Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 11, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Cerecor Inc. | ||
Entity Central Index Key | 0001534120 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | true | ||
Entity Small Business | true | ||
Entity Transition Period | true | ||
Entity Shell Company | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 42,653,659 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 40,821,693 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 10,646,301 | $ 2,472,187 |
Accounts receivable, net | 3,157,555 | 2,935,025 |
Other receivables | 5,469,011 | 427,241 |
Escrowed cash receivable | 0 | 3,752,390 |
Inventory, net | 1,110,780 | 382,153 |
Prepaid expenses and other current assets | 1,529,516 | 703,225 |
Restricted cash, current portion | 18,730 | 1,959 |
Total current assets | 21,931,893 | 10,674,180 |
Property and equipment, net | 586,512 | 44,612 |
Intangibles assets, net | 31,239,468 | 17,664,480 |
Goodwill | 16,411,123 | 14,292,282 |
Restricted cash, net of current portion | 81,725 | 131,353 |
Total assets | 70,250,721 | 42,806,907 |
Current liabilities: | ||
Accounts payable | 1,446,141 | 1,298,980 |
Accrued expenses and other current liabilities | 19,731,373 | 7,531,122 |
Income taxes payable | 2,032,258 | 2,259,148 |
Long-term debt, current portion | 1,050,000 | 0 |
Contingent consideration, current portion | 1,956,807 | 0 |
Total current liabilities | 26,216,579 | 11,089,250 |
Long term debt, net of current portion | 14,327,882 | 0 |
Contingent consideration, net of current portion | 7,093,757 | 2,576,633 |
Deferred tax liability, net | 69,238 | 7,144 |
License obligations | 1,250,000 | 1,250,000 |
Other long-term liabilities | 385,517 | 24,272 |
Total liabilities | 49,342,973 | 14,947,299 |
Stockholders’ equity: | ||
Common Stock—$0.001 par value; 200,000,000 shares authorized at December 31, 2018 and 2017; 40,804,189 and 31,266,989 shares issued and outstanding at December 31, 2018 and 2017, respectively | 40,804 | 31,268 |
Preferred Stock—$0.001 par value; 5,000,000 shares authorized at December 31, 2018 and 2017; 2,857,143 and zero shares issued and outstanding at December 31, 2018 and 2017, respectively | 2,857 | 0 |
Additional paid-in capital | 119,082,157 | 83,338,136 |
Contingently issuable shares | 0 | 2,655,464 |
Accumulated deficit | (98,218,070) | (58,165,260) |
Total stockholders’ equity | 20,907,748 | 27,859,608 |
Total liabilities and stockholders’ equity | $ 70,250,721 | $ 42,806,907 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
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) | 40,804,189 | 31,266,989 |
Common stock, shares outstanding (in shares) | 40,804,189 | 31,266,989 |
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 2,857,143 | 0 |
Preferred stock, shares outstanding (in shares) | 2,857,143 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | ||
Revenues | $ 18,326,801 | $ 27,813,137 |
Operating expenses: | ||
Cost of product sales | 7,478,262 | 635,648 |
Research and development | 5,786,635 | 4,372,578 |
Acquired in-process research and development | 18,723,952 | 0 |
General and administrative | 10,676,881 | 7,941,584 |
Sales and marketing | 8,522,461 | 569,825 |
Amortization expense | 4,532,448 | 403,520 |
Impairment of intangible assets | 1,861,562 | 0 |
Change in fair value of contingent consideration | 58,366 | 0 |
Total operating expenses | 57,640,567 | 13,923,155 |
(Loss) income from operations | (39,313,766) | 13,889,982 |
Other (expense) income: | ||
Change in fair value of warrant liability and unit purchase option liability | 25,010 | (29,624) |
Other income, net | 13,657 | 0 |
Interest expense, net | (811,621) | (24,016) |
Total other expense, net | (772,954) | (53,640) |
Net (loss) income before taxes | (40,086,720) | 13,836,342 |
Income tax (benefit) expense | (33,910) | 1,966,519 |
Net (loss) income after taxes | (40,052,810) | 11,869,823 |
Net (loss) income attributable to common shareholders | $ (41,710,193) | $ 7,772,084 |
Net income (loss) per share of common stock, basic (in dollars per share) | $ (1.20) | $ 0.42 |
Net income (loss) per share of common stock, diluted (in dollars per share) | $ (1.20) | $ 0.42 |
Weighted average shares of common stock outstanding, basic (in shares) | 34,773,613 | 18,410,005 |
Weighted average number of shares of common stock outstanding, diluted (in shares) | 34,773,613 | 18,754,799 |
Product revenue, net | ||
Revenues | ||
Revenues | $ 17,870,745 | $ 1,910,403 |
Sales force revenue | ||
Revenues | ||
Revenues | 456,056 | 278,165 |
License and other revenue | ||
Revenues | ||
Revenues | 0 | 25,000,000 |
Grant revenue | ||
Revenues | ||
Revenues | $ 0 | $ 624,569 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity - USD ($) | Total | Common stock | Additional paid in capital | Contingently Issuable Common Stock | Accumulated deficit | Common stock | Redeemable Convertible Preferred StockPreferred Stock |
Balance at the beginning (in shares) at Dec. 31, 2016 | 9,434,141 | 0 | |||||
Balance at the beginning at Dec. 31, 2016 | $ 207,002 | $ 9,434 | $ 70,232,651 | $ (70,035,083) | $ 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 shares pursuant to common stock private placement, net of offering costs | 4,561,658 | 4,559,308 | $ 2,346 | 4 | |||
Issuance of shares in acquistion (in shares) | 5,184,920 | ||||||
Issuance of shares in acquisition | 5,858,955 | 5,853,770 | $ 5,185 | ||||
Shares purchased through employee stock purchase plan | 2,655,464 | $ 2,655,464 | |||||
Shares purchased through employee stock purchase plan (in shares) | 60,616 | ||||||
Stock-based compensation | 46,861 | 46,800 | $ 61 | ||||
Stock-based compensation | 1,157,252 | 1,157,252 | |||||
Issuance of common stock for conversion of preferred stock (in shares) | 11,940,000 | ||||||
Issuance of common stock for conversion of preferred stock | 0 | (11,936) | $ 11,940 | $ (4) | |||
Net (loss) income | 11,869,823 | 11,869,823 | |||||
Balance at the end (in shares) at Dec. 31, 2017 | 31,266,989 | 0 | |||||
Balance at the end at Dec. 31, 2017 | 27,859,608 | $ 31,268 | 83,338,136 | 2,655,464 | (58,165,260) | $ 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock (in shares) | 2,349,968 | ||||||
Issuance of stock | 0 | $ 2,350 | 2,653,114 | (2,655,464) | |||
Issuance of common stock to Armistice Capital (in shares) | 1,000,000 | ||||||
Issuance of shares pursuant to common stock private placement, net of offering costs | 3,857,106 | 3,856,106 | $ 1,000 | ||||
Issuance of shares in acquistion (in shares) | 5,774,464 | ||||||
Issuance of shares in acquisition | 19,971,554 | 19,965,780 | $ 5,774 | ||||
Issuance of Series B convertible preferred stock upon warrant exercise, net of offering costs (in shares) | 2,857,143 | ||||||
Issuance of Series B convertible preferred stock upon warrant exercise, net of offering costs | 5,685,038 | 5,682,181 | $ 2,857 | ||||
Exercise of stock options and warrants (in shares) | 370,361 | ||||||
Exercise of stock options and warrants | 1,083,953 | 1,083,583 | $ 370 | ||||
Shares purchased through employee stock purchase plan (in shares) | 42,407 | ||||||
Stock-based compensation | 72,236 | 72,194 | $ 42 | ||||
Stock-based compensation | 2,431,063 | 2,431,063 | |||||
Net (loss) income | (40,052,810) | (40,052,810) | |||||
Balance at the end (in shares) at Dec. 31, 2018 | 40,804,189 | 2,857,143 | |||||
Balance at the end at Dec. 31, 2018 | $ 20,907,748 | $ 40,804 | $ 119,082,157 | $ 0 | $ (98,218,070) | $ 2,857 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows | 12 Months Ended | |
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Operating activities | ||
Net (loss) income | $ (40,052,810) | $ 11,869,823 |
Adjustments to reconcile net (loss) income (used in) provided by to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 4,554,963 | 425,476 |
Impairment of intangible assets | 1,861,562 | 0 |
Stock-based compensation | 2,431,063 | 1,157,252 |
Acquired in-process research and development | 18,723,952 | 0 |
Deferred taxes | (16,745) | (832,629) |
Amortization of inventory fair value adjustment associated with acquisition of TRx and Avadel Pediatric Product | 300,573 | 137,900 |
Non-cash interest expense | 302,882 | 20,364 |
Change in fair value of contingent consideration liability | 58,366 | 0 |
Change in fair value of warrant liability and unit purchase option liability | (25,010) | 29,624 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (222,530) | (247,195) |
Other receivables | (2,277,255) | (427,241) |
Inventory, net | (311,199) | (24,276) |
Prepaid expenses and other assets | (241,641) | (177,691) |
Escrowed cash receivable | 3,752,390 | (3,752,390) |
Accounts payable | 82,451 | 96,065 |
Income taxes payable | (226,890) | 2,259,148 |
Accrued expenses and other liabilities | 7,792,259 | 2,044,548 |
Other long term liabilities | 385,517 | 0 |
Net cash (used in) provided by operating activities | (3,128,102) | 12,578,778 |
Investing activities | ||
Net cash acquired from acquisition of Ichorion Therapeutics, Inc. | 1,429,877 | 0 |
Purchase of property and equipment | (564,415) | (23,325) |
Net cash provided by (used in) investing activities | 865,461 | (18,912,257) |
Financing activities | ||
Proceeds from exercise of stock options and warrants | 1,083,953 | 0 |
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | 5,685,038 | 0 |
Proceeds from sale of shares pursuant to common stock private placement, net | 3,857,106 | 4,649,996 |
Proceeds from sales of common stock purchased through employee stock purchase plan | 72,236 | 46,861 |
Proceeds from sale of shares under common stock purchase agreement | 0 | 1,693,498 |
Payment of contingent consideration | (294,435) | 0 |
Principal payments on term debt | 0 | (2,374,031) |
Payment of fractional shares upon conversion of preferred stock to common stock | 0 | 4 |
Payment of offering costs | 0 | (279,247) |
Net cash provided by financing activities | 10,403,898 | 3,737,081 |
Increase (decrease) in cash and cash equivalents | 8,141,257 | (2,596,398) |
Cash and cash equivalents at beginning of period | 2,605,499 | 5,201,897 |
Cash and cash equivalents at end of period | 10,746,756 | 2,605,499 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 525,000 | 72,526 |
Cash paid for taxes | 354,000 | 540,000 |
Debt assumed in Avadel Pediatric Products acquisition | (15,075,000) | 0 |
Supplemental disclosures of non-cash investing and financing activities | ||
Issuance of common stock in TRx acquisition | 19,971,554 | 5,858,955 |
Contingently issuable shares in TRx acquisition | 2,655,464 | |
Cash and cash equivalents | 10,646,301 | 2,472,187 |
Restricted cash, current | 18,730 | 1,959 |
Restricted cash, non-current | 81,725 | 131,353 |
TRx | ||
Investing activities | ||
Acquisition of business, net of cash acquired | 0 | (18,888,932) |
Supplemental disclosures of non-cash investing and financing activities | ||
Issuance of common stock in TRx acquisition | 0 | 5,858,955 |
Contingently issuable shares in TRx acquisition | 0 | 2,655,464 |
Avadel | ||
Investing activities | ||
Acquisition of business, net of cash acquired | $ (1) | $ 0 |
Business
Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business Cerecor Inc. (the "Company" or “Cerecor”) is a fully integrated biopharmaceutical company with commercial operations and research and development capabilities. The Company is building a robust pipeline of innovative therapies in pediatric healthcare, neurology, and orphan rare diseases. The Company's neurology pipeline is led by CERC-301, which is currently in a Phase I safety study for Neurogenic Orthostatic Hypotension ("nOH"). The Company is also developing two other neurological clinical and preclinical stage compounds. The Company's pediatric orphan rare disease pipeline is led by CERC-801, CERC-802 and CERC-803. All three of these compounds are preclinical therapies for inherited metabolic disorders known as Congenital Disorders of Glycosylation ("CDGs") by means of substrate replacement therapy. The U.S. Food and Drug Administration ("FDA") has granted Rare Pediatric Disease designation ("RPDD") and Orphan Drug Designation ("ODD") to all three compounds. Under the FDA’s Rare Pediatric Disease Priority Review Voucher ("PRV") program, upon the approval of a new drug application ("NDA") for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for a PRV that can be used to obtain priority review for a subsequent new drug application or biologics license application. The PRV may be sold or transferred an unlimited number of times. The Company plans to leverage the 505(b)(2) NDA pathway for all three compounds to accelerate development and approval. The Company is also in the process of developing one other preclinical pediatric orphan rare disease compound, CERC-913. The Company also has a diverse portfolio of marketed products. Our marketed products are led by our prescribed dietary supplements and prescribed drugs. Our prescribed dietary supplements include Poly-Vi-Flor and Tri-Vi-Flor which are prescription vitamin and fluoride supplements used in infants and children to treat or prevent deficiency of essential vitamins and fluoride. The Company also markets a number of prescription drugs that treat a range of pediatric diseases, disorders and conditions. Cerecor's prescription drugs include Millipred®, Ulesfia®, Karbinal™ ER, AcipHex® Sprinkle™ and Cefaclor for Oral Suspension. Finally, the Company has one marketed medical device, Flexichamber™. Cerecor was incorporated in 2011, commenced operations in the second quarter of 2011 and completed an initial public offering in October 2015. In August 2017, the Company sold its 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 indemnification obligations to Janssen. The Company collected the full amount of the escrow in August of 2018. Additionally, there is a potential future $20 million regulatory milestone payment to the Company. 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, the Company acquired TRx Pharmaceuticals, LLC (“TRx”) and its wholly-owned subsidiaries (see "TRx Acquisition" in Note 4 below for a description of the transaction). On February 16, 2018, Cerecor acquired all rights to Avadel Pharmaceuticals PLC’s (“Avadel”) marketed pediatric products (the “Acquired Products”) for the assumption of certain of Avadel's financial obligations (see "Avadel Pediatric Products Acquisition" in Note 4 below for a description of the transaction). On September 25, 2018, the Company acquired Ichorion Therapeutics, Inc., a privately-held biopharmaceutical company focused on developing treatments and increasing awareness of inherited metabolic disorders known as CDGs (see "Ichorion Asset Acquisition" in Note 4 below for a description of the transaction). Liquidity The Company applies a disciplined decision-making methodology as it evaluates the optimal allocation of the Company's resources between investing in the Company's current commercial product line, the Company's development portfolio and acquisitions or in-licensing of new assets in order to meet its cash flow needs. For the year ended December 31, 2018, Cerecor generated a net loss of $40.1 million and negative cash flow from operations of $3.1 million . As of December 31, 2018, Cerecor had an accumulated deficit of $98.2 million and a balance of $10.6 million in cash and cash equivalents. During the third quarter of 2018, the Company entered into a securities purchase agreement with Armistice Capital Master Fund Ltd. ("Armistice"), pursuant to which the Company sold 1,000,000 shares of the Company's common stock that generated net proceeds of approximately $3.9 million (see "Armistice Private Placements" in Note 13 below for a description of the transaction). During the fourth quarter of 2018, Armistice exercised warrants for convertible preferred stock that generated net proceeds of approximately $5.7 million (see "December 2018 Armistice Private Placement" in Note 13 below for a description of the transaction). Additionally, during the first quarter of 2019, the Company closed on an underwritten public offering of common stock for 1,818,182 shares of common stock of the Company, at a price to the public of $5.50 per share ("public price"). Armistice participated in the offering by purchasing 363,637 shares of common stock of the Company from the underwriter at the public price. The net proceeds of the offering was approximately $9.0 million . The Company plans to use cash and the anticipated positive net cash flows from the Company's existing product sales to offset costs related to its pediatric rare disease programs, neurology clinical programs, business development, costs associated with its organizational infrastructure and debt principal and interest payments. Cerecor expects to continue to incur significant expenses and operating losses for the immediate future as it continues to invest in the Company's pipeline assets. Our ability to achieve and maintain profitability in the future is dependent on, among other things, the development, regulatory approval and commercialization of our new product candidates and achieving a level of revenues from our existing product sales adequate to support our cost structure, which includes significant investment in our pipeline assets. The Company believes it will require additional financing to continue to execute its clinical development strategy and/or fund future operations. The Company plans to meet its capital requirements through operating cash flows from product sales and some combination of equity or debt financings, collaborations, out-licensing arrangements, strategic alliances, federal and private grants, marketing, distribution or licensing arrangements or the sale of current or future assets. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible or suspend or curtail planned programs. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates. Our plan to aggressively develop our pipeline, including our recently acquired pediatric rare disease preclinical programs, will require substantial cash inflows in excess of what the Company expects our current commercial operations to generate. The Company expects that our existing cash and cash equivalents, together with anticipated revenue, will enable us to fund our operating expenses, capital expenditure requirements, and other non-operating cash payments such as fixed quarterly payments on our outstanding debt balances through at least March 2020. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance 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 (the “FASB”). Reclassification During 2018, the Company concluded that going forward it would net amounts due to distributors against open receivable balances. The Company has reclassified $0.3 million from accrued expenses and other current liabilities to accounts receivable, net in the December 31, 2017 balance sheet to conform with current period presentation. During 2018, the Company concluded that going forward it would include amortization expense within its own standalone line in operating expenses in the Company's consolidated statements of operations. The Company has reclassified $0.4 million from sales and marketing expenses in the December 31, 2017 statements of operations to conform with current period presentation. 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. 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, cost of product sales, stock-based compensation, fair value measurements (including those relating to contingent consideration), cash flows used in management's going concern assessment, 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. 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 million , of which $3.75 million was deposited into a twelve -month escrow to secure certain indemnification obligations to Janssen. The Company collected the full escrow amount in August 2018. Restricted Cash Restricted cash consists of the 2016 Employee Stock Purchase Plan (the "Plan") deposits and credit card deposits. In exchange for receiving business credit card services from Silicon Valley Bank, the Company deposited $50,000 as collateral with Silicon Valley Bank. These deposits are recorded as restricted cash, net of current portion on the balance sheet at December 31, 2018. Additionally, deposits made by employees for future stock purchases as part of the Plan is recorded as restricted cash. As part of the Plan, eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the Plan administrator. The Company adopted ASU No. 2016-18, Restricted Cash ("ASU 2016-18") effective January 1, 2018 and now includes restricted cash balances within the cash, cash equivalents and restricted cash balance on the statement of cash flows. All prior periods were retrospectively adjusted to conform to the current period presentation. Accounts Receivable, net Accounts receivable, net is comprised of amounts due from customers in the ordinary course of business. Management considers all accounts receivable to be fully collectible at December 31, 2018, 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. 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 primarily of finished goods 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. Property and Equipment Property and equipment consists of computers, office equipment, furniture, and leasehold improvements 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. For leasehold improvements, deprecation of the asset will begin at the date it is placed in service and the depreciable life of the leasehold improvement is the shorter of the lease term or the improvement's useful life. The Company uses a life of ten years for leasehold improvements. 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. Acquisitions For acquisitions that meet the definition of a business under ASC 805, the Company records the acquisition using the acquisition method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration. For acquisitions that do not meet the definition of a business under ASC 805, the Company accounts for the transaction as an asset acquisition. 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 the Company's Chief Executive Officer. The CEO views the Company’s operations and manages the business as one operating segment. All long‑lived assets of the Company reside in the United States. Goodwill Goodwill relates to the amount that arose in connection with the acquisitions of TRx and Avadel's pediatric products. 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. The Company consists of one reporting unit. 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 might not be recoverable. Impairment losses are measured and recognized to the extent the carrying value of such assets exceeds their fair value. Product Revenues, net The Company generates substantially all of its revenue from sales of prescription pharmaceutical products to its customers and has identified a single product delivery performance obligation, which is the provision of prescription pharmaceutical products to its customers based upon master service agreements in place with wholesaler distributors, purchase orders from retail pharmacies or other direct customers and a contractual arrangement with a specialty pharmacy. The performance obligation is satisfied at a point in time, when control of the product has been transferred to the customer, either at the time the product has been received by the customer or to a lesser extent when the product is shipped. The Company determines the transaction price based on fixed consideration in its contractual agreements and the transaction price is allocated entirely to the performance obligation to provide pharmaceutical products. In determining the transaction price, a significant financing component does not exist because the timing from when the Company delivers product to when the customers pay for the product is less than one year and the customers do not pay for product in advance of the transfer of the product. Revenues from sales of products are recorded net of any variable consideration for estimated allowances for returns, chargebacks, distributor fees, prompt payment discounts, government rebates, and other common gross-to-net revenue adjustments. The identified variable consideration is recorded as a reduction of revenue at the time revenues from product sales are recognized. The Company recognizes revenue only to the extent that it is probable that a significant revenue reversal will not occur in a future period. Provisions for returns and government rebates are included within current liabilities in the consolidated balance sheet. Provisions for prompt payment discounts and distributor fees are included as a reduction to 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. These estimates may differ from actual consideration amount received and the Company will re-assess these estimates and judgments each reporting period to adjust accordingly. The following table presents net revenues disaggregated by type: Year Ended December 31, 2018 2017 Prescribed dietary supplements $ 7,678,003 $ 1,092,271 Prescription drugs 10,192,742 818,132 Sales force revenue 456,056 278,165 License and other revenue — 25,000,000 Grant revenue — 624,569 Total revenues, net $ 18,326,801 $27,813,137 Concentration with Customer As is typical in the pharmaceutical industry, the Company sells its prescription pharmaceutical products (which include prescribed dietary supplements and prescription drugs) 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. For the year ended December 31, 2018, the Company’s three largest customers accounted for approximately 30% , 30% , and 25% , respectively, of the Company's total net product revenues from sale of prescription pharmaceutical products. 