Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 08, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
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 Common Stock, Shares Outstanding | 5,755,141 | |
Current reporting status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 001-37937 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 12,044,472 | $ 571,605 |
Restricted cash | 0 | 66,510 |
Prepaid expenses and other | 876,816 | 555,856 |
Total current assets | 12,921,288 | 1,193,971 |
Property and equipment, net | 1,590 | 4,956 |
Goodwill | 0 | 3,283,379 |
Indefinite-lived intangible assets | 9,243,128 | 9,243,128 |
Other assets | 709,113 | 705,660 |
Total assets | 22,875,119 | 14,431,094 |
Current liabilities: | ||
Accounts payable | 1,158,555 | 934,147 |
Accrued expenses and other current liabilities | 538,734 | 665,641 |
Total current liabilities | 1,697,289 | 1,599,788 |
Deferred tax liability | 2,918,518 | 2,918,518 |
Total liabilities | 4,615,807 | 4,518,306 |
Stockholders' equity: | ||
Common stock, $0.001 par value; 12,500,000 shares authorized as of September 30, 2019 and December 31, 2018; 5,660,481 and 810,856 shares issued as of September 30, 2019 and December 31, 2018, respectively; 5,633,490 and 783,865 shares outstanding as of September 30, 2019 and December 31, 2018, respectively | 5,660 | 811 |
Additional paid in capital | 188,116,697 | 168,170,244 |
Accumulated deficit | (164,838,373) | (153,233,595) |
Accumulated other comprehensive income | 253,734 | 253,734 |
Treasury stock | (5,281,180) | (5,281,180) |
Total stockholders' equity | 18,259,312 | 9,912,788 |
Total liabilities and stockholders' equity | 22,875,119 | 14,431,094 |
Series B [Member] | ||
Stockholders' equity: | ||
Preferred stock, 10,000,000 shares authorized | 1,804 | 1,804 |
Series A [Member] | ||
Stockholders' equity: | ||
Preferred stock, 10,000,000 shares authorized | $ 970 | $ 970 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 12,500,000 | 12,500,000 |
Common stock, shares issued | 5,660,481 | 810,856 |
Common stock, shares outstanding | 5,633,490 | 783,865 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Series B [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 1,804,394 | 1,804,394 |
Preferred stock, shares outstanding | 1,804,394 | 1,804,394 |
Series A [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 970,000 | 970,000 |
Preferred stock, shares outstanding | 970,000 | 970,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Operating costs and expenses: | ||||
Research and development | $ (3,520,638) | $ (735,879) | $ (4,471,939) | $ (2,369,219) |
General and administrative | (2,142,505) | (1,079,008) | (3,896,657) | (3,267,597) |
Goodwill impairment | (3,283,379) | 0 | (3,283,379) | 0 |
Loss from operations | (8,946,522) | (1,814,887) | (11,651,975) | (5,636,816) |
Other income (expense): | ||||
Other income (expense) | (223) | 2,292 | 267 | (24,838) |
Interest income | 46,617 | 59 | 46,930 | 424 |
Total other income (expense) | 46,394 | 2,351 | 47,197 | (24,414) |
Net loss | (8,900,128) | (1,812,536) | (11,604,778) | (5,661,230) |
Deemed dividend | (1,404,932) | 0 | (5,284,379) | 0 |
Net loss applicable to common stockholders | $ (10,305,060) | $ (1,812,536) | $ (16,889,157) | $ (5,661,230) |
Basic and diluted loss per share | $ (2.67) | $ (2.31) | $ (9.07) | $ (7.58) |
Weighted-average shares of common stock outstanding, basic and diluted | 3,862,936 | 783,865 | 1,861,867 | 746,629 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements Of Changes In Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock | Common Stock [Member] | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock | Total |
Beginning balance, shares at Dec. 31, 2017 | 3,090,742 | 753,659 | |||||
Beginning balance, value at Dec. 31, 2017 | $ 3,090 | $ 754 | $ 165,258,198 | $ (145,933,137) | $ 253,734 | $ (5,281,180) | $ 14,301,459 |
Exercise of warrants, shares | 30,834 | ||||||
Exercise of warrants, value | $ 31 | 1,479,969 | 1,480,000 | ||||
Conversion of Series B preferred stock to shares of common stock, shares | (316,348) | 26,363 | |||||
Conversion of Series B preferred stock to shares of common stock, value | $ (316) | $ 26 | 290 | ||||
Share-based expense | 1,123,000 | 1,123,000 | |||||
Common stock awards to vendors | 52,281 | 52,281 | |||||
Net loss | (5,661,230) | (5,661,230) | |||||
Ending balance, shares at Sep. 30, 2018 | 2,774,394 | 810,856 | |||||
Ending balance, value at Sep. 30, 2018 | $ 2,774 | $ 811 | 167,913,738 | (151,594,367) | 253,734 | (5,281,180) | 11,295,510 |
Beginning balance, shares at Jun. 30, 2018 | 2,774,394 | 810,856 | |||||
Beginning balance, value at Jun. 30, 2018 | $ 2,774 | $ 811 | 167,590,260 | (149,781,831) | 253,734 | (5,281,180) | 12,784,568 |
Share-based expense | 306,051 | 306,051 | |||||
Common stock awards to vendors | 17,427 | 17,427 | |||||
Net loss | (1,812,536) | (1,812,536) | |||||
Ending balance, shares at Sep. 30, 2018 | 2,774,394 | 810,856 | |||||
Ending balance, value at Sep. 30, 2018 | $ 2,774 | $ 811 | 167,913,738 | (151,594,367) | 253,734 | (5,281,180) | 11,295,510 |
Beginning balance, shares at Dec. 31, 2018 | 2,774,394 | 810,856 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 2,774 | $ 811 | 168,170,244 | (153,233,595) | 253,734 | (5,281,180) | 9,912,788 |
Issuance of common stock and warrants in registered direct offering, net of issuance costs, shares | 86,667 | ||||||
Issuance of common stock and warrants in registered direct offering, net of issuance costs, value | $ 87 | 2,698,963 | 2,699,050 | ||||
Issuance of common stock and warrants in public offering, net of issuance costs, shares | 1,746,666 | ||||||
Issuance of common stock and warrants in public offering, net of issuance costs, value | $ 1,747 | 13,420,203 | 13,421,950 | ||||
Issuance of common stock in connection with purchase of in-process research and development, shares | 624,995 | ||||||
Issuance of common stock in connection with purchase of in-process research and development, value | $ 625 | 3,030,601 | 3,031,226 | ||||
Exercise of pre-funded warrants, shares | 492,417 | ||||||
Exercise of pre-funded warrant, value | $ 492 | 4,517 | 5,009 | ||||
Exercise of purchase warrants, shares | 1,889,602 | ||||||
Exercise of purchase warrants, value | $ 1,890 | (1,890) | |||||
Issuance of common stock to vendor, shares | 7,836 | ||||||
Issuance of common stock to vendor, value | $ 7 | (7) | |||||
Issuance of warrants in connection with reverse stock split, shares | |||||||
Issuance of warrants in connection with reverse stock split, value | 63,536 | 63,536 | |||||
Issuance of common stock to adjust for reverse split rounding, shares | 1,442 | ||||||
Issuance of common stock to adjust for reverse split rounding, value | $ 1 | (1) | |||||
Deemed dividend related to Series B Preferred Stock down round provision | 5,284,379 | 5,284,379 | |||||
Accretion of deemed dividend related to Series B Preferred Stock down round provision | (5,284,379) | (5,284,379) | |||||
