Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | May 06, 2019 | Mar. 15, 2019 | Jun. 29, 2018 | |
Document And Entity Information [Abstract] | ||||
Document Type | S-1 | |||
Amendment Flag | false | |||
Document Period End Date | Mar. 31, 2019 | |||
Document Fiscal Year Focus | 2019 | |||
Document Fiscal Period Focus | Q1 | |||
Trading Symbol | XBIO | |||
Entity Registrant Name | Xenetic Biosciences, Inc. | |||
Entity Central Index Key | 0001534525 | |||
Current Fiscal Year End Date | --12-31 | |||
Entity Filer Category | Non-accelerated Filer | |||
Entity Public Float | $ 16,464,779 | |||
Entity Common Stock, Shares Outstanding | 10,443,889 | 10,443,889 | ||
Current Reporting Status | Yes | |||
Entity Small Business | true | |||
Entity Emerging Growth | false | |||
Entity Transition Period | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||
Cash | $ 2,018,133 | $ 571,605 | $ 5,533,062 |
Restricted cash | 66,510 | 66,510 | 66,510 |
Prepaid expenses and other | 1,116,758 | 555,856 | 285,005 |
Total current assets | 3,201,401 | 1,193,971 | 5,884,577 |
Property and equipment, net | 3,498 | 4,956 | 27,846 |
Goodwill | 3,283,379 | 3,283,379 | 3,283,379 |
Indefinite-lived intangible assets | 9,243,128 | 9,243,128 | 9,243,128 |
Other assets | 724,786 | 705,660 | 724,713 |
Total assets | 16,456,192 | 14,431,094 | 19,163,643 |
Current liabilities: | |||
Accounts payable | 1,040,289 | 934,147 | 786,779 |
Accrued expenses | 965,738 | 664,029 | 1,135,653 |
Other current liabilities | 1,612 | 21,234 | |
Total current liabilities | 2,006,027 | 1,599,788 | 1,943,666 |
Deferred tax liability | 2,918,518 | 2,918,518 | 2,918,518 |
Other liabilities | 13,119 | 0 | 0 |
Total liabilities | 4,937,664 | 4,518,306 | 4,862,184 |
Commitments and contingent liabilities | |||
Stockholders' equity: | |||
Common stock | 10,766 | 9,726 | 9,040 |
Additional paid in capital | 171,093,279 | 168,161,329 | 165,249,912 |
Accumulated deficit | (154,560,845) | (153,233,595) | (145,933,137) |
Accumulated other comprehensive income | 253,734 | 253,734 | 253,734 |
Treasury stock | (5,281,180) | (5,281,180) | (5,281,180) |
Total stockholders' equity | 11,518,528 | 9,912,788 | 14,301,459 |
Total liabilities and stockholders' equity | 16,456,192 | 14,431,094 | 19,163,643 |
Preferred Class A [Member] | |||
Stockholders' equity: | |||
Preferred stock | 970 | 970 | 970 |
Preferred Class B [Member] | |||
Stockholders' equity: | |||
Preferred stock | $ 1,804 | $ 1,804 | $ 2,120 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.001 | $ .001 | $ 0.001 |
Common stock, shares authorized | 45,454,546 | 45,454,546 | 45,454,546 |
Common stock, shares issued | 10,767,774 | 9,727,774 | 9,041,426 |
Common stock, shares outstanding | 10,443,889 | 9,403,889 | 8,717,541 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred Class A [Member] | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ .001 |
Preferred stock shares issued | 970,000 | 970,000 | 970,000 |
Preferred stock, shares outstanding | 970,000 | 970,000 | 970,000 |
Preferred Class B [Member] | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock shares issued | 1,804,394 | 1,804,394 | 2,120,742 |
Preferred stock, shares outstanding | 1,804,394 | 1,804,394 | 2,120,742 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | ||||
Total revenues | $ 0 | $ 7,585,000 | ||
Operating costs and expenses: | ||||
Cost of research and development revenue | 0 | (156,119) | ||
Research and development | $ (463,782) | $ (706,271) | (2,883,952) | (4,060,000) |
General and administrative | (863,373) | (1,122,072) | (4,392,375) | (6,937,643) |
Loss from operations | (1,327,155) | (1,828,343) | (7,276,327) | (3,568,762) |
Other income (expense): | ||||
Other expense (expense) | (245) | 5,398 | (24,640) | (24,552) |
Interest income (expense) | 150 | 427 | 509 | (1,818) |
Total other expense | (95) | 5,825 | (24,131) | (26,370) |
Net loss | (1,327,250) | (1,822,518) | $ (7,300,458) | $ (3,595,132) |
Deemed dividend | (3,879,447) | 0 | ||
Net loss applicable to common stockholders | $ (5,206,697) | $ (1,822,518) | ||
Basic and diluted loss per share | $ (0.54) | $ (0.21) | $ (.80) | $ (0.41) |
Weighted-average shares of common stock outstanding, basic and diluted | 9,681,222 | 8,717,541 | 9,070,883 | 8,665,763 |
Licenses [Member] | ||||
Revenue | ||||
Total revenues | $ 0 | $ 7,500,000 | ||
Collaboration Services [Member] | ||||
Revenue | ||||
Total revenues | $ 0 | $ 85,000 |
Consolidated Statements Of Chan
Consolidated Statements Of Changes In Stockholders' Equity - USD ($) | Preferred Stock | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Income / Loss | Treasury Stock | Total |
Beginning balance, shares at Dec. 31, 2016 | 3,275,742 | 8,731,029 | |||||
Beginning balance, value at Dec. 31, 2016 | $ 3,275 | $ 8,730 | $ 163,522,921 | $ (142,338,005) | $ 253,734 | $ (5,281,180) | $ 16,169,475 |
Conversion of notes, shares issued | 125,397 | ||||||
Conversion of notes, value | $ 125 | (125) | |||||
Conversion of Series B preferred stock to shares of common stock, Shares | (185,000) | 185,000 | |||||
Conversion of Series B preferred stock to shares of common stock, Value | $ (185) | $ 185 | |||||
Share-based expense | 1,784,129 | 1,784,129 | |||||
Common stock awards to vendors | 69,303 | 69,303 | |||||
Warrant expense | (126,316) | (126,316) | |||||
Net loss | (3,595,132) | (3,595,132) | |||||
Ending balance, shares at Dec. 31, 2017 | 3,030,742 | 9,041,426 | |||||
Ending balance, value at Dec. 31, 2017 | $ 3,090 | $ 9,040 | 165,249,912 | (145,933,137) | 253,734 | (5,281,180) | 14,301,459 |
Accretion of deemed dividend related to Series B Preferred Stock down round provision | 0 | ||||||
Share-based expense | 383,850 | 383,850 | |||||
Common stock awards to vendors | 17,427 | 17,427 | |||||
Warrant expense | 4,917 | 4,917 | |||||
Net loss | (1,822,518) | (1,822,518) | |||||
Ending balance, shares at Mar. 31, 2018 | 3,090,742 | 9,041,426 | |||||
Ending balance, value at Mar. 31, 2018 | $ 3,090 | $ 9,040 | 165,656,106 | (147,755,655) | 253,734 | (5,281,180) | 12,885,135 |
Beginning balance, shares at Dec. 31, 2017 | 3,030,742 | 9,041,426 | |||||
Beginning balance, value at Dec. 31, 2017 | $ 3,090 | $ 9,040 | 165,249,912 | (145,933,137) | 253,734 | (5,281,180) | 14,301,459 |
Exercise of warrants, shares | 370,000 | ||||||
Exercise of warrants, value | $ 370 | 1,479,630 | 1,480,000 | ||||
Conversion of Series B preferred stock to shares of common stock, Shares | (316,348) | 316,348 | |||||
Conversion of Series B preferred stock to shares of common stock, Value | $ (316) | $ 316 | |||||
Share-based expense | 1,351,873 | 1,351,873 | |||||
Common stock awards to vendors | 69,708 | 69,708 | |||||
Warrant expense | 10,206 | 10,206 | |||||
Net loss | (7,300,458) | (7,300,458) | |||||
Ending balance, shares at Dec. 31, 2018 | 2,774,394 | 9,727,774 | |||||
Ending balance, value at Dec. 31, 2018 | $ 2,774 | $ 9,726 | 168,161,329 | (153,233,595) | (253,734) | (5,281,180) | 9,912,788 |
Issuance of common stock and warrants in March 2019 registered direct offering, net of issuance costs, value | $ 1,040,000 | ||||||
Deemed dividend related to Series B Preferred Stock down round provision | 3,879,447 | 3,879,447 | |||||
Accretion of deemed dividend related to Series B Preferred Stock down round provision | $ (3,879,447) | $ (3,879,447) | |||||
Exercise of warrants, shares | 1,040 | 2,698,010 | 2,699,050 | ||||
Share-based expense | $ 243,089 | $ 243,089 | |||||
Common stock awards to vendors | 17,427 | 17,427 | |||||
Warrant expense | (26,476) | (26,576) | |||||
Net loss | (1,327,250) | (1,327,250) | |||||
Ending balance, shares at Mar. 31, 2019 | 2,774,394 | 10,767,774 | |||||
Ending balance, value at Mar. 31, 2019 | $ 2,774 | $ 10,766 | $ 171,093,279 | $ (154,560,845) | $ 253,734 | $ (5,281,180) | $ 11,518,528 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss | $ (1,327,250) | $ (1,822,518) | $ (7,300,458) | $ (3,595,132) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||
Depreciation | 1,458 | 5,723 | 15,827 | 23,784 |
Gain on sale of property and equipment | (2,000) | 0 | (15,437) | 0 |
Share-based expense | 243,089 | 383,850 | 1,351,873 | 1,784,129 |
Warrant-based expense for services | (26,576) | 4,917 | 10,206 | (126,316) |
Vendor share-based payments | 17,427 | 17,427 | 69,708 | 135,280 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | 0 | 3,000,000 | ||
Prepaid expenses and other assets | (536,698) | (51,888) | (251,798) | 280,633 |
Accounts payable, accrued expenses and other liabilities | 376,028 | (204,314) | (343,878) | (8,183) |
Net cash (used in) provided by operating activities | (1,254,522) | (1,666,803) | (6,463,957) | 1,494,195 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Purchases of property and equipment | 2,000 | 0 | 0 | (9,264) |
Proceeds from sales of property and equipment | 22,500 | 0 | ||
Net cash provided by (used in) investing activities | 2,000 | 0 | 22,500 | (9,264) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Net proceeds from issuance of common stock and warrants | 2,699,050 | 0 | ||
Proceeds from exercise of warrants | 1,480,000 | 0 | ||
Net cash provided by financing activities | 2,699,050 | 0 | 1,480,000 | 0 |
Net change in cash and restricted cash | 1,446,528 | (1,666,803) | (4,961,457) | 1,484,931 |
Cash and restricted cash at beginning of period | 638,115 | 5,599,572 | 5,599,572 | 4,114,641 |
Cash and restricted cash at end of period | 2,084,643 | 3,932,769 | 638,115 | 5,599,572 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Cash paid for interest | 8 | 671 | 599 | 1,932 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Conversion of Series B preferred stock to common stock | 316 | 185 | ||
Reclassification of common shares issuable to accounts payable | 0 | 65,977 | ||
Issuance of common stock for promissory note converted in 2016 | $ 0 | $ 125 | ||
Right of use asset acquired in exchange for lease liability | $ 43,330 | $ 0 |
1. The Company
1. The Company | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
The Company | 1. The Company Background Xenetic Biosciences, Inc. (“Xenetic” or the “Company”) incorporated in the state of Nevada and based in Framingham, Massachusetts, is a biopharmaceutical company focused on the discovery, research and development of next-generation biologic drugs and novel oncology therapeutics. Xenetic’s most advanced investigational drug candidate is oncology therapeutic XBIO-101 (sodium cridanimod) for the treatment of progestin – resistant endometrial cancer. Xenetic’s lead proprietary technology is PolyXen ™ On March 1, 2019, the Company entered into an agreement to acquire the novel Chimeric Antigen Receptor (“CAR”) T cell platform technology, referred to herein as “XCART” (the “Transaction”) a proximity-based screening platform capable of identifying CAR constructs that can target patient-specific tumor neoantigens, with a demonstrated proof of mechanism in B-cell Non-Hodgkin lymphomas. The XCART technology, developed by the Scripps Research Institute (the “Institute”) in collaboration with the Shemyakin-Ovchinnikov Institute of Bioorganic Chemistry (“IBCH”), is believed to have the potential to significantly enhance the safety and efficacy of cell therapy for B-cell lymphomas by generating patient- and tumor-specific CAR T cells. The closing of the Transaction is subject to customary closing conditions as well as conditions regarding (i) the Company having adequate financing to fund its future working capital obligations following the closing and (ii) the Company obtaining necessary and appropriate stockholder approvals, evidencing among other matters, approval of the Share Purchase Agreement and the transactions contemplated thereunder, including the issuance of the transaction shares. Subject to the satisfaction of the closing conditions, the Transaction is expected to close in the first half of 2019. As used in this Quarterly Report on Form 10-Q (“Quarterly Report”), unless otherwise indicated, all references herein to “Xenetic,” the “Company,” “we” or “us” refer to Xenetic Biosciences, Inc. and its wholly owned subsidiaries. The Company, directly or indirectly, through its wholly-owned subsidiary, Xenetic Biosciences (U.K.) Limited (“Xenetic UK”), and the wholly-owned subsidiaries of Xenetic UK, Lipoxen Technologies Limited (“Lipoxen”), Xenetic Bioscience, Incorporated and SymbioTec, GmbH (“SymbioTec”), owns various U.S. federal trademark registrations and applications, and unregistered trademarks and service marks, including but not limited to Virexxa®, OncoHist™, PolyXen™, ErepoXen™, ImuXen™, and PulmoXen™, which are used throughout this Quarterly Report. All other company and product names may be trademarks of the respective companies with which they are associated. Going Concern and Management’s Plan The Company incurred a net loss of approximately $1.3 million for the three months ended March 31, 2019. The Company had an accumulated deficit of approximately $154.6 million as of March 31, 2019 as compared to an accumulated deficit of approximately $153.2 million at December 31, 2018. Working capital (deficit) was approximately $1.2 million and $(0.4) million at March 31, 2019 and December 31, 2018, respectively. The Company expects to continue incurring losses for the foreseeable future and will need to raise additional capital or pursue other strategic alternatives in the very near term in order to continue the pursuit of its business plan and continue as a going concern. The Company believes that it has access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations, related party funding, or other means. On March 7, 2019, the Company closed a $3.1 million in a registered direct common stock offering resulting in $2.7 million of net proceeds to the Company. However, the Company has not secured any commitment for additional financing at this time. The terms, timing and extent of any future financing will depend upon several factors, including the achievement of progress in the Company’s clinical development programs, the Company’s ability to identify and enter into licensing or other strategic arrangements, and factors related to financial, economic and market conditions, many of which are beyond the Company’s control. While these condensed consolidated financial statements have been prepared on a going concern basis, if the Company does not successfully raise additional working capital, there can be no assurance that the Company will be able to continue its operations and these conditions raise substantial doubt about its ability to continue as a going concern. Under such circumstances, the Company would have to further reduce the planned scale of, or possibly suspend, some or all of its pre-clinical development initiatives and clinical trials. In addition, the Company would have to continue to reduce its general and administrative and other operating expenses and delay or cease the purchase of clinical research services if and until the Company is able to obtain additional financing. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. | 1. The Company Background Xenetic Biosciences, Inc. (“Xenetic” or the “Company”), incorporated in the state of Nevada and based in Framingham, Massachusetts, is a biopharmaceutical company focused on the discovery, research and development of next generation biological drugs and novel oncology therapeutics. The Company’s 170+ patent portfolio covers next generation biologic drugs and novel oncology drug therapeutics and provides protection for its current drug candidates and positions it well for strategic partnership and commercialization opportunities. The Company’s objective is to leverage its portfolio to maximize opportunities to out-license assets from its portfolio in order to generate working capital to both build long-term stockholder value and provide the Company with the funding necessary for clinical development of its oncology drug candidates through market launch. Xenetic incorporates its patented and proprietary technologies into a number of drug candidates under development with biotechnology and pharmaceutical industry collaborators to create what the Company believes will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics. While the Company primarily focuses on researching and developing oncology drugs, it also has significant interests in drugs being developed by its collaborators to treat other conditions. Xenetic’s most advanced investigational drug candidate is oncology therapeutic XBIO-101 (sodium cridanimod) for the treatment of progestin resistant endometrial cancer. The Company has exclusive rights to develop and commercialize XBIO-101 worldwide, except for specified countries in the Commonwealth of Independent States (“CIS”). XBIO-101 has been granted orphan drug designation by the United States (“U.S.”) Food and Drug Administration (“FDA”) for the potential treatment of progesterone receptor negative (“PrR-”) endometrial cancer in conjunction with progesterone therapy. The Company’s Phase II trial for XBIO-101 commenced patient dosing in October 2017. The Company closed patient enrollment in the trial in March 2019 as a result of slower than expected progress on the trial resulting from patient enrollment and retention challenges. Xenetic’s lead proprietary technology is PolyXen ™ On March 1, 2019, the Company entered into an agreement to acquire the novel CAR T (“Chimeric Antigen Receptor T Cell”) platform technology, referred to herein as “XCART,” (the “Transaction”) a proximity-based screening platform capable of identifying CAR constructs that can target patient-specific tumor neoantigens, with a demonstrated proof of mechanism in B-cell Non-Hodgkin lymphomas. The XCART technology, developed by The Scripps Research Institute (the “Institute”) in collaboration with the Shemyakin-Ovchinnikov Institute of Bioorganic Chemistry (“IBCH”), is believed to have the potential to significantly enhance the safety and efficacy of cell therapy for B-cell lymphomas by generating patient- and tumor-specific CAR T cells. The XCART technology platform was designed by its originators to utilize an established screening technique to identify peptide ligands that bind specifically to the unique B-cell receptor (“BCR”) on the surface of an individual patient’s malignant tumor cells. The peptide is then inserted into the antigen-binding domain of a CAR, and a subsequent transduction/transfection process is used to engineer the patient’s T cells into a CAR T format which redirects the patient’s T cells to attack the tumor. Essentially, the XCART screening platform is the inverse of a typical CAR T screening protocol wherein libraries of highly specific antibody domains are screened against a given target. In the case of XCART screening, the target is itself an antibody domain, and hence highly specific by its nature. The XCART technology creates the possibility of personalized treatment of lymphomas utilizing a CAR with an antigen-binding domain that should only recognize, and only be recognized by, the unique BCR of a particular patient’s B-cell lymphoma. An expected result for XCART is limited off-tumor toxicities, such as B-cell aplasia. Xenetic’s clinical development program will seek to confirm the early preclinical results, and to demonstrate a more attractive safety profile than existing therapies. The closing of the Transaction is subject to customary closing conditions as well as conditions regarding (i) the Company having adequate financing to fund its future working capital obligations following the closing and (ii) the Company obtaining necessary and appropriate stockholder approvals, evidencing among other matters, approval of the Share Purchase Agreement and the transactions contemplated thereunder, including the issuance of shares of the Company’s common stock. Subject to the satisfaction of the closing conditions, the Transaction is expected to close in the first half of 2019. See Note 14 “ Subsequent Events Xenetic’s drug candidates have resulted from its research activities or those of its collaborators and are in the development stage. As a result, the Company continues to commit a significant amount of its resources to its research and development activities and anticipates continuing to do so for the near future. To date, none of the Company’s drug candidates have received regulatory marketing authorization in the U.S. by the FDA nor in any other territories by any applicable agencies. Although the Company holds a broad patent portfolio, the focus of its internal development efforts was limited in 2018 to research and development of its primary product candidate XBIO-101 due to capital constraints. The Company intends to pursue development efforts of the XCART technology once the acquisition is consummated