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. Returns and Allowances Consistent with industry practice, the Company maintains a return policy that allows customers to return product within a specified period both prior to and, in certain cases, subsequent to the product's expiration date. The Company’s return policy generally allows customers to receive credit for expired products within six months prior to expiration and within one year after expiration. The provision for returns and allowances consists of estimates for future product returns and pricing adjustments. The primary factors considered in estimating potential product returns include: • the shelf life or expiration date of each product; • historical levels of expired product returns; • external data with respect to inventory levels in the wholesale distribution channel; • external data with respect to prescription demand for the Company’s products; and • the estimated returns liability to be processed by year of sale based on analysis of lot information related to actual historical returns. The Company’s estimate for returns and allowances may be impacted by a number of factors, but the principal factor relates to the level of inventory in the distribution channel. Rebates The Company is subject to rebates on sales made under governmental pricing programs. For example, Medicaid rebates are amounts owed based upon contractual agreements or legal requirements with public sector (Medicaid) benefit providers after the final dispensing of the product by a pharmacy to a benefit plan participant. Medicaid reserves are based on expected payments, which are driven by patient usage, contract performance and field inventory that will be subject to a Medicaid rebate. Medicaid rebates are typically billed up to 180 days after the product is shipped, however can be as much as 270 days after the quarter in which the product is dispensed to the Medicaid participant. In addition to the estimates mentioned above, the Company’s calculation also requires other estimates, such as estimates of sales mix, to determine which sales are subject to rebates and the amount of such rebates. Periodically, the Company adjusts the Medicaid rebate provision based on actual claims paid. Due to the delay in billing, adjustments to actual claims paid may incorporate revisions of this provision for several periods. Because Medicaid pricing programs involve particularly difficult interpretations of complex statutes and regulatory guidance, our estimates could differ from actual experience. In determining estimates for these rebates, the Company considers the terms of the contracts, relevant statutes, historical relationships of rebates to revenues, past payment experience, estimated inventory levels and estimated future trends. Sales Force Revenue Pursuant to a marketing agreement with Pharmaceutical Associates, Inc . ( “PAI”), the Company received a monthly marketing fee to promote, market and sell certain products on behalf of PAI. The Company was also entitled to a share of PAI's profits under the agreement. Marketing fees and profit-sharing was recognized as sale force revenue when all the performance obligations have been satisfied and to the extent that it was probable that a significant revenue reversal would not occur in a future period. The marketing agreement with PAI was terminated in April 2018. License and Other Revenue The Company recognizes revenues from collaboration, license or other research or sale arrangements when or as performance obligations are satisfied. For milestone payments, the Company assesses, at contract inception, whether the milestones are considered probable of being achieved. If it is probable that a significant revenue reversal will occur, the Company will not record revenue until the uncertainty has been resolved. Milestone payments that are contingent upon regulatory approval are not considered probable until the approvals are obtained as it is outside of the control of the Company. If it is probable that significant revenue reversal will not occur, the Company will estimate the milestone payments using the most likely amount method. The Company will re-assess the milestones each reporting period to determine the probability of achievement. Grant Revenue Grant revenues are derived from government grants that support the Company’s efforts on specific research projects. The Company determined that the government agencies providing grants to the Company are not our customers. The Company recognizes grant revenue when there is reasonable assurance of compliance with the conditions of the grant and reasonable assurance that the grant revenue will be received. Accounting Policy Elections Related to Adoption of New Revenue Recognition Standard The Company elected the following practical expedients in applying Topic 606 to its identified revenue streams: • Portfolio approach - contracts within each revenue stream have similar characteristics and the Company believes this approach would not differ materially than if applying Topic 606 to each individual contract. • Modified retrospective approach - the Company applied Topic 606 only to contracts with customers that were not completed at the date of initial application, January 1, 2018. • Significant financing component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. • Shipping and handling activities - the Company considers any shipping and handling costs that are incurred after the customer has obtained control of the product as a cost to fulfill a promise and will account for them as an expense. • Contract costs - the Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. The Company does not incur costs to obtain a contract or costs to fulfill a contract that would result in the capitalization of contract costs. Specifically, internal sales commissions are costs to fulfill a contract and are expensed in the same period that revenue is recognized, which is typically within the same quarterly reporting period. Contract costs are expensed or amortized in “Operating expenses” on the accompanying Consolidated Statements of Operations. The Company has not made significant changes to the judgments made in applying ASU 2014-09, Revenue from Contracts with Customers (Topic 606) for the year ended December 31, 2018. 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; (iv) the value of any write-offs of obsolete or damaged inventory that cannot be sold, (v) minimum sale obligations and (vi) minimum purchase obligations. 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. Shipping, Handling, and Freight The Company includes the cost of shipping, handling, and freight associated with product sales as part of cost of product sales. Research and Development Costs 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, such as direct and allocated expenses for rent, utilities and insurance; and costs associated with preclinical activities and regulatory operations, pharmacovigilance, quality and travel. 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. 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 might vary and might result in it reporting amounts that are too high or too low for any particular period. Acquired In-Process Research and Development Expenses Acquired in-process research and development ("IPR&D") expense includes the initial costs of IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use. Amortization Expense Amortization expense includes the amortization of the Company's acquired intangible assets. There is no amortization expense included in cost of product sales or sales and marketing expense as all amortization expense is included within its own standalone line in operating expenses in the Company's consolidated statements of operations. Estimated Fair Value and Change in Fair Value of Contingent Consideration The Company's business acquisitions of Avadel's pediatric products and TRx involve the potential for future payment of consideration that is contingent upon the achievement of operation and commercial milestones and royalty payments on future product sales. The fair value of contingent consideration was determined at the acquisition date utilizing unobservable inputs such as 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 the current fair value with changes recorded in the consolidated statement of operations. There is no change in fair value of contingent consideration included in cost of product sales or research and development costs as the change in fair value of contingent consideration is included within its own standalone line in operating expenses in the Company's consolidated statements of operations. 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, 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, 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 option grants with market-based conditions, compensation expense is recognized ratably over the attribution period. The Company estimates the fair value of the market-based stock option grants using a Monte-Carlo simulation. The Company generally estimates fair value using assumptions, including the risk-free interest rate, the expected volatility of a peer group of similar companies, the expected term of the awards and the expected dividend yield. The expected term for market-based stock option awards is based on the expected term calculated using a Monte-Carlo simulation. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. 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 ("NOL") 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 NOLs and research and development credit carryforwards, may be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code (the "IRC"). 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, 2018, the Company did not believe any material uncertain tax positions were present. On December 22, 2017, the “Tax Cuts and Jobs Act” ("TCJA" or "the Act") was enacted, that significantly reforms the IRC. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and NOL 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 Note 15 below for further discussion related to the tax impact to the Company. Recently Adopted Accounting Pronouncements Adoption of ASC 606 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). Topic 606, along with amendments issued in 2015, 2016 and 2017, 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. On January 1, 2018, the Company adopted the new revenue recognition standard for all contracts not completed as of the adoption date using the modified retrospective method. The implementation of the new revenue recognition standard did not have a material quantitative impact on the Company’s consolidated financial statements as the timing of revenue recognition for product sales did not significantly change. In addition, the Company did not have a material cumulative effect adjustment to accumulated deficit upon adoption of the new revenue recognition standard on January 1, 2018. The information presented for the periods prior to January 1, 2018 has not been restated and is reported under Topic 605. The Company recognizes revenue when its performance obligations with its customers have been satisfied. At contract inception, the Company determines if a contract is within the scope of Topic 606 and then evaluates the contract using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Other Adopted Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-01, Business Combin |
Net (Loss) Income Per Share Of
Net (Loss) Income Per Share Of Common Stock, Basic And Diluted | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net (Loss) Income Per Share of Common Stock, Basic and Diluted | Net (Loss) Income Per Share of Common Stock, Basic and Diluted The Company computes earnings per share ("EPS") using the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared and participation rights in undistributed earnings. Under the two-class method, EPS for the common stock, preferred 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, preferred stock and participating warrants based on the weighted average shares outstanding during the period. In periods of net loss, losses are allocated to the participating security only if the security has not only the right to participate in earnings, but also a contractual obligation to share in the Company's losses. Diluted net (loss) income 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 and restricted stock awards 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) prior to issuance, 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, as stated above, net losses are not allocated to the participating securities unless the participating security has a contractual obligation to share in both earnings and losses of the Company. The following table sets forth the computation of basic and diluted net loss per share of common stock for the years ended December 31, 2018 and 2017 , which includes both classes of participating securities: Year ended December 31, Net (loss) income per share, basic and diluted calculation: 2018 2017 Basic (loss) income per share Net (loss) income $ (40,052,810 ) $ 11,869,823 Deemed distribution to shareholder 1,657,383 — Undistributable (loss) earnings allocable to common shares $ (41,710,193 ) $ 7,772,084 Undistributable (loss) earnings allocable to participating warrants $ — $ 4,097,739 Weighted average shares, basic Common stock 34,773,613 18,410,005 Participating warrants — 9,706,458 34,773,613 28,116,463 Basic (loss) income per share: Common stock $ (1.20 ) $ 0.42 Participating warrants $ — $ 0.42 Diluted (loss) income per share: Net (loss) income attributable to common shares $ (41,710,193 ) $ 7,772,084 Net (loss) income reallocated — 49,642 Undistributed (loss) earnings allocable to common shares $ (41,710,193 ) $ 7,821,726 Weighted average number of shares attributable to common shareholders - basic 34,773,613 18,410,005 Effect of dilutive securities: Stock options — 61,510 Contingently issuable shares — 283,284 Potentially dilutive shares — 344,794 Weighted average number of shares - diluted 34,773,613 18,754,799 Diluted (loss) income per share $ (1.20 ) $ 0.42 On December 27, 2018, the Company entered into a series of transactions as part of a private placement with Armistice in order to generate cash to continue to develop our pipeline assets and for general corporate purposes. The transactions are considered one transaction for accounting purposes. As part of the transaction, the Company exchanged common stock warrants issued as a part of the Armistice private placement in 2017 for the purchase up to 14,285,714 shares of the Company’s common stock at an exercise price of $0.40 per share (the "original warrants") for like-kind warrants to purchase up to 2,857,143 shares of the Company's newly designated Series B Convertible Preferred Stock (the "Series B Convertible Preferred Stock" or "convertible preferred stock") with an exercise price of $2.00 per share (the "exchanged warrants"). The convertible preferred stock has the same rights and preferences as common stock other than it is non-voting and converts to shares of common stock on a 1 for 5 ratio. Armistice immediately exercised the exchanged warrants and acquired an aggregate of 2,857,143 shares of the Series B Convertible Preferred Stock to generate net proceeds of approximately $5.7 million . The convertible preferred stock is considered a separate class of stock for EPS purposes, however basic and diluted EPS is not provided for the preferred stock for the year ended December 31, 2018 because the shares were only outstanding for five days for the year. Therefore, EPS for the preferred stock is immaterial for the year ended December 31, 2018, however will be disclosed going forward. In order to provide Armistice an incentive to exercise the exchanged warrants, the Company also entered into a securities purchase agreement with Armistice pursuant to which the Company issued warrants for 4,000,000 shares of common stock of the Company with a term of 5.5 years and an exercise price of $12.50 per share (the "incentive warrants"). For accounting purposes the fair value of the incentive warrants was considered a deemed distribution to Armistice of $1.7 million . The deemed distribution is calculated as the difference between the fair value of the incentive warrants on the date of the transaction of $2.2 million and the value that Armistice forwent by exchanging the original warrants of $0.5 million . The fair value of the incentive warrant is estimated using a Black-Scholes option-pricing model. The significant assumptions used in the model for valuing the incentive warrant on December 27, 2018 include: (i) volatility of 55% , (ii) risk-free interest rate of 2.62% , (iii) unit strike price of $12.50 , (iv) fair value of underlying equity of $3.02 , and (v) expected life of 5.5 years . The net loss of $40.1 million for the year ended December 31, 2018 is increased by the deemed distribution of $1.7 million to arrive at the net loss attributable to common shareholders of $41.7 million . While the incentive warrants do have the rights to participate in undistributed earnings, the incentive warrants issued do not share in net losses of the Company. As such, the incentive warrants are excluded from the weighted average shares and warrants outstanding during periods of net loss. For the 2017 EPS calculation, the shares of unexercised original warrants issued in the Armistice private placement transaction in 2017 are considered participating securities because these warrants contain a non-forfeitable right to dividends irrespective of whether the warrants are ultimately exercised. The following outstanding securities at December 31, 2018 and 2017 have been excluded from the computation of diluted weighted shares outstanding, as they could have been anti-dilutive: December 31, 2018 2017 Stock options 4,246,597 2,812,006 Warrants on common stock 4,024,708 4,661,145 Restricted Stock Awards 445,000 — Underwriters' unit purchase option 40,000 40,000 |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations and Asset Acquisitions [Abstract] [Abstract] | |
Acquisition | Acquisition Ichorion Asset Acquisition On September 24, 2018, the Company entered into, and subsequently consummated the transactions contemplated by, an agreement and plan of merger by and among the Company and Ichorion Therapeutics, Inc., a Delaware corporation (the “Ichorion Asset Acquisition”), with Ichorion surviving as a wholly owned subsidiary of the Company. The consideration for the Ichorion Asset Acquisition consisted of approximately 5.8 million shares of the Company’s common stock, par value $0.001 per share, as adjusted for Estimated Working Capital as defined in the Merger Agreement. The shares are subject to a lockup date through December 31, 2019, which restricts the resale of the common stock issued as part of the acquisition until the lockup period is complete. Consideration for the Ichorion Asset Acquisition includes certain development milestones worth up to an additional $15 million, payable either in shares of the Company's common stock or in cash, at the election of the Company. The fair value of the common stock shares transferred at closing was approximately $20 million using the Company's stock price close on September 24, 2018 and offset by an estimated discount for lack of marketability calculated using guideline public company volatility for comparable companies. The assets acquired consisted primarily of $18.7 million of IPR&D, $1.6 million of cash and $0.2 million assembled workforce. The Company recorded this transaction as an asset purchase as opposed to a business combination as management concluded that substantially all of the value received was related to one group of similar identifiable assets which was the IPR&D for the three preclinical therapies for inherited metabolic disorders known as CDGs (CERC-801, CERC-802 and CERC-803). The Company has considered these assets similar due to similarities in the risks for development, compound type, stage of development, regulatory pathway, patient population and economics of commercialization. The fair value of the IPR&D was immediately recognized as Acquired In-Process Research and Development expense as the IPR&D asset has no other alternate use due to the stage of development. The acquired IPR&D expense was not tax deductible for the year ended December 31, 2018. The $0.2 million of transaction costs incurred were recorded to acquire IPR&D expense. The assembled workforce asset recorded to intangible assets will be amortized over an estimated useful life of two years . The contingent consideration is related to three future development milestones and if met the Company may be required to pay out an additional $15 million . The first milestone is contingent on the first product being approved for marketing by the FDA on or prior to December 31, 2021. If this milestone is met, the Company is required to make a milestone payment of $6 million , payable either in shares of the Company's common stock or in cash, at the election of the Company. The second milestone is contingent on the second product being approved for marketing by the FDA on or prior to December 31, 2021. If this milestone is met, the Company is required to make a milestone payment of $5 million , payable in either shares of the Company's common stock or cash, at the election of the Company. The third milestone is contingent on a protide molecule being approved by the FDA on or prior to December 31, 2023. If this milestone is met, the Company is required to make a milestone payment of $4 million , payable in either shares of the Company's common stock or cash, at the election of the Company. The contingent consideration related to the development milestones will be recognized if and when such milestones are probable and can be reasonably estimated. As of December 31, 2018, no contingent consideration related to the development milestone has been recognized. The Company will continue to monitor the development milestones at each reporting period. Acquisitions of Businesses Avadel Pediatric Products Acquisition On February 16, 2018, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Avadel US Holdings, Inc., Avadel Pharmaceuticals (USA), Inc., Avadel Pediatrics, Inc., Avadel Therapeutics, LLC and Avadel Pharmaceuticals PLC (collectively, the “Sellers”) to purchase and acquire all rights to the Sellers’ pediatric products. Total consideration transferred to the Sellers consisted of a cash payment of one dollar. In addition, the Company assumed existing seller debt due in January 2021 with a fair value of $15.1 million and contingent consideration relating to royalty obligations through February 2026 with a fair value at acquisition date of approximately $7.9 million . As a result of the Avadel pediatric products acquisition, the Company has currently recorded goodwill of $3.8 million , which is deductible over 15 years for income tax purposes. 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 an expanded commercial footprint and diversified pediatric product portfolio that is expected to provide revenue and cost synergies. Transaction costs of $0.1 million were included as general and administrative expense in the consolidated statements of operations for the year ended December 31, 2018. During the second quarter of 2018, the Company identified and recorded measurement period adjustments to the preliminary purchase price allocation. These adjustments are reflected in the tables below. The measurement period adjustments were the result of additional analysis performed and information identified during the second quarter of 2018 based on facts and circumstances that existed as of the purchase date. There were no additional measurement adjustments recorded in 2018. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition and as adjusted for measurement period adjustments identified during the second quarter: At February 16, 2018 (preliminary) Measurement Period Adjustments At February 16, 2018 (as adjusted) Inventory $ 2,549,000 $ (1,831,000 ) $ 718,000 Prepaid assets — 570,000 570,000 Intangible assets 16,453,000 1,838,000 18,291,000 Accrued expenses — (362,000 ) (362,000 ) Fair value of debt assumed (15,272,303 ) 197,303 (15,075,000 ) Fair value of contingent consideration (7,875,165 ) (44,835 ) (7,920,000 ) Total net liabilities assumed (4,145,468 ) 367,468 (3,778,000 ) Consideration exchanged 241,000 (240,999 ) 1 Goodwill $ 4,386,468 $ (608,467 ) $ 3,778,001 Based on valuation estimates utilizing the estimated sales price of inventory less sales and marketing costs and an allowance for profit, a step-up in the value of inventory of $0.3 million was recorded in the opening balance sheet, of which approximately $0.1 million was charged to cost of goods sold during the post-acquisition period, February 16, 2018 through December 31, 2018. The purchase price allocation related to the acquisition of Avadel's pediatric products has been finalized. The fair values of intangible assets, including marketing rights, licenses and developed technology, were determined using variations of the income approach. 