||||
Cash and cash equivalents | $ 2,472,187 | $ 5,127,958 | $ 2,472,187 | $ 5,127,958 | $ 21,161,967 | $ 11,742,349 | ||||||||||
Avadel | Subsequent Event | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Long-term debt acquired | $ 15,000,000 | $ 15,000,000 | ||||||||||||||
Product royalty | 15.00% |
Significant Accounting Polici41
Significant Accounting Policies (Details) | Aug. 14, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Sep. 30, 2013USD ($) | Dec. 31, 2017USD ($)class_of_stocksegmentproduct_lineshares | Jun. 30, 2017USD ($) | Apr. 30, 2017USD ($) | Dec. 31, 2016USD ($)class_of_stockshares | Dec. 31, 2015USD ($) |
Net Loss Per Share, Basic and Diluted | ||||||||||||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | shares | 0 | 0 | ||||||||||
Escrowed Cash Receivable [Abstract] | ||||||||||||
Proceeds on sale of rights | $ 25,000,000 | $ 25,000,000 | $ 0 | $ 25,000,000 | $ 0 | $ 0 | $ 25,000,000 | $ 0 | $ 0 | |||
Escrowed cash receivable | $ 3,750,000 | $ 3,750,000 | 3,752,390 | 3,752,390 | 0 | |||||||
Escrow period | 12 months | 12 months | ||||||||||
Reserve on escrow receivable | 0 | 0 | ||||||||||
Restricted Cash | ||||||||||||
Deposits | 50,000 | |||||||||||
Security deposit required, end of third year | $ 13,000 | |||||||||||
Accounts Receivable | ||||||||||||
Allowance for Doubtful Accounts Receivable | 0 | $ 0 | ||||||||||
Accounts Receivable, Payment Terms | 30 days | |||||||||||
Sales discounts, percent | 2.00% | |||||||||||
Sales discounts, amount | $ 57,705 | |||||||||||
Inventory | ||||||||||||
Reserves for excess and obsolete inventory | 178,346 | 178,346 | 0 | |||||||||
Intangible Assets | ||||||||||||
Impairment of Intangible Assets, Finite-lived | 0 | |||||||||||
Grant Revenue [Abstract] | ||||||||||||
Revenue recognized on grant | 45,000 | 38,000 | 158,000 | 384,000 | 624,569 | 1,152,987 | 0 | |||||
Concentration Risk | ||||||||||||
Product revenue, net | 1,911,000 | $ 0 | $ 0 | $ 0 | $ 1,910,403 | $ 0 | $ 0 | |||||
Number of product lines | product_line | 5 | |||||||||||
Clinical Trial Expense Accruals | ||||||||||||
Number of material adjustments to prior period estimates of accrued expenses | class_of_stock | 0 | 0 | ||||||||||
Segment Reporting Information, Additional Information [Abstract] | ||||||||||||
Number of operating segments | segment | 1 | |||||||||||
Equipment | ||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||
Computer, software, equipment and furniture, useful life | 5 years | |||||||||||
Computers and software | ||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||
Computer, software, equipment and furniture, useful life | 4 years | |||||||||||
Furniture and Fixtures | ||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||
Computer, software, equipment and furniture, useful life | 5 years | |||||||||||
National Institute On Drug Abuse (NIDA) | ||||||||||||
Grant Revenue [Abstract] | ||||||||||||
Research and development arrangement contract to perform for others | $ 1,020,000 | |||||||||||
Revenue recognized on grant | $ 600,000 | $ 1,020,000 | ||||||||||
National Institute on Alcohol Abuse and Alcoholism (NIAAA) | ||||||||||||
Grant Revenue [Abstract] | ||||||||||||
Research and development arrangement contract to perform for others | $ 1,000,000 | |||||||||||
Revenue recognized on grant | $ 132,000 | |||||||||||
Employee Stock Purchase Plan (ESPP) | ||||||||||||
Restricted Cash | ||||||||||||
Certificate of deposit supporting lease obligation | $ 2,000 | $ 2,000 | ||||||||||
Sales Revenue | Product Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 100.00% | |||||||||||
Accounts Payable | Vendor Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 60.00% | 70.00% | ||||||||||
Major Customer Number One | Sales Revenue | Customer Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 40.00% | |||||||||||
Major Customer Number One | Accounts Receivable | Customer Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 42.00% | |||||||||||
Major Customer Number Two | Sales Revenue | Customer Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 25.00% | |||||||||||
Major Customer Number Two | Accounts Receivable | Customer Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 26.00% | |||||||||||
Major Customer Number Three | Sales Revenue | Customer Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 22.00% | |||||||||||
Major Customer Number Three | Accounts Receivable | Customer Concentration Risk | ||||||||||||
Concentration Risk | ||||||||||||
Concentration risk percentage | 21.00% |
Net Loss Per Share Of Common 42
Net Loss Per Share Of Common Stock, Basic And Diluted (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic income (loss) per share | |||||||||||
Net income (loss) | $ (3,091,000) | $ 18,721,000 | $ (1,799,000) | $ (1,961,000) | $ (1,639,000) | $ (6,169,000) | $ (3,524,000) | $ (5,140,000) | $ 11,869,823 | $ (16,471,603) | $ (10,490,103) |
Weighted average shares of common stock outstanding, basic (in shares) | 18,410,005 | 8,830,396 | 2,226,023 | ||||||||
Basic income (loss) per share (in dollars per share) | $ (0.11) | $ 0.52 | $ (0.14) | $ (0.19) | $ 0.42 | $ (1.87) | $ (4.71) | ||||
Diluted income (loss) per share: | |||||||||||
Net income (loss) attributable to common shares | $ 7,772,084 | $ (16,471,603) | $ (10,490,103) | ||||||||
Net income (loss) reallocated | 49,642 | 0 | 0 | ||||||||
Undistributed earnings (loss) allocable to common shares | $ 7,821,726 | $ (16,471,603) | $ (10,490,103) | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options (in shares) | 61,510 | 0 | 0 | ||||||||
Underwriters' unit purchase options (in shares) | 283,284 | 0 | 0 | ||||||||
Potentially dilutive shares (in shares) | 344,794 | 0 | 0 | ||||||||
Weighted average number of shares of common stock outstanding, diluted (in shares) | 18,754,799 | 8,830,396 | 2,226,023 | ||||||||