Share-based expense | 683,104 | 683,104 | |||||
Common stock awards to vendors | 47,427 | 47,427 | |||||
Net loss | (11,604,778) | (11,604,778) | |||||
Ending balance, shares at Sep. 30, 2019 | 2,774,394 | 5,660,481 | |||||
Ending balance, value at Sep. 30, 2019 | $ 2,774 | $ 5,660 | 188,116,697 | (164,838,373) | 253,734 | (5,281,180) | 18,259,312 |
Beginning balance, shares at Jun. 30, 2019 | 2,774,394 | 949,218 | |||||
Beginning balance, value at Jun. 30, 2019 | $ 2,774 | $ 948 | 171,352,760 | (155,938,245) | 253,734 | (5,281,180) | 10,390,791 |
Issuance of common stock and warrants in public offering, net of issuance costs, shares | 1,746,666 | ||||||
Issuance of common stock and warrants in public offering, net of issuance costs, value | $ 1,747 | 13,420,203 | 13,421,950 | ||||
Issuance of common stock in connection with purchase of in-process research and development, shares | 624,995 | ||||||
Issuance of common stock in connection with purchase of in-process research and development, value | $ 625 | 3,030,601 | 3,031,226 | ||||
Exercise of pre-funded warrants, shares | 450,000 | ||||||
Exercise of pre-funded warrant, value | $ 450 | 4,050 | 4,500 | ||||
Exercise of purchase warrants, shares | 1,889,602 | ||||||
Exercise of purchase warrants, value | $ 1,890 | (1,890) | |||||
Issuance of warrants in connection with reverse stock split, shares | |||||||
Issuance of warrants in connection with reverse stock split, value | 63,536 | 63,536 | |||||
Deemed dividend related to Series B Preferred Stock down round provision | 1,404,932 | 1,404,932 | |||||
Accretion of deemed dividend related to Series B Preferred Stock down round provision | (1,404,932) | (1,404,932) | |||||
Share-based expense | 232,437 | 232,437 | |||||
Common stock awards to vendors | 15,000 | 15,000 | |||||
Net loss | (8,900,128) | (8,900,128) | |||||
Ending balance, shares at Sep. 30, 2019 | 2,774,394 | 5,660,481 | |||||
Ending balance, value at Sep. 30, 2019 | $ 2,774 | $ 5,660 | $ 188,116,697 | $ (164,838,373) | $ 253,734 | $ (5,281,180) | $ 18,259,312 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (11,604,778) | $ (5,661,230) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Acquired in-process research and development | 3,031,226 | 0 |
Goodwill impairment | 3,283,379 | 0 |
Depreciation | 3,366 | 12,540 |
Amortization of right of use asset | 16,629 | 0 |
Gain on sale of property and equipment | (2,000) | (15,437) |
Share-based expense | 683,104 | 1,123,000 |
Issuance of warrants in connection with reverse stock split | 63,536 | 0 |
Vendor share-based expense | 47,427 | 52,281 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (297,712) | (310,239) |
Accounts payable, accrued expenses and other liabilities | 54,171 | (623,992) |
Net cash used in operating activities | (4,721,652) | (5,423,077) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of property and equipment | 2,000 | 22,500 |
Net cash provided by investing activities | 2,000 | 22,500 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of common stock and warrants in public offering | 13,421,950 | 0 |
Net proceeds from issuance of common stock and warrants in registered direct offering | 2,699,050 | 0 |
Proceeds from exercise of warrants | 5,009 | 1,480,000 |
Net cash provided by financing activities | 16,126,009 | 1,480,000 |
Net change in cash and restricted cash | 11,406,357 | (3,920,577) |
Cash and restricted cash at beginning of period | 638,115 | 5,599,572 |
Cash and restricted cash at end of period | 12,044,472 | 1,678,995 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 8 | 599 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Right of use asset acquired in exchange for lease liability | 43,330 | 0 |
Issuance of common stock to vendor | 7 | 0 |
Issuance of common stock to acquire in-process research and development | 3,031,226 | 0 |
Issuance of common stock to adjust for Reverse Stock Split | 1 | 0 |
Issuance of common stock from cashless exercise of purchase warrants | 1,890 | 0 |
Conversion of Series B preferred stock to common stock | $ 0 | $ 316 |
1. The Company
1. The Company | 9 Months Ended |
Sep. 30, 2019 | |
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 progressing XCART™, a personalized Chimeric Antigen Receptor (“CAR”) T cell platform technology engineered to target patient-specific tumor neoantigens. The Company is initially advancing cell-based therapeutics targeting the unique B-cell receptor on the surface of an individual patient’s malignant tumor cells, for the treatment of B-cell 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. On March 1, 2019, the Company entered into agreements with Hesperix S.A. (“Hesperix”) and Opko Pharmaceuticals LLC (“OPKO”) to acquire the XCART technology (the “Transaction”) and closed the Transaction on July 19, 2019 concurrent with the completion of an approximate $15 million public offering (the “Offering”). For additional information regarding the Transaction, see Note 4 – “Acquisitions.” Additionally, Xenetic is leveraging its proprietary drug delivery platform, PolyXen ™ 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 subsidiaries, Hesperix and 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”), own various U.S. federal trademark registrations and applications, and unregistered trademarks and service marks, including but not limited to XCART, OncoHist™, PolyXen, ErepoXen™, and ImuXen™, 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 Management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company has incurred substantial losses since its inception and expects to continue to incur operating losses in the near-term. These factors raise substantial doubt about its ability to 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 to continue as a going concern. On March 7, 2019, the Company closed on a $3.1 million registered direct common stock offering resulting in $2.7 million of net proceeds to the Company. On July 19, 2019, the Company completed the Offering resulting in $13.4 million of net proceeds to the Company. The Company believes that these financings, coupled with the Company’s existing resources, will be adequate to fund the Company’s operations as a going concern. However, the Company anticipates it may need additional capital in the long-term to pursue its business initiatives and continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on a going concern basis and 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 | 9 Months Ended |
Sep. 30, 2019 | |