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 both as of the date of acquisition and as adjusted by measurement period adjustments identified during the second quarter includes the following: At February 16, 2018 (preliminary) Measurement Period Adjustments At February 16, 2018 (as adjusted) Useful Life Acquired Product Marketing Rights - Karbinal $ 6,221,000 $ (21,000 ) $ 6,200,000 10 years Acquired Product Marketing Rights - AcipHex 2,520,000 283,000 2,803,000 10 years Acquired Product Marketing Rights - Cefaclor 6,291,000 1,320,000 7,611,000 7 years Acquired Developed Technology - Flexichamber 1,131,000 546,000 1,677,000 10 years Acquired IPR&D - LiquiTime formulations 290,000 (290,000 ) — Indefinite Total $ 16,453,000 $ 1,838,000 $ 18,291,000 TRx Acquisition On November 17, 2017, the Company entered into, and consummated the transactions contemplated by, an equity interest purchase agreement (the “TRx Purchase Agreement”) by and among the Company, TRx, Fremantle Corporation and LRS International LLC, the selling members of TRx (collectively, the “TRx Sellers”), which provided for the purchase of all of the equity and ownership interests of TRx by the Company (the "TRx Acquisition"). The consideration for the TRx 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 (the "Equity Consideration") and certain potential contingent payments. Upon closing, the Company issued 5,184,920 shares of its common stock to the TRx Sellers. Pursuant to the TRx Purchase Agreement, the issuance of the remaining 2,349,968 shares were subject to the Company's stockholder approval. In May 2018, stockholder approval was obtained and the remaining shares were issued to the TRx Sellers. The contingent shares were initially recorded to contingently issuable shares, which is recorded within stockholder's equity and were reclassed to common stock and additional paid in capital upon issuance, on the consolidating balance sheet date. As a result of the TRx Acquisition, the Company has currently recorded goodwill of $12.6 million , of which $8.7 million was deductible for income taxes. During the third quarter of 2018, the Company identified and recorded measurement period adjustments to our preliminary purchase price allocation that was disclosed in prior periods. These adjustments are reflected in the tables below. If the measurement period adjustments were reflected in the consolidated statement of operations for the year ended December 31, 2017 its impact would have been immaterial. The measurement period adjustments were the result of an arbitration ruling discussed in further detail in Note 11, the facts and circumstances of which existed as of the acquisition date. The following table summarizes the preliminary acquisition-date fair value of the consideration transferred at the date of acquisition both as disclosed in prior periods prior to the third quarter of 2018 and as adjusted for measurement period adjustments identified during the third quarter of 2018: At November 17, 2017 (preliminary) Measurement Period Adjustments At November 17, 2017 (as adjusted) Cash $ 18,900,000 $ — $ 18,900,000 Common stock (including contingently issuable shares) 8,514,419 — 8,514,419 Contingent payments 2,576,633 (1,210,000 ) 1,366,633 Total consideration transferred $ 29,991,052 (1,210,000 ) 28,781,052 The TRx Acquisition 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 research and development, intellectual property, and processes. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition both as disclosed in prior periods prior to the third quarter of 2018 and as adjusted for measurement period adjustments identified during the third quarter of 2018: At November 17, 2017 (preliminary) Measurement Period Adjustments At November 17, 2017 (as adjusted) Fair value of assets acquired: Cash and cash equivalents $ 11,068 $ — $ 11,068 Accounts receivable, net 2,872,545 — 2,872,545 Inventory 495,777 — 495,777 Prepaid expenses and other current assets 134,281 — 134,281 Other receivables — 2,764,515 2,764,515 Identifiable Intangible Assets: — Acquired product marketing rights - Metafolin 10,465,000 1,522,000 11,987,000 PAI sales and marketing agreement 2,334,000 219,000 2,553,000 Acquired product marketing rights - Millipred 4,714,000 342,000 5,056,000 Acquired product marketing rights - Ulesfia 555,000 (555,000 ) — Total assets acquired 21,581,671 4,292,515 25,874,186 Fair value of liabilities assumed: Accounts payable 192,706 — 192,706 Accrued expenses and other current liabilities 4,850,422 3,764,515 8,614,937 Deferred tax liability 839,773 78,840 918,613 Total liabilities assumed 5,882,901 3,843,355 9,726,256 Total identifiable net assets 15,698,770 449,160 16,147,930 Fair value of consideration transferred 29,991,052 (1,210,000 ) 28,781,052 Goodwill $ 14,292,282 $ (1,659,160 ) $ 12,633,122 Based on valuation estimates utilizing the estimated selling price of inventory less sales and marketing costs and an allowance for profit, a step-up in the value of inventory of $0.2 million was recorded in the opening balance sheet, of which approximately $0.2 million was charged to cost of product sales during the year ended December 31, 2018. The purchase price allocation related to the TRx Acquisition has been finalized. The fair values of intangible assets, including marketing rights, licenses and developed technology, 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 final fair value of intangible assets both as disclosed in prior periods and as adjusted by measurement period adjustments identified during the third quarter of 2018 includes the following: At November 17, Measurement Period Adjustments At November 17, 2017 (as adjusted) Useful Life Acquired product marketing rights - Metafolin $ 10,465,000 $ 1,522,000 $ 11,987,000 15 years PAI sales and marketing agreement 2,334,000 219,000 2,553,000 2 years Acquired product marketing rights - Millipred 4,714,000 342,000 5,056,000 4 years Acquired product marketing rights - Ulesfia 555,000 (555,000 ) — Total $ 18,068,000 $ 1,528,000 $ 19,596,000 The Company received written notice to terminate the PAI sales and marketing agreement in the second quarter of 2018. As a result, the Company reassessed the fair value of the PAI sales and marketing agreement on that date (a level III non-recurring fair value measurement) and concluded due to the absence of future cash flows beyond the date of termination that the fair value was $0 . An impairment charge was recognized in the year ended December 31, 2018 in the amount of $1.9 million , representing the remaining net book value of the PAI sales and marketing agreement intangible asset. Pro Forma Impact of Business Combinations The following supplemental unaudited pro forma information presents Cerecor’s financial results as if the acquisitions of Avadel Pediatric Products, which was completed on February 16, 2018, and of TRx, which was completed on November 17, 2017, had each occurred on January 1, 2017: Year Ended December 31, 2018 2017 Pro forma Pro forma Total revenues, net $ 20,031,801 $ 51,288,212 Net loss $ (40,919,015 ) $ 5,963,853 Basic and diluted net (loss) income per share $ (1.18 ) $ 0.21 The above unaudited pro forma information was determined based on the historical GAAP results of Cerecor, Avadel's pediatric products and TRx. The unaudited pro forma consolidated results are provided for informational purposes only and are not necessarily indicative of what Cerecor’s consolidated results of operations would have been had the acquisitions of Avadel's pediatric products and TRx been completed on the dates indicated or what the consolidated results of operations will be in the future. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC No. 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. 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, 2018 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* $ 7,324,932 $ — $ — Liabilities Contingent consideration $ — $ — $ 9,050,564 Warrant liability** $ — $ — $ 2,950 Unit purchase option liability** $ — $ — $ 7,216 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 *Investments in money market funds are reflected in cash and cash equivalents on the accompanying Balance Sheets. **Warrant liability and unit purchase option liability are reflected in accrued expenses and other current liabilities on the accompanying consolidated balance sheets. At December 31, 2018 and 2017 , the Company’s financial instruments included cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities, short term and long-term debt, warrant liability, the underwriters' unit purchase option liability and contingent consideration. The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, 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 long-term debt of $14.9 million as of December 31, 2018 was based on current interest rates for similar types of borrowings and is in Level 2 of the fair value hierarchy. Level 3 Valuation 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 contingent consideration for the years ended December 31, 2018 and 2017 : Warrant Unit purchase Contingent liability option liability consideration Total Balance at December 31, 2017 $ 8,185 $ 26,991 $ 2,576,633 $ 2,611,809 Issuance of contingent consideration — — 7,920,000 7,920,000 Payment of contingent consideration — — (294,435 ) (294,435 ) Purchase price allocation measurement period adjustment of contingent consideration — — (1,210,000 ) (1,210,000 ) Change in fair value (5,235 ) (19,775 ) 58,366 33,356 Balance at December 31, 2018 $ 2,950 $ 7,216 $ 9,050,564 $ 9,060,730 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 In 2014, the Company issued warrants to purchase 625,208 shares of convertible preferred stock. Upon the closing of our initial public offering ("IPO") in October 2015 these warrants became warrants to purchase 22,328 shares of common stock, in accordance with their terms. The warrants expire in October 2020. The warrants represent a freestanding financial instrument that is indexed to an obligation, which the Company refers to as the warrant liability. The warrant liability is marked-to-market each reporting period with the change in fair value recorded to other income, net 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, 2018 , include (i) volatility of 50% , (ii) risk-free interest rate of 2.51% , (iii) strike price of $8.40 , (iv) fair value of common stock of $3.23 , and (v) expected life of 1.8 years. The underwriters’ unit purchase option (the “UPO”) was issued to the underwriters of the Company's 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. The Class B warrants expired in April 2017 and the Class A warrants expired in October 2018, while the UPO expires in October 2020. 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, net 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. The significant assumptions used in preparing the simulation model for valuing the UPO as of December 31, 2018 , include (i) volatility of 50% , (ii) risk-free interest rate of 2.51% , (iii) unit strike price of $7.47 , (iv) fair value of underlying equity of $3.23 , and (v) expected life of 1.8 years. The Company's business acquisitions of Avadel's pediatric products and TRx (see Note 4) involve the potential for future payment of consideration that is contingent upon the achievement of operation and commercial milestones and royalty payments on future product sales. The fair value of contingent consideration was determined at the acquisition date utilizing unobservable inputs such as 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 liabilities are remeasured at the current fair value with changes recorded in the consolidated statement of operations. As part of the acquisition of Avadel's pediatric products, the Company will pay a 15% annual royalty on net sales of the acquired Avadel pediatric products through February 2026 up to an aggregate amount of $12.5 million . The fair value of the future royalty is the expected future value of the contingent payments discounted to a present value. The estimated fair value of the royalty payments as of December 31, 2018 was $7.8 million . The significant assumptions used in estimating the fair value of the royalty payment as of December 31, 2018 include (i) the expected net sales of the acquired Avadel pediatric products that are subject to the 15% royalty based on the Company's net sales forecast, and (ii) the risk-adjusted discount rate of 8.1% , which is comprised of the risk-free interest rate of 2.6% and a counterparty risk of 5.5% . The liability is reduced by periodic payments. The consideration for the TRx acquisition includes certain potential contingent payments. First, pursuant to the TRx Purchase Agreement, the Company is required to pay $3.0 million to the Sellers upon the gross profit related to TRx products achieving or exceeding a gross profit of $12.6 million in 2018. The Company did not achieve this contingent event in 2018 and therefore no value was assigned to the contingent payout for the year ended December 31, 2018. Additionally, the Company will pay $2.0 million upon the transfer of the Ulesfia NDA to the Company ("NDA Transfer Milestone"). Finally, the Company will pay $2.0 million upon FDA approval of a new dosage of Ulesfia ("FDA Approval Milestone"). The main inputs utilized to determine the fair value of each milestone is the probability of the milestone's success, the expected time to successfully reach the milestone, and the risk-adjusted discount rate. The estimated fair value of the NDA Transfer Milestone as of December 31, 2018 was $0.9 million and the significant assumptions used in estimating the fair value include (i) probability of milestone success of 45.0% , (ii) expected time to milestone of 0.5 years, and (iii) risk-adjusted discount rate of 7.9% , which is comprised of the risk-free rate of 2.4% and a counterparty risk of 5.5% . The estimated fair value of the FDA Approval Milestone as of December 31, 2018 was $0.4 million . The significant assumptions used in estimating the fair value of the FDA Approval Milestone as of December 31, 2018 include (i) probability of milestone success at 22.5% , (ii) expected time to milestone of 1.5 years, and (iii) risk-adjusted discount rate of 8.0% , which is comprised of the risk-free rate of 2.5% and a counterparty risk of 5.5% . No other changes in valuation techniques or inputs occurred during the years ended December 31, 2018 and 2017 . No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the years ended December 31, 2018 and 2017 . |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory consists of finished goods 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. Inventory consisted of the following as of December 31, 2018 and 2017: December 31, 2018 2017 Raw materials $ 11,392 $ — Finished goods 1,427,935 560,499 Inventory reserve (328,547 ) (178,346 ) Inventory, net $ 1,110,780 $ 382,153 During the years ended December 31, 2018 and 2017, the Company recorded a related charge to cost of goods sold for obsolete inventory of $150,201 and $178,346 , respectively. |
Property And Equipment
Property And Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment as of December 31, 2018 and 2017 consisted of the following: December 31, 2018 2017 Furniture and equipment $ 133,229 $ 58,126 Computers and software 122,065 96,133 Leasehold improvements 463,381 — Total property and equipment 718,675 154,259 Less accumulated depreciation (132,163 ) (109,647 ) Property and equipment, net $ 586,512 $ 44,612 Depreciation expense was $22,515 and $21,956 for the years ended December 31, 2018 and December 31, 2017 , respectively. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2017 were as follows: Balance at December 31, 2016 $ — Goodwill from acquisition of TRx Pharmaceuticals 14,292,282 Balance at December 31, 2017 $ 14,292,282 Goodwill from acquisition of Avadel's pediatric products 3,778,001 Goodwill purchase price allocation measurement period adjustment from acquisition of TRx Pharmaceuticals (1,659,160 ) Balance at December 31, 2018 $ 16,411,123 There were no accumulated impairment losses to goodwill at December 31, 2018 or December 31, 2017. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The changes in intangible assets for the years ended December 31, 2018 and 2017 were as follows: Balance at December 31, 2016 $ — Additions 18,068,000 Amortization (403,520 ) Balance at December 31, 2017 $ 17,664,480 Additions 18,441,000 Purchase price allocation measurement period adjustments 1,527,998 Amortization (4,532,448 ) Impairment (1,861,562 ) Balance at December 31, 2018 $ 31,239,468 The following is a summary of intangible assets held by the Company at December 31, 2018 and December 31, 2017, respectively: December 31, 2018 Gross Carrying Amount Accumulated Amortization Impairment Loss Net Carrying Amount Weighted-Average Remaining Life (in years) Acquired Product Marketing Rights $ 33,656,998 $ (4,080,767 ) $ — $ 29,576,231 9.45 Sales and Marketing Agreement 2,553,000 (691,438 ) (1,861,562 ) — — Acquired Developed Technology 1,677,000 (145,013 ) — 1,531,987 9.25 Acquired Assembled Workforce 150,000 (18,750 ) — 131,250 1.75 Total Intangible Assets $ 38,036,998 $ (4,935,968 ) $ (1,861,562 ) $ 31,239,468 9.41 December 31, 2017 Gross Carrying Amount Accumulated Amortization Impairment Loss Net Carrying Amount Weighted-Average Remaining Life (in years) Acquired Product Marketing Rights $ 15,734,000 $ (257,645 ) $ — $ 15,476,355 11.20 Sales and Marketing Agreement 2,334,000 (145,875 ) — 2,188,125 1.90 Total Intangible Assets $ 18,068,000 $ (403,520 ) $ — $ 17,664,480 10.05 The Company received written notice to terminate the PAI sales and marketing agreement in the second quarter of 2018. As a result the Company reassessed the fair value of the PAI sales and marketing agreement on that date (a level III non-recurring fair value measurement) and concluded due to the absence of future cash flows beyond the date of termination that the fair value was $0 . An impairment charge was recognized in the year ended December 31, 2018 in the amount of $1.9 million, representing the remaining net book value of the PAI sales and marketing agreement intangible asset on the date of assessment. Amortization of intangibles for the next five years and thereafter is expected to be as follows: Estimated Amortization For the Years Ending December 31, Expense 2019 $ 4,315,318 2020 4,296,568 2021 4,082,334 2022 2,976,322 2023 2,976,322 Thereafter 12,592,604 Total future amortization expense $ 31,239,468 |
Accrued Expenses And Other Curr
Accrued Expenses And Other Current Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017 consisted of the following: December 31, 2018 2017 Sales returns $ 3,972,510 $ 3,478,349 Medicaid rebates 2,237,269 350,681 Minimum sales commitments, royalties payable, and purchase obligations 9,662,901 743,010 Compensation and benefits 1,953,065 1,401,514 Research and development expenses 278,132 299,480 General and administrative 1,112,378 1,001,454 Sales and marketing 235,721 — Other 279,397 256,634 Total accrued expenses and other current liabilities $ 19,731,373 $ 7,531,122 |
Agreements
Agreements | 12 Months Ended |
Dec. 31, 2018 | |
ASSET ACQUISITION AND LICENSE AGREEMENTS | |
Agreements | 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, 2018. 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 & Co. (“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-Vi-Flor” trademarks and agreed not to oppose TRx’s seeking the marks Poly-Vi-Flor and Tri-Vi-Flor in the United States and in any other countries where Mead Johnson does not have an active registration 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 Poly-Vi-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 Related Contracts 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”) In November 2017, the Company acquired TRx and its wholly-owned subsidiaries, including Zylera. The previous owners of TRx beneficially own more than 10% of our outstanding common stock. Zylera, which is our wholly owned subsidiary, entered into the First Amended and Restated Distribution Agreement with Lachlan, effective December 18, 2015. Pursuant to the Lachlan Agreement, Lachlan named Zylera as its exclusive distributor of Ulesfia in the United States and agreed to supply Ulesfia to Zylera exclusively for marketing and sale in the United States. Zylera is obligated to purchase a minimum of 20,000 units per year, or approximately $1.2 million worth of product, from Lachlan, subject to certain termination rights. Zylera must pay Lachlan $58.84 per unit and handling fees that are 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 Lachlan Agreement also requires that Zylera make certain cumulative net sales milestone payments and royalty payments to Lachlan with a $3 million annual minimum payment unless and until there has been a “Market Change” involving a new successful competitive product. Lachlan is obligated to pay identical amounts to an unrelated third party from which it obtained rights to Ulesfia, with the payments ultimately flowing to Summers Laboratories, Inc. (“Summers Labs”). Because of the dispute described below, the Company has not made any payments to Lachlan under the Lachlan Agreement subsequent to the acquisition date. On December 10, 2016, Zylera informed Lachlan that a Market Change had occurred due to the introduction of Arbor Pharmaceuticals' lice product, Sklice®. On June 5, 2017, Lachlan and Zylera entered into joint legal representation along with other unrelated third parties in negotiation and arbitration of a dispute with Summers Labs regarding the existence of a Market Change and the concomitant obligations of the parties. The arbitration panel issued an interim ruling on October 23, 2018 that no market change had occurred up to and including the date of the hearing. The arbitration panel issued a second interim ruling on December 26, 2018. The second interim award rejected Summers Labs' request to accelerate future minimum royalties, however, it ruled in favor of Summers Labs that it is owed reimbursement for all reasonable costs and expenses, including legal fees, by Shionogi, as well as interest, as stipulated in the contract. The arbitration panel issued a final award on March 1, 2019 that dictated the final amount of reimbursable costs and interest as contemplated in the second interim ruling. The final award has no direct bearing on the Company as the Company was not a named defendant to the original claim by Summers Labs and a federal court denied Zylera's ability to be a counterclaimant in the matter. Furthermore, the Company is not subject to the guarantee or interest provisions identified in the second ruling as these elements of the contractual relationship were not passed down to the Company’s agreement with Lachlan. However, the Company has interpreted this ruling's impact on the Lachlan agreement to mean that a market change has not occurred, and the minimum purchase obligation and minimum royalty provisions of the contract are active and due for any prior periods as well as going forward for any future periods. The Company has recognized a $7.8 million liability for these minimum obligations in accrued liabilities as of December 31, 2018. Under the terms of the TRx Purchase Agreement, the former TRx owners are required to indemnify the Company for 100% of all pre-acquisition losses related this arbitration, including legal costs, and possible minimum payments in excess of $1 million . Furthermore, the former TRx owners are required to indemnify the Company for 50% of post-acquisition Ulesfia losses, which would include losses resulting from having to fund these minimum obligations. The Company has recorded an indemnity receivable of $4.9 million in other receivables as of December 31, 2018, which the Company believes is fully collectible. The receivable is net of $1.9 million collection made in the fourth quarter of 2018 from a full cash escrow release with the former TRx owners from the escrow that was established as a part of the TRx acquisition. The post-acquisition minimum obligations net of amounts recorded within the indemnity receivable of $2.2 million has been recorded in cost of product sales for the year ended December 31, 2018. If the Company fails to make these minimum obligations timely then the Lachlan Agreement may be terminated by Lachlan, in which case the Company would no longer be able to sell the Ulesfia product, but it would also not be subject to future minimum obligations. Lachlan has not requested payment for the minimum obligations. Commercial, Supply, and Distribution Agreements Acquired Product Marketing Rights - Karbinal On February 16, 2018, in connection with the acquisition of Avadel's pediatric products, the Company entered into a supply and distribution agreement with TRIS Pharma (the "Karbinal Agreement"), under which the Company is granted the exclusive right to distribute and sell the product in the United States. The initial term of the Karbinal Agreement is 20 years . The Company will pay TRIS a royalty equal to 23.5% of net sales. Avadel has agreed to offset the 23.5% royalty payable by 8.5% , for a net royalty equal to 15% , in fiscal year 2018 and 2019 for net sales of Karbinal. The make-whole payment is capped at $750,000 each year. The Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units through 2033. The Company is required to pay TRIS a royalty make whole payment of $30 for each unit under the 70,000 units annual minimum sales commitment through 2033. The annual payment is due in August of each year. The Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net sales, the first of which is triggered at $40.0 million . Acquired Product Marketing Rights - AcipHex On February 16, 2018, in connection with the acquisition of Avadel's pediatric products, the Company assumed the License and Assignment Agreement for AcipHex (“AcipHex Agreement”) between Eisai, Inc. and FSC Therapeutics, LLC dated June 2014 and the Supply Agreement between Eisai, Inc. and FSC Laboratories, Inc. dated June 2014. Per the AcipHex Agreement, the Company is granted the exclusive license to exploit the products in the territory (U.S.) and an exclusive license to use Eisai trademarks to sell the products. Eisai will manufacture and supply the requirements for supply of the products. The term of the AcipHex Agreement is perpetual unless terminated per the agreement. Eisai will receive (a) a royalty with respect to the sales of AcipHex equal to 15.0% of Net Sales. The royalties are payable until the first commercial sale of an unauthorized generic product in the territory or the date that is five years from the effective date of the agreement. A maximum $8.0 million of sales-based milestone payments is possible should AcipHex accumulated net sales exceed $50.0 million in any twelve-month period Acquired Product Marketing Rights- Cefaclor On February 16, 2018, in connection with the acquisition of Avadel's pediatric products, the Company assumed the License, Supply and Distribution Agreement for Cefaclor between Yung Shin Pharm. Ind, Co., Ltd. and FSC Therapeutics, LLC dated March 2015 (“Cefaclor Agreement”). The initial term of the Cefaclor Agreement runs through December 31, 2024 and will automatically renew for additional, successive twelve -month periods unless terminated by either party. Yung Shin will receive a royalty equal to 15.0% of Net Sales of Cefaclor. A maximum $6.5 million of sales-based milestone payments is possible should Cefaclor accumulated net sales exceed $40.0 million in any twelve-month period. |