Diluted income (loss) per share (in dollars per share) | $ (0.11) | $ 0.52 | $ (0.14) | $ (0.19) | $ 0.42 | $ (1.87) | $ (4.71) | ||||
Common stock warrants | |||||||||||
Basic income (loss) per share | |||||||||||
Undistributed earnings (loss) allocated to participating securities | $ 4,097,739 | $ 0 | $ 0 | ||||||||
Weighted average shares of common stock outstanding, basic (in shares) | 9,706,458 | 0 | 0 | ||||||||
Basic income (loss) per share (in dollars per share) | $ 0.42 | $ 0 | $ 0 | ||||||||
Common stock | |||||||||||
Basic income (loss) per share | |||||||||||
Undistributed earnings (loss) allocated to participating securities | $ 7,772,084 | $ (16,471,603) | $ (10,490,103) | ||||||||
Weighted average shares of common stock outstanding, basic (in shares) | 18,410,005 | 8,830,396 | 2,226,023 | ||||||||
Common Stock And Participating Warrants | |||||||||||
Basic income (loss) per share | |||||||||||
Weighted average shares of common stock outstanding, basic (in shares) | 28,116,463 | 8,830,396 | 2,226,023 |
Net Loss Per Share Of Common 43
Net Loss Per Share Of Common Stock, Basic And Diluted - Anti-dilutive Securities (Details) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Anti-dilutive securities | |||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 0 | 0 | |
Stock options | |||
Anti-dilutive securities | |||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 2,812,006 | 1,849,359 | 959,188 |
Non-participating warrants on common stock | |||
Anti-dilutive securities | |||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 4,661,145 | 7,400,934 | 7,400,934 |
Underwriters' unit purchase option | |||
Anti-dilutive securities | |||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 40,000 | 40,000 | 40,000 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) - USD ($) | Nov. 17, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 14,292,282 | $ 0 | |
TRx | |||
Business Acquisition [Line Items] | |||
Cash | $ 18,900,000 | ||
Unregistered shares of common stock issued or issuable as part of acquisition (in shares) | 7,534,884 | ||
Shares issued for purchase of business | $ 8,500,000 | ||
Shares issued upon closing (in shares) | 5,184,920 | ||
Contingent shares issuable as part of acquisition (in shares) | 2,349,968 | ||
Goodwill | $ 14,292,282 | ||
Goodwill, expected tax deductible amount | $ 9,200,000 | ||
Adjustment to inventory | 200,000 | ||
Cost of Sales | TRx | |||
Business Acquisition [Line Items] | |||
Adjustment to inventory | $ 138,000 | ||
PAI Sales & Marketing Agreement | TRx | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets, weighted average useful life (in years) | 2 years | ||
Metafolin | Acquired product marketing rights | TRx | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets, weighted average useful life (in years) | 15 years | ||
Millipred | Acquired product marketing rights | TRx | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets, weighted average useful life (in years) | 4 years | ||
Ulesfia | Acquired product marketing rights | TRx | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets, weighted average useful life (in years) | 3 years |
Acquisition - Schedule of Consi
Acquisition - Schedule of Consideration Transferred (Details) - TRx | Nov. 17, 2017USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 18,900,000 |
Common stock (including contingently issuable shares) | 8,514,419 |
Contingent payments | 2,576,633 |
Total consideration transferred | $ 29,991,052 |
Acquisition - Schedule of Alloc
Acquisition - Schedule of Allocation of Purchase Price (Details) - USD ($) | Nov. 17, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value of liabilities assumed: | |||
Goodwill | $ 14,292,282 | $ 0 | |
TRx | |||
Current assets: | |||
Cash and cash equivalents | $ 11,068 | ||
Accounts receivable, net | 2,872,545 | ||
Inventory | 495,777 | ||
Prepaid expenses and other current assets | 134,281 | ||
Identifiable intangible assets | |||
Identifiable intangible assets | 18,068,000 | ||
Total assets acquired | 21,581,671 | ||
Fair value of liabilities assumed: | |||
Accounts payable | 192,706 | ||
Accrued expenses and other current liabilities | 4,850,422 | ||
Deferred tax liability | 839,773 | ||
Total liabilities assumed | 5,882,901 | ||
Total identifiable net assets | 15,698,770 | ||
Fair value of consideration transferred | 29,991,052 | ||
Goodwill | 14,292,282 | ||
PAI Sales & Marketing Agreement | TRx | |||
Identifiable intangible assets | |||
Identifiable intangible assets | 2,334,000 | ||
Metafolin | Acquired product marketing rights | TRx | |||
Identifiable intangible assets | |||
Identifiable intangible assets | 10,465,000 | ||
Millipred | Acquired product marketing rights | TRx | |||
Identifiable intangible assets | |||
Identifiable intangible assets | 4,714,000 | ||
Ulesfia | Acquired product marketing rights | TRx | |||
Identifiable intangible assets | |||
Identifiable intangible assets | $ 555,000 |
Acquisition - Schedule of Intan
Acquisition - Schedule of Intangible Assets Acquired (Details) - TRx | Nov. 17, 2017USD ($) |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 18,068,000 |
PAI Sales & Marketing Agreement | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | 2,334,000 |
Metafolin | Acquired product marketing rights | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | 10,465,000 |
Millipred | Acquired product marketing rights | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | 4,714,000 |
Ulesfia | Acquired product marketing rights | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 555,000 |
Acquisition - Pro Forma Informa
Acquisition - Pro Forma Information (Details) - TRx - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | ||