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 and 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. As a result, 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. On June 25, 2019, the Company effected a reduction, on a 1 for 12 basis, in its authorized common stock, par value $0.001, along with a corresponding and proportional decrease in the number of shares issued and outstanding (the “Reverse Stock Split”). On the effective date of the Reverse Stock Split, (i) every 12 shares of common stock were reduced to one share of common stock, with any fractional amounts rounded up to one share; (ii) the number of shares of common stock into which each outstanding warrant, restricted stock unit, or option to purchase common stock were proportionately reduced on the same basis as the common stock; (iii) the exercise price of each outstanding warrant or option to purchase common stock were proportionately increased on a 1 for 12 basis; and (iv) the number of shares of common stock into which each share of preferred stock could be converted were proportionately reduced on the same basis as the common stock. Unless otherwise indicated, all of the share numbers, share prices, and exercise prices have been adjusted, on a retroactive basis, to reflect this Reverse Stock Split. Certain prior period amounts have been reclassified to conform to the presentation for the current period. Principles of Consolidation The condensed consolidated financial statements of the Company include the accounts of Hesperix and Xenetic UK and Xenetic UK’s wholly owned subsidiaries: Lipoxen, Xenetic Bioscience, Incorporated, and SymbioTec. All 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 each period, except where such non-participating securities would be anti-dilutive. For the three and nine months ended September 30, 2019 and 2018, basic and diluted net loss per share are the same for each respective period 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) |
3. Significant Strategic Drug C
3. Significant Strategic Drug Collaborations - Related Parties | 9 Months Ended |
Sep. 30, 2019 | |
Significant Strategic Drug Collaborations - Related Parties | |
Significant Strategic Drug Collaborations - Related Parties | 3. Significant Strategic Collaborations – Related Parties The Company has entered into various research, development, license and supply agreements with Takeda Pharmaceuticals Co. Ltd. (“Takeda”), Serum Institute of India (“Serum Institute”), 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 September 30, 2019. No amounts were recognized as revenue related to these agreements during the three and nine months ended September 30, 2019 or 2018. The related party ownership interest in the Company materially changed in connection with the Offering. |
4. Acquisitions
4. Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | 4. Acquisitions On March 1, 2019 (the “Signing Date”) the Company entered into agreements with Hesperix and Opko to acquire the XCART technology. The Company entered into a Share Purchase Agreement, as amended (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, pursuant to which the Company purchased from Sellers all of the issued and outstanding shares of capital stock of Hesperix. Under the terms of the Share Purchase Agreement, the Company issued to Sellers an aggregate of Four Hundred Six Thousand Two Hundred Forty-Six (406,246) shares of the Company’s common stock (the “Transaction Shares”) 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 issued the Transaction Shares pursuant to a registration statement on Form S-4. 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 the 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 with OPKO (the “OPKO Assignment Agreement”), 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 in 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 the 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 issued One Hundred Sixty Four Thousand Sixty Two (164,062) shares of the Company’s common stock to OPKO and Fifty-Four Thousand Six Hundred Eighty Seven (54,687) shares of the Company’s common stock to the Institute 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. On July 19, 2019, the Company closed the Transaction (the “Closing Date”), acquiring in-process research and development (“IPR&D”) related to certain intellectual property rights with respect to the XCART technology. The acquisition did not meet the business combination requirements and, as a result, was accounted for as an asset acquisition. The total consideration for the IPR&D was approximately $4.1 million, which represented the value of the common shares issued of $3.0 million utilizing the market price of the Company’s stock price at the Closing Date and approximately $1.1 million of transaction costs. As there was no future alternative use for the IPR&D, the Company recorded expense of $3.0 million to Research and development expense and $1.1 million to General and administrative expense for the transaction costs in the three and nine months ended September 30, 2019. |
5. Property and Equipment, net
5. Property and Equipment, net | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | 5. Property and Equipment, net Property and equipment, net consists of the following: September 30, December 31, Office and computer equipment $ 42,289 $ 42,289 Leasehold improvements – 26,841 Furniture and fixtures 14,738 20,263 Property and equipment – at cost 57,027 89,393 Less accumulated depreciation (55,437 ) (84,437 ) Property and equipment – net $ 1,590 $ 4,956 Depreciation expense was approximately $1,000 for the three months ended September 30, 2019 and 2018, respectively, and approximately $3,000 and $13,000 for the nine months ended September 30, 2019 and 2018, respectively. |
6. Goodwill and Indefinite-Live
6. Goodwill and Indefinite-Lived Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Indefinite-Lived Intangible Assets | 6. Goodwill and Indefinite-Lived Intangible Assets 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 and is not amortized. The Company assesses goodwill for impairment at least annually, or when events or changes in the business environment indicate that the carrying value may not be fully recoverable. The Company performs its annual impairment review during the fourth quarter at the reporting unit level. Goodwill may be considered impaired if the carrying value of the reporting unit, including goodwill, exceeds the reporting unit’s fair value. The Company is comprised of one reporting unit. The Company experienced a significant decline in its stock price during the three months ended September 30, 2019 resulting in a drop in its market capitalization indicating potential impairment. The Company determined the fair value of the reporting unit using its market capitalization, concluding that the fair value of the reporting unit is less than the carrying amount in excess of Goodwill, therefore fully impairing Goodwill. Goodwill impairment is presented within continuing operations in the condensed consolidated statements of operations. A reconciliation of the change in the carrying value of Goodwill is as follows: Balance as of January 1, 2018 $ 3,283,379 No changes – Balance as of December 31, 2018 3,283,379 Impairment (3,283,379 ) Balance as of September 30, 2019 $ – 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 the IPR&D was approximately $9.2 million as of September 30, 2019 and December 31, 2018, respectively. IPR&D is required to be tested annually until the project is completed or abandoned. The IPR&D is not yet commercialized and, therefore, has not yet begun to be amortized as of September 30, 2019. The Company assesses IPR&D for impairment at least annually as of October 1 or when events or changes in circumstances indicate that the carrying value may be impaired. No impairment was recorded during the nine months ended September 30, 2019 nor during the year ended December 31, 2018. |