Deerfield Debt Obligation
Deerfield Debt Obligation | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Deerfield Debt Obligation | Deerfield Debt Obligation In relation to the Company's acquisition of Avadel's pediatric products on February 16, 2018, the Company assumed an obligation that Avadel had to Deerfield (the "Deerfield Obligation"). Beginning in July 2018 through October 2020, the Company will pay a quarterly payment of $262,500 to Deerfield. In January 2021, a balloon payment of $15,250,000 is due. On the acquisition date, the Company determined the fair value of these payments to be $ 15,075,000 using a market participant's estimated cost of debt. Management performed a credit risk analysis that determined the Company's credit rating to be B to BB plus the yield on a ten -year treasury security. The difference between the gross value and fair value of these payments will be recorded as interest expense in the Company's consolidated statements of operations through January 2021 using the effective interest method. Interest expense for the year ended December 31, 2018 was $0.8 million and is included in interest expense, net on the accompanying statements of operations. The amounts due within the next year are included in current portion of long-term debt on the Company's consolidated balance sheets. The amounts due in greater than one year are included in long-term debt, net of current portion, on the Company's consolidated balance sheets. The Deerfield Obligation was $15.4 million as of December 31, 2018, of which $1.1 million is recorded as a current liability. The Deerfield Obligation contains certain covenants in which the Company is in compliance with as of December 31, 2018. |
Capital Structure
Capital Structure | 12 Months Ended |
Dec. 31, 2018 | |
CAPITAL STRUCTURE | |
Capital Structure | Capital Structure According to the Company's amended and restated certificate of incorporation, the Company is authorized to issue two classes of stock, common stock and preferred stock. At December 31, 2018 , 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 certificate of incorporation in connection with the closing of the Armistice Private Placement (as defined below) 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 of the Series A Preferred Stock”). The Certificate of Designation of the Series A Preferred Stock 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 and was approved by its shareholders on June 30, 2017. On July 6, 2017, Armistice converted all of its outstanding shares of Series A Preferred Stock into common stock. On December 26, 2018, the Company filed a Certificate of Designation of Preferences of Series B Non-Voting Convertible Preferred Stock ("Series B Convertible Preferred Stock" or "convertible preferred stock") of Cerecor Inc. (the “Certificate of Designation of the Series B Preferred Stock”) classifying and designating the rights, preferences and privileges of the Series B Convertible Preferred Stock. The Certificate of Designation of the Series B Convertible Preferred Stock authorized the issuance of 2,857,143 shares of convertible preferred stock to Armistice with a par value of $0.001 per share. The Series B Convertible Preferred Stock converts to shares of common stock on a 1 for 5 ratio and holds no voting rights. Convertible Preferred Stock December 2018 Armistice Private Placement On December 27, 2018, the Company entered into a series of transactions as part of a private placement with Armistice in order to generate cash to continue to develop our pipeline assets and for general corporate purposes. The transactions are considered one transaction for accounting purposes. As part of the transaction, the Company exchanged common stock warrants issued on April 27, 2017 to Armistice for the purchase up to 14,285,714 shares of the Company’s common stock at an exercise price of $0.40 per share (the "original warrants") for like-kind warrants to purchase up to 2,857,143 shares of the Company's newly designated Series B Convertible Preferred Stock with an exercise price of $2.00 per share (the "exchanged warrants"). Armistice immediately exercised the exchanged warrants and acquired an aggregate of 2,857,143 shares of the convertible preferred stock. Net proceeds of the transaction were approximately $5.7 million . In order to provide Armistice an incentive to exercise the exchanged warrants, the Company also entered into a securities purchase agreement with Armistice pursuant to which the Company issued warrants for 4,000,000 shares of common stock of the Company with a term of 5.5 years and an exercise price of $12.50 per share (the "incentive warrants"). For accounting purposes this was considered a deemed distribution to Armistice of $1.7 million . The deemed distribution is calculated as the difference between the fair value of the incentive warrants on the date of the transaction of $2.2 million and the value that Armistice forwent by exchanging the original warrants of $0.5 million . The fair value of the incentive warrant is estimated using a Black-Scholes option-pricing model. The significant assumptions used in the model for valuing the incentive warrant on December 27, 2018 include (i) volatility of 55% , (ii) risk free interest rate of 2.62% , (iii) unit strike price of $12.50 , (iv) fair value of underlying equity of $3.02 , and (v) expected life of 5.5 years . Voting Holders of the Company's convertible preferred stock are not entitled to vote. Dividends The holders of convertible preferred 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 convertible preferred 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 Each share of convertible preferred stock converts to shares of common stock on a 1 for 5 ratio. There are no other preemptive or subscription rights and there are no redemption or sinking fund provisions applicable to the Company’s common stock. Common Stock Common Stock Offering On March 8, 2019, the Company closed on an underwritten public offering of common stock for 1,818,182 shares of common stock of the Company, at a price to the public of $5.50 per share. Armistice participated in the offering by purchasing 363,637 shares of common stock of the Company from the underwriter at the public price. The net proceeds to the Company from the offering was approximately $9.0 million . Armistice Private Placements As discussed in detail above (see "December 2018 Armistice Private Placement" ), on December 27, 2018 the Company exchanged previously outstanding warrants for like-kind warrants for 2,857,143 shares of the Company's convertible preferred stock with an exercise price of $2.00 per share which Armistice immediately exercised thus acquiring 2,857,143 shares of convertible preferred stock for net proceeds of $5.7 million . The convertible preferred stock converts to common stock on a 1 to 5 ratio (or to 14,285,714 shares of common stock in total). Additionally, on December 27, 2018, in order to provide Armistice an incentive to exercise the exchanged warrants, the Company entered into a securities purchase agreement with Armistice pursuant to which the Company issued warrants for 4,000,000 shares of common stock of the Company with a term of 5.5 years and an exercise price of $12.50 per share (the "incentive warrants"). See "December 2018 Armistice Private Placement" above for more details. On August 17, 2018, the Company entered into a securities purchase agreement with Armistice, pursuant to which the Company sold 1,000,000 shares of the Company’s common stock, $0.001 par value per share for a purchase price of $3.91 per share, which was the closing price of shares of the Common Stock on August 16, 2018. Net proceeds of this securities purchase agreement were approximately $3.9 million . 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. Ichorion Asset Acquisition On September 25, 2018, under the terms of the Ichorion Asset Acquisition noted above in Note 4, the Company issued 5.8 million common stock shares upon closing. Contingently Issuable Shares Under the terms of TRx acquisition noted above in Note 4, the Company was required to issue common stock having an aggregate value as calculated in the TRx Purchase Agreement on the Closing Date of $8.1 million (the “Equity Consideration”). Upon closing, the Company issued 5,184,920 shares of its common stock. Pursuant to the TRx Purchase Agreement, the issuance of the remaining 2,349,968 shares as a part of the Equity Consideration was subject to stockholder approval at the Company's 2018 Annual Stockholder's Meeting. This approval was obtained in May 2018 and the remaining shares were issued to the TRx Sellers. 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, 2018 , the following common stock warrants were outstanding: Number of shares Exercise price Expiration underlying warrants per share date 22,328* $ 8.40 October 2020 2,380* $ 8.68 May 2022 4,000,000 $ 12.50 June 2024 4,024,708 *Accounted for as a liability instrument (see Note 5) |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
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. An Amended and Restated 2016 Equity Incentive Plan (the "2016 Amended Plan") was approved by the Company's stockholders in May 2018, which increased the share reserve by an additional 1.4 million shares. During the term of the 2016 Amended Plan, the share reserve will automatically increase on the first trading day in January of each calendar year, 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, 2018, there were 602,657 shares available for future issuance under the 2016 Plan. On January 1, 2019, on the terms of the 2016 Amended Plan an additional 1,632,167 shares were made available for issuance for a total of 2,234,824 shares 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. Stock-based compensation expense includes expense related to stock options, restricted stock awards and ESPP shares. The amount of stock-based compensation expense recognized for the years ending December 31, 2018 and 2017 was as follows: Year Ended December 31, 2018 2017 Research and development $ 101,000 $ 156,047 General and administrative 2,135,710 1,001,205 Sales and marketing 194,353 — Total stock-based compensation $ 2,431,063 $ 1,157,252 During the third quarter of 2018, the Company modified stock options of a senior executive who was separated in the period. This modification resulted in the recognition of approximately $322,000 of compensation expense, which is included in general and administrative expenses for the year ended December 31, 2018 in the accompanying statement of operations. Stock options with service-based vesting conditions The Company has granted awards that contain service-based vesting conditions. The compensation cost for these options is recognized on a straight-line basis over the vesting periods. A summary of option activity with service-based vesting conditions for the year ended December 31, 2018 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 at December 31, 2017 2,823,489 $ 3.93 7.29 Granted 1,639,860 $ 3.85 $ 3,737,728 Exercised (243,115 ) Forfeited (473,637 ) $ 2.77 $ 1,109,083 Balance at December 31, 2018 3,746,597 $ 4.16 7.79 Exercisable at December 31, 2018 1,997,468 $ 4.71 6.62 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, 2018 , the aggregate intrinsic value of options outstanding and options currently exercisable was $1.5 million and $1.0 million , respectively. The total intrinsic value of options exercised during the year ended December 31, 2018 was $0.5 million . The total grant date fair value of shares which vested during the years ended December 31, 2018 and 2017 was $1.2 million and $2.9 million , respectively. The per‑share weighted‑average grant date fair value of the options granted during 2018 and 2017 was estimated at $2.28 and $0.66 , respectively. There were 641,286 options that vested during the year ended December 31, 2018 with a weighted average grant date fair value of $1.87 per share. At December 31, 2018, there was $3,062,257 of total unrecognized compensation cost related to nonvested service-based vesting conditions awards. This unrecognized compensation cost is expected to be recognized over a weighted-average period of 3.1 years. Stock options with market-based vesting conditions During 2018 the Company granted awards that contain market-based vesting conditions. A summary of option activity with market-based vesting conditions for the year ended December 31, 2018 is as follows: Options Outstanding Number of shares Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value (1) Balance at December 31, 2017 — Granted 500,000 $ 4.24 Balance at December 31, 2018 500,000 $ 4.24 9.24 $ — Exercisable at December 31, 2018 — (1) The aggregate intrinsic value in the above table represents the total pre-tax amount that a participant would receive if the option had been exercised on the last day of the respective fiscal period. Options with a market value less than its exercise value are not included in the intrinsic value amount. The weighted-average grant-date fair value of stock options with market-based vesting conditions granted during 2018 was $2.52 per share or $1,260,000 . At December 31, 2018, there was $917,568 of total unrecognized compensation cost related to nonvested market-based vesting conditions awards. This compensation cost is expected to be recognized over a weighted-average period of 2.05 years. Stock-based compensation assumptions The following table shows the assumptions used to compute stock-based compensation expense for stock options granted to employees and members of the board of directors under the Black-Scholes valuation model, and the assumptions used to compute stock-based compensation expense for market-based stock option grants under a Monte Carlo simulation: Year Ended December 31, Service-based options 2018 2017 Risk-free interest rate 2.51% — 3.01% 1.85% — 2.38% Expected term of options (in years) 5.0 — 6.25 5.0 — 6.25 Expected stock price volatility 55% — 65% 55% — 100% Expected annual dividend yield 0% — 0% 0% — 0% Market-based options Risk-free interest rate 2.84% Expected term of options (in years) 2.8 Expected stock price volatility 60% Expected annual dividend yield 0% 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 with service-based vesting 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 for service-based options. The expected life of stock options with market-based vesting is derived from a Monte Carlo simulation which is the valuation technique used to value such awards. • 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% . Restricted Stock Award During 2018, the Company granted restricted stock awards ("RSA") to certain employees. The Company measures the fair value of the restricted awards using the stock price at the date of the grant. The restricted shares vest annually over a four year period beginning on the first anniversary of the award. A summary of RSA grants activity for the year ended December 31, 2018 is as follows: Non-vested RSAs Outstanding Number of shares Weighted average grant date fair value Non-vested RSAs at December 31, 2017 — Granted 445,000 $ 4.27 Non-vested RSAs at December 31, 2018 445,000 The stock compensation expense on this award for the year ended December 31, 2018 was $346,514 . At December 31, 2018, there was $1,551,986 of total unrecognized compensation cost related to the RSA grants. This compensation cost is expected to be recognized over a weighted-average period of 3.3 years. 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, 2018, 783,983 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 $49,863 and $76,305 for the years ended December 31, 2018 and December 31, 2017, respectively, which are included in the table above with stock-based compensation from stock options. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740 (Topic 740, Income Taxes). ASC Topic 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 our financial statement for the calendar year 2018. Tax years beginning in 2015 are generally subject to examination by taxing authorities, although NOLs 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 $0.2 million of interest and penalties related to unrecognized tax benefits for income taxes that have been accrued or recognized as of and for the year ended December 31, 2018. 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, 2018 and 2017: December 31, 2018 2017 Current: Federal $ (53,281 ) $ 2,309,285 State 36,116 489,863 Total Current: (17,165 ) 2,799,148 Deferred: Federal (52,235 ) (789,274 ) State 35,490 (43,355 ) Total Deferred (16,745 ) (832,629 ) Net income tax (benefit) expense $ (33,910 ) $ 1,966,519 The net deferred tax liabilities consisted of the following for the years ending December 31, 2018 and 2017: December 31, 2018 2017 Deferred tax assets: Net operating losses $ 4,421,423 $ 716,819 Accrued compensation 465,430 271,437 Deferred rent 15,373 4,051 Tax credits 252,095 — Stock-based compensation 1,922,736 1,291,230 Installment sale 508,291 — Other reserves 262,260 72,881 Basis difference in tangible and intangible assets, net 2,968,764 2,019,272 Total deferred tax assets 10,816,372 4,375,690 Deferred tax liabilities: Prepaid expenses (160,474 ) — Installment sales — (358,844 ) Total deferred tax liabilities (160,474 ) (358,844 ) Deferred tax asset, net 10,655,898 4,016,846 Less valuation allowance (10,725,136 ) (4,023,990 ) Net deferred taxes $ (69,238 ) $ (7,144 ) As of December 31, 2018, the Company has roughly $16,426,000 of gross NOLs for federal and state tax purposes of which approximately $3,580,000 will begin to expire in 2031, while the remaining amount of $12,846,000 will carryforward indefinitely. The income tax benefit for the years ended December 31, 2018 and 2017 differed from the amounts computed by applying the U.S. federal income tax rate as follows: December 31, 2018 2017 Federal statutory rate 21.00 % 34.00 % Permanent Adjustments (0.37 )% 0.17 % Built-in-loss (0.33 )% 1.52 % State taxes 4.43 % 27.91 % Research and development credit 0.61 % (1.04 )% Change in statutory rate due to Tax Cuts and Job Act — % 15.82 % NOL adjustment per § 382 — % 126.82 % Non-deductible IPR&D expense (9.84 )% — % Other (0.04 )% 0.04 % Change in valuation allowance (15.37 )% (191.03 )% Effective income tax rate 0.09 % 14.21 % The valuation allowance recorded by the Company as of December 31, 2018 and December 31, 2017 resulted from the uncertainties of the future utilization of deferred tax assets relating from NOL carry forwards for federal and state income tax purposes. Realization of the NOL carry forwards is contingent on future taxable earnings. The 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 partial valuation allowance continues to be recorded against the Company’s deferred tax asset as of December 31, 2018 and December 31, 2017, as it was determined based upon past and projected future losses that it was “more likely than not” that the Company’s deferred tax assets would not be realized. As of December 31, 2018 and December 31, 2017, the Company has a net deferred tax liability due to having an indefinite life asset, referred to as a “naked credit.” The naked credit can be offset up to 80% by NOLs generated after January 1, 2018, the remaining 20% remains as a liability. In future years, if the 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, 2018 and December 31, 2017 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. The Company's current and future unused losses may be subject to limitation under Sections 382 and 383 of the IRC. Sections 382 and 383 of the IRC subject the future utilization of NOLs 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 (in general, an “ownership change” is defined as a greater than 50% change (by value) in equity ownership over a three-year period). 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 IRC, the Act reduces U.S. federal corporate tax rate from 35% to 21%. In addition, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Act ("SAB 118") which allowed 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 was expected over the past year, and significant data and analysis was required to finalize amounts recorded pursuant to the Tax Act, the Company considered the accounting for the deferred tax remeasurements and other items to be incomplete at December 31, 2017 due to the forthcoming guidance and its ongoing analysis of final year-end data and tax positions. The Company has completed its analysis within the measurement period in accordance with SAB 118 and there were no material additional adjustments necessary. |
Commitments And Contingencies
Commitments And Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company is party in various contractual disputes, litigation, and potential claims arising in the ordinary course of business. The Company does not believe that the resolution of these matters will have a material adverse effect on our financial position or results of operations except as otherwise disclosed in this document. See Note 11 for further discussion of the Lachlan legal arbitration. Purchase obligations The Company has unconditional purchase obligations as a result of recent acquisitions that include agreements to purchase goods that are enforceable and legally binding and that specify all significant terms including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable at any time without penalty. The unconditional purchase obligations outstanding as of December 31, 2018 include the following: Lachlan Pharmaceuticals Minimum Purchase and Minimum Royalties Obligations As discussed in Note 4, in November 2017, the Company acquired TRx and its wholly-owned subsidiaries, including Zylera. The previous owners of TRx beneficially own more than 10% of our outstanding common stock. Zylera, which is now our wholly owned subsidiary, entered into an agreement with Lachlan Pharmaceuticals, an Irish company controlled by the previous owners of TRx (“Lachlan”), effective December 18, 2015. Pursuant to the Lachlan Agreement, Lachlan named Zylera as its exclusive distributor of Ulesfia in the United States and agreed to supply Ulesfia to Zylera exclusively for marketing and sale in the United States. The Lachlan agreement requires Zylera to purchase a minimum of 20,000 units per year, or approximately $1.2 million worth of product, from Lachlan, unless and until there has been a “Market Change” involving a new successful competitive product. Zylera must pay Lachlan $58.84 per unit and handling fees that are equal to $3.66 per unit of fully packaged Ulesfia in 2018 and escalate at a rate of 10% annually. The Lachlan Agreement also requires that Zylera make certain cumulative net sales milestone payments and royalty payments to Lachlan with a $3.0 million annual minimum payment unless and until there has been a “Market Change” involving a new successful competitive product. The Company expects a successful competitive product will enter the market in early 2021 and therefore the future minimum purchase obligations and royalty payments are expected through 2020. As of December 31, 2018, future minimum purchase obligations and future minimum royalty payments to Lachlan are as follows: 2019* 2020* 2021 2022 Total* Minimum Purchase Obligations 1,257,326 1,265,378 — — $2,522,704 Minimum Royalties 3,000,000 3,000,000 — — 6,000,000 Total 4,257,326 4,265,378 — — $8,522,704 *Per the TRx Purchase Agreement, the previous owners of TRx are required to indemnify the Company for 50% of post-acquisition Ulesfia losses, which include the future minimum purchase obligations and future minimum royalties disclosed above. Thus, the Company's future net payouts related to the Ulesfia product will be significantly reduced as a result of the indemnification. Karbinal Royalty Make Whole Provision As discussed in Note 4, on February 16, 2018, in connection with the acquisition of Avadel's pediatric products, the Company entered into a supply and distribution agreement with TRIS Pharma (the "Karbinal Agreement"). As part of this agreement, the Company has an annual minimum sales commitment, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units through 2033. The Company is required to pay TRIS a royalty make whole payment of $30 for each unit under the 70,000 units annual minimum sales commitment through 2033. The annual payment is due in August of each year. The Company paid $0.9 million to TRIS in August 2018 related to the make whole payment for the commercial year ended July 31, 2018. For the year ended December 31, 2018, the Company has accrued $0.7 million in accrued expenses and other current liabilities related to the Karbinal royalty make whole for the commercial year ending July 31, 2019. The post-acquisition make whole provision of $1.3 million has been recorded in cost of product sales for the year ended December 31, 2018. The future royalty make whole payments is unknown as the amount owed to TRIS is dependent on the number of units sold. Office Lease During the third quarter of 2018, the Company entered into a lease for the Company's new corporate headquarters in Rockville, Maryland. The Company obtained access to the building in September 2018 to perform leasehold improvements, which resulted in the lease commencement date for accounting purposes. The Company occupied the building in January 2019. The landlord provided a lease incentive related for leasehold improvements in the amount of $381,900 , which the Company may requisition the landlord for payment on a monthly basis for the work incurred-to-date. As of December 31, 2018, the Company incurred leasehold improvements for the full amount of the incentive which the Company has recognized within other receivables. The Company recognized a corresponding lease incentive obligation within other long-term liabilities. The lease incentive obligation is reduced and recognized in income as a reduction to straight-line rental expense. The annual base rent for the office space is $161,671 , subject to annual 2.5% increases over the term of the lease. The lease provides for a rent abatement for a period of 12 months following the Company's date of occupancy. The lease has an initial term of 10 years from the date the Company makes its first annual fixed rent payment which is expected to occur in January 2020. The Company has the option to extend the lease two times, each for a period of five years , and may terminate the lease as of the sixth anniversary of the first annual fixed rent payment, upon the payment of a termination fee. As of the lease commencement date, it is not reasonably certain that the Company will exercise the renewal periods or early terminate the lease and therefore the end date of the lease for accounting purposes is January 31, 2030. The Company analyzed the lease agreement and determined the lease classification is operating. The Company recognizes operating lease rent expense on a straight-line basis over the expected term of each lease. The Company recognized rent expense for this property of $41,749 in general and administrative expense on the statement of operations for the year ended December 31, 2018. As of December 31, 2018, minimum operating lease obligations for the new office space are as follows: Minimum Lease Payments 2019 $ — 2020 155,815 2021 169,510 2022 173,748 2023 178,092 Thereafter 1,183,290 Total $ 1,860,455 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance 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 (the “FASB”). |