Total revenues, net | $ 43,602,212 | $ 19,586,923 |
Net income | $ 14,564,584 | $ (19,499,137) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Assets | $ 471,183 | $ 4,758,539 |
Level 3 | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities | 2,576,633 | |
Level 3 | Warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities | 8,185 | 5,501 |
Level 3 | Unit purchase option liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities | $ 26,991 | $ 51 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ / shares in Units, shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)class_of_stock$ / sharesshares | Dec. 31, 2016USD ($)class_of_stock | Dec. 31, 2015 | |
Level 3 Valuation | |||
Number of changes in valuation techniques | class_of_stock | 0 | 0 | |
Amount of transfers of assets from level 2 to level 1 | $ 0 | $ 0 | |
Amount of transfers of assets from level 1 to level 2 | $ 0 | $ 0 | |
Common stock warrants | |||
Level 3 Valuation | |||
Number of shares available under warrant (in shares) | shares | 40 | ||
Minimum | |||
Level 3 Valuation | |||
Expected life | 5 years | 5 years | 5 years |
Maximum | |||
Level 3 Valuation | |||
Expected life | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Level 2 | |||
Level 3 Valuation | |||
Estimated fair value of debt | $ 2,400,000 | ||
Level 3 | |||
Level 3 Valuation | |||
Change in fair value | $ 29,624 | (72,625) | |
Warrant liability | Level 3 | |||
Level 3 Valuation | |||
Volatility | 55.00% | ||
Risk free interest rate | 1.96% | ||
Strike price (in dollars per share) | $ / shares | $ (8.40) | ||
Share price (in dollars per share) | $ / shares | $ (3.20) | ||
Expected life | 2 years 9 months 18 days | ||
Change in fair value | $ 2,684 | (22,105) | |
Equity Unit Purchase Option | Level 3 | |||
Level 3 Valuation | |||
Strike price (in dollars per share) | $ / shares | $ (7.48) | ||
Change in fair value | $ 26,940 | $ (50,520) | |
Equity Unit Purchase Option | Level 3 | Class A Warrant | |||
Level 3 Valuation | |||
Strike price (in dollars per share) | $ / shares | $ (5.23) | ||
Equity Unit Purchase Option | Level 3 | Class B Warrant | |||
Level 3 Valuation | |||
Strike price (in dollars per share) | $ / shares | $ (4.49) | ||
Equity Unit Purchase Option | Level 3 | Minimum | |||
Level 3 Valuation | |||
Volatility | 40.00% | ||
Risk free interest rate | 1.28% | ||
Equity Unit Purchase Option | Level 3 | Maximum | |||
Level 3 Valuation | |||
Volatility | 50.00% | ||
Risk free interest rate | 2.17% |
Fair Value Measurements - Rollf
Fair Value Measurements - Rollforward (Details) - Level 3 - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | $ 5,552 | $ 78,177 |
Issuance of contingent consideration | 2,576,633 | |
Change in fair value | 29,624 | (72,625) |
Ending balance | 2,611,809 | 5,552 |
Warrant liability | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 5,501 | 27,606 |
Change in fair value | 2,684 | (22,105) |
Ending balance | 5,501 | |
Warrant liability | Recurring basis | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 5,501 | |
Ending balance | 8,185 | 5,501 |
Unit purchase option liability | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 51 | 50,571 |
Change in fair value | 26,940 | (50,520) |
Ending balance | 26,991 | 51 |
Contingent consideration | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 0 | |
Issuance of contingent consideration | 2,576,633 | |
Ending balance | 2,576,633 | 0 |
Investor rights obligation | Recurring basis | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | $ 0 | 0 |
Ending balance | $ 0 |
Inventory - Narrative (Details)
Inventory - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |||
Finished goods | $ 382,153 | ||
Reserves for excess and obsolete inventory | 178,346 | $ 0 | |
Change in inventory reserve | $ 178,346 | $ 0 | $ 0 |
Property And Equipment (Details
Property And Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 21,956 | $ 26,856 |
Total property and equipment | 154,259 | 130,934 |
Less accumulated depreciation | (109,647) | (87,691) |
Property and equipment, net | 44,612 | 43,243 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 58,126 | 58,126 |
Computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 96,133 | $ 72,808 |
Goodwill (Details)
Goodwill (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Goodwill balance at December 31, 2016 | $ 0 |
Goodwill from acquisition of TRx Pharmaceuticals | 14,292,282 |
Goodwill balance at December 31, 2017 | 14,292,282 |
Accumulated impairment of goodwill | $ 0 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets Rollforward (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Intangible assets, beginning balance | $ 0 |
Intangible assets, ending balance | 18,068 |
TRx | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Intangible assets from acquisition of TRx Pharmaceuticals | $ 18,068 |
Intangible Assets - Schedule 56
Intangible Assets - Schedule of Finite Lived Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets gross carrying amount | $ 18,068,000 | |
Accumulated amortization | 403,520 | |
Total amortization expense | 17,664,480 | |
Amortization expense | 403,520 | $ 0 |
Acquired product marketing rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets gross carrying amount | 15,734,000 | |
Accumulated amortization | 257,645 | |
Total amortization expense | $ 15,476,355 | |
Weighted-Avg.Remaining Life | 11 years 2 months 12 days | |
PAI Sales & Marketing Agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets gross carrying amount | $ 2,334,000 | |
Accumulated amortization | 145,875 | |
Total amortization expense | $ 2,188,125 | |
Weighted-Avg.Remaining Life | 1 year 10 months 24 days |
Intangible Assets - Schedule 57
Intangible Assets - Schedule of Future Amortization Expense (Details) | Dec. 31, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 3,228,167 |