and pursue other developments efforts around CAR T technology. The Company also plans to research potential utilities for XBIO-101 alone or in combination, in immuno-oncology approaches and will continue to look for potential partner and out-licensing opportunities for its platform technologies subject to adequate funding. The Company, directly or indirectly, through its wholly-owned subsidiary, Xenetic UK, and the wholly-owned subsidiaries of Xenetic Biosciences (U.K.) Limited (“Xenetic UK”), Lipoxen Technologies Limited (“Lipoxen”), Xenetic Bioscience, Incorporated and SymbioTec, GmbH (“SymbioTec”), owns various U.S. federal trademark registrations and applications, and unregistered trademarks and service marks, including but not limited to Virexxa®, OncoHist™, PolyXen™, ErepoXen™, ImuXen™, and PulmoXen™, which may be used throughout this Annual Report. All other company and product names may be trademarks of the respective companies with which they are associated. Going Concern and Management’s Plan The Company incurred a net loss of approximately $7.3 million for the year ended December 31, 2018. The Company had an accumulated deficit of approximately $153.2 million as of December 31, 2018 as compared to an accumulated deficit of approximately $145.9 million as of December 31, 2017. Working capital (deficit) was approximately $(0.4) million at December 31, 2018 and approximately $3.9 million at December 31, 2017. The Company expects to continue incurring losses for the foreseeable future and will need to raise additional capital or pursue other strategic alternatives in the very near term in order to continue pursuit of its business plan and continue as a going concern. The Company believes that it has access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations, related party funding or other means. On March 5, 2019, the Company raised $3.1 million in a registered direct common stock offering resulting in $2.7 million of net proceeds to the Company. However, it has not secured any commitment for additional financing at this time. The terms, timing and extent of any future financing will depend upon several factors, including the achievement of progress in its clinical development programs, its ability to identify and enter into licensing or other strategic arrangements, and factors related to financial, economic and market conditions, many of which are beyond its control. While these consolidated financial statements have been prepared on a going concern basis, if the Company does not successfully raise additional working capital, there can be no assurance that the Company will be able to continue its operations and these conditions raise substantial doubt about its ability to continue as a going concern. Under such circumstances, the Company would have to further reduce the planned scale of, or possibly suspend, some or all of its preclinical development initiatives and clinical trials. In addition, the Company would have to continue to reduce its general and administrative and other operating expenses and delay or cease the purchase of clinical research services if and until the Company is able to obtain additional financing. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Preparation of Interim Financial Statements The accompanying condensed consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The results for the interim periods are not necessarily indicative of results for the full year. The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 29, 2019 as amended on April 30, 2019. These condensed consolidated financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. This assumption is presently uncertain and contingent upon the Company’s ability to raise additional working capital. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Principles of Consolidation The condensed consolidated financial statements of the Company include the accounts of Xenetic UK and its wholly owned subsidiaries: Lipoxen, Xenetic Bioscience, Incorporated, and SymbioTec. All material intercompany balances and transactions have been eliminated in consolidation. Basic and Diluted Net Loss per Share The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company computes diluted net loss per share after giving consideration to the dilutive effect of stock options that are outstanding during the period, except where such non-participating securities would be anti-dilutive. For the three months ended March 31, 2019 and 2018, basic and diluted net loss per share are the same for each year due to the Company’s net loss position. Potentially dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would be anti-dilutive. Recently Adopted Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07 , Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04: Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) | 2. Summary of Significant Accounting Policies Preparation of Financial Statements These consolidated financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. This assumption is presently uncertain and contingent upon the Company’s ability to raise additional working capital. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Principles of Consolidation The consolidated financial statements of the Company include the accounts of Xenetic UK and its wholly-owned subsidiaries: Lipoxen, Xenetic Bioscience, Incorporated, and SymbioTec. All material intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The consolidated financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue, costs and expenses in the financial statements and disclosures in the accompanying notes. Actual results and outcomes may differ materially from management’s estimates, judgments and assumptions. Functional Currency Change Effective April 1, 2015, the functional currency of the Company’s foreign subsidiaries changed from the British Pound Sterling to the U.S. dollar. The change in functional currency was applied on a prospective basis. Therefore, any gains and losses that were previously recorded in accumulated other comprehensive income remain unchanged. Foreign Currency Transactions Realized and unrealized gains and losses resulting from foreign currency transactions arising from exchange rate fluctuations on balances denominated in currencies other than the functional currencies are recognized in “Other income (expense)” in the consolidated statements of comprehensive loss. Monetary assets and liabilities that are denominated in a currency other than the functional currency are re-measured to the functional currency using the exchange rate at the balance sheet date and gains or losses are recorded in the consolidated statements of comprehensive loss. Fair Value of Financial Instruments The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. See Note 7, Fair Value Measurements Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents. Investments with original maturities of greater than 90 days from the date of purchase but less than one year from the balance sheet date are classified as short-term investments, while investments with maturities of one year or beyond from the balance sheet date are classified as long-term investments. Management determines the appropriate classification of its cash equivalents and investment securities at the time of purchase and re-evaluates such determination as of each balance sheet date. Restricted Cash As of December 31, 2018 and 2017, restricted cash represents a certificate of deposit that matures annually and secures the Company’s outstanding letter of credit of approximately $0.1 million for its former operating lease in Lexington, Massachusetts (the “Lexington Lease”). The Lexington Lease expired in January 2019 and the letter of credit is required to be maintained . In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains cash and cash equivalents with various major financial institutions. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. Property and Equipment The Company records property and equipment at cost less accumulated depreciation. Expenditures for major renewals and improvements which extend the life or usefulness of the asset are capitalized. Items of an ordinary repair or maintenance nature are charged directly to operating expense as incurred. The Company calculates depreciation using the straight-line method over the estimated useful lives of the assets: Asset Classification Estimated Useful Life Laboratory equipment 3 years Office and computer equipment 3 years Leasehold improvements 5 years or the remaining term of the lease, if shorter Furniture and fixtures 5 years The Company eliminates the cost of assets retired or otherwise disposed of, along with the corresponding accumulated depreciation, from the related accounts, and the resulting gain or loss is reflected in the results of operations. Indefinite-Lived Intangible Assets Acquired indefinite-lived intangible assets consist of in-process research and development (“IPR&D”) related to the Company’s business combination with SymbioTec, which was recorded at fair value on the acquisition date. IPR&D intangible assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development efforts. Substantial additional research and development may be required before the Company’s IPR&D reaches technological feasibility. Upon completion of the IPR&D project, the IPR&D assets will be amortized over their estimated useful lives. The Company assesses intangible assets with indefinite lives for impairment at least annually as of October 1, or when events or changes in the business environment indicate the carrying value may be impaired. T he circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that the acquired IPR&D is impaired. If the Company chooses to first assess the qualitative factors and it is determined that it is not more likely than not acquired IPR&D is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to perform in some periods but not in others. No impairment was recorded during the years ended December 31, 2018 and 2017. Goodwill Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company assesses goodwill for impairment at least annually, or when events or changes in the business environment indicate the carrying value may not be fully recoverable. The Company also has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that goodwill is impaired. If the Company chooses to first assess qualitative factors and it is determined that it is not more likely than not goodwill is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to do in some periods but not in others. The Company performs its annual impairment review as of October 1. No impairment was recorded during the years ended December 31, 2018 and 2017. Impairment of Long-Lived Assets The Company reviews long-lived assets to be held and used, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be fully recoverable. No such impairments were recorded during the years ended December 31, 2018 and 2017. Evaluation of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset or asset group and its eventual disposition. Impairment, if any, is calculated as the amount by which an asset’s carrying value exceeds its fair value, typically using discounted cash flows to determine fair value. Revenue Recognition The Company enters into supply, license and collaboration arrangements with pharmaceutical and biotechnology partners, some of which include royalty agreements based on potential net sales of approved commercial pharmaceutical products. Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The terms of the Company’s license agreements may include delivery of an IP license to a collaboration partner. The Company may be compensated under license arrangements through a combination of non-refundable upfront receipts, development and regulatory objective receipts and royalty receipts on future product sales by partners. The Company anticipates recognizing non-refundable upfront license payments and development and regulatory milestone payments received by the Company in license and collaboration arrangements that include future obligations, such as supply obligations, ratably over the Company’s expected performance period under each respective arrangement. The Company makes its best estimate of the period over which the Company expects to fulfil the Company’s performance obligations, which may include technology transfer assistance, research activities, clinical development activities, and manufacturing activities from development through the commercialization of the product. Given the uncertainties of these collaboration arrangements, significant judgment is required to determine the duration of the performance period. When the Company enters into an arrangement to sublicense some of its patents, it will consider the performance obligations to determine if there is a single element or multiple elements to the arrangement as it determines the proper method and timing of revenue recognition. The Company considers the terms of the license or sublicense for such elements as price adjustments or refund clauses in addition to any performance obligations for it to provide such as services, patent defense costs, technology support, marketing or sales assistance or any other elements to the arrangement that could constitute an additional deliverable to it that could change the timing of the revenue recognition. Non-refundable upfront license and sublicense fees received, whereby continued performance or future obligations are considered inconsequential or perfunctory to the relevant licensed technology, are recognized as revenue upon delivery of the technology. The Company expects to recognize royalty revenue in the period of sale, based on the underlying contract terms, provided that the reported sales are reliably measurable, the Company has no remaining performance obligations, and all other revenue recognition criteria are met. The Company anticipates reimbursements for research and development services completed by the Company related to the collaboration agreements to be recognized in operations as revenue on a gross basis. The Company’s license and collaboration agreements with certain collaboration partners could also provide for future milestone receipts to the Company based solely upon the performance of the respective collaboration partner in consideration of deadline extensions or upon the achievement of specified sales volumes of approved drugs. For such receipts, the Company expects to recognize the receipts as revenue when earned under the applicable contract terms on a performance basis or ratably over the term of the agreement. These receipts may also be recognized as revenue when continued performance or future obligations by the Company are considered inconsequential or perfunctory. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue at a point in time, or over time, as it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. As part of the accounting for these arrangements, the Company must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment to determine whether milestones or other variable consideration should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. In developing the stand-alone price for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validates the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance obligations. The Company recognizes a contract asset or liability for the difference between the Company’s performance (i.e., the goods or services transferred to the customer) and the customer’s performance (i.e., the consideration paid by, and unconditionally due from, the customer). See also Note 3, Significant Strategic Drug Development Collaborations – Related Parties Research and Development Expenses Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits, facilities expenses, overhead expenses, clinical trial and related clinical manufacturing expenses, fees paid to contract research organizations (“CROs”) and contract manufacturing organizations and other outside expenses. The Company expenses research and development costs as incurred. The Company expenses upfront, non-refundable payments made for research and development services as obligations are incurred. The value ascribed to intangible assets acquired but which have not met capitalization criteria is expensed as research and development at the time of acquisition. The Company is required to estimate accrued research and development expenses at each reporting period. This process involves reviewing open contracts and purchase orders, communicating with Company personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of actual costs. The majority of the Company’s service providers invoice it in arrears for services performed, on a pre-determined schedule or when contractual milestones are met. However, some require advanced payments. The Company makes estimates of accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at that time. The Company periodically confirms the accuracy of the estimates with the service providers and makes adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to: · program managers in connection with overall program management of clinical trials; · CROs in connection with clinical trials; and · investigative sites in connection with clinical trials. The Company bases its expenses related to clinical trials on its estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions and CROs that conduct and manage clinical trials on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual or prepaid accordingly. Although it does not expect its estimates to be materially different from amounts actually incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to the Company’s prior estimates of accrued research and development expenses. As of December 31, 2018, the Company has recorded accrued program expense of approximately $0.2 million as a component of accrued expenses. In addition, the Company has recorded approximately $0.4 million of deposits held with our clinical trial vendors as a component of prepaid expenses and other current assets as of December 31, 2018. At December 31, 2017, the Company had recorded $33,000 as a component of deferred program expenses as a component of prepaid expenses and other current assets. Share-based Expense Stock options and restricted stock units The Company grants share-based payments in the form of options and restricted stock units (“RSUs”) to employees and non-employees, Joint Share Ownership Plan (“JSOP”) awards to employees, as well as agreements to issue common stock in exchange for services provided by non-employees. Share-based expense is based on the estimated fair value of the option or calculated using the Black-Scholes option pricing model. Determining the appropriate fair value model and related assumptions requires judgment, including estimating share price volatility and expected terms of the awards. The expected volatility rates are estimated based on the actual volatility of the Company and of comparable public companies over the expected term of the option. The expected terms represent the time that options are expected to be outstanding. The Company accounts for forfeitures as they occur and not at the time of grant. The Company has not paid dividends and does not anticipate paying cash dividends in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Upon exercise, stock options are redeemed for newly issued shares of common stock. RSUs are redeemed for newly issued shares of common stock as the vesting and settlement provisions of the grant are met. For employee options that vest based solely on service conditions, the fair value measurement date is generally on the date of grant and the related compensation expense is recognized on a straight-line basis over the requisite vesting period of the awards. For non-employee options, the fair value measurement date is the earlier of the date the performance of services is complete or the date the performance commitment has been reached. The Company generally determines that the fair value of the stock options is more reliably measurable than the fair value of the services received. Compensation expense related to stock options granted to non-employees that vest based solely on service conditions is subject to re-measurement at each reporting period until the options vest and is recognized on a straight-line basis over the requisite vesting period of the awards. The Company adopted FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) · There have been no stock option exercises as a U.S. company and, therefore, there are no excess tax benefits related to windfalls. Moreover, the Company maintains a full valuation allowance and expects to do so for the foreseeable future; · The Company has elected to account for forfeitures as they occur, which the Company adopted using a modified retrospective approach and there was no material cumulative effect adjustment to be recorded to opening retained earnings; and · The Company will classify cash paid to taxing authorities arising from the withholding of shares from employees in cash flows from financing activities. Common stock awards The Company grants common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided, as this provides the most reliable measure of the fair value of the awards granted. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash. Warrants In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued to collaboration partners in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense on a straight-line basis over the requisite service period or at the date of issuance, if there is not a service period or if service has already been rendered. Warrants granted in connection with ongoing arrangements are more fully described in Note 9, Stockholders’ Equity Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on temporary differences resulting from the different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Additionally, the Company must assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. The Company evaluates the recoverability of its deferred tax assets on a quarterly basis. Basic and Diluted Net Loss per Share The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company computes diluted net loss per share after giving consideration to the dilutive effect of stock options that are outstanding during the period, except where such non-participating securities would be anti-dilutive. The Company’s JSOP awards, prior to exercise, are considered treasury shares by the Company and thus do not impact the Company’s net loss per share calculation. As of December 31, 2018 and 2017, there were approximately 0.3 million JSOP awards issued. For the years ended December 31, 2018 and 2017, basic and diluted net loss per share are the same for each year due to the Company’s net loss position. Potentially dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would be anti-dilutive. As of December 31, 2018 and 2017, approximately 0.8 million and 0.6 million potentially dilutive securities, respectively, were deemed anti-dilutive. 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, who is the Company’s Chief Executive Officer, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business in one operating segment. Operating Leases The Company leases administrative and laboratory facilities under operating leases. Lease agreements may include rent holidays, rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the Company takes possession of the leased space. Acquisitions The Company has a history of engaging in acquisition transactions that require the Company to evaluate whether the transaction meets the criteria of a business combination and, in some cases, whether it meets the definition of a reverse merger. If the transaction does not meet the business combination requirements, the transaction is accounted for as an asset acquisition or recapitalization and no goodwill is recognized. If the acquisition meets the definition of a business combination, the Company allocates the purchase price, including any contingent consideration, to the assets acquired and the liabilities assumed at their estimated fair values as of the date of the acquisition with any excess of the purchase price paid over the estimated fair value of net assets acquired recorded as goodwill. The fair value of the assets acquired and liabilities assumed is typically determined by using either estimates of replacement costs or discounted cash flow valuation methods. When determining the fair value of tangible assets acquired, the Company estimates the cost to replace the asset with a new asset, taking into consideration such factors as age, condition and the economic useful life of the asset. When determining the fair value of intangible assets acquired, the Company uses judgment to estimate the applicable discount rate, growth rates and the timing and amount of future cash flows. The fair value of assets acquired and liabilities assumed is typically determined using the assistance of an independent third-party specialist. Business combination related costs are expensed in the period in which the costs are incurred. Asset acquisition related costs are generally capitalized as a component of cost of the assets acquired. Recent Accounting Standards In June 2018, the FASB issued ASU 2018-07 , Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04: Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) The Company has considered other recent accounting standards and concluded that they are either not applicable to the business, or that no material effect is expected on the consolidated financial statements as a result of future adoption. |
3. Significant Strategic Drug D
3. Significant Strategic Drug Development Collaborations - Related Parties | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Significant Strategic Drug Development Collaborations - Related Parties | ||
Significant Strategic Drug Development Collaborations - Related Parties | 3. Significant Strategic Drug Development Collaborations – Related Parties The Company has entered into various research, development, license and supply agreements with Takeda Pharmaceuticals Co. Ltd., Serum Institute of India (“Serum Institute”), its controlling stockholder PJSC Pharmsynthez (“Pharmsynthez”) and SynBio LLC (“SynBio”), a wholly owned subsidiary of Pharmsynthez. The Company and its collaborative partners continue to engage in research and development activities with no resultant commercial products through March 31, 2019. No amounts were recognized as revenue related to these agreements during the three months ended March 31, 2019 or 2018. | 3. Significant Strategic Drug Development Collaborations – Related Parties Takeda Pharmaceutical Co. Ltd., (“Takeda”) (formerly Shire plc) The Company is party to an exclusive research, development and license agreement with Baxalta US Inc. and Baxalta AB, wholly-owned subsidiaries of Takeda, related to the development of a novel series of polysialylated blood coagulation factors. Takeda acquired Shire plc in January 2019. This collaboration with Takeda relies on the Company’s PolyXen technology to conjugate PSA with therapeutic blood-clotting factors, with the goal of improving the pharmacokinetic profile and extending the half-life of these biologic molecules. The agreement grants Takeda a worldwide, exclusive, royalty-bearing license to the Company’s PSA patented and proprietary technology in combination with Takeda’s proprietary molecules designed for the treatment of blood and bleeding disorders. The first program under this agreement was a next generation rFVIII protein product candidate (“SHP656”). In December 2016, Takeda reached a milestone of its Phase I/II clinical trial for the treatment of hemophilia with SHP656, triggering a $3.0 million payment to be paid to the Company pursuant to the agreement with Takeda. The Company determined the milestone to be non-substantive because all significant performance obligations to achieve the contingent payments were the responsibility of Takeda with only negligible amount by the Company of effort to fulfill its obligations, specifically assistance on a research committee. As the amount allocable to the remaining performance period was negligible, the Company recognized the full $3.0 million in milestone revenue in connection with this collaboration during the year ended December 31, 2016. The payment was made in January 2017. In May 2017 Takeda provided an update on the Phase I/II clinical study indicating that SHP656’s efficacy and pharmacokinetic data commensurate with the profile of an extended half-life rFVIII product. Additionally, to the Company’s knowledge, there were no drug-related adverse events, serious adverse events, or rFVIII inhibitors reported. However, the pre-defined once-weekly dosing criterion was not met and the rFVIII program was terminated by Takeda. On October 27, 2017, the Company entered into a Right of Sublicense Agreement (the “Sublicense Agreement”) with Baxalta Incorporated, Baxalta US Inc., and Baxalta GmbH (collectively, with their affiliates, “Baxalta”) wholly-owned subsidiaries of Takeda. Pursuant to the Sublicense Agreement, the Company granted to Baxalta the right to grant a nonexclusive sublicense to certain patents related to the Company’s PolyXen technology that were previously exclusively licensed to Baxalta in connection with products related to the treatment of blood and bleeding disorders (“Covered Products.”) Pursuant to the Sublicense Agreement, Baxalta (i) paid the Company a one-time payment of seven million five hundred thousand dollars ($7,500,000) in November 2017 and (ii) agreed to pay to the Company single digit royalty payments based upon net sales of the Covered Products throughout the term. The Company recognized the full $7.5 million as license revenue in connection with this Sublicense Agreement during the year ended December 31, 2017. There have been no royalty payments under the Sublicense Agreement to date. SynBio LLC In August 2011, SynBio LLC (“SynBio”) and the Company entered into a stock subscription and collaborative development of pharmaceutical products agreement (the “Co-Development Agreement”). The Company granted an exclusive license to SynBio to develop pharmaceutical products using certain molecule(s) based on SynBio’s technology and the Company’s proprietary technology (PolyXen, OncoHist and ImuXen) that prolongs the active life and/or improves the pharmacokinetics of certain therapeutic proteins and peptides (as well as conventional drugs). In return, SynBio granted an exclusive license to the Company to use the preclinical and clinical data generated by SynBio in certain agreed products and engage in the development of commercial candidates. SynBio and the Company are each responsible for funding their own research activities. There are no milestone or other research-related payments due under the agreement other than fees for the supply of each company’s respective research supplies based on their technology, which, when provided, are due to mutual convenience and not representative of an ongoing or recurring obligation to supply research supplies. Serum Institute of India Limited (“Serum Institute”) has agreed to directly provide the research supplies to SynBio, where the Company is not liable for any failure to supply the research supplies as a result of any act or fault of Serum Institute. Upon successful commercialization of any resultant products, the Company is entitled to receive royalties on sales in certain territories and pay royalties to SynBio for sales outside those certain territories. Through December 31, 2018, the Company and SynBio continued to engage in research and development activities with no resultant commercial products. The Company did not recognize revenue in connection with the Co-Development Agreement during the years ended December 31, 2018 and 2017. In 2017, SynBio became a wholly-owned subsidiary of Pharmsynthez and all ownership percentages previously held by SynBio are combined with Pharmsynthez. See Note 9, Stockholders’ Equity. Serum Institute of India Limited In August 2011, the Company entered into a collaborative research and development agreement with Serum Institute providing Serum Institute an exclusive license to use the Company’s PolyXen technology to research and develop one potential commercial product, Polysialylated Erythropoietin (“PSA-EPO”). Serum Institute is responsible for conducting all preclinical and clinical trials required to achieve regulatory approvals within the certain predetermined territories at Serum Institute’s own expense. Royalty payments are payable by Serum Institute to the Company for net sales to certain customers in the Serum Institute sales territory. Royalty payments are payable by the Company to Serum Institute for net sales received by the Company over the term of the license. There are no milestone or other research-related payments due under the collaborative arrangement. Through December 31, 2018, the Company and Serum Institute continued to engage in research and development activities with no resultant commercial products. No royalty revenue or expense was recognized by the Company related to the Serum Institute arrangement during the years ended December 31, 2018 and 2017. Serum Institute is a related party of the Company with a share ownership of approximately 6.7% and 7.2% of the total issued common stock of the Company as of December 31, 2018 and 2017, respectively. In addition to its’ common stock ownership, Serum Institute holds outstanding warrants to purchase the Company’s common stock. See Note 9, Stockholders’ Equity. PJSC Pharmsynthez In November 2009, the Company entered into a collaborative research and development license agreement with Pharmsynthez (the “Pharmsynthez Arrangement”) pursuant to which the Company granted an exclusive license to Pharmsynthez to develop, commercialize and market six drug candidates based on the Company’s PolyXen and ImuXen technology in certain territories. In exchange, Pharmsynthez granted an exclusive license to the Company to use any preclinical and clinical data developed by Pharmsynthez, within the scope of the Pharmsynthez Arrangement, and to engage in further research, development and commercialization of drug candidates outside of certain territories at the Company’s own expense. Pharmsynthez is an affiliate and controlling stockholder of the Company with a share ownership of approximately 57.1% and 61.5% of the total issued common stock of the Company as of December 31, 2018 and 2017, respectively. In addition to its common stock ownership, Pharmsynthez holds outstanding warrants to purchase the Company’s common stock, approximately 1.5 million shares of the Company’s issued and outstanding Series B Preferred Stock, and all of the Company’s issued and outstanding Series A Preferred Stock through its wholly-owned subsidiary, SynBio. See Note 9, Stockholders’ Equity |
4. Property and Equipment, net
4. Property and Equipment, net | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Property and Equipment, net | 5. Property and Equipment, net Property and equipment, net consists of the following: March 31, December 31, Office and computer equipment $ 42,288 $ 42,289 Leasehold improvements – 26,841 Furniture and fixtures 14,738 20,263 Property and equipment – at cost 57,026 89,393 Less accumulated depreciation (53,528 ) (84,437 ) Property and equipment – net $ 3,498 $ 4,956 Depreciation expense was approximately $1,000 and $6,000 for the three months ended March 31, 2019 and 2018, respectively. | 4. Property and Equipment, net Property and equipment, net consists of the following: December 31, December 31, Laboratory equipment $ – $ 264,583 Office and computer equipment 42,289 46,634 Leasehold improvements 26,841 26,841 Furniture and fixtures 20,263 20,263 Property and equipment – at cost 89,393 358,321 Less accumulated depreciation (84,437 ) (330,475 ) Property and equipment – net $ 4,956 $ 27,846 Depreciation expense was approximately $16,000 and $24,000 for the years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, the Company sold certain laboratory equipment for $22,500 resulting in an approximate $15,000 gain. |
5. Goodwill, Indefinite-Lived I
5. Goodwill, Indefinite-Lived Intangible Assets and Other Long-Term Assets | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill and Indefinite-Lived Intangible Assets | 6. Indefinite-Lived Intangible Assets The Company’s indefinite-lived intangible asset, OncoHist, is in-process research and development relating to the Company’s business combination with SymbioTec in 2012. The carrying value of OncoHist was approximately $9.2 million as of March 31, 2019 and December 31, 2018, respectively. No impairment was recorded during the three months ended March 31, 2019 nor during the year ended December 31, 2018. OncoHist is not yet commercialized and, therefore, has not yet begun to be amortized as of March 31, 2019. | 5. Goodwill, Indefinite-Lived Intangible Assets and Other Long-Term Assets Goodwill A reconciliation of the change in the carrying value of goodwill is as follows: Balance as of January 1, 2017 $ 3,283,379 No changes – Balance as of December 31, 2017 $ 3,283,379 No changes – Balance as of December 31, 2018 $ 3,283,379 As of October 1, 2018 and 2017, the dates of the Company’s annual impairment review, the fair value of the Company’s goodwill balance exceeded its carrying value. Indefinite-Lived Intangible Assets The Company’s indefinite-lived intangible asset, OncoHist, is IPR&D relating to the Company’s business combination with SymbioTec in 2012. The carrying value of OncoHist was approximately $9.2 million as of December 31, 2018 and 2017. No impairment was recorded during the years ended December 31, 2018 and 2017. OncoHist is not yet commercialized and, therefore, has not yet begun to be amortized as of December 31, 2018. Other Long-Term Assets On September 15, 2016, the Company issued approximately 0.2 million shares of common stock to Serum Institute in exchange for approximately $0.8 million of research and development and clinical PSA supply as well as settlement of approximately $0.2 million of prior purchases of PSA supply. Approximately $0.1 million of the clinical supply was utilized and expensed during the year ended December 31, 2017. No clinical supply was utilized during the year ended December 31, 2018. The Company has classified the remaining $0.7 million as long-term as it does not anticipate utilizing the majority of the PSA supply within the next 12 months. |
6. Accrued Expenses
6. Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 6. Accrued Expenses Accrued expenses consist of the following: December 31, December 31, Accrued payroll and benefits $ 53,541 $ 723,488 Accrued professional fees 394,075 389,086 Accrued research costs 205,067 11,477 Other 11,346 11,602 $ 664,029 $ 1,135,653 On November 2, 2017, the Company entered into a Settlement Agreement with M. Scott Maguire, former Chief Executive Officer of the Company (the “Settlement Agreement”), which terminated the Employment Agreement dated November 3, 2009, between Xenetic UK and Mr. Maguire. Pursuant to the terms of the Settlement Agreement, Mr. Maguire continued to receive his current base salary and benefits for a period of 12 months, received a lump sum termination payment of £30,000 and was reimbursed for certain tax liabilities as described in the Settlement Agreement. As of December 31, 2017, the Company expensed approximately $0.4 million of accrued payroll and benefits related to future payments required to be made to Mr. Maguire in accordance with the Settlement Agreement. All obligations to Mr. Maguire were paid as of December 31, 2018. Additionally, Mr. Maguire’s unvested stock options vested on October 31, 2018, upon the terms and conditions specified in the Settlement Agreement, and Mr. Maguire will have until June 10, 2020 to exercise the vested options. |
7. Fair Value Measurements
7. Fair Value Measurements | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | ||
Fair Value Measurements | 7. Fair Value Measurements Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, The carrying amounts of certain of the Company’s financial instruments approximates fair value due to their short maturities. There were no financial instruments classified as Level 3 in the fair value hierarchy during the three months ended March 31, 2019 and March 31, 2018, respectively. | 7. Fair Value Measurements ASC Topic 820, Fair Value Measurement, The carrying amount of certain of the Company’s financial instruments approximate fair value due to their short maturities. There were no financial instruments classified as Level 3 in the fair value hierarchy during the years ended December 31, 2018 and 2017. |
8. Income Taxes