Reclassification | Reclassification During 2018, the Company concluded that going forward it would net amounts due to distributors against open receivable balances. The Company has reclassified $0.3 million from accrued expenses and other current liabilities to accounts receivable, net in the December 31, 2017 balance sheet to conform with current period presentation. During 2018, the Company concluded that going forward it would include amortization expense within its own standalone line in operating expenses in the Company's consolidated statements of operations. The Company has reclassified $0.4 million from sales and marketing expenses in the December 31, 2017 statements of operations to conform with current period presentation. |
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. |
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, cost of product sales, stock-based compensation, fair value measurements (including those relating to contingent consideration), cash flows used in management's going concern assessment, 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. |
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 million , of which $3.75 million was deposited into a twelve -month escrow to secure certain indemnification obligations to Janssen. The Company collected the full escrow amount in August 2018. |
Restricted Cash | Restricted Cash Restricted cash consists of the 2016 Employee Stock Purchase Plan (the "Plan") deposits and credit card deposits. In exchange for receiving business credit card services from Silicon Valley Bank, the Company deposited $50,000 as collateral with Silicon Valley Bank. These deposits are recorded as restricted cash, net of current portion on the balance sheet at December 31, 2018. Additionally, deposits made by employees for future stock purchases as part of the Plan is recorded as restricted cash. As part of the Plan, eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the Plan administrator. The Company adopted ASU No. 2016-18, Restricted Cash ("ASU 2016-18") effective January 1, 2018 and now includes restricted cash balances within the cash, cash equivalents and restricted cash balance on the statement of cash flows. All prior periods were retrospectively adjusted to conform to the current period presentation. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable, net is comprised of amounts due from customers in the ordinary course of business. Management considers all accounts receivable to be fully collectible at December 31, 2018, 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. |
Concentration of Credit 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. |
Inventory | Inventory Inventory consists primarily of finished goods 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. |
Property and Equipment | Property and Equipment Property and equipment consists of computers, office equipment, furniture, and leasehold improvements 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. For leasehold improvements, deprecation of the asset will begin at the date it is placed in service and the depreciable life of the leasehold improvement is the shorter of the lease term or the improvement's useful life. The Company uses a life of ten years for leasehold improvements. 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. |
Acquisitions | Acquisitions For acquisitions that meet the definition of a business under ASC 805, the Company records the acquisition using the acquisition method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration. For acquisitions that do not meet the definition of a business under ASC 805, the Company accounts for the transaction as an asset acquisition. |
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 the Company's Chief Executive Officer. The CEO views the Company’s operations and manages the business as one operating segment. All long‑lived assets of the Company reside in the United States. |
Goodwill | Goodwill Goodwill relates to the amount that arose in connection with the acquisitions of TRx and Avadel's pediatric products. 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. The Company consists of one reporting unit. |
Intangible Assets | Amortization Expense Amortization expense includes the amortization of the Company's acquired intangible assets. There is no amortization expense included in cost of product sales or sales and marketing expense as all amortization expense is included within its own standalone line in operating expenses in the Company's consolidated statements of operations. 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 might not be recoverable. Impairment losses are measured and recognized to the extent the carrying value of such assets exceeds their fair value. |
Estimated Fair Value and Change in Fair Value of Contingent Consideration | Estimated Fair Value and Change in Fair Value of Contingent Consideration The Company's business acquisitions of Avadel's pediatric products and TRx involve the potential for future payment of consideration that is contingent upon the achievement of operation and commercial milestones and royalty payments on future product sales. The fair value of contingent consideration was determined at the acquisition date utilizing unobservable inputs such as 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 the current fair value with changes recorded in the consolidated statement of operations. There is no change in fair value of contingent consideration included in cost of product sales or research and development costs as the change in fair value of contingent consideration is included within its own standalone line in operating expenses in the Company's consolidated statements of operations. |
Revenue Recognition | Product Revenues, net The Company generates substantially all of its revenue from sales of prescription pharmaceutical products to its customers and has identified a single product delivery performance obligation, which is the provision of prescription pharmaceutical products to its customers based upon master service agreements in place with wholesaler distributors, purchase orders from retail pharmacies or other direct customers and a contractual arrangement with a specialty pharmacy. The performance obligation is satisfied at a point in time, when control of the product has been transferred to the customer, either at the time the product has been received by the customer or to a lesser extent when the product is shipped. The Company determines the transaction price based on fixed consideration in its contractual agreements and the transaction price is allocated entirely to the performance obligation to provide pharmaceutical products. In determining the transaction price, a significant financing component does not exist because the timing from when the Company delivers product to when the customers pay for the product is less than one year and the customers do not pay for product in advance of the transfer of the product. Revenues from sales of products are recorded net of any variable consideration for estimated allowances for returns, chargebacks, distributor fees, prompt payment discounts, government rebates, and other common gross-to-net revenue adjustments. The identified variable consideration is recorded as a reduction of revenue at the time revenues from product sales are recognized. The Company recognizes revenue only to the extent that it is probable that a significant revenue reversal will not occur in a future period. Provisions for returns and government rebates are included within current liabilities in the consolidated balance sheet. Provisions for prompt payment discounts and distributor fees are included as a reduction to 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. These estimates may differ from actual consideration amount received and the Company will re-assess these estimates and judgments each reporting period to adjust accordingly. The following table presents net revenues disaggregated by type: Year Ended December 31, 2018 2017 Prescribed dietary supplements $ 7,678,003 $ 1,092,271 Prescription drugs 10,192,742 818,132 Sales force revenue 456,056 278,165 License and other revenue — 25,000,000 Grant revenue — 624,569 Total revenues, net $ 18,326,801 $27,813,137 Concentration with Customer As is typical in the pharmaceutical industry, the Company sells its prescription pharmaceutical products (which include prescribed dietary supplements and prescription drugs) 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. For the year ended December 31, 2018, the Company’s three largest customers accounted for approximately 30% , 30% , and 25% , respectively, of the Company's total net product revenues from sale of prescription pharmaceutical products. 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. Returns and Allowances Consistent with industry practice, the Company maintains a return policy that allows customers to return product within a specified period both prior to and, in certain cases, subsequent to the product's expiration date. The Company’s return policy generally allows customers to receive credit for expired products within six months prior to expiration and within one year after expiration. The provision for returns and allowances consists of estimates for future product returns and pricing adjustments. The primary factors considered in estimating potential product returns include: • the shelf life or expiration date of each product; • historical levels of expired product returns; • external data with respect to inventory levels in the wholesale distribution channel; • external data with respect to prescription demand for the Company’s products; and • the estimated returns liability to be processed by year of sale based on analysis of lot information related to actual historical returns. The Company’s estimate for returns and allowances may be impacted by a number of factors, but the principal factor relates to the level of inventory in the distribution channel. Rebates The Company is subject to rebates on sales made under governmental pricing programs. For example, Medicaid rebates are amounts owed based upon contractual agreements or legal requirements with public sector (Medicaid) benefit providers after the final dispensing of the product by a pharmacy to a benefit plan participant. Medicaid reserves are based on expected payments, which are driven by patient usage, contract performance and field inventory that will be subject to a Medicaid rebate. Medicaid rebates are typically billed up to 180 days after the product is shipped, however can be as much as 270 days after the quarter in which the product is dispensed to the Medicaid participant. In addition to the estimates mentioned above, the Company’s calculation also requires other estimates, such as estimates of sales mix, to determine which sales are subject to rebates and the amount of such rebates. Periodically, the Company adjusts the Medicaid rebate provision based on actual claims paid. Due to the delay in billing, adjustments to actual claims paid may incorporate revisions of this provision for several periods. Because Medicaid pricing programs involve particularly difficult interpretations of complex statutes and regulatory guidance, our estimates could differ from actual experience. In determining estimates for these rebates, the Company considers the terms of the contracts, relevant statutes, historical relationships of rebates to revenues, past payment experience, estimated inventory levels and estimated future trends. Sales Force Revenue Pursuant to a marketing agreement with Pharmaceutical Associates, Inc . ( “PAI”), the Company received a monthly marketing fee to promote, market and sell certain products on behalf of PAI. The Company was also entitled to a share of PAI's profits under the agreement. Marketing fees and profit-sharing was recognized as sale force revenue when all the performance obligations have been satisfied and to the extent that it was probable that a significant revenue reversal would not occur in a future period. The marketing agreement with PAI was terminated in April 2018. License and Other Revenue The Company recognizes revenues from collaboration, license or other research or sale arrangements when or as performance obligations are satisfied. For milestone payments, the Company assesses, at contract inception, whether the milestones are considered probable of being achieved. If it is probable that a significant revenue reversal will occur, the Company will not record revenue until the uncertainty has been resolved. Milestone payments that are contingent upon regulatory approval are not considered probable until the approvals are obtained as it is outside of the control of the Company. If it is probable that significant revenue reversal will not occur, the Company will estimate the milestone payments using the most likely amount method. The Company will re-assess the milestones each reporting period to determine the probability of achievement. Grant Revenue Grant revenues are derived from government grants that support the Company’s efforts on specific research projects. The Company determined that the government agencies providing grants to the Company are not our customers. The Company recognizes grant revenue when there is reasonable assurance of compliance with the conditions of the grant and reasonable assurance that the grant revenue will be received. Accounting Policy Elections Related to Adoption of New Revenue Recognition Standard The Company elected the following practical expedients in applying Topic 606 to its identified revenue streams: • Portfolio approach - contracts within each revenue stream have similar characteristics and the Company believes this approach would not differ materially than if applying Topic 606 to each individual contract. • Modified retrospective approach - the Company applied Topic 606 only to contracts with customers that were not completed at the date of initial application, January 1, 2018. • Significant financing component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. • Shipping and handling activities - the Company considers any shipping and handling costs that are incurred after the customer has obtained control of the product as a cost to fulfill a promise and will account for them as an expense. • Contract costs - the Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. The Company does not incur costs to obtain a contract or costs to fulfill a contract that would result in the capitalization of contract costs. Specifically, internal sales commissions are costs to fulfill a contract and are expensed in the same period that revenue is recognized, which is typically within the same quarterly reporting period. Contract costs are expensed or amortized in “Operating expenses” on the accompanying Consolidated Statements of Operations. The Company has not made significant changes to the judgments made in applying ASU 2014-09, Revenue from Contracts with Customers (Topic 606) for the year ended December 31, 2018. 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; (iv) the value of any write-offs of obsolete or damaged inventory that cannot be sold, (v) minimum sale obligations and (vi) minimum purchase obligations. 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. Shipping, Handling, and Freight The Company includes the cost of shipping, handling, and freight associated with product sales as part of cost of product sales. |
Research and Development | Research and Development Costs 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, such as direct and allocated expenses for rent, utilities and insurance; and costs associated with preclinical activities and regulatory operations, pharmacovigilance, quality and travel. 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. |
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 might vary and might result in it reporting amounts that are too high or too low for any particular period. |
Acquired In-Process Research and Development Expenses | Acquired In-Process Research and Development Expenses Acquired in-process research and development ("IPR&D") expense includes the initial costs of IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use. |
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, 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, 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 option grants with market-based conditions, compensation expense is recognized ratably over the attribution period. The Company estimates the fair value of the market-based stock option grants using a Monte-Carlo simulation. The Company generally estimates fair value using assumptions, including the risk-free interest rate, the expected volatility of a peer group of similar companies, the expected term of the awards and the expected dividend yield. The expected term for market-based stock option awards is based on the expected term calculated using a Monte-Carlo simulation. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. |
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 ("NOL") 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 NOLs and research and development credit carryforwards, may be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code (the "IRC"). 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, 2018, the Company did not believe any material uncertain tax positions were present. On December 22, 2017, the “Tax Cuts and Jobs Act” ("TCJA" or "the Act") was enacted, that significantly reforms the IRC. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and NOL 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 Note 15 below for further discussion related to the tax impact to the Company. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements Adoption of ASC 606 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). Topic 606, along with amendments issued in 2015, 2016 and 2017, 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. On January 1, 2018, the Company adopted the new revenue recognition standard for all contracts not completed as of the adoption date using the modified retrospective method. The implementation of the new revenue recognition standard did not have a material quantitative impact on the Company’s consolidated financial statements as the timing of revenue recognition for product sales did not significantly change. In addition, the Company did not have a material cumulative effect adjustment to accumulated deficit upon adoption of the new revenue recognition standard on January 1, 2018. The information presented for the periods prior to January 1, 2018 has not been restated and is reported under Topic 605. The Company recognizes revenue when its performance obligations with its customers have been satisfied. At contract inception, the Company determines if a contract is within the scope of Topic 606 and then evaluates the contract using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Other Adopted Accounting Pronouncements In January 2017, the FASB issued ASU No. 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 adopted this standard on January 1, 2018. In January 2017, the FASB issued ASU No. 2017-04 “ Intangibles-Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment ” ("ASU 2017-04"). 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. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company early adopted this standard on January 1, 2018. The standard was applied prospectively and the adoption of this standard did not have an impact on the Company's financial statements. In May 2017, the FASB issued ASU No. 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 stock-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 adoption of this standard on January 1, 2018 did not have a significant impact on the Company’s financial statements. In November 2016, the FASB issued ASU No. 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. The Company adopted this standard on January 1, 2018. Upon adoption of ASU 2016-18, the Company applied the retrospective transition method for each period presented and included $0.1 million of restricted cash in the beginning period cash, cash equivalents and restricted cash balance as of January 1, 2017. In October 2016, the FA SB issued ASU No. 2016-16, “ Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory ” ("ASU 2016-16"), 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 adoption of this standard on January 1, 2018 d id not have a significant impact on the Company’s 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. The adoption of this standard on January 1, 2018 did not have a significant impact on the Company’s financial statements. Recent Accounting Pronouncements 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 No. 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 the Company beginning January 1, 2019. In July 2018, the FASB issued both codification improvements, which clarify how to apply certain aspects of the standard, and an update to the transition methods allowable. Companies can either adopt the new standard at the earliest period presented using a modified retrospective approach or continue to apply the guidance under the current lease standard in the comparative periods presented. Companies that elect this option would record a cumulative-effect adjustment to the opening balance of retained earnings on the date of adoption, if necessary. The Company expects to apply the new guidance at the effective date, without adjusting the comparative periods. The Company anticipates that ASU 2016-02 will have an impact to the consolidated balance sheet, as the Company will record an asset and a liability in connection with the leased office space. The Company will elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows the Company to carryforward the historical lease classification. The Company is not electing the hindsight practical expedient. The Company has performed a preliminary assessment on the impact to the consolidated balance sheet and preliminarily expects that we will record a right-of-use liability and corresponding of approximately $1 million and a corresponding right-of-use asset (with certain adjustments for the accrued rent and unamortized lease incentive balance at January 1, 2019) related to the leased office space. This expectation is subject to change as management refines the inputs utilized in the calculation. The Company does not expect an impact to the statement of operations or liquidity. The Company is in the process of identifying its other lease agreements that will be impacted by the new standard to arrive at the overall impact to the consolidated financial statements, however anticipates the overall balance sheet impact to be less than 5% of the total liabilities balance as of December 31, 2018. |
Significant Accounting Polici_3