2,019 | 3,082,292 |
2,020 | 2,038,030 |
2,021 | 1,728,867 |
2,022 | 697,667 |
Thereafter | 6,889,457 |
Total amortization expense | $ 17,664,480 |
Accrued Expenses And Other Cu58
Accrued Expenses And Other Current Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Sales returns and allowances | $ 4,146,217 | $ 0 |
Compensation and benefits | 1,401,514 | 272,601 |
General and administrative | 1,001,454 | 160,116 |
Royalties payable | 743,010 | 0 |
Research and development expenses | 299,480 | 315,937 |
Other | 256,634 | 0 |
Accrued interest | 0 | 193,781 |
Total accrued expenses and other current liabilities | $ 7,848,309 | $ 942,435 |
License Agreements (Details)
License Agreements (Details) | Apr. 01, 2017USD ($)salesperson | Sep. 22, 2016USD ($) | Dec. 18, 2015USD ($)unit | Dec. 01, 2014kg | May 31, 2011 | May 19, 2008USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2014USD ($) |
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Sales force revenue | $ 278,000 | $ 0 | $ 0 | $ 0 | $ 278,165 | $ 0 | $ 0 | ||||||||
Merck | CERC-301 | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Other commitment | $ 750,000 | ||||||||||||||
Merck | CERC-301 | Research and development | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Asset acquisition payments | $ 750,000 | ||||||||||||||
Merck | COMT Inhibitor | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Asset acquisition payments | $ 200,000 | ||||||||||||||
Lilly | License Agreement To Develop Transmembrane Ampa Receptor Regulatory Proteins | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Asset acquisition payments | $ 2,000,000 | ||||||||||||||
Potential milestone commitment due within 30 days | $ 750,000 | ||||||||||||||
Time period within execution of license agreement | 30 days | ||||||||||||||
Potential milestone commitment due after first subject closed | $ 1,250,000 | ||||||||||||||
TRx | Merck | Metafolin Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Percentage Metafolin requirements contracted to purchase | 100.00% | ||||||||||||||
Product royalty | 2.00% | ||||||||||||||
Purchase commitment minimum mass required | kg | 1 | ||||||||||||||
Royalty payment period | 45 days | ||||||||||||||
TRx | Mead Johnson and Company LLC | Poly-Vi-Flor And Tri-Vi-Flor License | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product royalty | 10.00% | ||||||||||||||
Royalty payment period | 45 days | ||||||||||||||
TRx | Presmar Associates | Poly-Vi-Flor Trademark | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product royalty | 5.00% | ||||||||||||||
Royalty payment period | 45 days | ||||||||||||||
TRx | PAI | PAI Sales & Marketing Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Number of salespersons | salesperson | 16 | ||||||||||||||
Monthly payment | $ 62,500 | ||||||||||||||
Product sales revenue share | 50.00% | ||||||||||||||
Duration of revenue sharing beyond contract termination | 6 months | ||||||||||||||
Contract term | 6 months | ||||||||||||||
Automatic renewal period | 6 months | ||||||||||||||
Contract cancellation notice period | 90 days | ||||||||||||||
Sales force revenue | $ 90,000 | ||||||||||||||
TRx | Watson Laboratories | License And Supply Agreement For Millipred Tablets | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Contract term | 5 years | ||||||||||||||
Automatic renewal period | 1 year | ||||||||||||||
Semi-annual license payment | $ 75,000 | ||||||||||||||
Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Minimum royalty | $ 3,000,000 | ||||||||||||||
Minimum revenue basis for royalty payment | 20,000,000 | ||||||||||||||
Potential milestone revenue threshold number one | 90,000,000 | ||||||||||||||
Potential milestone revenue threshold number two | 180,000,000 | ||||||||||||||
Potential milestone revenue threshold number three | 270,000,000 | ||||||||||||||
Potential milestone revenue threshold number four | 400,000,000 | ||||||||||||||
Potential milestone payment number one | 3,000,000 | ||||||||||||||
Potential milestone payment number two | 3,500,000 | ||||||||||||||
Potential milestone payment number three | 4,000,000 | ||||||||||||||
Potential milestone payment number four | $ 5,000,000 | ||||||||||||||
Minimum quantity required | unit | 20,000 | ||||||||||||||
Long-term purchase commitment | $ 1,117,700 | ||||||||||||||
Consecutive periods within twelve months orders unfilled | 6 months | ||||||||||||||
Periods within twelve months orders unfilled | 9 months | ||||||||||||||
Purchase commitment measurement period | 12 months | ||||||||||||||
Minimum | TRx | Merck | Metafolin Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product target age | 0 years | ||||||||||||||
Maximum | TRx | Merck | Metafolin Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product target age | 3 years | ||||||||||||||
Tier One | Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product royalty | 15.00% | ||||||||||||||
Tier One | Maximum | Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Royalty revenue threshold | $ 50,000,000 | ||||||||||||||
Tier Two | Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product royalty | 20.00% | ||||||||||||||
Tier Two | Minimum | Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Royalty revenue threshold | $ 50,000,000 | ||||||||||||||
Tier Three | Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Product royalty | 25.00% | ||||||||||||||
Tier Three | Minimum | Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | |||||||||||||||
Asset Acquisition And License Agreement [Line Items] | |||||||||||||||
Royalty revenue threshold | $ 100,000,000 |
Term Loan (Details)
Term Loan (Details) - USD ($) | Aug. 01, 2017 | Aug. 31, 2014 | Dec. 31, 2017 | Dec. 31, 2016 |
Term Loan | ||||