8. Income Taxes | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | 10. Income Taxes During the three months ended March 31, 2019 and 2018, there was no provision for income taxes as the Company incurred losses during both periods. Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company records a valuation allowance against its deferred tax assets as the Company believes it is more likely than not the deferred tax assets will not be realized. The valuation allowance against deferred tax assets was approximately $23.8 million and $23.5 million as of March 31, 2019 and December 31, 2018, respectively. As of March 31, 2019, and December 31, 2018, the net deferred tax liability of $2.9 million on the condensed consolidated balance sheets is related to book and tax basis differences for intangible assets with indefinite lives that were acquired in the Company’s January 2012 acquisition of SymbioTec. In accordance with ASC 740-10-30-18, the deferred tax liability related to the intangible assets cannot be used to offset deferred tax assets when determining the amount of the valuation allowance for deferred tax assets which are not more-likely-than-not to be realized. This results in a net deferred tax liability, even though the Company has a full valuation allowance on its other net deferred tax assets. This net deferred tax liability will continue to be reflected on the balance sheet until the related intangible assets are no longer held by the Company. As of March 31, 2019 and December 31, 2018, the Company did not record any unrecognized tax positions. | 8. Income Taxes Deferred tax assets and liabilities are determined based on temporary differences resulting from the different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Additionally, the Company must assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. The Company has provided a full valuation allowance on the Company’s deferred tax assets because the Company believes it is more likely than not that its deferred tax assets will not be realized. The Company evaluates the recoverability of its deferred tax assets on a quarterly basis. Currently, there is no provision for income taxes as the Company has incurred losses to date. The components of loss before income taxes are as follows: Year ended December 31, 2018 2017 Domestic (U.S.) $ (3,824,673 ) $ (5,889,926 ) Foreign (U.K.) (3,379,268 ) 2,398,830 Foreign (Germany) (96,517 ) (104,036 ) Loss before income taxes $ (7,300,458 ) $ (3,595,132 ) The reconciliation of income tax benefit at the U.S. corporation tax rate, being the rate applicable to the country of domicile of the Company to net income tax benefit is as follows: Year ended December 31, 2018 2017 Federal $ (1,533,096 ) $ (1,222,345 ) State (238,952 ) (303,315 ) Increase in tax losses not recognized 1,695,482 (359,833 ) Permanent differences, net 40,015 162,543 Foreign rate differential 124,294 (383,601 ) Share-based payments, net 20,441 (22,087 ) Changes per enacted tax reform – 2,320,059 Enhanced research and development tax credits (108,184 ) (191,421 ) Net provision (benefit) for income taxes $ – $ – Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows: Year ended December 31, 2018 2017 Deferred tax assets: U.K. net operating loss carryforwards $ 8,039,343 $ 7,641,719 U.K. capital loss carryforwards 1,298,303 1,378,643 U.S. federal net operating loss carryforwards 3,184,691 2,606,017 IPR&D 6,108,078 6,776,473 Share-based payments 1,859,357 1,527,615 Enhanced research and development tax credits 1,109,026 1,060,200 Germany net operating loss carryforwards 524,093 516,401 U.S. state net operating loss carryforwards 1,298,745 1,057,856 Accrued expenses 59,979 198,067 Depreciation 3,283 1,948 Other – – Total deferred tax assets before valuation allowance 23,484,898 22,764,939 Valuation allowance for deferred tax assets (23,484,898 ) (22,764,939 ) Deferred tax liabilities: Indefinite-lived intangible asset (2,918,518 ) (2,918,518 ) Debt discount – – Total deferred tax liabilities (2,918,518 ) (2,918,518 ) Net deferred liability $ (2,918,518 ) $ (2,918,518 ) For the years ended December 31, 2018 and 2017, the Company had U.K. net operating loss carryforwards of approximately $47.3 million and $45.0 million, respectively, U.S. federal net operating loss carryforwards of approximately $16.5 million and $13.5 million, respectively, U.S. state net operating loss carryforwards of approximately $16.2 million and $13.3 million, respectively, and Germany net operating loss carryforwards of approximately $1.7 million and $1.6 million, respectively. The U.K. and Germany net operating loss carryforwards can be carried forward indefinitely. $3.0 million of the U.S. federal net operating loss carryforwards can be carried forward indefinitely and the remaining U.S. federal and state net operating loss carryforwards begin to expire in 2032. The Company’s ability to use its operating loss carryforwards and tax credits generated in the U.S. to offset future taxable income is subject to restrictions under Section 382 of the U.S. Internal Revenue Code (the “Code”). These restrictions may limit the future use of the operating loss carryforwards and tax credits if certain ownership changes described in the Code occur. Future changes in stock ownership may occur that would create further limitations on the Company’s use of the operating loss carryforwards and tax credits. In such a situation, the Company may be required to pay income taxes, even though significant operating loss carryforwards and tax credits exist. The Company’s ability to use its operating loss carryforwards and tax credits generated in the U.K. are subject to restrictions under U.K. tax legislation. These regulations may limit the future use of operating loss carryforwards if there is a change in ownership and a change in the nature or conduct of the business carried on by the Company, and in certain circumstances where there is a change in the nature or conduct of the business only. In such cases the carryforwards would cease to be available to set against future income. On December 22, 2017, the U.S. enacted new tax reform (“Tax Cuts and Jobs Act”). The Tax Cuts and Jobs Act contains provisions with separate effective dates but is generally effective for taxable years beginning after December 31, 2017. Beginning with the year ending December 31, 2018, the corporate statutory rates on U.S. earnings were reduced from 34% to 21%. The impact of the rate reduction for the year ending December 31, 2017, was approximately $2.3 million relating to the revaluation of the net deferred tax assets. Other than the reduction in statutory rate, the Company does not anticipate the regulations will have a material impact on income taxes in future years. The Tax Cuts and Jobs Act also contains a provision requiring companies to repatriate all aggregate post 1986 earnings and profits of foreign corporations. The Company estimated that the repatriation will be zero under a provisional basis under SAB118. The final calculations under tax reform resulted in no change to the amounts estimated. The Company’s ability to use its operating loss carryforwards and tax credits generated in Germany are also subject to restrictions under German tax legislation. These regulations may limit the future use of operating loss carryforwards if there is a change in ownership. In such cases the carryforwards would cease to be available to set against future income. As of December 31, 2018 and 2017, the Company did not record any uncertain tax positions. The Company files income tax returns in the U.S. federal tax jurisdiction and Massachusetts state tax jurisdiction, and certain foreign tax jurisdictions. The Company is subject to examination by the U.S. federal, state, foreign, and local income tax authorities for calendar tax years ending 2013 through 2018 due to available net operating loss carryforwards and research and development tax credits arising in those years. The Company has not been notified of any examinations by the Internal Revenue Service or any other tax authorities as of December 31, 2018. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception. Potential 382 Limitation The Company’s net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service. The Company’s ability to utilize its net operating loss (“NOL”) and research and development credit (“R&D”) carryforwards may be substantially limited due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Code, as well as similar state provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined in Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders or public groups. The Company has not completed a study to assess whether one or more ownership changes have occurred since it became a loss corporation as defined in Section 382 of the Code, but the Company believes that it is likely that an ownership change has occurred. If the Company has experienced an ownership change, utilization of the NOL and R&D credit carryforwards would be subject to an annual limitation, which is determined by first multiplying the value of the Company’s common stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any such limitation may result in the expiration of a portion of the NOL or R&D credit carryforwards before utilization. Until a study is completed, and any limitation known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding adjustment to the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any potential limitation will have a material impact on the Company’s operating results. From time to time the Company may be assessed interest or penalties by major tax jurisdictions, namely the Commonwealth of Massachusetts. As of December 31, 2018, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. No interest and penalties have been recognized by the Company to date. The Company’s net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and are subject to certain limitations in the event of cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%. |
9. Stockholders' Equity
9. Stockholders' Equity | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Stockholders' Equity | 8. Stockholders’ Equity Common Stock On March 5, 2019, the Company entered into a Securities Purchase Agreement with certain purchasers pursuant to which the Company offered to the purchasers, in a registered direct offering, an aggregate of (i) 1,040,000 shares of common stock, par value $0.001 per share and (ii) prefunded warrants to purchase 509,000 shares of common stock. The prefunded warrants were exercisable beginning on March 7, 2019 at an exercise price of $0.001 per share. The shares were sold at a price of $2.00 per share and the prefunded warrants were sold at a price of $1.999 per prefunded warrant, which represents the per share purchase price for the shares less the $0.001 per share exercise price for each such prefunded warrant. The holders of the prefunded warrants will not have the right to exercise any portion of the prefunded warrant if the holder (together with its affiliates) would beneficially own in excess of 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the prefunded warrants. The net proceeds to the Company from this offering were approximately $2.7 million, after deducting expenses related to the offering, including dealer-manager fees and expenses. In a concurrent private placement, the Company issued to the purchasers a warrant to purchase one share of the Company’s common stock for each share and prefunded warrant purchased in the offering. These warrants have an exercise price of $2.25 per share, are exercisable beginning on September 8, 2019 and expire seven years from such date. The Company evaluated the terms of the warrants issued and determined that they should be classified as equity instruments. The grant date fair value of these warrants was estimated to be $1.90 per share, for a total of approximately $2.9 million. The fair value of the warrants was estimated using a Black-Scholes model utilizing the following key valuation assumptions: the Company’s stock price, a risk free rate of 2.56%, an expected life of 7.5 years and an expected volatility of 111.3%. The prefunded warrants had an intrinsic value of approximately $1.1 million. Series B Preferred Stock As of March 31, 2019 and December 31, 2018 there were approximately 1.8 million shares of Series B Preferred Stock issued and outstanding which are convertible into common stock on a two-for-one basis. The registered direct offering triggered the down-round provision in the Company’s Series B Preferred Stock resulting in an adjustment to the conversion ratio and the recording of a deemed dividend of $3.9 million increasing the net loss attributable to common shareholders for the three months ended March 31, 2019. There were no Series B Preferred Stock conversions during the three months ended March 31, 2019. Warrants In addition to the warrants issued in the registered direct offering, the Company has outstanding warrants to purchase an aggregate of 3,152,225 shares of common stock issued in connection with debt and equity financing arrangements as of March 31, 2019 at a weighted average exercise price of $4.30 and expiration dates ranging from July 2020 through November 2021. No warrants were exercised during the three months ended March 31, 2019 and no warrants were granted or exercised during the three months ended March 31, 2018, respectively. | 9. Stockholders’ Equity Common Stock Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to dividends when and if declared by the Board of Directors. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the holders of common stock are entitled to share ratably in the assets of the Company available for distribution. In March 2017, the Company issued approximately 0.1 million shares of the Company’s common stock to Pharmsynthez in connection with the conversion by Pharmsynthez of its $500,000, 10% convertible promissory note as a result of the Company’s underwritten public offering in November 2016 and Pharmsynthez subsequently exercising its rights to the shares. The shares issued to Pharmsynthez represent both owed principal and accrued interest. The holders of Series B Preferred Stock converted approximately 0.3 million shares and 0.2 million shares into the same number of shares of common stock during the years ended December 31, 2018 and December 31, 2017, respectively. During the year ended December 31, 2018, 0.4 million warrants were exercised resulting in the issuance of 0.4 million shares of common stock. There were no exercises of warrants during the year ended December 31, 2017. Series A Preferred Stock The Company has designated 1,000,000 shares as Series A preferred stock with each share having a par value of $0.001 and stated value of $4.80 (the “Series A Preferred Stock”). The following is a summary of the material terms of the Series A Preferred Stock. Liquidation Dividends Conversion Stock Dividends and Stock Splits Fundamental Transaction Voting Rights Fractional Shares Redemption As of December 31, 2018 and 2017, there were approximately 1.0 million shares of Series A Preferred Stock issued and outstanding which are convertible into the same number of shares of common stock. Series B Preferred Stock The Company has designated 2,500,000 shares as Series B preferred stock with each share having a stated value of $4.00 per share (the “Series B Preferred Stock”). The following is a summary of the material terms of the Company’s Series B Preferred Stock. Liquidation Dividends Conversion Stock Dividends and Stock Splits Fundamental Transaction Subsequent Equity Sales Voting Rights Fractional Shares As of December 31, 2018 and 2017, there were approximately 1.8 million and approximately 2.1 million shares of Series B Preferred Stock issued and outstanding which are convertible into the same number of shares of common stock. The holders of Series B Preferred Stock converted approximately 0.3 million shares and 0.2 million shares into the same number of shares of common stock during the years ended December 31, 2018 and December 31, 2017, respectively. Warrants Related to Collaboration and Consulting Agreements In connection with certain of the Company’s collaboration agreements and consulting arrangements, the Company has issued warrants to purchase shares of common stock as payment for services. As of December 31, 2018 and December 31, 2017, warrants to purchase 539,202 and 646,249 shares of common stock were outstanding, respectively. The fair value of these warrants was determined at each issuance date using the Black-Scholes option pricing model. The warrants are subject to re-measurement at each reporting period until the measurement date is reached. Expense is recognized on a straight-line basis over the expected service period or at the date of issuance, if there is not a service period. For the years ended December 31, 2018 and 2017, the Company recognized expense of approximately $10,000 and a gain of approximately $0.1 million, respectively, related to collaboration and consulting warrants. On December 31, 2014, SynBio was granted a warrant to purchase 204,394 new shares of common stock at an exercise price of $25.41 per share (“SynBio 2014 Warrant”). The SynBio 2014 Warrant is exercisable in four equal tranches, each with separate non-market, performance-based vesting criteria. The Company uses its judgment to assess the probability and timing of SynBio achieving these vesting criteria and estimated that it is not probable that the vesting criteria for any tranche will be achieved. None of the vesting criteria were met and, therefore, these warrants were forfeited. As a result, the Company did not recognize expense related to this warrant during the years ended December 31, 2018 and 2017. In connection with the SynBio 2014 Warrant grant, warrants to purchase 9,697 aggregate new shares of common stock were issued to SynBio and Pharmsynthez non-director designees (“SynBio Partner Warrants”) on December 31, 2014 under the same terms and conditions of the SynBio 2014 Warrant. The vesting criteria for any tranche were not met and, as a result, the Company did not recognize expense related to the SynBio Partner Warrants during the years ended December 31, 2018 and 2017. On December 31, 2014, the Company granted Serum Institute a warrant to purchase 96,970 new shares of common stock at an exercise price of $7.92 per share, as adjusted (“Serum Institute 2014 Warrant”). The Serum Institute 2014 Warrant is exercisable in two equal tranches, each with separate non-market, performance-based vesting criteria. The Company uses its judgment to assess the probability and timing of Serum Institute achieving these vesting criteria and estimated that it is probable that the vesting criteria will be achieved for each tranche. These judgments are reassessed at each reporting period until the measurement date is reached. In connection with the Serum Institute 2014 Warrant grant, warrants to purchase 4,852 aggregate new shares of common stock were issued to Serum Institute non-director designees (“Serum Institute Partner Warrants”) on December 31, 2014 under the same terms and conditions of the Serum Institute 2014 Warrant. In 2016, the Company issued 212,122 warrants to purchase shares of common stock to Serum Institute with an exercise price of $7.92. The new warrants were fully vested and expensed at the time of grant. The Company recognized warrant expense (income) of approximately $10,000 and $(0.1) million during the years ended December 31, 2018 and 2017, respectively, related to the Serum Institute 2014 Warrant and Serum Institute Partner Warrants. No collaboration or consulting service warrants were exercised or granted during the years ended December 31, 2018 and 2017. These warrants have an average weighted exercise price of $10.41 and expiration dates ranging from December 2019 through May 2021. Warrants Related to Financing Arrangements As of December 31, 2018 and 2017 there were outstanding warrants related to financing agreements to purchase an aggregate of 3,152,225 shares and 3,522,225 shares of Common Stock at an average weighted exercise price of $4.33 and $4.30, respectively. During the year ended December 31, 2018, warrants to purchase 370,000 shares of common stock were exercised resulting in approximately $1.5 million of net proceeds to the Company. There were no warrants exercised during the year ended December 31, 2017. No warrants related to financing agreements were granted during the years ended December 31, 2018 and 2017. These warrants have expiration dates ranging from July 1, 2020 through November 2021. |
10. Share-Based Expense