Significant Accounting Policies - (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Disaggregation of Revenue | The following table presents net revenues disaggregated by type: Year Ended December 31, 2018 2017 Prescribed dietary supplements $ 7,678,003 $ 1,092,271 Prescription drugs 10,192,742 818,132 Sales force revenue 456,056 278,165 License and other revenue — 25,000,000 Grant revenue — 624,569 Total revenues, net $ 18,326,801 $27,813,137 |
Net Loss Per Share Of Common St
Net Loss Per Share Of Common Stock, Basic And Diluted (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017 , which includes both classes of participating securities: Year ended December 31, Net (loss) income per share, basic and diluted calculation: 2018 2017 Basic (loss) income per share Net (loss) income $ (40,052,810 ) $ 11,869,823 Deemed distribution to shareholder 1,657,383 — Undistributable (loss) earnings allocable to common shares $ (41,710,193 ) $ 7,772,084 Undistributable (loss) earnings allocable to participating warrants $ — $ 4,097,739 Weighted average shares, basic Common stock 34,773,613 18,410,005 Participating warrants — 9,706,458 34,773,613 28,116,463 Basic (loss) income per share: Common stock $ (1.20 ) $ 0.42 Participating warrants $ — $ 0.42 Diluted (loss) income per share: Net (loss) income attributable to common shares $ (41,710,193 ) $ 7,772,084 Net (loss) income reallocated — 49,642 Undistributed (loss) earnings allocable to common shares $ (41,710,193 ) $ 7,821,726 Weighted average number of shares attributable to common shareholders - basic 34,773,613 18,410,005 Effect of dilutive securities: Stock options — 61,510 Contingently issuable shares — 283,284 Potentially dilutive shares — 344,794 Weighted average number of shares - diluted 34,773,613 18,754,799 Diluted (loss) income per share $ (1.20 ) $ 0.42 |
Schedule of anti-dilutive securities excluded from computation of diluted weighted shares outstanding | The following outstanding securities at December 31, 2018 and 2017 have been excluded from the computation of diluted weighted shares outstanding, as they could have been anti-dilutive: December 31, 2018 2017 Stock options 4,246,597 2,812,006 Warrants on common stock 4,024,708 4,661,145 Restricted Stock Awards 445,000 — Underwriters' unit purchase option 40,000 40,000 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations and Asset Acquisitions [Abstract] [Abstract] | |
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 both as disclosed in prior periods prior to the third quarter of 2018 and as adjusted for measurement period adjustments identified during the third quarter of 2018: At November 17, 2017 (preliminary) Measurement Period Adjustments At November 17, 2017 (as adjusted) Fair value of assets acquired: Cash and cash equivalents $ 11,068 $ — $ 11,068 Accounts receivable, net 2,872,545 — 2,872,545 Inventory 495,777 — 495,777 Prepaid expenses and other current assets 134,281 — 134,281 Other receivables — 2,764,515 2,764,515 Identifiable Intangible Assets: — Acquired product marketing rights - Metafolin 10,465,000 1,522,000 11,987,000 PAI sales and marketing agreement 2,334,000 219,000 2,553,000 Acquired product marketing rights - Millipred 4,714,000 342,000 5,056,000 Acquired product marketing rights - Ulesfia 555,000 (555,000 ) — Total assets acquired 21,581,671 4,292,515 25,874,186 Fair value of liabilities assumed: Accounts payable 192,706 — 192,706 Accrued expenses and other current liabilities 4,850,422 3,764,515 8,614,937 Deferred tax liability 839,773 78,840 918,613 Total liabilities assumed 5,882,901 3,843,355 9,726,256 Total identifiable net assets 15,698,770 449,160 16,147,930 Fair value of consideration transferred 29,991,052 (1,210,000 ) 28,781,052 Goodwill $ 14,292,282 $ (1,659,160 ) $ 12,633,122 The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition and as adjusted for measurement period adjustments identified during the second quarter: At February 16, 2018 (preliminary) Measurement Period Adjustments At February 16, 2018 (as adjusted) Inventory $ 2,549,000 $ (1,831,000 ) $ 718,000 Prepaid assets — 570,000 570,000 Intangible assets 16,453,000 1,838,000 18,291,000 Accrued expenses — (362,000 ) (362,000 ) Fair value of debt assumed (15,272,303 ) 197,303 (15,075,000 ) Fair value of contingent consideration (7,875,165 ) (44,835 ) (7,920,000 ) Total net liabilities assumed (4,145,468 ) 367,468 (3,778,000 ) Consideration exchanged 241,000 (240,999 ) 1 Goodwill $ 4,386,468 $ (608,467 ) $ 3,778,001 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The preliminary fair value of intangible assets both as of the date of acquisition and as adjusted by measurement period adjustments identified during the second quarter includes the following: At February 16, 2018 (preliminary) Measurement Period Adjustments At February 16, 2018 (as adjusted) Useful Life Acquired Product Marketing Rights - Karbinal $ 6,221,000 $ (21,000 ) $ 6,200,000 10 years Acquired Product Marketing Rights - AcipHex 2,520,000 283,000 2,803,000 10 years Acquired Product Marketing Rights - Cefaclor 6,291,000 1,320,000 7,611,000 7 years Acquired Developed Technology - Flexichamber 1,131,000 546,000 1,677,000 10 years Acquired IPR&D - LiquiTime formulations 290,000 (290,000 ) — Indefinite Total $ 16,453,000 $ 1,838,000 $ 18,291,000 The final fair value of intangible assets both as disclosed in prior periods and as adjusted by measurement period adjustments identified during the third quarter of 2018 includes the following: At November 17, Measurement Period Adjustments At November 17, 2017 (as adjusted) Useful Life Acquired product marketing rights - Metafolin $ 10,465,000 $ 1,522,000 $ 11,987,000 15 years PAI sales and marketing agreement 2,334,000 219,000 2,553,000 2 years Acquired product marketing rights - Millipred 4,714,000 342,000 5,056,000 4 years Acquired product marketing rights - Ulesfia 555,000 (555,000 ) — Total $ 18,068,000 $ 1,528,000 $ 19,596,000 |
Schedule of Fair Value of Consideration Transferred | The following table summarizes the preliminary acquisition-date fair value of the consideration transferred at the date of acquisition both as disclosed in prior periods prior to the third quarter of 2018 and as adjusted for measurement period adjustments identified during the third quarter of 2018: At November 17, 2017 (preliminary) Measurement Period Adjustments At November 17, 2017 (as adjusted) Cash $ 18,900,000 $ — $ 18,900,000 Common stock (including contingently issuable shares) 8,514,419 — 8,514,419 Contingent payments 2,576,633 (1,210,000 ) 1,366,633 Total consideration transferred $ 29,991,052 (1,210,000 ) 28,781,052 |
Business Acquisition, Pro Forma Information | The following supplemental unaudited pro forma information presents Cerecor’s financial results as if the acquisitions of Avadel Pediatric Products, which was completed on February 16, 2018, and of TRx, which was completed on November 17, 2017, had each occurred on January 1, 2017: Year Ended December 31, 2018 2017 Pro forma Pro forma Total revenues, net $ 20,031,801 $ 51,288,212 Net loss $ (40,919,015 ) $ 5,963,853 Basic and diluted net (loss) income per share $ (1.18 ) $ 0.21 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 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* $ 7,324,932 $ — $ — Liabilities Contingent consideration $ — $ — $ 9,050,564 Warrant liability** $ — $ — $ 2,950 Unit purchase option liability** $ — $ — $ 7,216 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 *Investments in money market funds are reflected in cash and cash equivalents on the accompanying Balance Sheets. **Warrant liability and unit purchase option liability are reflected in accrued expenses and other current liabilities on the accompanying consolidated 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 contingent consideration for the years ended December 31, 2018 and 2017 : Warrant Unit purchase Contingent liability option liability consideration Total Balance at December 31, 2017 $ 8,185 $ 26,991 $ 2,576,633 $ 2,611,809 Issuance of contingent consideration — — 7,920,000 7,920,000 Payment of contingent consideration — — (294,435 ) (294,435 ) Purchase price allocation measurement period adjustment of contingent consideration — — (1,210,000 ) (1,210,000 ) Change in fair value (5,235 ) (19,775 ) 58,366 33,356 Balance at December 31, 2018 $ 2,950 $ 7,216 $ 9,050,564 $ 9,060,730 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 |
Inventory - (Tables)
Inventory - (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following as of December 31, 2018 and 2017: December 31, 2018 2017 Raw materials $ 11,392 $ — Finished goods 1,427,935 560,499 Inventory reserve (328,547 ) (178,346 ) Inventory, net $ 1,110,780 $ 382,153 |
Property And Equipment (Tables)
Property And Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment as of December 31, 2018 and 2017 consisted of the following: December 31, 2018 2017 Furniture and equipment $ 133,229 $ 58,126 Computers and software 122,065 96,133 Leasehold improvements 463,381 — Total property and equipment 718,675 154,259 Less accumulated depreciation (132,163 ) (109,647 ) Property and equipment, net $ 586,512 $ 44,612 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2017 were as follows: Balance at December 31, 2016 $ — Goodwill from acquisition of TRx Pharmaceuticals 14,292,282 Balance at December 31, 2017 $ 14,292,282 Goodwill from acquisition of Avadel's pediatric products 3,778,001 Goodwill purchase price allocation measurement period adjustment from acquisition of TRx Pharmaceuticals (1,659,160 ) Balance at December 31, 2018 $ 16,411,123 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The changes in intangible assets for the years ended December 31, 2018 and 2017 were as follows: Balance at December 31, 2016 $ — Additions 18,068,000 Amortization (403,520 ) Balance at December 31, 2017 $ 17,664,480 Additions 18,441,000 Purchase price allocation measurement period adjustments 1,527,998 Amortization (4,532,448 ) Impairment (1,861,562 ) Balance at December 31, 2018 $ 31,239,468 |
Schedule of Finite-Lived Intangible Assets | The following is a summary of intangible assets held by the Company at December 31, 2018 and December 31, 2017, respectively: December 31, 2018 Gross Carrying Amount Accumulated Amortization Impairment Loss Net Carrying Amount Weighted-Average Remaining Life (in years) Acquired Product Marketing Rights $ 33,656,998 $ (4,080,767 ) $ — $ 29,576,231 9.45 Sales and Marketing Agreement 2,553,000 (691,438 ) (1,861,562 ) — — Acquired Developed Technology 1,677,000 (145,013 ) — 1,531,987 9.25 Acquired Assembled Workforce 150,000 (18,750 ) — 131,250 1.75 Total Intangible Assets $ 38,036,998 $ (4,935,968 ) $ (1,861,562 ) $ 31,239,468 9.41 December 31, 2017 Gross Carrying Amount Accumulated Amortization Impairment Loss Net Carrying Amount Weighted-Average Remaining Life (in years) Acquired Product Marketing Rights $ 15,734,000 $ (257,645 ) $ — $ 15,476,355 11.20 Sales and Marketing Agreement 2,334,000 (145,875 ) — 2,188,125 1.90 Total Intangible Assets $ 18,068,000 $ (403,520 ) $ — $ 17,664,480 10.05 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Amortization of intangibles for the next five years and thereafter is expected to be as follows: Estimated Amortization For the Years Ending December 31, Expense 2019 $ 4,315,318 2020 4,296,568 2021 4,082,334 2022 2,976,322 2023 2,976,322 Thereafter 12,592,604 Total future amortization expense $ 31,239,468 |
Accrued Expenses And Other Cu_2
Accrued Expenses And Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities as of December 31, 2018 and 2017 consisted of the following: December 31, 2018 2017 Sales returns $ 3,972,510 $ 3,478,349 Medicaid rebates 2,237,269 350,681 Minimum sales commitments, royalties payable, and purchase obligations 9,662,901 743,010 Compensation and benefits 1,953,065 1,401,514 Research and development expenses 278,132 299,480 General and administrative 1,112,378 1,001,454 Sales and marketing 235,721 — Other 279,397 256,634 Total accrued expenses and other current liabilities $ 19,731,373 $ 7,531,122 |
Capital Structure (Tables)
Capital Structure (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
CAPITAL STRUCTURE | |
Schedule of outstanding common stock warrants | At December 31, 2018 , the following common stock warrants were outstanding: Number of shares Exercise price Expiration underlying warrants per share date 22,328* $ 8.40 October 2020 2,380* $ 8.68 May 2022 4,000,000 $ 12.50 June 2024 4,024,708 *Accounted for as a liability instrument (see Note 5) |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation [Abstract] | |
Schedule of stock-based compensation expense | The amount of stock-based compensation expense recognized for the years ending December 31, 2018 and 2017 was as follows: Year Ended December 31, 2018 2017 Research and development $ 101,000 $ 156,047 General and administrative 2,135,710 1,001,205 Sales and marketing 194,353 — Total stock-based compensation $ 2,431,063 $ 1,157,252 |
Summary of option activity | A summary of option activity with service-based vesting conditions for the year ended December 31, 2018 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 at December 31, 2017 2,823,489 $ 3.93 7.29 Granted 1,639,860 $ 3.85 $ 3,737,728 Exercised (243,115 ) Forfeited (473,637 ) $ 2.77 $ 1,109,083 Balance at December 31, 2018 3,746,597 $ 4.16 7.79 Exercisable at December 31, 2018 1,997,468 $ 4.71 6.62 A summary of option activity with market-based vesting conditions for the year ended December 31, 2018 is as follows: Options Outstanding Number of shares Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value (1) Balance at December 31, 2017 — Granted 500,000 $ 4.24 Balance at December 31, 2018 500,000 $ 4.24 9.24 $ — Exercisable at December 31, 2018 — (1) The aggregate intrinsic value in the above table represents the total pre-tax amount that a participant would receive if the option had been exercised on the last day of the respective fiscal period. Options with a market value less than its exercise value are not included in the intrinsic value amount. |
Schedule of fair value assumptions for options | The following table shows the assumptions used to compute stock-based compensation expense for stock options granted to employees and members of the board of directors under the Black-Scholes valuation model, and the assumptions used to compute stock-based compensation expense for market-based stock option grants under a Monte Carlo simulation: Year Ended December 31, Service-based options 2018 2017 Risk-free interest rate 2.51% — 3.01% 1.85% — 2.38% Expected term of options (in years) 5.0 — 6.25 5.0 — 6.25 Expected stock price volatility 55% — 65% 55% — 100% Expected annual dividend yield 0% — 0% 0% — 0% Market-based options Risk-free interest rate 2.84% Expected term of options (in years) 2.8 Expected stock price volatility 60% Expected annual dividend yield 0% |
Nonvested Restricted Stock Shares Activity | A summary of RSA grants activity for the year ended December 31, 2018 is as follows: Non-vested RSAs Outstanding Number of shares Weighted average grant date fair value Non-vested RSAs at December 31, 2017 — Granted 445,000 $ 4.27 Non-vested RSAs at December 31, 2018 445,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017: December 31, 2018 2017 Current: Federal $ (53,281 ) $ 2,309,285 State 36,116 489,863 Total Current: (17,165 ) 2,799,148 Deferred: Federal (52,235 ) (789,274 ) State 35,490 (43,355 ) Total Deferred (16,745 ) (832,629 ) Net income tax (benefit) expense $ (33,910 ) $ 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, 2018 and 2017: December 31, 2018 2017 Deferred tax assets: Net operating losses $ 4,421,423 $ 716,819 Accrued compensation 465,430 271,437 Deferred rent 15,373 4,051 Tax credits 252,095 — Stock-based compensation 1,922,736 1,291,230 Installment sale 508,291 — Other reserves 262,260 72,881 Basis difference in tangible and intangible assets, net 2,968,764 2,019,272 Total deferred tax assets 10,816,372 4,375,690 Deferred tax liabilities: Prepaid expenses (160,474 ) — Installment sales — (358,844 ) Total deferred tax liabilities (160,474 ) (358,844 ) Deferred tax asset, net 10,655,898 4,016,846 Less valuation allowance (10,725,136 ) (4,023,990 ) Net deferred taxes $ (69,238 ) $ (7,144 ) |
Reconciliation of income tax expenses between federal statutory rate and effective income tax rate | The income tax benefit for the years ended December 31, 2018 and 2017 differed from the amounts computed by applying the U.S. federal income tax rate as follows: December 31, 2018 2017 Federal statutory rate 21.00 % 34.00 % Permanent Adjustments (0.37 )% 0.17 % Built-in-loss (0.33 )% 1.52 % State taxes 4.43 % 27.91 % Research and development credit 0.61 % (1.04 )% Change in statutory rate due to Tax Cuts and Job Act — % 15.82 % NOL adjustment per § 382 — % 126.82 % Non-deductible IPR&D expense (9.84 )% — % Other (0.04 )% 0.04 % Change in valuation allowance (15.37 )% (191.03 )% Effective income tax rate 0.09 % 14.21 % |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Long-term Purchase Commitment | As of December 31, 2018, future minimum purchase obligations and future minimum royalty payments to Lachlan are as follows: 2019* 2020* 2021 2022 Total* Minimum Purchase Obligations 1,257,326 1,265,378 — — $2,522,704 Minimum Royalties 3,000,000 3,000,000 — — 6,000,000 Total 4,257,326 4,265,378 — — $8,522,704 *Per the TRx Purchase Agreement, the previous owners of TRx are required to indemnify the Company for 50% of post-acquisition Ulesfia losses, which include the future minimum purchase obligations and future minimum royalties disclosed above. Thus, the Company's future net payouts related to the Ulesfia product will be significantly reduced as a result of the indemnification. |
Schedule of future lease obligations | As of December 31, 2018, minimum operating lease obligations for the new office space are as follows: Minimum Lease Payments 2019 $ — 2020 155,815 2021 169,510 2022 173,748 2023 178,092 Thereafter 1,183,290 Total $ 1,860,455 |
Business (Details)
Business (Details) | Mar. 08, 2019USD ($)$ / sharesshares | Mar. 05, 2019USD ($)$ / sharesshares | Aug. 17, 2018USD ($)$ / sharesshares | Aug. 14, 2017USD ($) | Apr. 27, 2017USD ($)shares | Aug. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($)shares | Dec. 31, 2018USD ($)productshares | Dec. 31, 2017USD ($)shares |
Subsequent Event [Line Items] | ||||||||||
Number of marketed medical devices | product | 1 | |||||||||
Revenues | $ 18,326,801 | $ 27,813,137 | ||||||||
Escrowed cash receivable | $ 3,750,000 | $ 3,750,000 | $ 0 | 0 | 3,752,390 | |||||
Escrow period | 12 months | 12 months | ||||||||
Potential future regulatory milestone payment | $ 20,000,000 | |||||||||
Net (loss) income | (40,052,810) | 11,869,823 | ||||||||
Cash flows from operations | (3,128,102) | 12,578,778 | ||||||||
Accumulated deficit | (98,218,070) | (98,218,070) | (58,165,260) | |||||||
Cash and cash equivalents | 10,646,301 | 10,646,301 | 2,472,187 | |||||||
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | $ 5,685,038 | 0 | ||||||||
2 Neurological Clinical And Preclinical Stage Compounds | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of products in development | product | 2 | |||||||||
3 Preclinical Therapies | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of products in development | product | 3 | |||||||||
Preclinical Pediatric Orphan Rare Disease Compound | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of products in development | product | 1 | |||||||||
License and other revenue | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Revenues | $ 25,000,000 | $ 25,000,000 | $ 0 | $ 25,000,000 | ||||||
Private Placement | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Proceeds from issuance or sale of equity | $ 3,900,000 | $ 4,650,000 | $ 3,900,000 | |||||||
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | $ 5,700,000 | |||||||||
Sale of stock price per share (in dollars per share) | $ / shares | $ 3.91 | |||||||||
Common stock | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Issuance of stock (in shares) | shares | 2,349,968 | 2,301,598 | ||||||||
Common stock | Private Placement | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Issuance of stock (in shares) | shares | 1,000,000 | 2,345,714 | 1,000,000 | |||||||
Subsequent Event | Bought Deal | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued (in shares) | shares | 1,818,182 | 1,818,182 | ||||||||
Sale of stock price per share (in dollars per share) | $ / shares | $ 5.50 | $ 5.50 | ||||||||
Consideration received | $ 9,000,000 | $ 9,000,000 | ||||||||
Armistice | Subsequent Event | Bought Deal | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued (in shares) | shares | 363,637 | 363,637 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | Jan. 01, 2019USD ($) | Aug. 14, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2018USD ($)segmentreporting_unit | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Reclassification | ||||||
Prior period reclassification adjustment | $ 300,000 | |||||
Amortization expense | 4,532,448 | $ 403,520 | ||||
Escrowed Cash Receivable [Abstract] | ||||||
Revenues | 18,326,801 | 27,813,137 | ||||
Escrowed cash receivable | $ 3,750,000 | $ 3,750,000 | 0 | 3,752,390 | ||
Escrow period | 12 months | 12 months | ||||
Restricted Cash | ||||||
Deposits | $ 50,000 | |||||
Accounts Receivable, Net [Abstract] | ||||||
Allowance for doubtful accounts receivable | $ 0 | |||||
Payment terms | 30 days | |||||
Prompt payment discount | 2.00% | |||||
Segment Reporting Information, Additional Information [Abstract] | ||||||
Number of operating segments | segment | 1 | |||||
Goodwill | ||||||
Number of reporting units | reporting_unit | 1 | |||||
New Accounting Pronouncements and Changes in Accounting Principles | ||||||
Restricted cash | $ 100,000 | |||||
Computers and software | ||||||
Property, Plant and Equipment [Abstract] | ||||||
Computer, software, equipment and furniture, useful life | 4 years | |||||
Equipment | ||||||
Property, Plant and Equipment [Abstract] | ||||||
Computer, software, equipment and furniture, useful life | 5 years | |||||
Furniture and Fixtures | ||||||
Property, Plant and Equipment [Abstract] | ||||||
Computer, software, equipment and furniture, useful life | 5 years | |||||
Leasehold improvements | ||||||
Property, Plant and Equipment [Abstract] | ||||||
Computer, software, equipment and furniture, useful life | 10 years | |||||
Major Customer Number One | Sales Revenue | Customer Concentration Risk | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 30.00% | 40.00% | ||||
Major Customer Number Two | Sales Revenue | Customer Concentration Risk | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 30.00% | 25.00% | ||||
Major Customer Number Three | Sales Revenue | Customer Concentration Risk | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 25.00% | 22.00% | ||||
License and other revenue | ||||||
Escrowed Cash Receivable [Abstract] | ||||||
Revenues | $ 25,000,000 | $ 25,000,000 | $ 0 | $ 25,000,000 | ||
Minimum | ||||||
Rebates | ||||||
Medicaid billing period | 180 days | |||||
Maximum | ||||||
Rebates | ||||||
Medicaid billing period | 270 days | |||||
Accounting Standards Update 2016-02 | Scenario, Forecast | Subsequent Event | ||||||
New Accounting Pronouncements and Changes in Accounting Principles | ||||||
Right-of-use asset | $ 1,000,000 | |||||
Lease liability | $ 1,000,000 | |||||
Accounting Standards Update 2016-02 | Scenario, Forecast | Subsequent Event | Maximum | Total Liabilities | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 5.00% |
Significant Accounting Polici_5
Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) | Aug. 14, 2017 | Aug. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 18,326,801 | $ 27,813,137 | ||
Prescribed dietary supplements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 7,678,003 | 1,092,271 | ||
Prescription drugs | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,192,742 | 818,132 | ||
License and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 25,000,000 | $ 25,000,000 | 0 | 25,000,000 |
Sales force revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 456,056 | 278,165 | ||
Grant revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 0 | $ 624,569 |
Net Loss Per Share Of Common _2
Net Loss Per Share Of Common Stock, Basic And Diluted (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Basic (loss) income per share | ||
Net (loss) income | $ (40,052,810) | $ 11,869,823 |
Deemed distribution to shareholder | $ 0 | |
Weighted average shares of common stock outstanding, basic (in shares) | 34,773,613 | 18,410,005 |
Basic income (loss) per share (in dollars per share) | $ (1.20) | $ 0.42 |
Diluted (loss) income per share: | ||
Net (loss) income attributable to common shares | $ (41,710,193) | $ 7,772,084 |
Net (loss) income reallocated | 0 | 49,642 |
Undistributed (loss) earnings allocable to common shares | $ (41,710,193) | $ 7,821,726 |
Effect of dilutive securities: | ||
Stock options (in shares) | 0 | 61,510 |
Underwriters' unit purchase options (in shares) | 0 | 283,284 |
Potentially dilutive shares (in shares) | 0 | 344,794 |
Weighted average number of shares of common stock outstanding, diluted (in shares) | 34,773,613 | 18,754,799 |
Diluted income (loss) per share (in dollars per share) | $ (1.20) | $ 0.42 |
Common stock warrants | ||
Basic (loss) income per share | ||
Undistributed earnings (loss) allocated to participating securities | $ 0 | $ 4,097,739 |
Weighted average shares of common stock outstanding, basic (in shares) | 0 | 9,706,458 |
Basic income (loss) per share (in dollars per share) | $ 0 | $ 0.42 |
Common stock | ||
Basic (loss) income per share | ||
Undistributed earnings (loss) allocated to participating securities | $ (41,710,193) | $ 7,772,084 |
Weighted average shares of common stock outstanding, basic (in shares) | 34,773,613 | 18,410,005 |
Common Stock And Participating Warrants | ||
Basic (loss) income per share | ||