Term loan | $ 0 | $ 2,374,031 | ||
Debt discount | 0 | (20,364) | ||
Term Loan, net of debt discount | 0 | 2,353,667 | ||
Current portion, net of debt discount | 0 | (2,353,667) | ||
Long term debt, net of current portion and debt discount | 0 | 0 | ||
Term Loan, Long-Term | ||||
Term Loan | ||||
Face amount | $ 7,500,000 | |||
Repayments of debt including termination fee | $ 494,231 | |||
One-time fee payable at maturity | $ 187,500 | |||
Term Loan | ||||
Interest expense including amortization of discount and accrual of termination fee | 95,000 | 489,000 | ||
Term Loan, Long-Term | Long-Term Debt Caption | ||||
Term Loan | ||||
Lender fees paid | $ 110,000 | |||
Term Loan, Long-Term | Interest Expense | ||||
Term Loan | ||||
Amortization of debt discount | 23,000 | 106,000 | ||
Accretion of one-time fee | 12,000 | $ 56,000 | ||
Term Loan, Long-Term | Series B convertible preferred stock warrants | ||||
Term Loan | ||||
One-time fee payable at maturity | $ 187,500 | |||
Term Loan, Long-Term | Prime rate | ||||
Term Loan | ||||
Margin on interest rate, deducted from basis | 3.25% | |||
Maximum | Term Loan, Long-Term | ||||
Term Loan | ||||
Interest rate, maximum | 7.95% |
Capital Structure - Common Stoc
Capital Structure - Common Stock (Details) | Nov. 17, 2017USD ($)shares | Apr. 27, 2017USD ($)$ / sharesshares | Sep. 08, 2016USD ($)$ / sharesshares | Nov. 23, 2015USD ($)shares | Oct. 20, 2015USD ($)class_of_stock$ / sharesshares | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($)class_of_stockVote$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)shares | Jan. 27, 2017USD ($) | Aug. 31, 2014$ / sharesshares |
Common Stock | |||||||||||
Number of classes of stock authorized to issue | class_of_stock | 2 | ||||||||||
Number of shares of capital stock authorized to issue (in shares) | 205,000,000 | ||||||||||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | |||||||||
Preferred stock, shares authorized (in shares) | 5,000,000 | 0 | |||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||||||
Initial Public Offering [Abstract] | |||||||||||
Gross proceeds | $ | $ 135,319 | $ 1,502,593 | $ 1,899,987 | $ 21,165,589 | |||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Threshold price per common stock on any trading day to present notice for purchase of common stock | $ / shares | $ 0.50 | ||||||||||
Number of shares sold under purchase agreement (in shares) | 31,266,989 | 9,434,141 | |||||||||
Proceeds from issuance of common stock | $ | $ 1,693,498 | $ 2,003,182 | |||||||||
Common stock | |||||||||||
Common Stock | |||||||||||
Number of shares available under warrant (in shares) | 22,328 | ||||||||||
Initial Public Offering [Abstract] | |||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 8.40 | ||||||||||
Issuance of stock (in shares) | 2,301,598 | 763,998 | 4,020,000 | ||||||||
Gross proceeds | $ | $ 2,302 | $ 764 | $ 4,020 | ||||||||
Aspire Capital Fund LLC (Aspire Capital) | |||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Term of common stock purchase agreement | 30 months | ||||||||||
Common stock issued as commitment fee | 175,000 | ||||||||||
Capital Unit | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 5.23 | ||||||||||
Issuance of stock (in shares) | 4,000,000 | ||||||||||
Share price (in dollars per share) | $ / shares | $ 6.50 | ||||||||||
Gross proceeds | $ | $ 26,000,000 | ||||||||||
Net proceeds from IPO | $ | 23,600,000 | ||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Proceeds from unit purchase option | $ | $ 100 | ||||||||||
Units available, as a percentage of units sold | 1.00% | ||||||||||
Equity purchase option unit, exercise price per unit | $ / shares | $ 7.48 | ||||||||||
Equity purchase option unit, exercise price as percent of IPO price | 115.00% | ||||||||||
Capital Unit, Class B | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 4.49 | ||||||||||
Class A Warrant | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Number of equity instruments included in a unit | 1 | ||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 4.55 | ||||||||||
Issuance of stock (in shares) | 551,900 | ||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Equity purchase option, unit exercise price after first warrant expiration | $ / shares | 7.475 | ||||||||||
Equity purchase option, unit exercise price after second warrant expiration | $ / shares | $ 7.47 | ||||||||||
Class B Warrant | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Number of equity instruments included in a unit | 1 | ||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 3.90 | ||||||||||
Issuance of stock (in shares) | 551,900 | ||||||||||
Common Stock | |||||||||||
Common Stock | |||||||||||
Number of shares available under warrant (in shares) | 18,986,859 | ||||||||||
Initial Public Offering [Abstract] | |||||||||||
Number of equity instruments included in a unit | 1 | ||||||||||
Issuance of stock (in shares) | 20,000 | ||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Number of votes per share | Vote | 1 | ||||||||||
Number of preemptive, conversion or subscription rights | class_of_stock | 0 | ||||||||||
Number of redemption or sinking fund provisions | class_of_stock | 0 | ||||||||||
Common Stock | Class A Warrant | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Class of warrant or right, number of securities called by each warrant or right | 1 | 1 | |||||||||
Series B convertible preferred stock | Preferred Stock | |||||||||||
Common Stock | |||||||||||
Number of shares available under warrant (in shares) | 625,208 | ||||||||||
Initial Public Offering [Abstract] | |||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 0.2999 | ||||||||||
Maximum | Capital Unit | |||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Number of units available under the option | 40,000 | ||||||||||