7. Fair Value Measurements
7. Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 7. Fair Value Measurements Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, |
8. Stockholders' Equity
8. Stockholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity The Offering On July 17, 2019, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Maxim Group LLC (the “Underwriter”), relating to the Company’s Offering of 1,730,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”), Prefunded Warrants to purchase 570,000 shares of Common Stock (the “Prefunded Warrants”), and warrants to purchase 2,300,000 shares of the Common Stock (the “Purchase Warrants,” and together with the Shares and the Prefunded Warrants, the "Firm Securities"). Each Share was sold together with one Purchase Warrant at a combined public offering price of $6.50 per Share and Purchase Warrant. Each Pre-funded Warrant purchased was sold together with one Purchase Warrant at a combined public offering price of $6.49 per Prefunded Warrant and Purchase Warrant. The Prefunded Warrants were exercisable beginning on July 17, 2019 at an exercise price of $0.01 per share. 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 4.99% Pursuant to the Underwriting Agreement, the Company also granted the Underwriter a 45-day option to purchase up to an additional 345,000 shares of Common Stock and/or Purchase Warrants to purchase up to 345,000 shares of Common Stock (the "Additional Securities," and together with the Firm Securities, the "Securities"), at the public offering price less discounts and commissions. The Securities were offered, issued, and sold On the Company completed the Offering resulting in gross proceeds to the Company of approximately $15.0 million before deducting the underwriting discount and offering fees and expenses payable by the Company. In addition, on the Closing Date, the Underwriter exercised its overallotment option with respect to 160,000 Purchase Warrants, resulting in additional gross proceeds of $1,600. The Company intends to use the net proceeds from the Offering of approximately $13.4 million to fund its research, development and clinical programs, including the development of the XCART technology acquired in the Transaction, and for other general corporate purposes. Prefunded Warrants to purchase 450,000 shares of Common Stock were exercised during the three and nine months ended September 30, 2019 resulting in $4,500 of net proceeds to the Company. The Purchase Warrants are immediately exercisable at a price of $13.00 per share of Common Stock and expire five years from the date of issuance. The warrants began trading on NASDAQ on July 23, 2019 under the symbol “XBIOW.” The Purchase Warrants also provide that if the weighted-average price of Common Stock on any trading day on or after 30 days after issuance is lower than the then-applicable exercise price per share, each Purchase Warrant may be exercised, at the option of the holder, on a cashless basis for one share of Common Stock. 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 $4.61 per share, for a total of approximately $11.3 million. The fair value of these warrants was estimated using a Black-Scholes model utilizing the following key valuation assumptions: the Company’s stock price, a risk free rate of 1.83%, an expected life of 5 years and an expected volatility of 141.89%. Purchase Warrants to purchase approximately 1.9 million shares of Common Stock were exercised on a cashless one-for-one basis during the three and nine months ended September 30, 2019. Common Stock On July 16, 2019, the Company, in connection with the Offering, entered into a consent agreement with certain holders of warrants to purchase shares of the Company’s Common Stock whose consent was sought in connection with the Offering. In consideration of the holders’ consent, the Company agreed to (i) issue such holders an aggregate of 16,666 shares of the Company’s Common Stock (“Consent Shares”) and (ii) adjust the exercise price of those certain warrants issued to each holder in connection with the Company’s Reverse Stock Split on June 25, 2019. The Consent Shares and incremental cost associated with the warrant modification were determined to be direct costs of the Offering and, as a result, have been included within net proceeds from the Offering. On June 21, 2019, the Company filed a Certificate of Change to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effect the Reverse Stock Split. The Reverse Stock Split was effective at 12:01 a.m., eastern Time, on June 25, 2019. No fractional shares were issued as a result of the Reverse Stock Split and any remaining share fractions were rounded up to the nearest whole share, resulting in 1,442 new shares of Common Stock being issued to existing holders of the Company’s common stock. On June 19, 2019, shareholders of the Company voted to approve an amendment to the Company’s Articles of Incorporation to increase the authorized shares of Common Stock to 150,000,000 shares on a pre-Reverse Stock Split basis (the “Authorized Share Increase”). On June 24, 2019, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of the State of Nevada to effect the Authorized Share Increase as of June 25, 2019. As a result of the Authorized Share Increase and after giving effect to the Reverse Stock Split, the Company had 12,500,000 authorized shares of Common Stock. As a result of the Reverse Stock Split, the number of outstanding shares of our Common Stock held by non-affiliates was approximately 475,000. On June 28, 2019, the Company received a notice from the Nasdaq Capital Market ("NASDAQ") that it no longer met the minimum 500,000 publicly held shares requirement for continued listing. On July 19, 2019, the Company received a notice from NASDAQ that the Company had regained compliance with the publicly held shares requirement as a result of the Offering. 