Weighted average shares of common stock outstanding, basic (in shares) | 34,773,613 | 28,116,463 |
Net (Loss) Income Per Share O_2
Net (Loss) Income Per Share Of Common Stock, Basic And Diluted - Narrative (Details) | Dec. 27, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2014shares |
Anti-dilutive securities | |||||
Preferred stock, shares authorized (in shares) | shares | 5,000,000 | 5,000,000 | 5,000,000 | ||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | $ 5,685,038 | $ 0 | |||
Deemed distribution to shareholder | 0 | ||||
Net (loss) income | (40,052,810) | 11,869,823 | |||
Net (loss) income attributable to common shareholders | $ (41,710,193) | $ 7,772,084 | |||
Private Placement | |||||
Anti-dilutive securities | |||||
Number of shares available under warrant (in shares) | shares | 14,285,714 | ||||
Exercise price per share (in dollars per share) | $ / shares | $ 0.40 | ||||
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | $ 5,700,000 | ||||
Series B convertible preferred stock | Preferred Stock | |||||
Anti-dilutive securities | |||||
Number of shares available under warrant (in shares) | shares | 625,208 | ||||
Preferred stock conversion ratio | 5 | 5 | |||
Series B convertible preferred stock | Preferred Stock | Private Placement | |||||
Anti-dilutive securities | |||||
Preferred stock, shares authorized (in shares) | shares | 2,857,143 | ||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 2 | ||||
Common stock | |||||
Anti-dilutive securities | |||||
Issuance of common stock for conversion of preferred stock (in shares) | shares | 11,940,000 | ||||
Incentive Warrants | |||||
Anti-dilutive securities | |||||
Number of shares available under warrant (in shares) | shares | 4,000,000 | ||||
Exercise price per share (in dollars per share) | $ / shares | $ 12.50 | ||||
Expected life | 5 years 6 months | ||||
Deemed distribution to shareholder | $ 1,657,383 | $ 1,700,000 | |||
Fair value of warrants | 2,200,000 | ||||
Value forwent by Armistice | $ 500,000 | ||||
Incentive Warrants | Measurement input discount rate | |||||
Anti-dilutive securities | |||||
Warrants and rights outstanding measurement input | 0.55 | ||||
Incentive Warrants | Measurement input risk free interest rate | |||||
Anti-dilutive securities | |||||
Warrants and rights outstanding measurement input | 0.0262 | ||||
Incentive Warrants | Measurement input strike price (in dollars per share) | |||||
Anti-dilutive securities | |||||
Warrants and rights outstanding measurement input | $ / shares | 12.50 | ||||
Incentive Warrants | Measurement input fair value of underlying equity (per share) | |||||
Anti-dilutive securities | |||||
Warrants and rights outstanding measurement input | $ / shares | 3.02 |
Net Loss Per Share Of Common _3
Net Loss Per Share Of Common Stock, Basic And Diluted - Anti-dilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock options | ||
Anti-dilutive securities | ||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 4,246,597 | 2,812,006 |
Warrants on common stock | ||
Anti-dilutive securities | ||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 4,024,708 | 4,661,145 |
Restricted Stock Awards | ||
Anti-dilutive securities | ||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 445,000 | 0 |
Underwriters' unit purchase option | ||
Anti-dilutive securities | ||
Anti- dilutive securities excluded from the computation of diluted weighted shares outstanding | 40,000 | 40,000 |
Acquisition - Narrative (Detai
Acquisition - Narrative (Details) | Sep. 24, 2018USD ($)therapymilestone$ / sharesshares | Feb. 16, 2018USD ($) | Nov. 17, 2017USD ($)shares | Dec. 31, 2017USD ($)$ / shares | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($)$ / shares | Jun. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2021USD ($) | Dec. 31, 2023USD ($) | Aug. 17, 2018$ / shares | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Issuance of common stock in TRx acquisition | $ 19,971,554 | $ 5,858,955 | |||||||||||||
Useful life (in years) | 9 years 4 months 28 days | 10 years 18 days | |||||||||||||
Debt assumed in Avadel Pediatric Products acquisition | $ 0 | $ (15,075,000) | $ (15,075,000) | $ 0 | |||||||||||
Goodwill | 14,292,282 | 16,411,123 | 16,411,123 | 14,292,282 | $ 0 | ||||||||||
Impairment of intangible assets | 1,861,562 | 0 | |||||||||||||
Cost of product sales | 7,478,262 | 635,648 | |||||||||||||
Avadel | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Cash | $ 1 | ||||||||||||||
Debt assumed in Avadel Pediatric Products acquisition | (15,075,000) | ||||||||||||||
Contingent consideration | 7,900,000 | ||||||||||||||
Goodwill | $ 3,778,001 | ||||||||||||||
Goodwill tax deductible period | 15 years | ||||||||||||||
Inventory | $ 300,000 | $ (1,831,000) | |||||||||||||
Fair value of consideration transferred | $ 1 | ||||||||||||||
Cost of product sales | $ 100,000 | ||||||||||||||
TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Issuance of common stock in TRx acquisition | 0 | $ 5,858,955 | |||||||||||||
Cash | $ 18,900,000 | ||||||||||||||
Contingent consideration | 1,366,633 | ||||||||||||||
Goodwill | $ 12,633,122 | ||||||||||||||
Inventory | $ 200,000 | $ 0 | |||||||||||||
Unregistered shares of common stock issued or issuable as part of acquisition (in shares) | shares | 7,534,884 | ||||||||||||||
Shares issued for purchase of business (in shares) | $ 8,514,419 | ||||||||||||||
Shares issued upon closing (in shares) | shares | 5,184,920 | ||||||||||||||
Contingent shares issuable as part of acquisition (in shares) | shares | 2,349,968 | ||||||||||||||
Goodwill, expected tax deductible amount | $ 8,700,000 | ||||||||||||||
Fair value of consideration transferred | $ 28,781,052 | ||||||||||||||
Cost of product sales | 200,000 | ||||||||||||||
General and administrative | Avadel | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Transaction costs | 100,000 | $ 100,000 | |||||||||||||
Acquired Assembled Workforce | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Useful life (in years) | 1 year 9 months | ||||||||||||||
PAI Sales & Marketing Agreement | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Useful life (in years) | 1 year 10 months 24 days | ||||||||||||||
Fair value of sales and marketing agreement | 0 | $ 0 | |||||||||||||
PAI Sales & Marketing Agreement | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Useful Life | 2 years | ||||||||||||||
Acquired Product Marketing Rights | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Useful life (in years) | 9 years 5 months 12 days | 11 years 2 months 12 days | |||||||||||||
Metafolin | Acquired Product Marketing Rights | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Useful Life | 15 years | ||||||||||||||
Millipred | Acquired Product Marketing Rights | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Useful Life | 4 years | ||||||||||||||
Nonrecurring | Level 3 | PAI Sales & Marketing Agreement | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Fair value of sales and marketing agreement | 0 | $ 0 | |||||||||||||
Ichorion | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Consideration issued (in shares) | shares | 5,800,000 | ||||||||||||||
Contingent consideration | $ 15,000,000 | ||||||||||||||
Payment for contingent consideration | 0 | ||||||||||||||
Issuance of common stock in TRx acquisition | 20,000,000 | ||||||||||||||
Intangible assets | $ 18,700,000 | ||||||||||||||
Number of preclinical therapies | therapy | 3 | ||||||||||||||
Cash acquired | $ 1,600,000 | ||||||||||||||
Transaction costs | $ 200,000 | ||||||||||||||
Number of contingent consideration milestones | milestone | 3 | ||||||||||||||
Ichorion | Acquired Assembled Workforce | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Intangible assets | $ 200,000 | ||||||||||||||
Useful life (in years) | 2 years | ||||||||||||||
Milestone One | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Contingent consideration | $ 3,000,000 | 0 | 0 | ||||||||||||
Milestone Two | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Contingent consideration | 2,000,000 | 900,000 | 900,000 | ||||||||||||
Milestone Three | TRx | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Contingent consideration | $ 2,000,000 | $ 400,000 | $ 400,000 | ||||||||||||
Scenario, Forecast | Milestone One | Ichorion | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Payment for contingent consideration | $ 6,000,000 | ||||||||||||||
Scenario, Forecast | Milestone Two | Ichorion | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Payment for contingent consideration | $ 5,000,000 | ||||||||||||||
Scenario, Forecast | Milestone Three | Ichorion | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Payment for contingent consideration | $ 4,000,000 |
Acquisition - Schedule of Alloc
Acquisition - Schedule of Allocation of Purchase Price (Details) - USD ($) | Feb. 16, 2018 | Nov. 17, 2017 | Dec. 31, 2017 | Mar. 31, 2018 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2016 |
Fair value of liabilities assumed: | |||||||||
Debt assumed in Avadel Pediatric Products acquisition | $ 0 | $ (15,075,000) | |||||||
Goodwill | 14,292,282 | 16,411,123 | $ 0 | ||||||
Measurement Period Adjustments | |||||||||
Intangible assets | 1,527,998 | ||||||||
Goodwill | $ (1,659,160) | ||||||||
Avadel | |||||||||
Business Acquisition [Line Items] | |||||||||
Inventory | $ 718,000 | ||||||||
Prepaid expenses and other current assets | 570,000 | ||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 18,291,000 | ||||||||
Fair value of liabilities assumed: | |||||||||
Accrued expenses and other current liabilities | (362,000) | ||||||||
Debt assumed in Avadel Pediatric Products acquisition | (15,075,000) | ||||||||
Fair value of contingent consideration | (7,920,000) | ||||||||
Total identifiable net assets | (3,778,000) | ||||||||
Fair value of consideration transferred | 1 | ||||||||
Goodwill | 3,778,001 | ||||||||
Measurement Period Adjustments | |||||||||
Inventory | $ 300,000 | $ (1,831,000) | |||||||
Prepaid assets | 570,000 | ||||||||
Intangible assets | 1,838,000 | $ 1,838,000 | |||||||
Accrued expenses | (362,000) | ||||||||
Fair value of debt assumed | 197,303 | ||||||||
Fair value of contingent consideration | (44,835) | ||||||||
Total net liabilities assumed | 367,468 | ||||||||
Consideration exchanged | (240,999) | ||||||||
Goodwill | $ (608,467) | ||||||||
TRx | |||||||||
Business Acquisition [Line Items] | |||||||||
Fair value of assets acquired: | $ 11,068 | ||||||||
Accounts receivable, net | 2,872,545 | ||||||||
Inventory | 495,777 | ||||||||
Prepaid expenses and other current assets | 134,281 | ||||||||
Other receivables | 2,764,515 | ||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 19,596,000 | ||||||||
Total assets acquired | 25,874,186 | ||||||||
Fair value of liabilities assumed: | |||||||||
Accounts payable | 192,706 | ||||||||
Accrued expenses and other current liabilities | (8,614,937) | ||||||||
Deferred tax liability | 918,613 | ||||||||
Total liabilities assumed | 9,726,256 | ||||||||
Total identifiable net assets | 16,147,930 | ||||||||
Fair value of consideration transferred | 28,781,052 | ||||||||
Goodwill | 12,633,122 | ||||||||
Measurement Period Adjustments | |||||||||
Accounts receivable, net | $ 0 | ||||||||
Inventory | $ 200,000 | 0 | |||||||
Prepaid assets | 0 | ||||||||
Other receivables | 2,764,515 | ||||||||
Intangible assets | 1,528,000 | ||||||||
Total assets acquired | 4,292,515 | ||||||||
Accounts payable | 0 | ||||||||
Accrued expenses | (3,764,515) | ||||||||
Deferred tax liability | 78,840 | ||||||||
Fair value of contingent consideration | 1,210,000 | ||||||||
Total liabilities assumed | 3,843,355 | ||||||||
Total net liabilities assumed | 449,160 | ||||||||
Consideration exchanged | (1,210,000) | ||||||||
Goodwill | (1,659,160) | ||||||||
PAI Sales & Marketing Agreement | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 2,553,000 | ||||||||
Measurement Period Adjustments | |||||||||
Intangible assets | 219,000 | ||||||||
Metafolin | Acquired Product Marketing Rights | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 11,987,000 | ||||||||
Measurement Period Adjustments | |||||||||
Intangible assets | 1,522,000 | ||||||||
Millipred | Acquired Product Marketing Rights | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 5,056,000 | ||||||||
Measurement Period Adjustments | |||||||||
Intangible assets | 342,000 | ||||||||
Ulesfia | Acquired Product Marketing Rights | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 0 | ||||||||
Measurement Period Adjustments | |||||||||
Intangible assets | $ (555,000) | ||||||||
Previously Reported | Avadel | |||||||||
Business Acquisition [Line Items] | |||||||||
Inventory | 2,549,000 | ||||||||
Prepaid expenses and other current assets | 0 | ||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 16,453,000 | ||||||||
Fair value of liabilities assumed: | |||||||||
Accrued expenses and other current liabilities | 0 | ||||||||
Debt assumed in Avadel Pediatric Products acquisition | (15,272,303) | ||||||||
Fair value of contingent consideration | (7,875,165) | ||||||||
Total identifiable net assets | (4,145,468) | ||||||||
Fair value of consideration transferred | 241,000 | ||||||||
Goodwill | $ 4,386,468 | ||||||||
Previously Reported | TRx | |||||||||
Business Acquisition [Line Items] | |||||||||
Fair value of assets acquired: | 11,068 | ||||||||
Accounts receivable, net | 2,872,545 | ||||||||
Inventory | 495,777 | ||||||||
Prepaid expenses and other current assets | 134,281 | ||||||||
Other receivables | 0 | ||||||||
Identifiable Intangible Assets: | |||||||||
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 | ||||||||
Previously Reported | PAI Sales & Marketing Agreement | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 2,334,000 | ||||||||
Previously Reported | Metafolin | Acquired Product Marketing Rights | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 10,465,000 | ||||||||
Previously Reported | Millipred | Acquired Product Marketing Rights | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | 4,714,000 | ||||||||
Previously Reported | Ulesfia | Acquired Product Marketing Rights | TRx | |||||||||
Identifiable Intangible Assets: | |||||||||
Intangible assets | $ 555,000 |
Acquisition - Schedule of Inta
Acquisition - Schedule of Intangible Assets Acquired (Details) - USD ($) | Feb. 16, 2018 | Nov. 17, 2017 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 |
Measurement Period Adjustments | ||||||
Intangible assets | $ 1,527,998 | |||||
Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 18,291,000 | |||||
Measurement Period Adjustments | ||||||
Intangible assets | $ 1,838,000 | $ 1,838,000 | ||||
TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 19,596,000 | |||||
Measurement Period Adjustments | ||||||
Intangible assets | $ 1,528,000 | |||||
PAI Sales & Marketing Agreement | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 2,553,000 | |||||
Useful Life | 2 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | 219,000 | |||||
Karbinal | Acquired Product Marketing Rights | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 6,200,000 | |||||
Useful Life | 10 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | (21,000) | |||||
AcipHex | Acquired Product Marketing Rights | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 2,803,000 | |||||
Useful Life | 10 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | 283,000 | |||||
Cefaclor | Acquired Product Marketing Rights | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 7,611,000 | |||||
Useful Life | 7 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | 1,320,000 | |||||
Flexichamber | Acquired Developed Technology | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 1,677,000 | |||||
Useful Life | 10 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | 546,000 | |||||
LiquiTime Process | In Process Research and Development | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 0 | |||||
Measurement Period Adjustments | ||||||
Intangible assets | $ (290,000) | |||||
Metafolin | Acquired Product Marketing Rights | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 11,987,000 | |||||
Useful Life | 15 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | 1,522,000 | |||||
Millipred | Acquired Product Marketing Rights | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 5,056,000 | |||||
Useful Life | 4 years | |||||
Measurement Period Adjustments | ||||||
Intangible assets | 342,000 | |||||
Ulesfia | Acquired Product Marketing Rights | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 0 | |||||
Measurement Period Adjustments | ||||||
Intangible assets | $ (555,000) | |||||
Previously Reported | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 16,453,000 | |||||
Previously Reported | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 18,068,000 | |||||
Previously Reported | PAI Sales & Marketing Agreement | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 2,334,000 | |||||
Previously Reported | Karbinal | Acquired Product Marketing Rights | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 6,221,000 | |||||
Previously Reported | AcipHex | Acquired Product Marketing Rights | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 2,520,000 | |||||
Previously Reported | Cefaclor | Acquired Product Marketing Rights | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 6,291,000 | |||||
Previously Reported | Flexichamber | Acquired Developed Technology | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 1,131,000 | |||||
Previously Reported | LiquiTime Process | In Process Research and Development | Avadel | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 290,000 | |||||
Previously Reported | Metafolin | Acquired Product Marketing Rights | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 10,465,000 | |||||
Previously Reported | Millipred | Acquired Product Marketing Rights | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 4,714,000 | |||||
Previously Reported | Ulesfia | Acquired Product Marketing Rights | TRx | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 555,000 |
Acquisition - Schedule of Consi
Acquisition - Schedule of Consideration Transferred (Details) - TRx - USD ($) | Nov. 17, 2017 | Sep. 30, 2018 |
Business Acquisition [Line Items] | ||
Cash | $ 18,900,000 | |
Common stock (including contingently issuable shares) | 8,514,419 | |
Contingent payments | 1,366,633 | |
Total consideration transferred | 28,781,052 | |
Measurement Period Adjustments | ||
Contingent payments | $ (1,210,000) | |
Consideration exchanged | $ (1,210,000) | |
Previously Reported | ||
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 - Pro Forma Informa
Acquisition - Pro Forma Information (Details) - TRx - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Total revenues, net | $ 20,031,801 | $ 51,288,212 |
Net income | $ (40,919,015) | $ 5,963,853 |
Basic and diluted net loss per share (in dollars per share) | $ (1.18) | $ 0.21 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Assets | $ 7,324,932 | $ 471,183 |
Level 3 | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities | 9,050,564 | 2,576,633 |
Level 3 | Warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities | 2,950 | 8,185 |
Level 3 | Unit purchase option liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities | $ 7,216 | $ 26,991 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Feb. 16, 2018USD ($) | Dec. 31, 2018USD ($)$ / sharesclass_of_stock | Dec. 31, 2017USD ($)class_of_stock | Sep. 30, 2018$ / shares | Nov. 17, 2017USD ($) | Dec. 31, 2015shares | Oct. 31, 2015shares | Dec. 31, 2014shares |
Level 3 Valuation | ||||||||
Change in fair value | $ (58,366) | $ 0 | ||||||
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 | ||||||||
Level 3 Valuation | ||||||||
Number of shares available under warrant (in shares) | shares | 22,328 | |||||||
Avadel | ||||||||
Level 3 Valuation | ||||||||
Product royalty | 15.00% | |||||||
Royalty obligation | $ 12,500,000 | |||||||
Royalty obligation fair value | $ 7,800,000 | |||||||
Contingent consideration | $ 7,900,000 | |||||||
Avadel | Measurement input risk free interest rate | ||||||||
Level 3 Valuation | ||||||||
Royalty obligation measurement input | 0.026 | |||||||
Avadel | Measurement input counterparty credit risk | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.055 | |||||||
Avadel | Measurement input discount rate | ||||||||
Level 3 Valuation | ||||||||
Royalty obligation measurement input | 0.081 | |||||||
TRx | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration | $ 1,366,633 | |||||||
Milestone One | TRx | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration | $ 0 | 3,000,000 | ||||||
Gross profit | 12,600,000 | |||||||
Milestone Two | TRx | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration | $ 900,000 | 2,000,000 | ||||||
Contingent consideration expected time to milestone | 6 months | |||||||
Milestone Two | TRx | Measurement input risk free interest rate | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.024 | |||||||
Milestone Two | TRx | Measurement input counterparty credit risk | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.055 | |||||||
Milestone Two | TRx | Measurement input probability of milestone success | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.450 | |||||||
Milestone Two | TRx | Measurement input discount rate | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.079 | |||||||
Milestone Three | TRx | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration | $ 400,000 | $ 2,000,000 | ||||||
Contingent consideration expected time to milestone | 1 year 6 months | |||||||
Milestone Three | TRx | Measurement input risk free interest rate | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.025 | |||||||
Milestone Three | TRx | Measurement input counterparty credit risk | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.055 | |||||||
Milestone Three | TRx | Measurement input probability of milestone success | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.225 | |||||||
Milestone Three | TRx | Measurement input discount rate | ||||||||
Level 3 Valuation | ||||||||
Contingent consideration liability measurement input | 0.080 | |||||||
Level 2 | ||||||||
Level 3 Valuation | ||||||||
Estimated fair value of debt | $ 14,900,000 | |||||||
Level 3 | ||||||||
Level 3 Valuation | ||||||||
Change in fair value | $ (33,356) | (29,624) | ||||||
Warrant liability | Level 3 | ||||||||
Level 3 Valuation | ||||||||
Expected life | 1 year 9 months 18 days | |||||||
Warrant liability | Level 3 | Measurement input price volatility | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | 0.50 | |||||||
Warrant liability | Level 3 | Measurement input risk free interest rate | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | 0.0251 | |||||||
Warrant liability | Level 3 | Measurement input strike price (in dollars per share) | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | $ / shares | 8.40 | |||||||
Warrant liability | Level 3 | Measurement input share price (in dollars per share) | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | $ / shares | 3.23 | |||||||
Unit purchase option liability | Level 3 | ||||||||
Level 3 Valuation | ||||||||
Expected life | 1 year 9 months 18 days | |||||||
Change in fair value | $ 19,775 | $ (26,940) | ||||||
Unit purchase option liability | Level 3 | Measurement input price volatility | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | 0.50 | |||||||
Unit purchase option liability | Level 3 | Measurement input risk free interest rate | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | 0.0251 | |||||||
Unit purchase option liability | Level 3 | Measurement input strike price (in dollars per share) | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | $ / shares | 7.47 | |||||||
Unit purchase option liability | Level 3 | Measurement input share price (in dollars per share) | ||||||||
Level 3 Valuation | ||||||||
Warrants and rights outstanding measurement input | $ / shares | 3.23 | |||||||
Common Stock Warrants | ||||||||
Level 3 Valuation | ||||||||
Number of shares available under warrant (in shares) | shares | 40,000 | |||||||
Series B convertible preferred stock | Preferred Stock | ||||||||
Level 3 Valuation | ||||||||
Number of shares available under warrant (in shares) | shares | 625,208 |
Fair Value Measurements - Rollf
Fair Value Measurements - Rollforward (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Change in fair value | $ 58,366 | $ 0 |
Level 3 | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 2,611,809 | 5,552 |
Issuance of contingent consideration | 7,920,000 | 2,576,633 |
Payment of contingent consideration | (294,435) | |
Purchase price allocation measurement period adjustment of contingent consideration | (1,210,000) | |
Change in fair value | 33,356 | 29,624 |
Ending balance | 9,060,730 | 2,611,809 |
Warrant liability | Recurring basis | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 8,185 | 5,501 |
Change in fair value | (5,235) | 2,684 |
Ending balance | 2,950 | 8,185 |
Unit purchase option liability | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 26,991 | 51 |
Change in fair value | (19,775) | 26,940 |
Ending balance | 7,216 | 26,991 |
Contingent consideration | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 2,576,633 | 0 |
Issuance of contingent consideration | 7,920,000 | 2,576,633 |
Payment of contingent consideration | (294,435) | |
Purchase price allocation measurement period adjustment of contingent consideration | (1,210,000) | |
Change in fair value | 58,366 | 0 |
Ending balance | $ 9,050,564 | $ 2,576,633 |
Inventory - (Details)
Inventory - (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 11,392 | $ 0 |
Finished goods | 1,427,935 | 560,499 |
Inventory reserve | (328,547) | (178,346) |
Inventory, net | 1,110,780 | 382,153 |