Private Placement | |||||||||||
Common Stock | |||||||||||
Proceeds from issuance or sale of equity | $ | $ 4,650,000 | ||||||||||
Number of shares available under warrant (in shares) | 14,285,714 | ||||||||||
Convertible preferred stock conversion price (in dollars per share) | $ / shares | $ 0.35 | ||||||||||
Initial Public Offering [Abstract] | |||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 0.40 | ||||||||||
Gross proceeds | $ | $ 5,000,000 | ||||||||||
Private Placement | Common stock | |||||||||||
Common Stock | |||||||||||
Percentage of outstanding shares issued | 19.99% | ||||||||||
Convertible preferred stock shares authorized (in shares) | 11,940,000 | ||||||||||
Initial Public Offering [Abstract] | |||||||||||
Issuance of stock (in shares) | 2,345,714 | ||||||||||
Private Placement | Series A Preferred Stock | Preferred Stock | |||||||||||
Common Stock | |||||||||||
Preferred stock, shares authorized (in shares) | 4,179 | ||||||||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 1,000 | ||||||||||
IPO | Class B Warrant | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Class of warrant or right, number of securities called by each warrant or right | 0.5 | ||||||||||
Common Stock Purchase Agreement | Aspire Capital Fund LLC (Aspire Capital) | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Gross proceeds | $ | $ 1,000,000 | $ 789,000 | |||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Maximum value of common stock purchases committed to by counterparty | $ | $ 15,000,000 | ||||||||||
Number of shares sold under purchase agreement (in shares) | 250,000 | 965,165 | |||||||||
Price per share (in dollars per share) | $ / shares | $ 4 | ||||||||||
Proceeds from issuance of common stock | $ | $ 1,900,000 | ||||||||||
Common Stock Purchase Agreement | Maximum | Aspire Capital Fund LLC (Aspire Capital) | |||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Number of common stock issued per day on achieving threshold price per common stock | 50,000 | ||||||||||
Equity Distribution Agreement for Sale of Common Stock | Maxim Group LLC (Maxim) | |||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Proceeds from issuance of common stock | $ | $ 905,000 | ||||||||||
Payments of stock issuance costs | $ | $ 33,000 | ||||||||||
Sale of common stock through equity distribution agreement | $ | $ 12,075,338 | ||||||||||
Equity Distribution Agreement for Sale of Common Stock | Maxim Group LLC (Maxim) | Common stock | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Issuance of stock (in shares) | 1,336,433 | ||||||||||
Equity Distribution Agreement for Sale of Common Stock | Common Stock | Maxim Group LLC (Maxim) | |||||||||||
Underwriter's Unit Purchase Option [Abstract] | |||||||||||
Shares available to be issued | $ | $ 2,900,000 | ||||||||||
Over-Allotment Option | Common Stock | Class B Warrant | |||||||||||
Initial Public Offering [Abstract] | |||||||||||
Class of warrant or right, number of securities called by each warrant or right | 0.5 | ||||||||||
TRx | |||||||||||
Common Stock | |||||||||||
Contingent shares issuable as part of acquisition (in shares) | 2,349,968 | ||||||||||
Unregistered shares of common stock issued or issuable as part of acquisition | $ | $ 8,100,000 | ||||||||||
Shares issued upon closing (in shares) | 5,184,920 |
Capital Structure - Warrants (D
Capital Structure - Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 31, 2017 | Aug. 31, 2014 |
Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 18,986,859 | |
Term Loan Lender | ||
Common Stock Warrants | ||
Face amount | $ 7.5 | |
Preferred Stock | Series B convertible preferred stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 625,208 | |
Exercise price per share (in dollars per share) | $ 0.2999 | |
Common stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 22,328 | |
Exercise price per share (in dollars per share) | $ 8.40 | |
Common stock warrants, expiration date of August 2018 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 80,966 | |
Exercise price per share (in dollars per share) | $ 28 | |
Common stock warrants, expiration date of October 2018 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 4,551,900 | |
Exercise price per share (in dollars per share) | $ 4.55 | |
Common stock warrants, expiration date of October 2018 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 40,000 | |
Exercise price per share (in dollars per share) | $ 5.23 | |
Common stock warrants, expiration date of December 2018 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 3,571 | |
Exercise price per share (in dollars per share) | $ 28 | |
Common stock warrants, expiration date of October 2020 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 22,328 | |
Exercise price per share (in dollars per share) | $ 8.40 | |
Common stock warrants, expiration date of May 2022 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 2,380 | |
Exercise price per share (in dollars per share) | $ 8.68 | |
Common stock warrants expiration date of June 2022 | Common Stock | ||
Common Stock Warrants | ||
Number of shares available under warrant (in shares) | 14,285,714 | |
Exercise price per share (in dollars per share) | $ 0.40 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | Jan. 01, 2018$ / sharesshares | May 18, 2016USD ($)grantshares | Dec. 31, 2017USD ($)board_member$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares |
Annual share reserve increase (as a percent) | 4.00% | |||||
Total stock-based compensation | $ 1,157,252 | $ 1,694,891 | $ 394,748 | |||
Number of board members who resigned | board_member | 2 | |||||
Option Activity, Number of shares | ||||||
Balance, beginning of period (in shares) | shares | 2,823,489 | 1,849,359 | 959,188 | |||
