Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 06, 2020 | Jun. 28, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
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 | $ 5,342,529 | ||
Entity Common Stock, Shares Outstanding | 6,284,915 | ||
Current Reporting Status | Yes | ||
Well known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Entity Small Business | true | ||
Entity Emerging Growth | false | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity Incorporation State Country Code | NV | ||
Entity File Number | 001-37937 | ||
Security 12g Title | Common Stock, $0.001 par value per share |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 10,367,920 | $ 571,605 |
Restricted cash | 0 | 66,510 |
Prepaid expenses and other | 722,079 | 555,856 |
Total current assets | 11,089,999 | 1,193,971 |
Property and equipment, net | 757 | 4,956 |
Goodwill | 0 | 3,283,379 |
Indefinite-lived intangible assets | 9,243,128 | 9,243,128 |
Other assets | 1,213,042 | 705,660 |
Total assets | 21,546,926 | 14,431,094 |
Current liabilities: | ||
Accounts payable | 931,128 | 934,147 |
Accrued expenses and other current liabilities | 484,029 | 665,641 |
Total current liabilities | 1,415,157 | 1,599,788 |
Deferred tax liability | 2,918,518 | 2,918,518 |
Total liabilities | 4,333,675 | 4,518,306 |
Commitments and contingent liabilities (Note 13) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 12,500,000 shares authorized as of December 31, 2019 and December 31, 2018; 6,092,432 and 810,856 shares issued as of December 31, 2019 and December 31, 2018, respectively; 6,065,441 and 783,865 shares outstanding as of December 31, 2019 and December 31, 2018, respectively | 6,092 | 811 |
Additional paid in capital | 188,240,451 | 168,170,244 |
Accumulated deficit | (166,008,620) | (153,233,595) |
Accumulated other comprehensive income | 253,734 | 253,734 |
Treasury stock | (5,281,180) | (5,281,180) |
Total stockholders' equity | 17,213,251 | 9,912,788 |
Total liabilities and stockholders' equity | 21,546,926 | 14,431,094 |
Preferred Class A [Member] | ||
Stockholders' equity: | ||
Preferred stock, 10,000,000 shares authorized; Series B, $0.001 par value: 1,804,394 shares issued and outstanding as of December 31, 2019 and December 31, 2018; Series A, $0.001 par value: 970,000 shares issued and outstanding as of December 31, 2019 and December 31, 2018 | 970 | 970 |
Preferred Class B [Member] | ||
Stockholders' equity: | ||
Preferred stock, 10,000,000 shares authorized; Series B, $0.001 par value: 1,804,394 shares issued and outstanding as of December 31, 2019 and December 31, 2018; Series A, $0.001 par value: 970,000 shares issued and outstanding as of December 31, 2019 and December 31, 2018 | $ 1,804 | $ 1,804 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 12,500,000 | 12,500,000 |
Common stock, shares issued | 6,092,432 | 810,856 |
Common stock, shares outstanding | 6,065,441 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Class A [Member] | ||
Preferred stock, par value | $ 0.001 | $ .001 |
Preferred stock shares issued | 970,000 | 970,000 |
Preferred stock, shares outstanding | 970,000 | 970,000 |
Preferred Class 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 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | ||
Total revenues | $ 17,066 | $ 0 |
Operating costs and expenses: | ||
Research and development | (4,889,340) | (2,883,952) |
General and administrative | (4,731,176) | (4,392,375) |
Goodwill impairment (Note 6) | (3,283,379) | 0 |
Total operating costs and expenses | (12,903,895) | (7,276,327) |
Loss from operations | (12,886,829) | (7,276,327) |
Other income (expense): | ||
Other income (expense) | 3,315 | (24,640) |
Interest income, net | 108,489 | 509 |
Total other income (expense) | 111,804 | (24,131) |
Net loss | (12,775,025) | (7,300,458) |
Deemed dividend | (5,284,379) | 0 |
Net loss applicable to common stockholders | $ (18,059,404) | $ (7,300,458) |
Basic and diluted loss per share | $ (6.33) | $ (9.66) |
Weighted-average shares of common stock outstanding, basic and diluted | 2,852,464 | 756,015 |
Royalty [Member] | ||
Revenue | ||
Total revenues | $ 17,066 | $ 0 |
Consolidated Statements Of Stoc
Consolidated Statements Of Stockholders' Equity (Unaudited) - 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, 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 | ||||
Issuance of common stock to vendor, value | 69,708 | 69,708 | |||||
Share-based expense | 1,362,079 | 1,362,079 | |||||
Net loss | (7,300,458) | (7,300,458) | |||||
Ending balance, shares at Dec. 31, 2018 | 2,774,394 | 810,856 | |||||
Ending balance, value at Dec. 31, 2018 | $ 2,774 | $ 811 | 168,170,244 | (153,233,595) | 253,734 | (5,281,180) | 9,912,788 |
Common stock and warrants issued new, shares | 1,833,333 | ||||||
Common stock and warrants issued new, value | $ 1,834 | 16,119,166 | 16,121,000 | ||||
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 | 612,417 | ||||||
Exercise of pre-funded warrant, value | $ 612 | 5,597 | 6,209 | ||||
Exercise of purchase warrants, shares | 2,201,553 | ||||||
Exercise of purchase warrants, value | $ 2,202 | (2,202) | |||||
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, 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 | 806,090 | 806,090 | |||||
Common stock awards to vendors | 47,427 | 47,427 | |||||
Net loss | (12,775,025) | (12,775,025) | |||||
Ending balance, shares at Dec. 31, 2019 | 2,774,394 | 6,092,432 | |||||