10. Share-Based Expense | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Share-Based Expense | 9. Share-Based Expense Total share-based expenses related to stock options, restricted stock units (“RSUs”), common stock awards, and non-financing warrants were approximately $0.2 million and $0.4 million during the three months ended March 31, 2019 and 2018, respectively. Share-based expenses is classified in the condensed consolidated statements of operations as follows: Three Months Ended March 31, 2019 2018 Research and development expenses $ 11,418 $ 60,345 General and administrative expenses 222,522 345,849 $ 233,940 $ 406,194 Employee Stock Options No employee stock options or RSUs were granted nor exercised during the three months ended March 31, 2019 and 2018, respectively. The Company recognized a total of $0.2 million and $0.4 million of compensation expense related to employee stock options during the three months ended March 31, 2019 and 2018 respectively. Non-Employee Stock Options The Company did not grant any non-employee stock options during the three-months ended March 31, 2019. During the three months ended March 31, 2018, the Company granted 10,000 non-employee stock options. The Company recognized approximately $0 and $9,000 of expense related to non-employee stock options during the three months ended March 31, 2019 and 2018, respectively. Common Stock Awards During the three months ended March 31, 2019 and 2018, the Company granted 8,219 and 8,094 common stock awards, respectively, based on the value of the professional services provided and the average stock price during each respective quarter. As all services were rendered in each respective quarter, approximately $17,000 of expense related to common stock awards was recognized during each of the three-month periods ended March 31, 2019 and 2018, respectively. All common stock awards were authorized but not issued as of March 31, 2019. Warrants In connection with certain of the Company’s collaboration agreements and consulting arrangements, the Company has issued warrants to purchase shares of common stock as payment for services. As of March 31, 2019 and December 31, 2018, warrants to purchase 539,202 shares of common stock were outstanding, respectively. The fair value of these warrants was determined at each issuance date using the Black-Scholes option pricing model. The warrants are subject to re-measurement at each reporting period until the measurement date is reached. Expense is recognized on a straight-line basis over the expected service period or at the date of issuance, if there is not a service period. The Company recognized income of approximately $27,000 as a result of a reduction in estimated fair value of warrants for the three months ended March 31, 2019. During the three months ended March 31, 2018, the Company recognized approximately $5,000 of expense on revaluation of warrants. No warrants were granted or exercised in connection with collaboration or consulting services during the three months ended March 31, 2019 and 2018. These warrants have an average weighted exercise price of $10.41 and expiration dates ranging from December 2019 through May 2021. | 10. Share-Based Expense Total share-based expense related to stock options, RSUs, common stock awards, and non-financing warrants was approximately $1.4 million and $1.8 million for the years ended December 31, 2018 and 2017, respectively. (See Note 9, Stockholders’ Equity Share-based expense is classified in the consolidated statements of comprehensive loss as follows: Year Ended December 31, 2018 2017 Research and development expenses $ 203,030 $ 101,401 General and administrative expenses 1,228,757 1,691,692 $ 1,431,787 $ 1,793,093 Stock Option Modifications During the year ended December 31, 2017 the Company modified certain former employee stock option awards to extend the expiry dates through March 31, 2018. As a result of the modification, the Company recognized approximately $4,000 in incremental compensation expense during the year ended December 31, 2017, which was charged to general and administrative expense in the consolidated statements of comprehensive loss. In November 2017, the Company accelerated the vesting and extended the exercise period post termination for certain employees, including the Company’s former Chief Executive Officer. These modifications resulted in a change in incremental value and catch up of share-based amortization of approximately $0.2 million, which was charged to general and administrative expense. Stock Options The Company grants stock option awards and RSUs to employees and non-employees with varying vesting terms under the Xenetic Biosciences, Inc. Amended and Restated Equity Incentive Plan (“Stock Plan”). The Company measures the fair value of stock option awards using the Black-Scholes option pricing model, which uses the assumptions noted in the tables below, including the risk-free interest rate, expected term, share price volatility, dividend yield and forfeiture rate. The risk-free interest rate is based upon the U.S. Treasury yield curve in effect at the time of grant, with a term that approximates the expected life of the option. For employee stock options issued in 2018 and 2017 that qualify as “plain vanilla” stock options, the expected term is based on the simplified method. The Company has a limited history of stock option exercises, which does not provide a reasonable basis for the Company to estimate the expected term of employee stock options. For all other employee stock options, the Company estimates the expected life using judgment based on the anticipated research and development milestones of the Company’s clinical projects and behavior of the Company’s employees. The expected life of non-employee options is the contractual life of the option. The Company determines the expected volatility based on a blended volatility rate of its own historical volatility with that of comparable publicly traded companies with drug candidates in similar therapeutic areas and stages of nonclinical and clinical development to the Company’s drug candidates. The Company has applied an expected dividend yield of 0% as the Company has not historically declared a dividend and does not anticipate declaring a dividend during the expected life of the options. Effective January 1, 2017, the Company adopted ASU 2016-09 and elected to account for forfeitures as they occur. Employee Stock Options During the years ended December 31, 2018 and 2017, 100,000 and 700,000 total stock options to purchase shares of common stock were granted by the Company, respectively. The weighted average grant date fair value per option share was $2.63 and $2.70, respectively. No stock options were exercised during the years ended December 31, 2018 and 2017. During the years ended December 31, 2018 and 2017, 524,540 and 340,930 total stock options vested, with total fair values of approximately $1.6 million and $1.9 million, respectively. As of December 31, 2018, there was approximately $1.0 million of unrecognized share-based payments related to employee stock options that are expected to vest. The Company expects to recognize this expense over a weighted-average period of approximately 1.3 years. Key assumptions used in the Black-Scholes option pricing model for options granted to employees during the years ending December 31, 2018 and 2017 are as follows: Year Ended December 31, 2018 2017 Weighted-average expected dividend yield (%) – – Weighted-average expected volatility (%) 118.03 111.37 Weighted-average risk-free interest rate (%) 2.90 1.79 Weighted-average expected life of option (years) 5.90 5.36 Weighted-average exercise price ($) 3.05 3.34 The following is a summary of employee stock option activity for the years ended December 31, 2018 and 2017: Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2017 1,193,712 $ 4.43 8.94 $ 526,073 Granted 700,000 3.34 Expired (113,343 ) 4.61 Outstanding as of December 31, 2017 1,780,369 3.99 8.53 $ 5,273 Granted 100,000 3.05 Expired (110,929 ) 5.73 Outstanding as of December 31, 2018 1,769,440 $ 3.83 8.17 $ – Vested or expected to vest as of December 31, 2018 1,744,440 $ 3.85 8.16 $ – Exercisable as of December 31, 2017 731,895 $ 4.84 7.44 $ 5,273 Exercisable as of December 31, 2018 1,152,173 $ 4.11 7.92 $ – A summary of the status of the Company’s non-vested employee stock option shares as of December 31, 2018, and the changes during the year ended December 31, 2018, is as follows: Number of Weighted- Balance as of January 1, 2018 1,048,474 $ 2.86 Granted 100,000 $ 2.63 Forfeited (6,667 ) $ 2.91 Vested (524,540 ) $ 3.05 Balance as of December 31, 2018 617,267 $ 2.65 Restricted Stock Units For the year ended December 31, 2017, the Company granted 50,000 RSUs. There were no RSU grants for the year ended December 31, 2018. The RSUs vest annually over a 3-year period and had a grant date fair value of $2.11. During the year ended December 31, 2018, 16,667 RSUs were vested and none expired. Non-Employee Stock Options Share-based expense related to stock options granted to non-employees is recognized as the services are rendered on a straight-line basis. The Company determined that the fair value of the stock options is more reliably measurable than the fair value of the services received. Compensation expense related to stock options granted to non-employees is subject to re-measurement at each reporting period until the options vest. During the year ended December 31, 2018, 10,000 total stock options to purchase shares of common stock were granted by the Company to non-employees. No options were granted to non-employees and none were exercised during the year ended December 31, 2017. During the year ended December 31, 2018 and 2017, 10,000 and 10,101 total stock options vested, with total fair values of approximately $36,000 and $0.1 million, respectively. As of December 31, 2018, all non-employees stock options had vested. For the years ended December 31, 2018 and 2017, the Company recognized approximately $36,000 and $0.1 million, respectively, of compensation expense related to non-employee options. The following is a summary of non-employee stock option activity for the years ended December 31, 2018 and 2017: Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2017 57,442 $ 7.57 7.23 $ – Expired (723 ) 10.34 Outstanding as of December 31, 2017 56,719 7.53 6.31 $ – Granted 10,000 1.93 Expired (3,148 ) 18.25 Outstanding as of December 31, 2018 63,571 $ 6.12 5.40 $ – Vested or expected to vest as of December 31, 2018 63,571 $ 6.12 5.40 $ – Exercisable as of December 31, 2017 56,719 $ 7.53 6.31 $ – Exercisable as of December 31, 2018 63,571 $ 6.12 5.40 $ – A summary of the status of the Company’s non-vested non-employee stock option shares as of December 31, 2018, and the changes during the year ended December 31, 2018 is as follows: Number of Weighted- Balance as of January 1, 2018 – $ – Granted 10,000 $ 1.73 Vested (10,000 ) $ 1.73 Balance as of December 31, 2018 – $ – Common Stock Awards The Company granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized as services are rendered on a straight-line basis. A summary of the Company’s common stock awards granted and issued during the years ended December 31, 2018 and 2017 are as follows: Number of shares Balance as of January 1, 2017 29,790 Granted 41,800 Issued (8,773 ) Balance as of December 31, 2017 62,817 Granted 26,000 Issued – Balance as of December 31, 2018 88,817 The Company granted 26,000 and 41,800 shares of common stock during the years ended December 31, 2018 and 2017, respectively, in exchange for professional services. As all services were rendered in each respective period, expense related to common stock awards of approximately $0.1 million and $0.1 million was recognized during the years ended December 31, 2018 and 2017, respectively. The balance of the common stock awards has not been issued as of December 31, 2018. Joint Share Ownership Plan As of December 31, 2018 and 2017, there were approximately 0.3 million JSOP awards issued and outstanding to two former senior executives, respectively. Under the JSOP, shares in the Company are jointly purchased at fair market value by the participating executives and the trustees of the JSOP trust, with such shares held in the JSOP trust. For U.S. GAAP purposes the awards were valued as employee options and recorded as a reduction in equity as treasury shares until they are exercised by the employee. The JSOP awards are fully vested and have no expiration date. There were no compensation charges during the years ended December 31, 2018 and 2017, respectively. |
11. Employee Benefit Plans
11. Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | 11. Employee Benefit Plans The Company has a defined contribution 401(k) savings plan (the “401(k) Plan”). The 401(k) Plan covers substantially all U.S. employees, and allows participants to defer a portion of their annual compensation on a pre-tax basis or make post-tax contributions. Company contributions to the 401(k) Plan may be made at the discretion of the Board of Directors. There were no company contributions to the 401(k) Plan during the year ended December 31, 2018. The Company made contributions of approximately $51,000 to the 401(k) Plan for the year ended December 31, 2017. In the U.K., the Company has adopted a defined contribution plan (the “UK Plan”) which qualifies under the rules established by HM Revenue & Customs. The UK Plan generally allows all U.K. employees to contribute a minimum of 3% of salary with no maximum limit. The Company contributes to the plan between 8% and 12% of the employee’s salary, depending upon seniority of the employee. The Company, at its discretion, may also contribute to an employee’s personal pension plan. There were no contributions for the years ended December 31, 2018 and December 31, 2017, respectively. |
12. Commitments and Contingent
12. Commitments and Contingent Liabilities | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingent Liabilities | 11. Commitments Leases The Company determines whether an arrangement is a lease at inception. On January 25, 2019, the Company relocated its corporate headquarters from Lexington Massachusetts to Framingham, Massachusetts. The sublease calls for total future minimum rent payments of approximately $50,000 and has a termination date of September 30, 2020, which corresponds to the underlying base lease. The Company does not have options to extend, termination options or material residual value guarantees. The Company recorded a right-of-use (“ROU”) asset and corresponding lease liability on the condensed consolidated balance sheet. The Company recognized a ROU asset and a lease liability of approximately $43,000 during the three months ended March 31, 2019. As the sublease does not provide an implicit rate, we used our incremental borrowing rate (10.2%) based on the information available at the lease’s commencement date in determining the present value of lease payments. Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Three Months Ended March 31, 2019 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 3,977 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ 43,330 Supplemental balance sheet information related to our operating leases is as follows: Balance Sheet Classification March 31, 2019 Right-of-use assets Other assets $ 39,353 Current lease liabilities Accrued expenses and other current liabilities $ 26,234 Non-current lease liabilities Other liabilities $ 13,119 The Company did not apply the provisions of ASU 2016-02 to the lease of its former headquarters in Lexington, Massachusetts or its office space lease in Miami, Florida as they did not have a material impact on our condensed consolidated financial statements. The leases would have resulted in a combined increase in total assets of approximately $11,000 and a combined increase in total liabilities of approximately $12,000 in our March 31, 2019 condensed consolidated balance sheet, respectively, and would not have a material impact on our accumulated deficit as of the beginning of 2019. The lease of the Company’s former headquarters expired on January 31, 2019 and the Miami office space lease expires in November 2019. As of March 31, 2019, total minimum lease payments on these leases are $12,449. | 12. Commitments and Contingent Liabilities Leases In August 2013, the Company entered into the Lexington Lease to lease office and laboratory space under an operating lease with a commencement date of January 1, 2014 and a termination date of January 31, 2019. With the execution of this lease, the Company is required to maintain a $66,000 letter of credit as a security deposit. The letter of credit is secured by a certificate of deposit, which is classified as restricted cash within the consolidated balance sheets. The letter of credit is required to be maintained In December 2016, the Company entered into a one-year lease of office space in Miami, Florida, under an operating lease with a commencement date of December 1, 2016, and a termination date of November 30, 2017. The Company renewed this lease in November 2017 for an additional two years with a revised termination date of November 30, 2019. The Company’s contractual commitments under all non-cancelable operating leases as of December 31, 2018, are as follows: As of December 31, Total Operating Leases 2019 $ 24,583 2020 – Total minimum lease payments $ 24,583 Rent expense is calculated on a straight-line basis over the term of the leases. Rent expense under the Company’s operating leases was approximately $0.1 million for the years ended December 31, 2018 and 2017, respectively. Subsequent to year end, the Lexington Lease expired and the Company relocated its corporate headquarters to Framingham, Massachusetts. The new lease commenced in January 2019 and has a termination date of September 30, 2020. The total contractual commitment of approximately $50,000 associated with the new lease is not reflected in the table above. Litigation On August 27, 2015, Eurogentec S.A. (“EGT”), a former supplier of the Company, brought an action against the Company in the Commercial Court of the Canton of Zurich Switzerland (the “Court”) alleging nonpayment of invoices for services provided by EGT. The Company requested dismissal of the claim based on the argument that EGT knew, or should have known, that the services provided by EGT should not have been performed or had not been properly performed. On July 12, 2017, the Court rendered a decision in favor of EGT ordering the Company to pay approximately $0.7 million to EGT, representing all amounts that EGT alleged were owed by the Company, plus interest and court and legal fees. The Company had previously recorded $0.6 million related to this contract when the relevant services were provided and accrued an additional $0.1 million related to interest and fees in 2017 as a result of the ruling. In December 2017, the Company entered into a Settlement Agreement and paid approximately $0.6 million to settle all claims associated with this matter. |
13. Related Party Transactions
13. Related Party Transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | 12. Related Party Transactions The Company has entered into various research, development, license and supply agreements with Serum Institute and the Company’s controlling stockholder, Pharmsynthez (as well as SynBio, a wholly owned subsidiary of Pharmsynthez), each a related party whose relationship and ownership has not materially changed from that disclosed in the Company’s Annual Report on Form 10-K for the years ended December 31, 2018 filed with the SEC on March 29, 2019 as amended on April 30, 2019. The Company has agreed to acquire the XCART technology platform from Hesperix and OPKO. Dr. Genkin is a director and significant shareholder of Hesperix. In addition, the Company has agreed to repay a $150,000 loan that Dr. Genkin entered into with Hesperix. Mr. Adam Logal, one of our directors, is Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer of OPKO Health, Inc., the parent company of OPKO. | 13. Related Party Transactions The Company has entered into various research, development, license and supply agreements with Takeda, SynBio, Serum Institute and Pharmsynthez, each a related party whose relationship, ownership, and nature of transactions is disclosed within other sections of these footnotes. During the year ended December 31, 2017, the Company received research and consulting services from a director of Pharmsynthez, a controlling stockholder of the Company. The total amount of services received was approximately $0.1 million for the year ended December 31, 2017. This consulting agreement was terminated in July 2017. Please refer to Note 3, Significant Strategic Drug Development Collaborations – Related Parties Stockholder’s Equity |
14. Subsequent Events