Granted (in shares) | shares | 1,020,377 | 915,242 | ||||
Forfeitures (in shares) | shares | (46,247) | (25,071) | ||||
Balance, end of period (in shares) | shares | 2,823,489 | 2,823,489 | 1,849,359 | 959,188 | ||
Vested or expected to vest (in shares) | shares | 2,823,489 | 2,823,489 | ||||
Exercisable (in shares) | shares | 1,762,908 | 1,762,908 | ||||
Option Activity, Weighted-average exercise price | ||||||
Beginning of period (in dollars per share) | $ / shares | $ 3.93 | $ 5.57 | $ 7.68 | |||
Granted (in dollars per share) | $ / shares | 0.94 | 3.35 | ||||
Forfeitures (in dollars per share) | $ / shares | 3.57 | 5.04 | ||||
End of period (in dollars per share) | $ / shares | $ 3.93 | 3.93 | $ 5.57 | $ 7.68 | ||
Vested or expected to vest (in dollars per share) | $ / shares | 3.93 | 3.93 | ||||
Exercisable (in dollars per share) | $ / shares | $ 5.02 | $ 5.02 | ||||
Option Activity, Fair value of options granted | ||||||
Grant date fair value of options granted | $ 669,816 | $ 669,816 | $ 2,155,234 | |||
Option Activity, Weighted-average remaining contractual term (in years) | ||||||
Balance | 7 years 3 months 15 days | 8 years 5 months 9 days | 7 years 6 months 4 days | |||
Vested or expected to vest | 7 years 3 months 15 days | |||||
Exercisable | 6 years 1 month 28 days | |||||
Aggregate intrinsic value | 2,400,000 | $ 2,400,000 | ||||
Fair value of options vested in period | $ 2,900,000 | $ 400,000 | $ 700,000 | |||
Per share weighted average fair value of options granted (in dollars per share) | $ / shares | $ 0.66 | $ 2.35 | $ 2.80 | |||
Options vested (in shares) | shares | 997,902 | |||||
Options vested weighted average grant date fair value (in dollars per share) | $ / shares | $ 2.98 | |||||
Options exercises in period (in shares) | shares | 0 | 0 | 0 | |||
Fair value assumptions | ||||||
Expected annual dividend yield | 0.00% | |||||
Unrecognized compensation expense | ||||||
2,018 | 732,441 | $ 732,441 | ||||
2,019 | 352,657 | 352,657 | ||||
2,020 | 188,351 | 188,351 | ||||
2,021 | 68,623 | 68,623 | ||||
Total | $ 1,342,072 | 1,342,072 | ||||
Research and development | ||||||
Total stock-based compensation | 156,047 | $ 141,247 | $ 67,021 | |||
General and administrative | ||||||
Total stock-based compensation | $ 1,001,205 | $ 1,553,644 | $ 327,727 | |||
Minimum | ||||||
Fair value assumptions | ||||||
Risk-free interest rate | 1.85% | 1.01% | 1.64% | |||
Expected term of options (in years) | 5 years | 5 years | 5 years | |||
Expected stock price volatility | 55.00% | 80.00% | ||||
Expected annual dividend yield | 0.00% | 0.00% | 0.00% | |||
Maximum | ||||||
Fair value assumptions | ||||||
Risk-free interest rate | 2.38% | 1.93% | 1.97% | |||
Expected term of options (in years) | 6 years 3 months | 6 years 3 months | 6 years 3 months | |||
Expected stock price volatility | 100.00% | 100.00% | 70.00% | |||
Expected annual dividend yield | 0.00% | 0.00% | 0.00% | |||
2016 Plan | ||||||
Increase in number of shares reserved for issuance (in shares) | shares | 600,000 | |||||
Common stock remaining for future issuance (in shares) | shares | 41,448 | 41,448 | ||||
2016 Plan | Stock options | ||||||
Award expiration period | 10 years | |||||
2015 Plan | ||||||
Number of grants to be made | grant | 0 | |||||
Common stock remaining for future issuance (in shares) | shares | 464,476 | |||||
2011 Stock Incentive Plan | ||||||
Number of grants to be made | grant | 0 | |||||
Employee Stock Purchase Plan (ESPP) | ||||||
Common stock remaining for future issuance (in shares) | shares | 480,000 | |||||
Total stock-based compensation | $ 76,305 | |||||
Unrecognized compensation expense | ||||||
Percentage of fair market value on the lower of first day or last day of the offering period at which employees may purchase stock under the ESPP | 85.00% | |||||
Maximum portion of earning an employee may contribute to the ESPP Plan | 15.00% | |||||
Maximum annual amount of fair market value of the Company's common stock that a participant may accrue the rights to purchase | $ 25,000 | |||||
Shares of common stock for future issuance (in shares) | shares | 500,000 | |||||
Automatic increase to shares authorized as percentage of outstanding stock at end of preceding year | 1.00% | |||||
Employee | 2016 Plan | Stock options | ||||||
Award vesting period | 4 years | |||||
Chief Executive Officer | General and administrative | ||||||
Total stock-based compensation | $ 781,000 | |||||
Director | 2016 Plan | Stock options | ||||||
Award vesting period | 3 years | |||||
Directors And Former Executive Officer | General and administrative | ||||||
Total stock-based compensation | $ 67,000 | |||||
Subsequent Event | 2016 Plan | ||||||
Increase in number of shares reserved for issuance (in shares) | shares | 1,250,679 |
Income Taxes - Schedule of Inc
Income Taxes - Schedule of Income Tax Provision (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ 2,309,285 | $ 0 | $ 0 |
State | 489,863 | 0 | 0 |
Total current income tax expense (benefit) | 2,799,148 | 0 | 0 |
Deferred: | |||
Federal | (789,274) | 0 | 0 |
State | (43,355) | 0 | 0 |
Total deferred income tax expense (benefit) | (832,629) | 0 | 0 |
Net Income Tax Expense | $ 1,966,519 | $ 0 | $ 0 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Taxes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Tax Assets, Net [Abstract] | ||
Net operating losses | $ 716,819 | $ 20,587,955 |
Research and development credits | 0 | 1,840,505 |
Deferred rent | 4,051 | 11,902 |
Accrued compensation | 271,437 | 90,936 |
Stock-based compensation | 1,291,230 | 2,169,070 |
Other reserves | 72,881 | 0 |
Basis difference in tangible and intangible assets | 2,554,924 | 6,174,163 |
Total deferred tax assets | 4,911,342 | 30,874,531 |
Deferred Tax Liabilities, Deferred Expense [Abstract] | ||