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) 86,667 shares of Common Stock, par value $0.001 per share and (ii) prefunded warrants to purchase 42,417 shares of Common Stock. The prefunded warrants were exercisable beginning on March 7, 2019 at an exercise price of $0.012 per share. The shares were sold at a price of $24.00 per share and the prefunded warrants were sold at a price of $23.988 per prefunded warrant, which represents the per share purchase price for the shares less the $0.012 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 $27.00 per share, were 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 $22.74 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. In June 2019, the prefunded warrants were exercised in full resulting in $509 of net proceeds to the Company. Series B Preferred Stock As of September 30, 2019 and December 31, 2018 there were approximately 1.8 million shares of Series B Preferred Stock issued and outstanding which were convertible on a 1.625 preferred shares to one share of common stock basis. The number of shares of Common Stock that, when aggregated with any shares of Common Stock that may be issued in connection with any conversion of Series B Preferred Stock and the exercise of warrants issued in connection with the Series B Preferred Stock, is subject to an Issuable Maximum, subject to adjustment, as set forth in the Second Amended and Restated Certificate of Designation of the Company’s Series B Preferred Stock. As of September 30, 2019, the Issuable Maximum is 0.6 million shares of Common Stock that can be issued upon the conversion of the currently outstanding Series B Preferred Stock and the exercise of warrants, issued in connection with the Series B Preferred Stock, that are currently outstanding. The March 2019 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 nine months ended September 30, 2019. In addition, the Offering triggered the down-round provision in the Company’s Series B Preferred Stock, resulting in a further adjustment to the conversion ratio and the recording of a deemed dividend of $1.4 million during the third quarter increasing the net loss attributable to common shareholders for the three and nine months ended September 30, 2019. There were no Series B Preferred Stock conversions during the nine months ended September 30, 2019. During the nine months ended September 30, 2018, the holders of Series B Preferred Stock converted approximately 316,000 shares into approximately 26,000 shares of common stock. Warrants On July 17, 2019, in connection with the Offering, the Company offered to the purchasers Prefunded Warrants to purchase 570,000 shares of common stock. The Prefunded Warrants were exercisable beginning on July 17, 2019 at an exercise price of $0.01 per share. The Prefunded Warrants were sold at a price of $6.49 per Prefunded Warrant, which represents the per share purchase price for the shares less the $0.01 per share exercise price for each such Prefunded Warrant. The holders of the Prefunded Warrants did 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 4.99% 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. Prefunded Warrants to purchase 450,000 shares were exercised during the three and nine months ended September 30, 2019 resulting in net proceeds to the Company of $4,500. Also in connection with the Offering, the Company issued to the purchasers the Purchase Warrants. These Purchase Warrants have an exercise price of $13.00 per share, were exercisable beginning on July 17, 2019 and expire five years from such date. The warrants began trading on NASDAQ on July 23, 2019 under the symbol “XBIOW.” The Purchase Warrants also provide that if the weighted-average price of Common Stock on any trading day on or after 30 days after issuance is lower than the then-applicable exercise price per share, each Purchase Warrant may be exercised, at the option of the holder, on a cashless basis for one share of Common Stock. Purchase Warrants to purchase approximately 1.9 million shares of common stock were exercised on a cashless one-for-one basis during the three and nine months ended September 30, 2019. As of September 30, 2019, there were approximately 120,000 Prefunded Warrants and 0.6 million Purchase Warrants outstanding. Subsequent to quarter end, the remaining outstanding Prefunded Warrants were exercised resulting in $1,200 of net proceeds to the Company. On June 24, 2019, the Company entered into a consent agreement with certain holders of warrants to purchase shares of the Company’s common stock whose consent was required to effect the Reverse Stock Split. In consideration of the holders’ consent, the Company agreed to issue the holders warrants (the “Consent Warrants”) to purchase 8,335 shares of the Company’s common stock, at an exercise price per share based on a volume weighted average price for the five trading days following the effectiveness of the Reverse Stock Split. The Consent Warrants were issued on July 3, 2019 at an exercise price of $10.63. The Company evaluated the terms of the Consent Warrants and determined that they should be classified as equity instruments. The grant date fair value of these warrants was estimated to be $7.62 per share, for a total of approximately $64,000. The fair value of the Consent Warrants was estimated using a Black-Scholes model utilizing the following key valuation assumptions: the Company’s stock price, a risk free rate of 1.83%, an expected life of 7 years and an expected volatility of 114.53%. The Company recorded approximately $64,000 as general and administrative expense during the three and nine months ended September 30, 2019. In March 2019, in connection with its registered direct offering, the Company offered to the purchasers prefunded warrants to purchase 42,417 shares of common stock. The prefunded warrants were exercisable beginning on March 7, 2019 at an exercise price of $0.012 per share. The prefunded warrants were sold at a price of $23.988 per prefunded warrant, which represents the per share purchase price for the shares less the $0.012 per share exercise price for each such prefunded warrant. The holders of the prefunded warrants did 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. All of these prefunded warrants were exercised in June 2019 resulting in net proceeds to the Company of $509. 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 (129,084 shares) purchased in the offering. These warrants have an exercise price of $27.00 per share, are exercisable beginning on September 8, 2019 and expire seven years from such date. As of September 30, 2019, all of these warrants were outstanding. In addition to the prefunded and purchase warrants issued in the March 2019 registered direct offering and the Offering, the Company has outstanding warrants to purchase an aggregate of 262,690 shares of common stock in connection with debt and equity financing arrangements as of September 30, 2019 at a weighted average exercise price of $51.97 and expiration dates ranging from July 2020 through November 2021. There were no debt and equity financing warrants granted or exercised during the nine months ended September 30, 2019. During the nine months ended September 30, 2018, debt and equity financing warrants to purchase approximately 31,000 shares of common stock were exercised resulting in approximately $1.5 million of net proceeds to the Company. |
9. Share-Based Expense