Write down of obsolete inventory | $ 150,201 | $ 178,346 |
Property And Equipment (Details
Property And Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 718,675 | $ 154,259 |
Less accumulated depreciation | (132,163) | (109,647) |
Property and equipment, net | 586,512 | 44,612 |
Depreciation | 22,515 | 21,956 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 133,229 | 58,126 |
Computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 122,065 | 96,133 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 463,381 | $ 0 |
Goodwill (Details)
Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 14,292,282 | $ 0 |
Goodwill from acquisitions | 3,778,001 | 14,292,282 |
Goodwill purchase price allocation measurement period adjustment | (1,659,160) | |
Ending Balance | 16,411,123 | $ 14,292,282 |
Accumulated impairment of goodwill | $ 0 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets Rollforward (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Indefinite-lived Intangible Assets [Roll Forward] | ||
Intangible assets, beginning balance | $ 17,664,480 | $ 0 |
Additions | 18,441,000 | 18,068,000 |
Purchase price allocation measurement period adjustments | 1,527,998 | |
Amortization | (4,532,448) | (403,520) |
Impairment | (1,861,562) | 0 |
Intangible assets, ending balance | $ 31,239,468 | $ 17,664,480 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Finite Lived Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 38,036,998 | $ 18,068,000 |
Accumulated Amortization | (4,935,968) | (403,520) |
Impairment Loss | (1,861,562) | 0 |
Net Carrying Amount | $ 31,239,468 | $ 17,664,480 |
Weighted-Average Remaining Life | 9 years 4 months 28 days | 10 years 18 days |
Acquired Product Marketing Rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 33,656,998 | $ 15,734,000 |
Accumulated Amortization | (4,080,767) | (257,645) |
Impairment Loss | 0 | 0 |
Net Carrying Amount | $ 29,576,231 | $ 15,476,355 |
Weighted-Average Remaining Life | 9 years 5 months 12 days | 11 years 2 months 12 days |
Sales and Marketing Agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 2,553,000 | $ 2,334,000 |
Accumulated Amortization | (691,438) | (145,875) |
Impairment Loss | (1,861,562) | 0 |
Net Carrying Amount | 0 | $ 2,188,125 |
Weighted-Average Remaining Life | 1 year 10 months 24 days | |
Acquired Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,677,000 | |
Accumulated Amortization | (145,013) | |
Impairment Loss | 0 | |
Net Carrying Amount | $ 1,531,987 | |
Weighted-Average Remaining Life | 9 years 3 months | |
Acquired Assembled Workforce | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 150,000 | |
Accumulated Amortization | (18,750) | |
Impairment Loss | 0 | |
Net Carrying Amount | $ 131,250 | |
Weighted-Average Remaining Life | 1 year 9 months |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Impairment loss | $ 1,861,562 | $ 0 |
PAI Sales & Marketing Agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Impairment loss | 1,861,562 | $ 0 |
Fair value of sales and marketing agreement | $ 0 |
Intangible Assets - Schedule _3
Intangible Assets - Schedule of Future Amortization Expense (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 4,315,318 | |
2020 | 4,296,568 | |
2021 | 4,082,334 | |
2022 | 2,976,322 | |
2023 | 2,976,322 | |
Thereafter | 12,592,604 | |
Total future amortization expense | $ 31,239,468 | $ 17,664,480 |
Accrued Expenses And Other Cu_3
Accrued Expenses And Other Current Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Sales returns | $ 3,972,510 | $ 3,478,349 |
Medicaid rebates | 2,237,269 | 350,681 |
Minimum sales commitments, royalties payable, and purchase obligations | 9,662,901 | 743,010 |
Compensation and benefits | 1,953,065 | 1,401,514 |
Research and development expenses | 278,132 | 299,480 |
General and administrative | 1,112,378 | 1,001,454 |
Sales and marketing | 235,721 | 0 |
Other | 279,397 | 256,634 |
Total accrued expenses and other current liabilities | $ 19,731,373 | $ 7,531,122 |
Agreements (Details)
Agreements (Details) | Feb. 16, 2018USD ($)unit$ / unit | Sep. 22, 2016USD ($) | Dec. 18, 2015USD ($)unit | Dec. 01, 2014kg | May 31, 2011 | May 19, 2008USD ($) | Aug. 31, 2018USD ($) | Nov. 30, 2017USD ($)$ / unit | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2013USD ($) | Oct. 31, 2017 |
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Other commitment | $ 6,000,000 | |||||||||||
Noncontrolling interest ownership percentage by Noncontrolling Owners | 10.00% | |||||||||||
Cost of product sales | 7,478,262 | $ 635,648 | ||||||||||
Ulesfia Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
License obligation current | 7,800,000 | |||||||||||
Escrow deposit disbursement | 1,900,000 | |||||||||||
Cost of product sales | 2,200,000 | |||||||||||
Indemnity receivable | 4,900,000 | |||||||||||
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 | |||||||||||
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 | |||||||||||
TRIS Pharma | Karbinal Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Product royalty | 23.50% | |||||||||||
Contract term | 20 years | |||||||||||
Potential milestone revenue threshold | $ 40,000,000 | |||||||||||
Potential milestone payment | $ 3,000,000 | |||||||||||
Minimum quantity required | unit | 70,000 | |||||||||||
Make whole payment (in dollars per unit) | $ / unit | 30 | |||||||||||
Product royalty | 15.00% | |||||||||||
Make whole payment | $ 934,300 | $ 1,281,525 | ||||||||||
Avadel | Karbinal Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Make whole payment (percent) | 8.50% | |||||||||||
Eisai Inc | AcipHex Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Product royalty | 15.00% | |||||||||||
Potential milestone revenue threshold | $ 50,000,000 | |||||||||||
Yung Shin Pharm. Ind, Co | Cefaclor | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Product royalty | 15.00% | |||||||||||
Automatic renewal period | 12 months | |||||||||||
Potential milestone revenue threshold | $ 40,000,000 | |||||||||||
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 | |||||||||||
Contract term | 1 year | |||||||||||
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 | 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 | Ulesfia Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Price per unit (in dollars per unit) | $ / unit | 58.84 | |||||||||||
Management and handling fee (in dollars per unit) | $ / unit | 3.66 | |||||||||||
Management and handling fee annual price increase | 10.00% | |||||||||||
Zylera | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Minimum royalty | $ 3,000,000 | |||||||||||
Minimum quantity required | unit | 20,000 | |||||||||||
Long-term purchase commitment | $ 1,200,000 | |||||||||||
Consecutive periods within twelve months orders unfilled | 6 months | |||||||||||
Periods within twelve months orders unfilled | 9 months | |||||||||||
Purchase commitment measurement period | 12 months | |||||||||||
Indemnification of post-acquisition losses, (as a percent) | 50.00% | |||||||||||
Lachlan Pharmaceuticals | Ulesfia Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Indemnification of pre-acquisition losses | 100.00% | |||||||||||
Indemnification of post-acquisition losses, (as a percent) | 50.00% | |||||||||||
Minimum | TRx | Merck | Metafolin Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Product target age | 0 years | |||||||||||
Minimum | Lachlan Pharmaceuticals | Ulesfia Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Threshold indemnification of legal costs and possible minimum payments | $ 1,000,000 | |||||||||||
Maximum | TRIS Pharma | Karbinal Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Make whole payment | $ 750,000 | |||||||||||
Maximum | Eisai Inc | AcipHex Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Royalty payment period | 5 years | |||||||||||
Potential milestone payment | $ 8,000,000 | |||||||||||
Maximum | Yung Shin Pharm. Ind, Co | Cefaclor | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Potential milestone payment | $ 6,500,000 | |||||||||||
Maximum | TRx | Merck | Metafolin Supply Agreement | ||||||||||||
Asset Acquisition And License Agreement [Line Items] | ||||||||||||
Product target age | 3 years |
Deerfield Debt Obligation (Deta
Deerfield Debt Obligation (Details) - USD ($) | 12 Months Ended | 28 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2020 | Jan. 31, 2021 | Feb. 16, 2018 | |
Debt Instrument | |||||
Interest expense, net | $ (811,621) | $ (24,016) | |||
Long-term debt, current portion | 1,050,000 | $ 0 | |||
Deerfield Obligation | |||||
Debt Instrument | |||||
Interest expense, net | 800,000 | ||||
Long term debt | $ 15,400,000 | ||||
Scenario, Forecast | Deerfield Obligation | |||||
Debt Instrument | |||||
Periodic payment | $ 262,500 | ||||
Balloon payment to be paid | $ 15,250,000 | ||||
Level 1 | Deerfield Obligation | |||||
Debt Instrument | |||||
Estimated fair value of debt | $ 15,075,000 |
Capital Structure - Narrative (
Capital Structure - Narrative (Details) | Mar. 08, 2019USD ($)$ / sharesshares | Mar. 05, 2019USD ($)$ / sharesshares | Dec. 27, 2018USD ($)$ / sharesshares | Sep. 24, 2018$ / sharesshares | Aug. 17, 2018USD ($)$ / sharesshares | Nov. 17, 2017USD ($)shares | Apr. 27, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)shares | Dec. 31, 2018USD ($)class_of_stockVote$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Oct. 31, 2015shares | Oct. 20, 2015class_of_stock | Dec. 31, 2014shares |
Capital Structure | ||||||||||||||
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 | 205,000,000 | ||||||||||||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | 200,000,000 | |||||||||||
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 | 5,000,000 | |||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | $ | $ 5,685,038 | $ 0 | ||||||||||||
Deemed distribution to shareholder | $ | 0 | |||||||||||||
Gross proceeds | $ | $ 0 | $ 1,502,593 | ||||||||||||
Common stock | ||||||||||||||
Capital Structure | ||||||||||||||
Number of shares available under warrant (in shares) | 22,328 | |||||||||||||
Issuance of stock (in shares) | 2,349,968 | 2,301,598 | ||||||||||||
Gross proceeds | $ | $ 2,350 | $ 2,302 | ||||||||||||
Common Stock | ||||||||||||||
Capital Structure | ||||||||||||||
Number of shares available under warrant (in shares) | 4,024,708 | 4,024,708 | ||||||||||||
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 | |||||||||||||
Series B convertible preferred stock | Preferred Stock | ||||||||||||||
Capital Structure | ||||||||||||||
Preferred stock conversion ratio | 5 | 5 | ||||||||||||
Number of shares available under warrant (in shares) | 625,208 | |||||||||||||
Private Placement | ||||||||||||||
Capital Structure | ||||||||||||||
Number of shares available under warrant (in shares) | 14,285,714 | |||||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 0.40 | |||||||||||||
Proceeds from issuance of Series B convertible preferred stock upon warrant exercise, net | $ | $ 5,700,000 | |||||||||||||
Sale of stock price per share (in dollars per share) | $ / shares | $ 3.91 | |||||||||||||
Proceeds from issuance or sale of equity | $ | $ 3,900,000 | $ 4,650,000 | $ 3,900,000 | |||||||||||
Gross proceeds | $ | $ 5,000,000 | |||||||||||||
Convertible preferred stock conversion price (in dollars per share) | $ / shares | $ 0.35 | |||||||||||||
Private Placement | Common stock | ||||||||||||||
Capital Structure | ||||||||||||||
Issuance of stock (in shares) | 1,000,000 | 2,345,714 | 1,000,000 | |||||||||||
Percentage of outstanding shares issued | 19.99% | |||||||||||||
Convertible preferred stock shares authorized (in shares) | 11,940,000 | |||||||||||||
Private Placement | Series A Preferred Stock | Preferred Stock | ||||||||||||||
Capital Structure | ||||||||||||||
Preferred stock, shares authorized (in shares) | 4,179 | |||||||||||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 1,000 | |||||||||||||
Private Placement | Series B convertible preferred stock | Preferred Stock | ||||||||||||||
Capital Structure | ||||||||||||||
Preferred stock, shares authorized (in shares) | 2,857,143 | |||||||||||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 2 | |||||||||||||
TRx | ||||||||||||||
Capital Structure | ||||||||||||||
Unregistered shares of common stock issued or issuable as part of acquisition | $ | $ 8,100,000 | |||||||||||||
Shares issued upon closing (in shares) | 5,184,920 | |||||||||||||
Contingent shares issuable as part of acquisition (in shares) | 2,349,968 | |||||||||||||
Ichorion | ||||||||||||||
Capital Structure | ||||||||||||||
Issuance of shares in acquistion (in shares) | 5,800,000 | |||||||||||||
Subsequent Event | Bought Deal | ||||||||||||||
Capital Structure | ||||||||||||||
Sale of stock price per share (in dollars per share) | $ / shares | $ 5.50 | $ 5.50 | ||||||||||||
Number of shares issued (in shares) | 1,818,182 | 1,818,182 | ||||||||||||
Consideration received | $ | $ 9,000,000 | $ 9,000,000 | ||||||||||||
Incentive Warrants | ||||||||||||||
Capital Structure | ||||||||||||||
Number of shares available under warrant (in shares) | 4,000,000 | |||||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 12.50 | |||||||||||||
Expected life | 5 years 6 months | |||||||||||||
Deemed distribution to shareholder | $ | $ 1,657,383 | $ 1,700,000 | ||||||||||||
Fair value of warrants | $ | 2,200,000 | |||||||||||||
Value forwent by Armistice | $ | $ 500,000 | |||||||||||||
Incentive Warrants | Measurement input discount rate | ||||||||||||||
Capital Structure | ||||||||||||||
Warrants and rights outstanding measurement input | 0.55 | |||||||||||||
Incentive Warrants | Measurement input risk free interest rate | ||||||||||||||
Capital Structure | ||||||||||||||
Warrants and rights outstanding measurement input | 0.0262 | |||||||||||||
Incentive Warrants | Measurement input strike price (in dollars per share) | ||||||||||||||
Capital Structure | ||||||||||||||
Warrants and rights outstanding measurement input | $ / shares | 12.50 | |||||||||||||
Incentive Warrants | Measurement input fair value of underlying equity (per share) | ||||||||||||||
Capital Structure | ||||||||||||||
Warrants and rights outstanding measurement input | $ / shares | 3.02 | |||||||||||||
Armistice | Subsequent Event | Bought Deal | ||||||||||||||
Capital Structure | ||||||||||||||
Number of shares issued (in shares) | 363,637 | 363,637 |
Capital Structure - Warrants (D
Capital Structure - Warrants (Details) - $ / shares | Dec. 31, 2018 | Oct. 31, 2015 | Dec. 31, 2014 |
Common Stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 4,024,708 | ||
Preferred Stock | Series B convertible preferred stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 625,208 | ||
Common stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 22,328 | ||
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) | 4,000,000 | ||
Exercise price per share (in dollars per share) | $ 12.50 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | Jan. 01, 2019$ / sharesshares | May 18, 2016USD ($)grantshares | May 31, 2018shares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares |
Annual share reserve increase (as a percent) | 4.00% | |||||
Total stock-based compensation | $ | $ 2,431,063 | $ 1,157,252 | ||||
Fair value assumptions | ||||||
Expected annual dividend yield | 0.00% | |||||
Research and development | ||||||
Total stock-based compensation | $ | $ 101,000 | 156,047 | ||||
General and administrative | ||||||
Total stock-based compensation | $ | 2,135,710 | 1,001,205 | ||||
Sales and marketing | ||||||
Total stock-based compensation | $ | $ 194,353 | $ 0 | ||||
Service Based Options | ||||||
Option Activity, Number of shares | ||||||
Balance, beginning of period (in shares) | 3,746,597 | 2,823,489 | ||||
Granted (in shares) | 1,639,860 | |||||
Options exercises in period (in shares) | (243,115) | |||||
Forfeitures (in shares) | (473,637) | |||||
Balance, end of period (in shares) | 3,746,597 | 2,823,489 | ||||
Exercisable (in shares) | 1,997,468 | |||||
Option Activity, Weighted-average exercise price | ||||||
Beginning of period (in dollars per share) | $ / shares | $ 4.16 | $ 3.93 | ||||
Granted (in dollars per share) | $ / shares | 3.85 | |||||
Forfeitures (in dollars per share) | $ / shares | 2.77 | |||||
End of period (in dollars per share) | $ / shares | 4.16 | $ 3.93 | ||||
Vested or expected to vest (in dollars per share) | $ / shares | 1.87 | |||||
Exercisable (in dollars per share) | $ / shares | $ 4.71 | |||||
Option Activity, Fair value of options granted | ||||||
Grant date fair value of options granted | $ | $ 3,737,728 | |||||
Grant date fair value forfeitures | $ | $ 1,109,083 | |||||
Option Activity, Weighted-average remaining contractual term (in years) | ||||||
Balance | 7 years 9 months 15 days | 7 years 3 months 15 days | ||||
Exercisable | 6 years 7 months 13 days | |||||
Aggregate intrinsic value | $ | $ 1,500,000 | |||||
Aggregate intrinsic value of options exercisable | $ | 1,000,000 | |||||
Intrinsic value of options exercised | $ | 500,000 | |||||
Fair value of options vested in period | $ | $ 1,200,000 | $ 2,900,000 | ||||
Per share weighted average fair value of options granted (in dollars per share) | $ / shares | $ 2.28 | $ 0.66 | ||||
Options vested (in shares) | 641,286 | |||||
Unrecognized compensation expense | $ | $ 3,062,257 | |||||
Unrecognized compensation cost period for recognition | 3 years 1 month 6 days | |||||
Market Based Options | ||||||
Option Activity, Number of shares | ||||||
Balance, beginning of period (in shares) | 500,000 | 0 | ||||
Granted (in shares) | 500,000 | |||||
Balance, end of period (in shares) | 500,000 | 0 | ||||
Exercisable (in shares) | 0 | |||||
Option Activity, Weighted-average exercise price | ||||||
Beginning of period (in dollars per share) | $ / shares | $ 4.24 | |||||
Granted (in dollars per share) | $ / shares | $ 4.24 | |||||
End of period (in dollars per share) | $ / shares | $ 4.24 | |||||
Option Activity, Fair value of options granted | ||||||
Grant date fair value of options granted | $ | $ 1,260,000 | |||||
Option Activity, Weighted-average remaining contractual term (in years) | ||||||
Balance | 9 years 2 months 27 days | |||||
Aggregate intrinsic value | $ | $ 0 | |||||
Per share weighted average fair value of options granted (in dollars per share) | $ / shares | $ 2.52 | |||||
Unrecognized compensation expense | $ | $ 917,568 | |||||
Unrecognized compensation cost period for recognition | 2 years 18 days | |||||
Fair value assumptions | ||||||
Risk-free interest rate | 2.84% | |||||
Expected term of options (in years) | 2 years 9 months 18 days | |||||
Expected stock price volatility | 60.00% | |||||
Expected annual dividend yield | 0.00% | |||||
Restricted Stock | ||||||
Total stock-based compensation | $ | $ 346,514 | |||||
Option Activity, Weighted-average remaining contractual term (in years) | ||||||
Unrecognized compensation cost period for recognition | 3 years 3 months 18 days | |||||
Restricted Stock Award, Number of Shares | ||||||
Nonvested restricted, beginning balance (in shares) | 445,000 | 0 | ||||
Granted (in shares) | 445,000 | |||||
Nonvested restricted, ending balance (in shares) | 445,000 | 0 | ||||
Restricted Stock Award Weighted Average Grant Date Fair Value [Abstract] | ||||||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 4.27 | |||||
Restricted stock award unrecognized compensation expense | $ | $ 1,551,986 | |||||
Minimum | Service Based Options | ||||||
Fair value assumptions | ||||||
Risk-free interest rate | 2.51% | 1.85% | ||||
Expected term of options (in years) | 5 years | 5 years | ||||
Expected stock price volatility | 55.00% | 55.00% | ||||
Expected annual dividend yield | 0.00% | 0.00% | ||||
Maximum | Service Based Options | ||||||
Fair value assumptions | ||||||
Risk-free interest rate | 3.01% | 2.38% | ||||
Expected term of options (in years) | 6 years 3 months | 6 years 3 months | ||||
Expected stock price volatility | 65.00% | 100.00% | ||||
Expected annual dividend yield | 0.00% | 0.00% | ||||
2016 Plan | ||||||
Increase in number of shares reserved for issuance (in shares) | 600,000 | 1,400,000 | ||||
Common stock remaining for future issuance (in shares) | 602,657 | |||||
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) | 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) | 783,983 | |||||
Total stock-based compensation | $ | $ 49,863 | $ 76,305 | ||||
Restricted Stock Award Weighted Average Grant Date Fair Value [Abstract] | ||||||
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) | 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 | |||||
Director | 2016 Plan | Stock options | ||||||
Award vesting period | 3 years | |||||
Terminated Executive | ||||||
Total stock-based compensation | $ | $ 322,000 | |||||
Subsequent Event | 2016 Plan | ||||||
Increase in number of shares reserved for issuance (in shares) | 1,632,167 | |||||
Shares available for issuance | 2,234,824 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Operating Loss Carryforwards [Line Items] | |
Accrued penalties and interest accrued | $ 200 |
Naked credit offset by NOLs | 80.00% |
Naked credit not offset by NOLs | 20.00% |
Federal and State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 16,426 |
Net Operating Losses Expiring Beginning 2031 | Federal and State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 3,580 |
Net Operating Losses Carrying Forward Indefinitely | Federal and State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 12,846 |
Income Taxes - Schedule of Inc
Income Taxes - Schedule of Income Tax Provision (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||
Federal | $ (53,281) | $ 2,309,285 |
State | 36,116 | 489,863 |
Total current income tax expense (benefit) | (17,165) | 2,799,148 |
Deferred: | ||
Federal | (52,235) | (789,274) |
State | 35,490 | (43,355) |
Total deferred income tax expense (benefit) | (16,745) | (832,629) |
Net income tax (benefit) expense | $ (33,910) | $ 1,966,519 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Taxes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets, Net [Abstract] | ||
Net operating losses | $ 4,421,423 | $ 716,819 |
Accrued compensation | 465,430 | 271,437 |
Deferred rent | 15,373 | 4,051 |
Tax credits | 252,095 | 0 |
Stock-based compensation | 1,922,736 | 1,291,230 |
Installment sale | 508,291 | 0 |
Other reserves | 262,260 | 72,881 |
Basis difference in tangible and intangible assets, net | 2,968,764 | 2,019,272 |
Total deferred tax assets | 10,816,372 | 4,375,690 |
Deferred Tax Liabilities, Deferred Expense [Abstract] | ||
Prepaid expenses | (160,474) | 0 |
Installment sales | 0 | (358,844) |
Total deferred tax liabilities | (160,474) | (358,844) |
Deferred tax asset, net | 10,655,898 | 4,016,846 |
Less valuation allowance | (10,725,136) | (4,023,990) |
Net deferred taxes | $ (69,238) | $ (7,144) |
Income Taxes - Expense (Details
Income Taxes - Expense (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of income tax expense | ||
Federal statutory rate | 21.00% | 34.00% |
Permanent Adjustments | (0.37%) | 0.17% |
Built-in-loss | (0.33%) | 1.52% |
State taxes | 4.43% | 27.91% |
Research and development credit | 0.61% | (1.04%) |
Change in statutory rate due to Tax Cuts and Job Act | 0.00% | 15.82% |
NOL adjustment per § 382 | 0.00% | 126.82% |
Non-deductible IPR&D expense | (9.84%) | 0.00% |
Other | (0.04%) | 0.04% |
Change in valuation allowance | (15.37%) | (191.03%) |
Effective income tax rate | 0.09% | 14.21% |
Commitments And Contingencies_2
Commitments And Contingencies (Details) | Feb. 16, 2018unit$ / unit | Dec. 18, 2015USD ($)unit | Aug. 31, 2018USD ($) | Nov. 30, 2017$ / unit | Sep. 30, 2018USD ($)extension | Dec. 31, 2018USD ($) | Oct. 31, 2017 |
Operating Leased Assets [Line Items] | |||||||
Noncontrolling interest ownership percentage by Noncontrolling Owners | 10.00% | ||||||
Rent expense | $ 41,749 | ||||||
Rockville Office | |||||||
Operating Leased Assets [Line Items] | |||||||
Incentive to lessee | 381,900 | ||||||
Annual base rent | $ 161,671 | ||||||
Annual rent increase (as a percent) | 2.50% | ||||||
Period of abatement | 12 months | ||||||
Lease term | 10 years | ||||||
Number of optional extensions | extension | 2 | ||||||
Lease renewal term | 5 years | ||||||
Karbinal Agreement | TRIS Pharma | |||||||
Operating Leased Assets [Line Items] | |||||||
Minimum quantity required | unit | 70,000 | ||||||
Make whole payment (in dollars per unit) | $ / unit | 30 | ||||||
Make whole payment | $ 934,300 | 1,281,525 | |||||
Accrued make whole payment | $ 700,000 | ||||||
Zylera | Ulesfia Supply Agreement | |||||||
Operating Leased Assets [Line Items] | |||||||
Price (in dollars per unit) | $ / unit | 58.84 | ||||||
Management and handling fee (in dollars per unit) | $ / unit | 3.66 | ||||||
Management and handling fee annual price increase | 10.00% | ||||||
Zylera | Ulesfia Supply Agreement | Lachlan Pharmaceuticals | |||||||
Operating Leased Assets [Line Items] | |||||||
Minimum quantity required | unit | 20,000 | ||||||
Long-term purchase commitment | $ 1,200,000 | ||||||
Minimum royalty | $ 3,000,000 | ||||||
Indemnification of post-acquisition losses, (as a percent) | 50.00% |
Commitments And Contingencies -
Commitments And Contingencies - Minimum Purchase Obligations and Royalties (Details) | Dec. 31, 2018USD ($) |
Minimum Purchase Obligations | |
2019 | $ 1,257,326 |
2020 | 1,265,378 |
2021 | 0 |
2022 | 0 |
Total | 2,522,704 |
Minimum Royalties | |
2019 | 3,000,000 |
2020 | 3,000,000 |
2021 | 0 |
2022 | 0 |
Total | 6,000,000 |
Total | |
2019 | 4,257,326 |
2020 | 4,265,378 |
2021 | 0 |
2022 | 0 |
Total | $ 8,522,704 |
Commitments And Contingencies_3
Commitments And Contingencies - Operating Lease Obligations (Details) | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 0 |
2020 | 155,815 |
2021 | 169,510 |
2022 | 173,748 |
2023 | 178,092 |
Thereafter | 1,183,290 |
Total | $ 1,860,455 |