Basis difference in intangible assets | (535,652) | 0 |
Installment sale | (358,844) | 0 |
Total deferred tax liabilities | (894,496) | 0 |
Deferred tax asset, net | 4,016,846 | 30,874,531 |
Less valuation allowance | (4,023,990) | (30,874,531) |
Net deferred taxes | $ (7,144) | |
Net deferred taxes | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | |||
Unrecognized tax benefits interest and penalties accrued | $ 0 | ||
Net operating loss carryforwards | $ 52,170,000 | ||
Federal statutory rate | 34.00% | 34.00% | 34.00% |
Reduction of deferred taxes due to change in tax rate | $ 2,200,000 | ||
Net Operating Losses Expiring Beginning 2031 | Federal And Maryland | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 3,012,000 | ||
Net Operating Losses Expiring Before 2017 Ownership Change | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 2,800,000 | ||
Net Operating Losses Expiring Immediately | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 46,000,000 | ||
Net Operating Losses Available In 2017 After The Ownership Change | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 107,702 | ||
Net Operating Losses Available 2018 | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 158,513 |
Income Taxes - Expense (Details
Income Taxes - Expense (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of income tax expense | |||
Federal statutory rate | 34.00% | 34.00% | 34.00% |
Permanent differences | 0.02% | (0.02%) | (0.02%) |
Warrants | 0.07% | 0.15% | 4.26% |
Acquisition costs | 0.08% | 0.00% | 0.00% |
Built in loss | 1.52% | 0.00% | 0.00% |
State taxes | 27.91% | 3.44% | 5.12% |
Research and development credit | (1.04%) | 2.18% | 2.69% |
Change in statutory rate due to Tax Cuts and Job Act | 15.82% | 0.00% | 0.00% |
NOL adjustment per § 382 | 126.82% | 0.00% | 0.00% |
Other | 0.04% | 0.00% | 0.03% |
Change in valuation allowance | (191.03%) | (39.75%) | (46.08%) |
Effective income tax rate | 14.21% | 0.00% | 0.00% |
Commitments And Contingencies68
Commitments And Contingencies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2013 | |
Other Commitments [Line Items] | |||
Period of abatement | 3 months | ||
Rent expense | $ 142,000 | $ 142,000 | |
Future lease obligation: | |||
2,018 | 158,716 | ||
2,019 | 0 | ||
Total | 158,716 | ||
Research and Development Arrangement | Maximum | |||
Future lease obligation: | |||
Obligation for future services | $ 1,900,000 |
Selected Quarterly Financial 69
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) | Aug. 14, 2017 | Aug. 31, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Quarterly Financial Data [Abstract] | |||||||||||||
License and other revenue | $ 25,000,000 | $ 25,000,000 | $ 0 | $ 25,000,000 | $ 0 | $ 0 | $ 25,000,000 | $ 0 | $ 0 | ||||
Product revenue, net | 1,911,000 | 0 | 0 | 0 | 1,910,403 | 0 | 0 | ||||||
Sales force revenue | 278,000 | 0 | 0 | 0 | 278,165 | 0 | 0 | ||||||
Grant revenue | 45,000 | 38,000 | 158,000 | 384,000 | 624,569 | 1,152,987 | 0 | ||||||
Cost of product sales | 636,000 | 0 | 0 | 0 | 635,648 | 0 | 0 | ||||||
Research and development | 1,961,000 | 965,000 | 494,000 | 953,000 | $ 773,000 | $ 4,582,000 | $ 2,502,000 | $ 2,293,000 | 4,372,578 | 10,149,879 | 6,587,183 | ||
General and administrative | 3,021,000 | 2,152,000 | 1,439,000 | 1,330,000 | 1,095,000 | 1,703,000 | 1,636,000 | 2,649,000 | 7,941,584 | 7,083,155 | 4,422,764 | ||
Sales and marketing | 973,000 | 0 | 0 | 0 | 973,345 | 0 | 0 | ||||||
Change in fair value of warrant liability, unit purchase option liability and investor rights obligation | (28,000) | 0 | 2,000 | (4,000) | 130,000 | (101,000) | 91,000 | (47,000) | (29,624) | 72,625 | 1,313,049 | ||
Interest expense, net | 31,000 | 29,000 | (26,000) | (58,000) | (83,000) | (104,000) | (127,000) | (151,000) | (24,016) | (464,181) | (793,205) | ||
Net income (loss) | $ (3,091,000) | $ 18,721,000 | $ (1,799,000) | $ (1,961,000) | $ (1,639,000) | $ (6,169,000) | $ (3,524,000) | $ (5,140,000) | $ 11,869,823 | $ (16,471,603) | $ (10,490,103) | ||
Net income (loss) per share of common stock, basic (in dollars per share) | $ (0.11) | $ 0.52 | $ (0.14) | $ (0.19) | $ 0.42 | $ (1.87) | $ (4.71) | ||||||
Net income (loss) per share of common stock, diluted (in dollars per share) | $ (0.11) | $ 0.52 | $ (0.14) | $ (0.19) | $ 0.42 | $ (1.87) | $ (4.71) | ||||||
Net loss per share of common stock, basic and diluted (in dollars per share) | $ (0.18) | $ (0.70) | $ (0.41) | $ (0.59) |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - Zylera | Dec. 18, 2015USD ($)unit | Jan. 01, 2014 | Dec. 31, 2017USD ($) | Nov. 30, 2017USD ($)unit$ / unit |
Lachlan Pharmaceuticals | Ulesfia Supply Agreement | ||||
Related Party Transaction [Line Items] | ||||
Minimum quantity required | unit | 20,000 | |||
Long-term purchase commitment | $ 1,117,700 | |||
Minimum royalty | $ 3,000,000 | |||
Lachlan Pharmaceuticals | Ulesfia Supply Agreement | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Minimum quantity required | unit | 20,000 | |||
Long-term purchase commitment | $ 1,177,000 | |||
Minimum royalty | $ 3,000,000 | |||
Management and handling fee (in dollars per unit) | $ / unit | 3.66 | |||
Management and handling fee annual price increase | 10.00% | |||
Payments for purchases | $ 0 | |||
Contract cancellation notice period | 30 days | |||
COO and Director | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Noncontrolling interest ownership percentage by Noncontrolling Owners | 5.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Avadel $ in Millions | Feb. 12, 2018USD ($)product | Dec. 31, 2017USD ($) | Feb. 16, 2018USD ($) |
Subsequent Event [Line Items] | |||
Total revenues, net | $ 8 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Number of products | product | 4 | ||
Long-term debt acquired | $ 15 | $ 15 |