9. Share-Based Expense | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Expense | 9. Share-Based Expense Total share-based expense related to stock options, restricted stock units (“RSUs”), common stock awards, and non-financing warrants were approximately $0.2 million and $0.3 million during the three months ended September 30, 2019 and 2018, respectively, and approximately $0.7 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively. Share-based compensation expense is classified in the condensed consolidated statements of operations as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Research and development expenses $ 38,843 $ 9,155 $ 81,921 $ 178,926 General and administrative expenses 208,594 314,323 648,610 996,355 $ 247,437 $ 323,478 $ 730,531 $ 1,175,281 Employee Stock Options During the nine months ended September 30, 2019, the Company granted 50,000 stock option awards. The weighted average grant date fair value per option share was $1.18. Key assumptions used in the Black-Scholes option pricing model for options granted during the nine months ending September 30, 2019 were the Company’s stock price, a risk free rate of 1.60%, an expected life of 5.5 years and an expected volatility of 119.11%. Non-Employee Stock Options The Company did not grant any non-employee stock options during the nine months ended September 30, 2019. During the nine months ended September 30, 2018, the Company granted 834 non-employee stock options. There were no non-employee stock options exercised during the nine months ended September 30, 2019 and 2018, respectively. The Company did not recognize any expense related to non-employee stock options during the three and nine months ended September 30, 2019, respectively, as all options were fully vested in 2018. The Company recognized approximately $1,000 and $36,000 of expense during the three and nine months ended September 30, 2018, respectively. Common Stock Awards During the three months ended September 30, 2019 and 2018, the Company granted 7,153 and 375 common stock awards, respectively, and 9,026 and 1,627 common stock awards during the nine months ended September 30, 2019 and 2018, 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 $15,000 and $17,000 of expense related to common stock awards was recognized during the three month periods ended September 30, 2019 and 2018, respectively, and approximately $47,000 and $52,000 of expense during the nine months ended September 30, 2019 and 2018, respectively. Other than 7,836 shares of Common Stock issued in June 2019, which represented common stock awards authorized but not issued as of March 31, 2019, all common stock awards were authorized but not issued as of September 30, 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 September 30, 2019 and December 31, 2018, collaboration warrants to purchase 44,944 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. These warrants have an average weighted exercise price of $124.90 and expiration dates ranging from December 2019 through May 2021. No collaboration warrants were granted or exercised in connection with collaboration or consulting services during the three and nine months ended September 30, 2019 and 2018, respectively. |
10. Income Taxes
10. Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes During the nine months ended September 30, 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 $26.2 million and $23.5 million as of September 30, 2019 and December 31, 2018, respectively. As of September 30, 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 September 30, 2019 and December 31, 2018, the Company did not record any unrecognized tax positions. |
11. Commitments
11. Commitments | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 11. Commitments Leases The Company determines whether an arrangement is a lease at inception. In January 2019, the Company entered into a sublease and relocated its corporate headquarters from Lexington, Massachusetts to Framingham, Massachusetts. This sublease calls for total future minimum rent payments of approximately $52,000 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 nine months ended September 30, 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: Nine Months Ended September 30, 2019 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 16,629 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 September 30, 2019 Right-of-use assets Prepaid expenses and other $ 26,701 Current lease liabilities Accrued expenses and other current liabilities $ 26,701 Non-current lease liabilities Other liabilities $ – 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 $3,000 and a combined increase in total liabilities of approximately $3,000 in our September 30, 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 September 30, 2019, total minimum lease payments on these leases were approximately $3,000. |
12. Related Party Transactions
12. Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
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 Pharmsynthez (as well as SynBio, a wholly owned subsidiary of Pharmsynthez), each a related party whose relationship 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. In connection with the Offering, Serum Institute’s and Pharmsynthez’ ownership significantly changed. As of September 30, 2019, Serum Institute owned less than 1% and Pharmsynthez owned approximately 7.9% of the total outstanding common stock of the Company. During the third quarter, the Company entered into a sponsored research agreement with Pharmsynthez related to experiments identified by the Company to support its efforts as it prepares for initial tech transfer of the XCART methods to a future academic collaborator. Under the agreement, the Company made a $350,000 payment to Pharmsynthez during the third quarter of 2019, which is refundable on pro rata basis if the project is terminated prematurely as a result of Pharmsynthez failing to perform the work. The Company expensed approximately $40,000 related to this agreement during the three months ended September 30, 2019. As of September 30, 2019, approximately $310,000 was recorded as an advanced payment and included in Prepaid expenses and other on the September 30, 2019 condensed consolidated balance sheet. On July 19, 2019, the Company acquired the XCART technology platform from Hesperix and OPKO. Dr. Genkin is a director and significant shareholder of Hesperix. In addition, the Company agreed to repay an approximate $225,000 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. Subsequent to quarter end, the Company entered into a loan agreement with Pharmsynthez (the “Pharmsynthez Loan”), pursuant to which the Company shall advance Pharmsynthez an aggregate principal amount of up to $500,000 to be used for the development of a specific product under the August 2011 Stock Subscription and Collaborative Development of Pharmaceutical Products Agreement between the Company and SynBio. The Pharmsynthez Loan has a term of 15-months and shall accrue interest at a rate of 10% per annum. The Pharmsynthez Loan is guaranteed by SynBio and AS Kevelt, which are the operating entities of Pharmsynthez, and is secured by all of the equity interests of the Company owned by Pharmsynthez and SynBio. |