14. Subsequent Events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 13. Subsequent Events The Company performed a review of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements. | 14. Subsequent Events The Company performed a review of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements except as described below. XCART Transaction On March 1, 2019 (the “Signing Date”), the Company entered into the Share Purchase Agreement with Hesperix, the owners of Hesperix (each, a “Seller” and collectively, the “Sellers”), and Alexey Andreevich Vinogradov, as the representative of each Seller (the “Sellers’ Representative”), pursuant to which the Company will purchase from Sellers all of the issued and outstanding shares of capital stock (the “Shares”) of Hesperix. Under the terms of the Share Purchase Agreement, the Company will issue to Sellers an aggregate of Four Million Eight Hundred Seventy-Five Thousand (4,875,000) shares of the Company’s common stock (the “Transaction Shares”), regardless of the trading price per share of the Company’s common stock at the time of the closing. In addition, the Share Purchase Agreement contains customary representations and warranties relating to each Seller and about the condition of the Company and Hesperix. The Company expects to issue the Transaction Shares pursuant to a registration statement on Form S-4. The closing of the Transaction is subject to customary closing conditions as well as conditions regarding (i) the Company having adequate financing to fund its future working capital obligations following the closing and (ii) the Company obtaining necessary and appropriate stockholder approvals, evidencing among other matters, approval of the Share Purchase Agreement and the transactions contemplated thereunder, including the issuance of the Transaction Shares. Subject to the satisfaction of the closing conditions, the Transaction is expected to close in the first half of 2019. The Company is currently evaluating the accounting impacts associated with the Transaction. On the Signing Date and in connection with the Transaction, Hesperix entered into an assignment agreement (the “Hesperix Assignment Agreement”) with the IBCH, Pharmsynthez, and certain other parties thereto (collectively, the “Assignors”), pursuant to which, the Assignors have agreed, among other things, to sell, assign, transfer, and convey unto Hesperix all of their individual right, title, and interest throughout the world in and to patents related to “Articles And Methods Directed To Personalized Therapy Of Cancer,” and the related know-how. Hesperix has agreed to pay each of IBCH and Pharmsynthez a royalty rate in the low single digit range based on the net sales of products in each country in which, in absence of the Hesperix Assignment Agreement, the manufacture, use, offer for sale, sale, or importation of such product would infringe a valid claim of a patent. Also on the Signing Date, the Company entered into an assignment agreement (the “OPKO Assignment Agreement”) with OPKO Pharmaceuticals, LLC (“OPKO”), pursuant to which the Company will acquire and accept, all of OPKO’s right, title and interest in and to that certain Intellectual Property License Agreement (the “IP License Agreement”), entered into between the Institute and OPKO regarding certain patents related to “Articles And Methods Directed To Personalized Therapy Of Cancer” and which the Institute agreed to grant an exclusive royalty-bearing license, to the patent rights owned by the Institute to OPKO and OPKO has agreed to pay the Institute a royalty rate in the low single digit range based on the net sales of products in each country in which, in absence of the IP License Agreement, the manufacture, use, offer for sale, sale, or importation of such product would infringe a valid claim of a patent or pending application. Under the terms of the OPKO Assignment Agreement and the IP License Agreement, the Company will issue One Million Nine Hundred Sixty-Eight Thousand Seven Hundred Fifty (1,968,750) shares of the Company’s common stock to OPKO and Six Hundred Fifty-Six Thousand Two Hundred Fifty (656,250) shares of the Company’s common stock to the Institute regardless of the trading price per share of the Company’s common stock at the time of the closing. In addition, the OPKO Assignment Agreement contains customary representations and warranties relating to OPKO and the IP License Agreement. Financing On March 5, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers who are parties to the Purchase Agreement (the “Purchasers”), pursuant to which the Company offered to the Purchasers, in a registered direct offering, an aggregate of (i) 1,040,000 shares (the “Shares”) of common stock, par value $0.001 per share (“Common Stock”) and (ii) pre-funded warrants to purchase 509,000 shares of Common Stock (the “Pre-Funded Warrants”). The Pre-Funded Warrants will be exercisable beginning on March 7, 2019 at an exercise price of $0.001 per share. The Shares were sold at a price of $2.00 per share and the Pre-Funded Warrants were sold at a price of $1.999 per Pre-Funded Warrant, which represents the per share purchase price for the Shares less the $0.001 per share exercise price for each such Pre-Funded Warrant. Aggregate gross proceeds to the Company were approximately $3.1 million, In a concurrent private placement, the Company also sold to the Purchasers a warrant to purchase one share of the Company’s Common Stock for each Share and Pre-Funded Warrant purchased in the offering, representing warrants to purchase up to 1,549,000 shares of the Company’s Common Stock (the “Purchase Warrants”). The Purchase Warrants will be exercisable beginning on September 8, 2019 (the “Initial Exercise Date”) at an exercise price of $2.25 per share and expire on the seven year anniversary of the Initial Exercise Date. |
4. Acquisitions (March 2019 Not
4. Acquisitions (March 2019 Note) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | 4. Acquisitions On March 1, 2019 (the “Signing Date”), the Company entered into the Share Purchase Agreement with Hesperix S.A., a Swiss Corporation (“Hesperix”), the owners of Hesperix (each, a “Seller” and collectively, the “Sellers”), and Alexey Andreevich Vinogradov, as the representative of each Seller, pursuant to which the Company will purchase from Sellers all of the issued and outstanding shares of capital stock of Hesperix. Under the terms of the Share Purchase Agreement, the Company will issue to Sellers an aggregate of Four Million Eight Hundred Seventy-Five Thousand (4,875,000) shares of the Company’s common stock (the “Transaction Shares”), regardless of the trading price per share of the Company’s common stock at the time of the closing. In addition, the Share Purchase Agreement contains customary representations and warranties relating to each Seller and about the condition of the Company and Hesperix. The Company expects to issue the Transaction Shares pursuant to a registration statement on Form S-4. The closing of the Transaction is subject to customary closing conditions as well as conditions regarding (i) the Company having adequate financing to fund its future working capital obligations following the closing and (ii) the Company obtaining necessary and appropriate stockholder approvals, evidencing among other matters, approval of the Share Purchase Agreement and the transactions contemplated thereunder, including the issuance of the Transaction Shares. Subject to the satisfaction of the closing conditions, the Transaction is expected to close in the first half of 2019. The Transaction is expected to be accounted for as an asset acquisition and, as a result, $0.5 million of costs related to the acquisition have been capitalized to date and are reflected in prepaid expenses and other in the condensed consolidated balance sheet. On the Signing Date and in connection with the Transaction, Hesperix entered into an assignment agreement (the “Hesperix Assignment Agreement”) with IBCH, Pharmsynthez, and certain other parties thereto (collectively, the “Assignors”), pursuant to which, the Assignors have agreed, among other things, to sell, assign, transfer, and convey unto Hesperix all of their individual right, title, and interest throughout the world in and to patents related to “Articles And Methods Directed To Personalized Therapy Of Cancer,” and the related know-how. Hesperix has agreed to pay each of IBCH and Pharmsynthez a royalty rate in the low single digit range based on the net sales of products in each country in which, in absence of the Hesperix Assignment Agreement, the manufacture, use, offer for sale, sale, or importation of such product would infringe a valid claim of a patent. Also on the Signing Date, the Company entered into an assignment agreement (the “OPKO Assignment Agreement”) with OPKO Pharmaceuticals, LLC (“OPKO”), pursuant to which the Company will acquire and accept, all of OPKO’s right, title and interest in and to that certain Intellectual Property License Agreement (the “IP License Agreement”), entered into between the Institute and OPKO regarding certain patents related to “Articles And Methods Directed To Personalized Therapy Of Cancer” and which the Institute agreed to grant an exclusive royalty-bearing license, to the patent rights owned by the Institute to OPKO and OPKO has agreed to pay the Institute a royalty rate in the low single digit range based on the net sales of products in each country in which, in absence of the IP License Agreement, the manufacture, use, offer for sale, sale, or importation of such product would infringe a valid claim of a patent or pending application. Under the terms of the OPKO Assignment Agreement and the IP License Agreement, the Company will issue One Million Nine Hundred Sixty-Eight Thousand Seven Hundred Fifty (1,968,750) shares of the Company’s common stock to OPKO and Six Hundred Fifty-Six Thousand Two Hundred Fifty (656,250) shares of the Company’s common stock to the Institute regardless of the trading price per share of the Company’s common stock at the time of the closing. In addition, the OPKO Assignment Agreement contains customary representations and warranties relating to OPKO and the IP License Agreement. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Preparation of Financial Statements | Preparation of Interim Financial Statements The accompanying condensed consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The results for the interim periods are not necessarily indicative of results for the full year. The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 29, 2019 as amended on April 30, 2019. These condensed consolidated financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. This assumption is presently uncertain and contingent upon the Company’s ability to raise additional working capital. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | Preparation of Financial Statements These consolidated financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. This assumption is presently uncertain and contingent upon the Company’s ability to raise additional working capital. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements of the Company include the accounts of Xenetic UK and its wholly owned subsidiaries: Lipoxen, Xenetic Bioscience, Incorporated, and SymbioTec. All material intercompany balances and transactions have been eliminated in consolidation. | Principles of Consolidation The consolidated financial statements of the Company include the accounts of Xenetic UK and its wholly-owned subsidiaries: Lipoxen, Xenetic Bioscience, Incorporated, and SymbioTec. All material intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The consolidated financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenue, costs and expenses in the financial statements and disclosures in the accompanying notes. Actual results and outcomes may differ materially from management’s estimates, judgments and assumptions. | |
Functional Currency Change | Functional Currency Change Effective April 1, 2015, the functional currency of the Company’s foreign subsidiaries changed from the British Pound Sterling to the U.S. dollar. The change in functional currency was applied on a prospective basis. Therefore, any gains and losses that were previously recorded in accumulated other comprehensive income remain unchanged. | |
Foreign Currency Transaction | Foreign Currency Transactions Realized and unrealized gains and losses resulting from foreign currency transactions arising from exchange rate fluctuations on balances denominated in currencies other than the functional currencies are recognized in “Other income (expense)” in the consolidated statements of comprehensive loss. Monetary assets and liabilities that are denominated in a currency other than the functional currency are re-measured to the functional currency using the exchange rate at the balance sheet date and gains or losses are recorded in the consolidated statements of comprehensive loss. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. See Note 7, Fair Value Measurements | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents. Investments with original maturities of greater than 90 days from the date of purchase but less than one year from the balance sheet date are classified as short-term investments, while investments with maturities of one year or beyond from the balance sheet date are classified as long-term investments. Management determines the appropriate classification of its cash equivalents and investment securities at the time of purchase and re-evaluates such determination as of each balance sheet date. | |
Restricted Cash | Restricted Cash As of December 31, 2018 and 2017, restricted cash represents a certificate of deposit that matures annually and secures the Company’s outstanding letter of credit of approximately $0.1 million for its former operating lease in Lexington, Massachusetts (the “Lexington Lease”). The Lexington Lease expired in January 2019 and the letter of credit is required to be maintained . In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash | |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains cash and cash equivalents with various major financial institutions. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. | |
Property and Equipment | Property and Equipment The Company records property and equipment at cost less accumulated depreciation. Expenditures for major renewals and improvements which extend the life or usefulness of the asset are capitalized. Items of an ordinary repair or maintenance nature are charged directly to operating expense as incurred. The Company calculates depreciation using the straight-line method over the estimated useful lives of the assets: Asset Classification Estimated Useful Life Laboratory equipment 3 years Office and computer equipment 3 years Leasehold improvements 5 years or the remaining term of the lease, if shorter Furniture and fixtures 5 years The Company eliminates the cost of assets retired or otherwise disposed of, along with the corresponding accumulated depreciation, from the related accounts, and the resulting gain or loss is reflected in the results of operations. | |
Indefinite-Lived Intangible Assets | Indefinite-Lived Intangible Assets Acquired indefinite-lived intangible assets consist of in-process research and development (“IPR&D”) related to the Company’s business combination with SymbioTec, which was recorded at fair value on the acquisition date. IPR&D intangible assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development efforts. Substantial additional research and development may be required before the Company’s IPR&D reaches technological feasibility. Upon completion of the IPR&D project, the IPR&D assets will be amortized over their estimated useful lives. The Company assesses intangible assets with indefinite lives for impairment at least annually as of October 1, or when events or changes in the business environment indicate the carrying value may be impaired. T he circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that the acquired IPR&D is impaired. If the Company chooses to first assess the qualitative factors and it is determined that it is not more likely than not acquired IPR&D is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to perform in some periods but not in others. No impairment was recorded during the years ended December 31, 2018 and 2017. | |
Goodwill | Goodwill Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company assesses goodwill for impairment at least annually, or when events or changes in the business environment indicate the carrying value may not be fully recoverable. The Company also has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that goodwill is impaired. If the Company chooses to first assess qualitative factors and it is determined that it is not more likely than not goodwill is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to do in some periods but not in others. The Company performs its annual impairment review as of October 1. No impairment was recorded during the years ended December 31, 2018 and 2017. | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets to be held and used, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be fully recoverable. No such impairments were recorded during the years ended December 31, 2018 and 2017. Evaluation of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset or asset group and its eventual disposition. Impairment, if any, is calculated as the amount by which an asset’s carrying value exceeds its fair value, typically using discounted cash flows to determine fair value. | |
Revenue Recognition | Revenue Recognition The Company enters into supply, license and collaboration arrangements with pharmaceutical and biotechnology partners, some of which include royalty agreements based on potential net sales of approved commercial pharmaceutical products. Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The terms of the Company’s license agreements may include delivery of an IP license to a collaboration partner. The Company may be compensated under license arrangements through a combination of non-refundable upfront receipts, development and regulatory objective receipts and royalty receipts on future product sales by partners. The Company anticipates recognizing non-refundable upfront license payments and development and regulatory milestone payments received by the Company in license and collaboration arrangements that include future obligations, such as supply obligations, ratably over the Company’s expected performance period under each respective arrangement. The Company makes its best estimate of the period over which the Company expects to fulfil the Company’s performance obligations, which may include technology transfer assistance, research activities, clinical development activities, and manufacturing activities from development through the commercialization of the product. Given the uncertainties of these collaboration arrangements, significant judgment is required to determine the duration of the performance period. When the Company enters into an arrangement to sublicense some of its patents, it will consider the performance obligations to determine if there is a single element or multiple elements to the arrangement as it determines the proper method and timing of revenue recognition. The Company considers the terms of the license or sublicense for such elements as price adjustments or refund clauses in addition to any performance obligations for it to provide such as services, patent defense costs, technology support, marketing or sales assistance or any other elements to the arrangement that could constitute an additional deliverable to it that could change the timing of the revenue recognition. Non-refundable upfront license and sublicense fees received, whereby continued performance or future obligations are considered inconsequential or perfunctory to the relevant licensed technology, are recognized as revenue upon delivery of the technology. The Company expects to recognize royalty revenue in the period of sale, based on the underlying contract terms, provided that the reported sales are reliably measurable, the Company has no remaining performance obligations, and all other revenue recognition criteria are met. The Company anticipates reimbursements for research and development services completed by the Company related to the collaboration agreements to be recognized in operations as revenue on a gross basis. The Company’s license and collaboration agreements with certain collaboration partners could also provide for future milestone receipts to the Company based solely upon the performance of the respective collaboration partner in consideration of deadline extensions or upon the achievement of specified sales volumes of approved drugs. For such receipts, the Company expects to recognize the receipts as revenue when earned under the applicable contract terms on a performance basis or ratably over the term of the agreement. These receipts may also be recognized as revenue when continued performance or future obligations by the Company are considered inconsequential or perfunctory. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue at a point in time, or over time, as it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. As part of the accounting for these arrangements, the Company must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment to determine whether milestones or other variable consideration should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. In developing the stand-alone price for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validates the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance obligations. The Company recognizes a contract asset or liability for the difference between the Company’s performance (i.e., the goods or services transferred to the customer) and the customer’s performance (i.e., the consideration paid by, and unconditionally due from, the customer). See also Note 3, Significant Strategic Drug Development Collaborations – Related Parties | |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits, facilities expenses, overhead expenses, clinical trial and related clinical manufacturing expenses, fees paid to contract research organizations (“CROs”) and contract manufacturing organizations and other outside expenses. The Company expenses research and development costs as incurred. The Company expenses upfront, non-refundable payments made for research and development services as obligations are incurred. The value ascribed to intangible assets acquired but which have not met capitalization criteria is expensed as research and development at the time of acquisition. The Company is required to estimate accrued research and development expenses at each reporting period. This process involves reviewing open contracts and purchase orders, communicating with Company personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of actual costs. The majority of the Company’s service providers invoice it in arrears for services performed, on a pre-determined schedule or when contractual milestones are met. However, some require advanced payments. The Company makes estimates of accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at that time. The Company periodically confirms the accuracy of the estimates with the service providers and makes adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to: · program managers in connection with overall program management of clinical trials; · CROs in connection with clinical trials; and · investigative sites in connection with clinical trials. The Company bases its expenses related to clinical trials on its estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions and CROs that conduct and manage clinical trials on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual or prepaid accordingly. Although it does not expect its estimates to be materially different from amounts actually incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to the Company’s prior estimates of accrued research and development expenses. As of December 31, 2018, the Company has recorded accrued program expense of approximately $0.2 million as a component of accrued expenses. In addition, the Company has recorded approximately $0.4 million of deposits held with our clinical trial vendors as a component of prepaid expenses and other current assets as of December 31, 2018. At December 31, 2017, the Company had recorded $33,000 as a component of deferred program expenses as a component of prepaid expenses and other current assets. | |
Share-Based Expense | Share-based Expense Stock options and restricted stock units The Company grants share-based payments in the form of options and restricted stock units (“RSUs”) to employees and non-employees, Joint Share Ownership Plan (“JSOP”) awards to employees, as well as agreements to issue common stock in exchange for services provided by non-employees. Share-based expense is based on the estimated fair value of the option or calculated using the Black-Scholes option pricing model. Determining the appropriate fair value model and related assumptions requires judgment, including estimating share price volatility and expected terms of the awards. The expected volatility rates are estimated based on the actual volatility of the Company and of comparable public companies over the expected term of the option. The expected terms represent the time that options are expected to be outstanding. The Company accounts for forfeitures as they occur and not at the time of grant. The Company has not paid dividends and does not anticipate paying cash dividends in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Upon exercise, stock options are redeemed for newly issued shares of common stock. RSUs are redeemed for newly issued shares of common stock as the vesting and settlement provisions of the grant are met. For employee options that vest based solely on service conditions, the fair value measurement date is generally on the date of grant and the related compensation expense is recognized on a straight-line basis over the requisite vesting period of the awards. For non-employee options, the fair value measurement date is the earlier of the date the performance of services is complete or the date the performance commitment has been reached. The Company generally determines that the fair value of the stock options is more reliably measurable than the fair value of the services received. Compensation expense related to stock options granted to non-employees that vest based solely on service conditions is subject to re-measurement at each reporting period until the options vest and is recognized on a straight-line basis over the requisite vesting period of the awards. The Company adopted FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) · There have been no stock option exercises as a U.S. company and, therefore, there are no excess tax benefits related to windfalls. Moreover, the Company maintains a full valuation allowance and expects to do so for the foreseeable future; · The Company has elected to account for forfeitures as they occur, which the Company adopted using a modified retrospective approach and there was no material cumulative effect adjustment to be recorded to opening retained earnings; and · The Company will classify cash paid to taxing authorities arising from the withholding of shares from employees in cash flows from financing activities. Common stock awards The Company grants common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided, as this provides the most reliable measure of the fair value of the awards granted. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash. | |
Warrants | Warrants In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued to collaboration partners in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense on a straight-line basis over the requisite service period or at the date of issuance, if there is not a service period or if service has already been rendered. Warrants granted in connection with ongoing arrangements are more fully described in Note 9, Stockholders’ Equity | |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on temporary differences resulting from the different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Additionally, the Company must assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. The Company evaluates the recoverability of its deferred tax assets on a quarterly basis. | |
Basic and Diluted Net Loss per Share | Basic and Diluted Net Loss per Share The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company computes diluted net loss per share after giving consideration to the dilutive effect of stock options that are outstanding during the period, except where such non-participating securities would be anti-dilutive. For the three months ended March 31, 2019 and 2018, basic and diluted net loss per share are the same for each year due to the Company’s net loss position. Potentially dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would be anti-dilutive. | Basic and Diluted Net Loss per Share The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company computes diluted net loss per share after giving consideration to the dilutive effect of stock options that are outstanding during the period, except where such non-participating securities would be anti-dilutive. The Company’s JSOP awards, prior to exercise, are considered treasury shares by the Company and thus do not impact the Company’s net loss per share calculation. As of December 31, 2018 and 2017, there were approximately 0.3 million JSOP awards issued. For the years ended December 31, 2018 and 2017, basic and diluted net loss per share are the same for each year due to the Company’s net loss position. Potentially dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would be anti-dilutive. As of December 31, 2018 and 2017, approximately 0.8 million and 0.6 million potentially dilutive securities, respectively, were deemed anti-dilutive. |
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, who is the Company’s Chief Executive Officer, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business in one operating segment. | |
Operating Leases | Operating Leases The Company leases administrative and laboratory facilities under operating leases. Lease agreements may include rent holidays, rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the Company takes possession of the leased space. | |
Acquisitions | Acquisitions The Company has a history of engaging in acquisition transactions that require the Company to evaluate whether the transaction meets the criteria of a business combination and, in some cases, whether it meets the definition of a reverse merger. If the transaction does not meet the business combination requirements, the transaction is accounted for as an asset acquisition or recapitalization and no goodwill is recognized. If the acquisition meets the definition of a business combination, the Company allocates the purchase price, including any contingent consideration, to the assets acquired and the liabilities assumed at their estimated fair values as of the date of the acquisition with any excess of the purchase price paid over the estimated fair value of net assets acquired recorded as goodwill. The fair value of the assets acquired and liabilities assumed is typically determined by using either estimates of replacement costs or discounted cash flow valuation methods. When determining the fair value of tangible assets acquired, the Company estimates the cost to replace the asset with a new asset, taking into consideration such factors as age, condition and the economic useful life of the asset. When determining the fair value of intangible assets acquired, the Company uses judgment to estimate the applicable discount rate, growth rates and the timing and amount of future cash flows. The fair value of assets acquired and liabilities assumed is typically determined using the assistance of an independent third-party specialist. Business combination related costs are expensed in the period in which the costs are incurred. Asset acquisition related costs are generally capitalized as a component of cost of the assets acquired. | |
Recent Accounting Standards | Recently Adopted Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07 , Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04: Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) | Recent Accounting Standards In June 2018, the FASB issued ASU 2018-07 , Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04: Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) The Company has considered other recent accounting standards and concluded that they are either not applicable to the business, or that no material effect is expected on the consolidated financial statements as a result of future adoption. |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Life of Assets | Asset Classification Estimated Useful Life Laboratory equipment 3 years Office and computer equipment 3 years Leasehold improvements 5 years or the remaining term of the lease, if shorter Furniture and fixtures 5 years |
4. Property and Equipment, net
4. Property and Equipment, net (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of Property and Equipment, Net | March 31, December 31, Office and computer equipment $ 42,288 $ 42,289 Leasehold improvements – 26,841 Furniture and fixtures 14,738 20,263 Property and equipment – at cost 57,026 89,393 Less accumulated depreciation (53,528 ) (84,437 ) Property and equipment – net $ 3,498 $ 4,956 | December 31, December 31, Laboratory equipment $ – $ 264,583 Office and computer equipment 42,289 46,634 Leasehold improvements 26,841 26,841 Furniture and fixtures 20,263 20,263 Property and equipment – at cost 89,393 358,321 Less accumulated depreciation (84,437 ) (330,475 ) Property and equipment – net $ 4,956 $ 27,846 |
5. Goodwill and Indefinite-Live
5. Goodwill and Indefinite-Lived Intangible Assets and Other Long-Term Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Reconciliation of Change in Carrying Value of Goodwill | Balance as of January 1, 2017 $ 3,283,379 No changes – Balance as of December 31, 2017 $ 3,283,379 No changes – Balance as of December 31, 2018 $ 3,283,379 |
6. Accrued Expenses (Tables)
6. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | December 31, December 31, Accrued payroll and benefits $ 53,541 $ 723,488 Accrued professional fees 394,075 389,086 Accrued research costs 205,067 11,477 Other 11,346 11,602 $ 664,029 $ 1,135,653 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Components of loss before income taxes | Year ended December 31, 2018 2017 Domestic (U.S.) $ (3,824,673 ) $ (5,889,926 ) Foreign (U.K.) (3,379,268 ) 2,398,830 Foreign (Germany) (96,517 ) (104,036 ) Loss before income taxes $ (7,300,458 ) $ (3,595,132 ) |
Reconciliation of income tax provision (benefit) | Year ended December 31, 2018 2017 Federal $ (1,533,096 ) $ (1,222,345 ) State (238,952 ) (303,315 ) Increase in tax losses not recognized 1,695,482 (359,833 ) Permanent differences, net 40,015 162,543 Foreign rate differential 124,294 (383,601 ) Share-based payments, net 20,441 (22,087 ) Changes per enacted tax reform – 2,320,059 Enhanced research and development tax credits (108,184 ) (191,421 ) Net provision (benefit) for income taxes $ – $ – |
Schedule of deferred tax assets and liabilities | Year ended December 31, 2018 2017 Deferred tax assets: U.K. net operating loss carryforwards $ 8,039,343 $ 7,641,719 U.K. capital loss carryforwards 1,298,303 1,378,643 U.S. federal net operating loss carryforwards 3,184,691 2,606,017 IPR&D 6,108,078 6,776,473 Share-based payments 1,859,357 1,527,615 Enhanced research and development tax credits 1,109,026 1,060,200 Germany net operating loss carryforwards 524,093 516,401 U.S. state net operating loss carryforwards 1,298,745 1,057,856 Accrued expenses 59,979 198,067 Depreciation 3,283 1,948 Other – – Total deferred tax assets before valuation allowance 23,484,898 22,764,939 Valuation allowance for deferred tax assets (23,484,898 ) (22,764,939 ) Deferred tax liabilities: Indefinite-lived intangible asset (2,918,518 ) (2,918,518 ) Debt discount – – Total deferred tax liabilities (2,918,518 ) (2,918,518 ) Net deferred liability $ (2,918,518 ) $ (2,918,518 ) |
10. Share-Based Expense (Tables
10. Share-Based Expense (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Schedule of Share-Based Compensation Expense | Three Months Ended March 31, 2019 2018 Research and development expenses $ 11,418 $ 60,345 General and administrative expenses 222,522 345,849 $ 233,940 $ 406,194 | Year Ended December 31, 2018 2017 Research and development expenses $ 203,030 $ 101,401 General and administrative expenses 1,228,757 1,691,692 $ 1,431,787 $ 1,793,093 |
Common Stock Awards [Member] | ||
Common stock awards | Number of shares Balance as of January 1, 2017 29,790 Granted 41,800 Issued (8,773 ) Balance as of December 31, 2017 62,817 Granted 26,000 Issued – Balance as of December 31, 2018 88,817 | |
Employee Stock Options [Member] | ||
Assumptions used | Year Ended December 31, 2018 2017 Weighted-average expected dividend yield (%) – – Weighted-average expected volatility (%) 118.03 111.37 Weighted-average risk-free interest rate (%) 2.90 1.79 Weighted-average expected life of option (years) 5.90 5.36 Weighted-average exercise price ($) 3.05 3.34 | |
Option activity | Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2017 1,193,712 $ 4.43 8.94 $ 526,073 Granted 700,000 3.34 Expired (113,343 ) 4.61 Outstanding as of December 31, 2017 1,780,369 3.99 8.53 $ 5,273 Granted 100,000 3.05 Expired (110,929 ) 5.73 Outstanding as of December 31, 2018 1,769,440 $ 3.83 8.17 $ – Vested or expected to vest as of December 31, 2018 1,744,440 $ 3.85 8.16 $ – Exercisable as of December 31, 2017 731,895 $ 4.84 7.44 $ 5,273 Exercisable as of December 31, 2018 1,152,173 $ 4.11 7.92 $ – | |
Non-vested option activity | Number of Weighted- Balance as of January 1, 2018 1,048,474 $ 2.86 Granted 100,000 $ 2.63 Forfeited (6,667 ) $ 2.91 Vested (524,540 ) $ 3.05 Balance as of December 31, 2018 617,267 $ 2.65 | |
Non Employee Stock Options [Member] | ||
Option activity | Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2017 57,442 $ 7.57 7.23 $ – Expired (723 ) 10.34 Outstanding as of December 31, 2017 56,719 7.53 6.31 $ – Granted 10,000 1.93 Expired (3,148 ) 18.25 Outstanding as of December 31, 2018 63,571 $ 6.12 5.40 $ – Vested or expected to vest as of December 31, 2018 63,571 $ 6.12 5.40 $ – Exercisable as of December 31, 2017 56,719 $ 7.53 6.31 $ – Exercisable as of December 31, 2018 63,571 $ 6.12 5.40 $ – | |
Non-vested option activity | Number of Weighted- Balance as of January 1, 2018 – $ – Granted 10,000 $ 1.73 Vested (10,000 ) $ 1.73 Balance as of December 31, 2018 – $ – |
12. Commitments and Contingen_2
12. Commitments and Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum operating lease payment schedule | As of December 31, Total Operating Leases 2019 $ 24,583 2020 – Total minimum lease payments $ 24,583 |
11. Commitments (March 2019 Not
11. Commitments (March 2019 Note) (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Supplemental cash flow information | Three Months Ended March 31, 2019 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 3,977 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ 43,330 |
Supplemental balance sheet information | Balance Sheet Classification March 31, 2019 Right-of-use assets Other assets $ 39,353 Current lease liabilities Accrued expenses and other current liabilities $ 26,234 Non-current lease liabilities Other liabilities $ 13,119 |
1. The Company (Details Narrati
1. The Company (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 05, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net loss | $ (1,327,250) | $ (1,822,518) | $ (7,300,458) | $ (3,595,132) | |
Accumulated deficit | (154,560,845) | (153,233,595) | (145,933,137) | ||
Working capital (deficit) | $ 1,200,000 | $ (400,000) | $ 3,900,000 | ||
Subsequent Event [Member] | |||||
Proceeds from stock offering | $ 2,700,000 |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details - Useful Lives) | 12 Months Ended |
Dec. 31, 2018 | |
Laboratory Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Office and Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years or the remaining term of the lease, if shorter |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||
Letter of credit | $ 100,000 | |
Letter of credit purpose | Required for operating lease in Lexington, Massachusetts. | |
Impairment of indefinate lived intangible assets | $ 0 | $ 0 |
Impairment of goodwill | 0 | 0 |
Impairment of long-lived assets | $ 0 | $ 0 |
Antidilutive shares | 800,000 | 600,000 |
JSOP [Member] | ||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||
Awards outstanding | 300,000 | 300,000 |
Accrued Program Expense [Member] | ||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||
Accrued program expense | $ 200,000 | |
Deposits held with clinical trial vendors [Member] | ||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||
Deposits held with clinical trial vendors | $ 400,000 | |
Deferred program expenses [Member] | ||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||
Deposits held with clinical trial vendors | $ 33,000 |
3. Significant Strategic Drug_2
3. Significant Strategic Drug Development Collaborations (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue | $ 0 | $ 7,585,000 |
Licenses [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue | $ 0 | $ 7,500,000 |
Serum Institute of India Ltd [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Percent ownership in Xenetic | 6.70% | 7.20% |
Pharmsynthez [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Percent ownership in Xenetic | 57.10% | 61.50% |