13. Subsequent Events
13. Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
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 other than as discussed above. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Preparation of Interim 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 and 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. As a result, 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. On June 25, 2019, the Company effected a reduction, on a 1 for 12 basis, in its authorized common stock, par value $0.001, along with a corresponding and proportional decrease in the number of shares issued and outstanding (the “Reverse Stock Split”). On the effective date of the Reverse Stock Split, (i) every 12 shares of common stock were reduced to one share of common stock, with any fractional amounts rounded up to one share; (ii) the number of shares of common stock into which each outstanding warrant, restricted stock unit, or option to purchase common stock were proportionately reduced on the same basis as the common stock; (iii) the exercise price of each outstanding warrant or option to purchase common stock were proportionately increased on a 1 for 12 basis; and (iv) the number of shares of common stock into which each share of preferred stock could be converted were proportionately reduced on the same basis as the common stock. Unless otherwise indicated, all of the share numbers, share prices, and exercise prices have been adjusted, on a retroactive basis, to reflect this Reverse Stock Split. Certain prior period amounts have been reclassified to conform to the presentation for the current period. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements of the Company include the accounts of Hesperix and Xenetic UK and Xenetic UK’s wholly owned subsidiaries: Lipoxen, Xenetic Bioscience, Incorporated, and SymbioTec. All intercompany balances and transactions have been eliminated in consolidation. |
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 each period, except where such non-participating securities would be anti-dilutive. For the three and nine months ended September 30, 2019 and 2018, basic and diluted net loss per share are the same for each respective period 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 | 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) |
5. Property and Equipment, net
5. Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following: September 30, December 31, Office and computer equipment $ 42,289 $ 42,289 Leasehold improvements – 26,841 Furniture and fixtures 14,738 20,263 Property and equipment – at cost 57,027 89,393 Less accumulated depreciation (55,437 ) (84,437 ) Property and equipment – net $ 1,590 $ 4,956 |
6. Goodwill and Indefinite-Li_2
6. Goodwill and Indefinite-Lived Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Reconciliation of change in carrying value of goodwill | A reconciliation of the change in the carrying value of goodwill is as follows: Balance as of January 1, 2018 $ 3,283,379 No changes – Balance as of December 31, 2018 3,283,379 Impairment (3,283,379 ) Balance as of September 30, 2019 $ – |
9. Share-Based Expense (Tables)
9. Share-Based Expense (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-based expense | Share-based compensation expense is classified in the condensed consolidated statements of operations as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Research and development expenses $ 38,843 $ 9,155 $ 81,921 $ 178,926 General and administrative expenses 208,594 314,323 648,610 996,355 $ 247,437 $ 323,478 $ 730,531 $ 1,175,281 |
11. Commitments (Tables)
11. Commitments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Supplemental cash flow information | Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Nine Months Ended September 30, 2019 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 16,629 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ 43,330 |
Supplemental balance sheet information | Supplemental balance sheet information related to our operating leases is as follows: Balance Sheet Classification September 30, 2019 Right-of-use assets Prepaid expenses and other $ 26,701 Current lease liabilities Accrued expenses and other current liabilities $ 26,701 Non-current lease liabilities Other liabilities $ – |
1. The Company (Details Narrati
1. The Company (Details Narrative) - USD ($) | 2 Months Ended | 7 Months Ended | 9 Months Ended | |
Mar. 07, 2019 | Jul. 19, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Proceeds from stock offering | $ 13,421,950 | $ 0 | ||
Proceeds from stock offering | $ 2,699,050 | $ 0 | ||
Public Offering [Member] | ||||
Proceeds from stock offering | $ 2,700,000 | |||
Direct Offering [Member] | ||||
Proceeds from stock offering | $ 13,400,000 |
4. Acquisitions (Details Narrat
4. Acquisitions (Details Narrative) - USD ($) | 3 Months Ended | 7 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jul. 19, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Research and development expense | $ 3,520,638 | $ 735,879 | $ 4,471,939 | $ 2,369,219 | |
General and administrative expense | $ 2,142,505 | $ 1,079,008 | 3,896,657 | $ 3,267,597 | |
XCART Technology [Member] | |||||
Payment for intellectual property | $ 4,100,000 | ||||
Research and development expense | 3,000,000 | ||||
General and administrative expense | $ 1,100,000 | ||||
Hesperix [Member] | |||||
Stock issued for acquisition, shares | 406,246 | ||||
OPKO Assignment Agreement [Member] | |||||
Stock issued for acquisition, shares | 164,062 | ||||
Institute [Member] | |||||
Stock issued for acquisition, shares | 54,687 |
5. Property and Equipment, ne_2
5. Property and Equipment, net (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property and equipment - at cost | $ 57,027 | $ 89,393 |
Less accumulated depreciation | (55,437) | (84,437) |
Property and equipment - net | 1,590 | 4,956 |
Office and Computer Equipment [Member] | ||
Property and equipment - at cost | 42,289 | 42,289 |
Leasehold Improvements [Member] | ||
Property and equipment - at cost | 0 | 26,841 |
Furniture and Fixtures [Member] | ||
Property and equipment - at cost | $ 14,738 | $ 20,263 |
5. Property and Equipment, ne_3
5. Property and Equipment, net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 1,000 | $ 3,366 | $ 12,540 |
6. Goodwill and Indefinite-Li_3
6. Goodwill and Indefinite-Lived Intangible Assets (Details - Change in carrying value of goodwill) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill, beginning balance | $ 3,283,379 | $ 3,283,379 | $ 3,283,379 |
Goodwill increase (decrease) for the period | 0 | 0 | |
Impairment | (3,283,379) | $ 0 | |
Goodwill, ending balance | $ 0 | $ 3,283,379 |
6. Goodwill and Indefinite-Li_4
6. Goodwill and Indefinite-Lived Intangible Assets (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Indefinite-lived intangible assets | $ 9,243,128 | $ 9,243,128 |
OncoHist [Member] | ||
Indefinite-lived intangible assets | 9,243,128 | $ 9,243,128 |
Impaiment of intangible assets | $ 0 |
7. Fair Value Measurements (Det
7. Fair Value Measurements (Details Narrative) | Sep. 30, 2019USD ($) |
Fair Value, Inputs, Level 3 [Member] | |
Derivative instruments | $ 0 |
8. Stockholders' Equity (Detail
8. Stockholders' Equity (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | 6 Months Ended | 7 Months Ended | 9 Months Ended | ||||||
Mar. 05, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Jun. 24, 2019 | Jul. 17, 2019 | Jul. 16, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 28, 2019 | Dec. 31, 2018 | |
Reverse stock split | On June 25, 2019, the company effected a reverse stock split on a 1-for-12 basis | ||||||||||
Reverse stock split, shares | 1,442 | ||||||||||
Net proceeds from issuance of common stock and warrants in public offering | $ 13,421,950 | $ 0 | |||||||||
Net proceeds from issuance of common stock and warrants in registered direct offering | $ 2,699,050 | 0 | |||||||||
Stock outstanding | 5,633,490 | 5,633,490 | 783,865 | ||||||||
Proceeds from warrants exercised | $ 5,009 | 1,480,000 | |||||||||
Deemed dividend related to Series B Preferred Stock down round provision, value | $ 1,404,932 | 5,284,379 | |||||||||
General and administrative expense | $ 2,142,505 | $ 1,079,008 | $ 3,896,657 | $ 3,267,597 | |||||||
Warrants [Member] | Debt and Equity Financing [Member] | |||||||||||
Warrants exercised, shares | 31,000 | ||||||||||
Proceeds from warrants exercised | $ 1,500,000 | ||||||||||
Warrants outstanding | 262,690 | 262,690 | |||||||||
Non-Affiliates [Member] | |||||||||||
Stock outstanding | 475,000 | ||||||||||
Prefunded Warrants [Member] | |||||||||||
Proceeds from warrants exercised | $ 4,500 | $ 4,500 | |||||||||
Series B Preferred Stock [Member] | |||||||||||
Deemed dividend related to Series B Preferred Stock down round provision, value | $ 3,900,000 | ||||||||||
Stock converted, shares converted | 0 | 316,000 | |||||||||
Stock converted, shares issued | 26,000 | ||||||||||
Deemed dividend | $ 3,900,000 | 1,400,000 | $ 1,400,000 | ||||||||
Underwriting Agreement [Member] | |||||||||||
Gross proceeds form the sale of stock and warrants | $ 15,000,000 | ||||||||||
Underwriting Agreement [Member] | Underwriter [Member] | |||||||||||
Warrants exercised, shares | 160,000 | ||||||||||
Proceeds from warrants exercised | $ 1,600 | ||||||||||
Underwriting Agreement [Member] | Consent Shares [Member] | |||||||||||
Stock issued new, shares | 16,666 | ||||||||||
Warrants issued | 8,335 | ||||||||||
General and administrative expense | $ 64,000 | 64,000 | |||||||||
Fair value adjustment of warrants | $ 2,000 | ||||||||||
Underwriting Agreement [Member] | Common Stock [Member] | |||||||||||
Stock issued new, shares | 1,730,000 | ||||||||||
Underwriting Agreement [Member] | Prefunded Warrants [Member] | |||||||||||
Stock issued new, shares | 570,000 | ||||||||||
Warrants outstanding | 120,000 | 120,000 | |||||||||
Intrinsic value of warrants | $ 3,100,000 | ||||||||||
Underwriting Agreement [Member] | Purchase Warrants [Member] | |||||||||||
Warrants issued | 2,300,000 | ||||||||||
Warrants exercised, shares | 1,900,000 | ||||||||||
Warrants granted fair value | $ 11,300,000 | ||||||||||
Warrants outstanding | 600,000 | 600,000 | |||||||||
Securities Purchase Agreement [Member] | |||||||||||
Net proceeds from issuance of common stock and warrants in registered direct offering | $ 2,700,000 | ||||||||||
Securities Purchase Agreement [Member] | Common Stock [Member] | |||||||||||
Stock issued new, shares | 86,667 | ||||||||||
Securities Purchase Agreement [Member] | Prefunded Warrants [Member] | |||||||||||
Warrants issued | 42,417 | ||||||||||
Warrants exercised, shares | 42,417 | ||||||||||
Proceeds from warrants exercised | $ 509 | ||||||||||
Warrants granted fair value | $ 2,900,000 | ||||||||||
Warrants outstanding | 42,417 | 42,417 | |||||||||
Intrinsic value of warrants | $ 1,100,000 |
9. Share-Based Expense (Details
9. Share-Based Expense (Details - Share based compensation) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based expense | $ 247,437 | $ 323,478 | $ 730,531 | $ 1,175,281 |
Research and Development Expenses [Member] | ||||
Share-based expense | 38,843 | 9,155 | 81,921 | 178,926 |
General and Administrative Expenses [Member] | ||||
Share-based expense | $ 208,594 | $ 314,323 | $ 648,610 | $ 996,355 |
9. Share-Based Expense (Detai_2
9. Share-Based Expense (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Share based compensation | $ 247,437 | $ 323,478 | $ 730,531 | $ 1,175,281 | |
Warrant [Member] | Collaboration Agreements [Member] | |||||
Warrants outstanding | 44,944 | 44,944 | 44,944 | ||
Weighted average exercise price | $ 124.90 | $ 124.90 | |||
Warrants issued | 0 | 0 | |||
Warrants exercised | 0 | 0 | |||
Warrants expiration dates | December 2019 through May 2021 | ||||
Employee Stock Options [Member] | |||||
Options granted | 0 | 0 | |||
Options exercised | 0 | 0 | |||
Share based compensation | $ 200,000 | 300,000 | $ 700,000 | $ 1,100,000 | |
Non Employee Stock Options [Member] | |||||
Options granted | 0 | 834 | |||
Options exercised | 0 | 0 | |||
Share based compensation | $ 0 | $ 1,000 | $ 0 | $ 36,000 | |
Common Stock Awards [Member] | |||||
Other than options granted | 7,153 | 375 | 9,026 | 1,627 | |
Share based compensation | $ 15,000 | $ 17,000 | $ 47,000 | $ 52,000 |
10. Income Taxes (Details Narra
10. Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Provision for income taxes | $ 0 | $ 0 | |
Deferred tax assets, valuation allowance | 26,200,000 | $ 23,500,000 | |
Net deferred tax liability | 2,900,000 | 2,900,000 | |
Unrecognized tax positions | $ 0 | $ 0 |
11. Commitments (Details - Supp
11. Commitments (Details - Supplemental Cash Flow Info) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating cash flow information | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 16,629 | |
Non-cash activity: | ||
Right-of-use assets obtained in exchange for lease obligations | $ 43,330 | $ 0 |
11. Commitments (Details - Leas
11. Commitments (Details - Lease liabilities) | Sep. 30, 2019USD ($) |
Other Assets [Member] | |
Right-of-use assets | $ 26,701 |
Accrued Expenses and other current liabilities [Member] | |
Current lease liabilities | 26,701 |
Other Liabilities [Member] | |
Non-current lease liabilities | $ 0 |
11. Commitments (Details Narrat
11. Commitments (Details Narrative) | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum lease payment | $ 3,000 |
Future minimim sublease rent payment | $ 52,000 |
Incremental borrowing rate | (10.20%) |
12. Related Party Transactions
12. Related Party Transactions (Details Narrative) | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Related party expenses | $ 40,000 |
Prepaid Expenses [Member] | |
Advanced payment | $ 310,000 |