Pharmsynthez [Member] | Series B Preferred Stock [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Common stock outstanding | 1,500,000 | |
Pharmsynthez [Member] | Series A Preferred Stock [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Common stock outstanding | 970,000 | |
Research, development, license and supply agreement [Member] | Takeda [Member] | Licenses [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue | $ 7,500,000 | |
Research, development, license and supply agreement [Member] | SynBio [Member] | Co-Development Agreement [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue | $ 0 | 0 |
License and supply agreements [Member] | Serum Institute of India Ltd [Member] | Royalty Revenue [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue | $ 0 | $ 0 |
4. Property and Equipment, ne_2
4. Property and Equipment, net (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | |||
Property and equipment - at cost | $ 57,026 | $ 89,393 | $ 358,321 |
Less accumulated depreciation | (53,528) | (84,437) | (330,475) |
Property and equipment - net | 3,498 | 4,956 | 27,846 |
Laboratory Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment - at cost | 0 | 264,583 | |
Office and Computer Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment - at cost | 42,288 | 42,289 | 46,634 |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment - at cost | 0 | 26,841 | 26,841 |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment - at cost | $ 14,738 | $ 20,263 | $ 20,263 |
4. Property and Equipment, ne_3
4. Property and Equipment, net (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 1,458 | $ 5,723 | $ 15,827 | $ 23,784 |
Gain on sale of equipment | $ 2,000 | $ 0 | 15,437 | 0 |
Proceeds from sale of equipment | $ 22,500 | $ 0 |
5. Goodwill and Indefinite-Li_2
5. Goodwill and Indefinite-Lived Intangible Assets (Details - Goodwill) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning Balance | $ 3,283,379 | $ 3,283,379 |
No chages | 0 | 0 |
Ending Balance | $ 3,283,379 | $ 3,283,379 |
5. Goodwill and Indefinite-Li_3
5. Goodwill and Indefinite-Lived Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2019 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Carrying value of indefinite-lived intangible asset | $ 9,243,128 | $ 9,243,128 | $ 9,243,128 |
Impairment of indefinite-lived intangible asset | 0 | 0 | |
Supply inventory | 700,000 | 700,000 | |
Supplies used during the period | 0 | 100,000 | |
OncoHist [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Carrying value of indefinite-lived intangible asset | 9,200,000 | 9,200,000 | $ 9,243,128 |
Impairment of indefinite-lived intangible asset | $ 0 | $ 0 |
6. Accrued Expenses (Details)
6. Accrued Expenses (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | |||
Accrued payroll and benefits | $ 53,541 | $ 723,488 | |
Accrued professional fees | 394,075 | 389,086 | |
Accrued research costs | 205,067 | 11,477 | |
Other | 11,346 | 11,602 | |
Total accrued expenses | $ 965,738 | $ 664,029 | $ 1,135,653 |
6. Accrued Expenses (Details Na
6. Accrued Expenses (Details Narrative) - M. Scott Maguire [Member] | 11 Months Ended | |
Dec. 02, 2017GBP (£) | Dec. 31, 2017USD ($) | |
Accrued payroll and benefits | $ | $ 400,000 | |
United Kingdom, Pounds | ||
Termination payment | £ | £ 30,000 |
7. Fair Value Measurements (Det
7. Fair Value Measurements (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Fair value financial instruments | $ 0 | $ 0 |
8. Income Taxes (Details - Inco
8. Income Taxes (Details - Income by geographic regions) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Loss before income taxes | $ (1,327,250) | $ (1,822,518) | $ (7,300,458) | $ (3,595,132) |
UNITED STATES [Member] | ||||
Loss before income taxes | (3,824,673) | (5,889,926) | ||
UNITED KINGDOM [Member] | ||||
Loss before income taxes | (3,379,268) | 2,398,830 | ||
GERMANY [Member] | ||||
Loss before income taxes | $ (96,517) | $ (104,036) |
8. Income Taxes (Details - Tax
8. Income Taxes (Details - Tax reconcilation) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Federal | $ (1,533,096) | $ (1,222,345) | ||
State | (238,952) | (303,315) | ||
Increase in tax losses not recognized | 1,695,482 | (359,833) | ||
Permanent differences, net | 40,015 | 162,543 | ||
Foreign rate differential | 124,294 | (383,601) | ||
Share-based payments, net | 20,441 | (22,087) | ||
Changes per enacted tax reform | 0 | 2,320,059 | ||
Enhanced research and development tax credits | (108,184) | (191,421) | ||
Net provision (benefit) for income taxes | $ 0 | $ 0 | $ 0 | $ 0 |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred Tax Assets) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | |||
U.S. federal net operating loss carryforwards | $ 3,184,691 | $ 2,606,017 | |
IPR&D | 6,108,078 | 6,776,473 | |
Share-based compensation | 1,859,357 | 1,527,615 | |
Enhanced research and development tax credits | 1,109,026 | 1,060,200 | |
U.S. state net operating loss carryforwards | 1,298,745 | 1,057,856 | |
Accrued expenses | 59,979 | 198,067 | |
Depreciation | 3,283 | 1,948 | |
Other | 0 | 0 | |
Total deferred tax assets before valuation allowance | 23,484,898 | 22,764,939 | |
Valuation allowance for deferred tax assets | $ (23,800,000) | (23,484,898) | (22,764,939) |
Deferred tax liability: | |||
Indefinite-lived intangible asset | (2,918,518) | (2,918,518) | |
Debt discount | 0 | 0 | |
Total deferred tax liabilities | (2,918,518) | (2,918,518) | |
Net deferred tax assets and liabilities | $ (2,900,000) | (2,918,518) | (2,918,518) |
UNITED KINGDOM [Member] | |||
Deferred tax assets: | |||
Foreign net operating loss carryforwards | 8,039,343 | 7,641,719 | |
Foreign capital loss carryforwards | 1,298,303 | 1,378,643 | |
GERMANY [Member] | |||
Deferred tax assets: | |||
Foreign net operating loss carryforwards | $ 524,093 | $ 516,401 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
UNITED KINGDOM [Member] | ||
Net operating loss carryforwards | $ 47,300,000 | $ 45,000,000 |
UNITED STATES [Member] | ||
Net operating loss carryforwards | $ 16,500,000 | 13,500,000 |
Operating loss expiration dates | Dec. 31, 2032 | |
State [Member] | ||
Net operating loss carryforwards | $ 16,200,000 | 13,300,000 |
Operating loss expiration dates | Dec. 31, 2032 | |
GERMANY [Member] | ||
Net operating loss carryforwards | $ 1,700,000 | $ 1,600,000 |
9. Stockholders' Equity (Detail
9. Stockholders' Equity (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 15, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Proceeds from warrant exercises | $ 1,480,000 | $ 0 | |||
Warrant-based expense for services | $ (26,576) | $ 4,917 | $ 10,206 | $ (126,316) | |
Series B Preferred Stock [Member] | |||||
Stock converted, shares converted | 300,000 | 200,000 | |||
Stock converted, shares issued | 300,000 | 200,000 | |||
Warrants [Member] | |||||
Warrants exercised | 400,000 | 0 | |||
Warrants exercised, stock issued | 400,000 | 0 | |||
Pharmsynthez [Member] | |||||
Debt converted, stock issued | 100,000 | ||||
Debt converted, amount converted | $ 500,000 | ||||
Serum Institute Warrants [Member] | |||||
Warrants outstanding | 539,202 | 646,249 | |||
Warrant-based expense for services | $ 10,000 | $ (100,000) | |||
Warrant weighted average exercise price | $ 10.41 | ||||
Warrant expiration date range | December 2019 through May 2021 | ||||
Financing Agreements [Member] | |||||
Warrants exercised | 370,000 | 0 | |||
Warrants exercised, stock issued | 370,000 | ||||
Proceeds from warrant exercises | $ 1,500,000 | ||||
Warrants outstanding | 3,152,225 | 3,522,225 | |||
Warrant weighted average exercise price | $ 4.33 | $ 4.30 | |||
Warrant expiration date range | July 1, 2020 through November 2021 | ||||
Warrants granted | 0 | 0 |
10. Share-Based Expense (Detail
10. Share-Based Expense (Details - Share based expense) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based compensation | $ 233,940 | $ 406,194 | $ 1,431,787 | $ 1,793,093 |
Research and Development Expense [Member] | ||||
Share-based compensation | 11,418 | 60,345 | 203,030 | 101,401 |
General and Administrative Expense [Member] | ||||
Share-based compensation | $ 222,522 | $ 345,849 | $ 1,228,757 | $ 1,691,692 |
10. Share-Based Compensation (D
10. Share-Based Compensation (Details - Assumptions Employee) - Employee Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average expected dividend yield | 0.00% | 0.00% |
Weighted-average expected volatility | 118.03% | 111.37% |
Weighted-average risk-free interest rate | 2.90% | 1.79% |
Weighted-average expected life of option | 5 years 10 months 25 days | 5 years 4 months 9 days |
Weighted-average exercise price | $ 3.05 | $ 3.34 |
10. Share-Based Compensation _2
10. Share-Based Compensation (Details - Employee option activity) - Employee Stock Options [Member] - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options outstanding, beginning balance | 1,769,440 | 1,780,369 | 1,780,369 | 1,193,712 |
Options granted | 0 | 0 | 100,000 | 700,000 |
Options expired | (110,929) | (113,343) | ||
Options outstanding, ending balance | 1,769,440 | 1,780,369 | ||
Options vested or expected to vest | 1,744,440 | |||
Options exercisable | 1,152,173 | 731,895 | ||
Weighted-average exercise price outstanding, beginning balance | $ 3.83 | $ 3.99 | $ 3.99 | $ 4.43 |
Weighted-average exercise price, granted | 3.05 | 3.34 | ||
Weighted-average exercise price, expired | 5.73 | 4.61 | ||
Weighted-average exercise price, ending balance | 3.83 | 3.99 | ||
Weighted-average exercise price, vested or expected to vest | 3.85 | |||
Weighted-average exercise price, exercisable | $ 4.11 | $ 4.84 | ||
Weighted-average remaining life outstanding | 8 years 2 months 1 day | 8 years 6 months 10 days | ||
Weighted-average remaining life, vested or expected to vest | 8 years 1 month 27 days | |||
Weighted-average remaining life, exercisable | 7 years 11 months 1 day | 7 years 5 months 9 days | ||
Aggregate intrinsic value, outstanding beginning balance | $ 0 | $ 5,273 | $ 5,273 | $ 526,073 |
Aggregate intrinsic value, outstanding ending balance | 0 | 5,273 | ||
Aggregate intrinsic value, exercisable | $ 0 | $ 5,273 |
10. Share-Based Compensation _3
10. Share-Based Compensation (Details - Non-Vested employee Option activity) - Employee Stock Options [Member] - $ / shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Non-vested options outstanding, beginning balance | 617,267 | 1,048,474 | 1,048,474 | |
Options granted | 0 | 0 | 100,000 | 700,000 |
Options forfeited | (6,667) | |||
Options vested | (524,540) | (340,930) | ||
Non-vested options outstanding, ending balance | 617,267 | 1,048,474 | ||
Non-vested weighted-average grant date fair value per share, beginning balance | $ 2.65 | $ 2.86 | $ 2.86 | |
Weighted-average grant date fair value per share, options granted | 2.63 | $ 2.70 | ||
Weighted-average grant date fair value per share, options forfeited | 2.91 | |||
Weighted-average grant date fair value per share, options vested | 3.05 | |||
Non-vested weighted-average grant date fair value per share, ending balance | $ 2.65 | $ 2.86 |
10. Share-Based Compensation _4
10. Share-Based Compensation (Details - Non-employee option activity) - Non Employee Stock Options [Member] - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options outstanding, beginning balance | 63,571 | 56,719 | 56,719 | 57,442 |
Options granted | 0 | 10,000 | 10,000 | 0 |
Options expired | (3,148) | (723) | ||
Options outstanding, ending balance | 63,571 | 56,719 | ||
Options vested or expected to vest | 63,571 | |||
Weighted-average exercise price outstanding, beginning balance | $ 6.12 | $ 7.53 | $ 7.53 | $ 7.57 |
Weighted-average exercise price, granted | 1.93 | |||
Weighted-average exercise price, forfeited/expired | 18.25 | 10.34 | ||
Weighted-average exercise price, ending balance | 6.12 | 7.53 | ||
Weighted-average exercise price, vested or expected to vest | 6.12 | |||
Weighted-average exercise price, exercisable | $ 6.12 | $ 7.53 | ||
Weighted-average remaining life outstanding | 5 years 4 months 24 days | 6 years 3 months 22 days | ||
Weighted-average remaining life, vested or expected to vest | 5 years 4 months 24 days | |||
Weighted-average remaining life, exercisable | 5 years 4 months 24 days | 6 years 3 months 22 days | ||
Aggregate intrinsic value, outstanding beginning balance | $ 0 | $ 0 | $ 0 | $ 0 |
Aggregate intrinsic value, outstanding ending balance | 0 | 0 | ||
Aggregate intrinsic value, vested or expected to vest | 0 | |||
Aggregate intrinsic value, exercisable | $ 0 | $ 0 |
10. Share-Based Compensation _5
10. Share-Based Compensation (Details - Non-vested non-employee) - Non Employee Stock Options [Member] - $ / shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Non-vested options outstanding, beginning balance | 0 | 0 | 0 | |
Options granted | 0 | 10,000 | 10,000 | 0 |
Options vested | (10,000) | (10,101) | ||
Non-vested options outstanding, ending balance | 0 | 0 | ||
Non-vested weighted-average grant date fair value per share, beginning balance | ||||
Weighted-average grant date fair value per share, options granted | 1.73 | |||
Weighted-average grant date fair value per share, options vested | 1.73 | |||
Non-vested weighted-average grant date fair value per share, ending balance |
10. Share-Based Compensation _6
10. Share-Based Compensation (Details - Common stock awards) - Common Stock Awards [Member] - shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Common stock awards outstanding, beginning balance | 88,817 | 62,817 | 62,817 | 29,790 |
Other than options granted | 8,219 | 8,094 | 26,000 | 41,800 |
Common stock awards issued | 0 | (8,773) | ||
Common stock awards outstanding, ending balance | 88,817 | 62,817 |
10. Share-Based Compensation _7
10. Share-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based compensation | $ 233,940 | $ 406,194 | $ 1,431,787 | $ 1,793,093 | |
Employee Stock Options [Member] | |||||
Share-based compensation | $ 200,000 | $ 400,000 | |||
Options granted | 0 | 0 | 100,000 | 700,000 | |
Weighted average grant date fair value | $ 2.63 | $ 2.70 | |||
Options exercised | 0 | 0 | 0 | 0 | |
Options vested | 524,540 | 340,930 | |||
Fair value of options vested | $ 1,600,000 | $ 1,900,000 | |||
Unrecognized compensation expense | $ 1,000,000 | ||||
Unrecognized compensation expense recognition period | 1 year 3 months 19 days | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Options granted | 0 | 0 | |||
Other than options granted | 0 | 50,000 | |||
Vesting period | 3 years | ||||
Other than options, grant date fair value per share | $ 2.11 | ||||
Other than options, shares vested | 16,667 | ||||
Other than options, shares expired | 0 | ||||
Non Employee Stock Options [Member] | |||||
Share-based compensation | $ 0 | $ 9,000 | $ 36,000 | $ 100,000 | |
Options granted | 0 | 10,000 | 10,000 | 0 | |
Weighted average grant date fair value | $ 1.73 | ||||
Options exercised | 0 | 0 | 0 | ||
Options vested | 10,000 | 10,101 | |||
Fair value of options vested | $ 36,000 | $ 100,000 | |||
Common Stock Awards [Member] | |||||
Share-based compensation | $ 17,000 | $ 17,000 | $ 100,000 | $ 100,000 | |
Other than options granted | 8,219 | 8,094 | 26,000 | 41,800 | |
Other than options, shares outstanding | 88,817 | 62,817 | 29,790 | ||
JSOP [Member] | |||||
Share-based compensation | $ 0 | $ 0 | |||
Other than options, shares outstanding | 300,000 | 300,000 | |||
Extend Expiry Dates [Member] | |||||
Incremental compensation expense | $ 4,000 | ||||
Post Termination Modifications [Member] | |||||
Incremental compensation expense | $ 200,000 |
11. Employee Benefit Plans (Det
11. Employee Benefit Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
401k Plan [Member] | ||
Contribution to defined contribution plan | $ 0 | $ 51,000 |
UK Plan [Member] | ||
Contribution to defined contribution plan | $ 0 | $ 0 |
12. Commitments and Contingen_3
12. Commitments and Contingent Liabilities (Details - Operating Lease) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease commitment current year | $ 24,583 | |
Operating lease 2020 | 0 | |
Total minimum lease payments | $ 12,449 | $ 24,583 |
12. Commitments and Contingen_4
12. Commitments and Contingent Liabilities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Rent expense | $ 100,000 | $ 100,000 |
Eurogentec [Member] | ||
Settlement expense | $ 600,000 | |
Lexington Lease [Member] | ||
Lease start date | Jan. 1, 2014 | |
Lease termination date | Jan. 31, 2019 | |
Letter of credit | $ 66,000 | |
Letter of credit expiration date | May 1, 2019 | |
Miami, Fl [Member] | ||
Lease start date | Dec. 1, 2016 | |
Lease termination date | Nov. 30, 2019 | |
Framingham Lease [Member] | Subsequent Event [Member] | ||
Lease start date | Feb. 1, 2019 | |
Lease termination date | Sep. 30, 2020 | |
Operating lease due in 2019 and 2020 | $ 50,000 |
13. Related Party Transactions
13. Related Party Transactions (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Pharmsynthez [Member] | |
Research and consulting expenses | $ 100,000 |
5. Property and Equipment, net
5. Property and Equipment, net (March 2019 Note) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Property and equipment - at cost | $ 57,026 | $ 89,393 | $ 358,321 |
Less accumulated depreciation | (53,528) | (84,437) | (330,475) |
Property and equipment - net | 3,498 | 4,956 | 27,846 |
Office and Computer Equipment [Member] | |||
Property and equipment - at cost | 42,288 | 42,289 | 46,634 |
Leasehold Improvements [Member] | |||
Property and equipment - at cost | 0 | 26,841 | 26,841 |
Furniture and Fixtures [Member] | |||
Property and equipment - at cost | $ 14,738 | $ 20,263 | $ 20,263 |
6. Indefinite-Lived Intangible
6. Indefinite-Lived Intangible Assets (March 2019 Note) (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Indefinite-lived intangible assets | $ 9,243,128 | $ 9,243,128 | $ 9,243,128 |
OncoHist [Member] | |||
Indefinite-lived intangible assets | 9,243,128 | $ 9,200,000 | $ 9,200,000 |
Impaiment of intangible assets | $ 0 |
9 Share-Based Expense (March 20
9 Share-Based Expense (March 2019 Note) (Details - Share based compensation) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based compensation | $ 233,940 | $ 406,194 | $ 1,431,787 | $ 1,793,093 |
Research and Development Expense [Member] | ||||
Share-based compensation | 11,418 | 60,345 | 203,030 | 101,401 |
General and Administrative Expenses [Member] | ||||
Share-based compensation | $ 222,522 | $ 345,849 | $ 1,228,757 | $ 1,691,692 |
9. Share-Based Expense (March 2
9. Share-Based Expense (March 2019 Note) (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share based compensation | $ 233,940 | $ 406,194 | $ 1,431,787 | $ 1,793,093 |
Warrant [Member] | Collaboration Agreements [Member] | ||||
Warrants outstanding | 539,202 | 539,202 | ||
Fair value adjustment of warrants | $ (27,000) | $ 5,000 | ||
Warrants issued | 0 | 0 | ||
Warrants exercised | 0 | 0 | ||
Employee Stock Options [Member] | ||||
Options granted | 0 | 0 | 100,000 | 700,000 |
Options exercised | 0 | 0 | 0 | 0 |
Share based compensation | $ 200,000 | $ 400,000 | ||
Restricted Stock Units R S U [Member] | ||||
Options granted | 0 | 0 | ||
Other than options granted | 0 | 50,000 | ||
Non Employee Stock Options [Member] | ||||
Options granted | 0 | 10,000 | 10,000 | 0 |
Options exercised | 0 | 0 | 0 | |
Share based compensation | $ 0 | $ 9,000 | $ 36,000 | $ 100,000 |
Common Stock Awards [Member] | ||||
Other than options granted | 8,219 | 8,094 | 26,000 | 41,800 |
Share based compensation | $ 17,000 | $ 17,000 | $ 100,000 | $ 100,000 |
10. Income Taxes (March 2019 No
10. Income Taxes (March 2019 Note) (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 0 | $ 0 | $ 0 | $ 0 |
Deferred tax assets, valuation allowance | 23,800,000 | 23,484,898 | 22,764,939 | |
Net deferred tax liability | 2,900,000 | 2,918,518 | $ 2,918,518 | |
Unrecognized tax positions | $ 0 | $ 0 |
11. Commitments (March 2019 N_2
11. Commitments (March 2019 Note) (Details - Supplemental Cash Flow Info) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating cash flow information | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 3,977 | |
Non-cash activity: | ||
Right-of-use assets obtained in exchange for lease obligations | $ 43,330 | $ 0 |
11. Commitments (March 2019 N_3
11. Commitments (March 2019 Note) (Details - Lease liabilities) | Mar. 31, 2019USD ($) |
Other Assets [Member] | |
Right-of-use assets | $ 39,353 |
Accrued Expenses [Member] | |
Current lease liabilities | 26,234 |
Other Liabilities [Member] | |
Non-current lease liabilities | $ 13,119 |
11. Commitments (March 2019 N_4
11. Commitments (March 2019 Note) (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Future minimum lease payment | $ 12,449 | $ 24,583 |