Ending balance, value at Dec. 31, 2019 | $ 2,774 | $ 6,092 | $ 188,240,451 | $ (166,008,620) | $ 253,734 | $ (5,281,180) | $ 17,213,251 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (12,775,025) | $ (7,300,458) |
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 | 4,199 | 15,827 |
Amortization of right of use asset | 23,288 | 0 |
Gain on sale of property and equipment | (2,000) | (15,437) |
Share-based expense | 806,090 | 1,362,079 |
Vendor share-based payments | 47,427 | 69,708 |
Issuance of warrants in connection with reverse stock split | 63,536 | 0 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (653,563) | (251,798) |
Accounts payable, accrued expenses and other liabilities | (227,961) | (343,878) |
Net cash used in operating activities | (6,399,404) | (6,463,957) |
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 | 6,209 | 1,480,000 |
Net cash provided by financing activities | 16,127,209 | 1,480,000 |
Net change in cash and restricted cash | 9,729,805 | (4,961,457) |
Cash and restricted cash at beginning of period | 638,115 | 5,599,572 |
Cash and restricted cash at end of period | 10,367,920 | 638,115 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 8 | 599 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Right of use assets obtained in exchange for lease obligations | 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 | 2,202 | 0 |
Conversion of Series B preferred stock to common stock | $ 0 | $ 316 |
1. The Company
1. The Company | 12 Months Ended |
Dec. 31, 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 advancing XCART ™ Acquisitions Additionally, Xenetic is leveraging its proprietary drug delivery platform, PolyXen ® 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”), owns various United States (“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 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 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 through mid-2021. However, the Company anticipates it may need additional capital in the long-term to pursue its business initiatives. 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. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Preparation of Financial Statements 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. 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-to-12 basis; and (iv) the number of shares of Common Stock into which each share of Preferred Stock were proportionately reduced on the same basis as the Common Stock. All of the share numbers, share prices, and exercise prices have been adjusted, on a retroactive basis, to reflect this 1-for-12 reverse stock split. Certain prior period amounts have been reclassified to conform to the presentation for the current period. Principles of Consolidation The consolidated financial statements of the Company include the accounts of Hesperix, Xenetic UK and Xenetic UK’s 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 The functional currency for the Company’s Switzerland-based subsidiary is the U.S. dollar. The functional currency of the Company’s UK-based 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 8, Fair Value Measurements Cash 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 restricted cash represented a certificate of deposit that secured 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 terminated in May 2019. The following table provides a reconciliation of cash and restricted cash reported in the consolidated balance sheets to the total of the amounts in the consolidated statement of cash flows: December 31, December 31, Cash $ 10,367,920 $ 571,605 Restricted cash – 66,510 Total cash and restricted cash in the statement of cash flows $ 10,367,920 $ 638,115 Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk include cash. The Company maintains cash with various major financial institutions that management believes are of high credit quality. 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. At acquisition, we generally determine the fair value of intangible assets, including IPR&D, using the “income method.” IPR&D intangible assets are considered indefinite-lived intangible assets and are not amortized 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. IPR&D is not amortized but is reviewed 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. The impairment loss, if any, is measured as the excess of the carrying value of the intangible asset over its fair value. During 2019 and 2018, we used the quantitative method and determined that the fair value of the indefinite-lived intangible assets exceeded its carrying value as October 1, 2019 and 2018. Intangible assets are highly vulnerable to impairment charges, particularly newly acquired assets for IPR&D. Considering the high risk nature of research and development and the industry’s success rate of bringing developmental compounds to market, IPR&D impairment charges are likely to occur in future periods. Estimating the fair value of IPR&D for potential impairment is highly sensitive to changes in projections and assumptions and changes to assumptions could potentially lead to impairment. The Company’s estimates and assumptions are reasonable and otherwise consistent with assumptions market participants would use in their estimates of fair value. However, if future results are not consistent with the Company’s estimates and assumptions, then we may be exposed to an impairment charge, which could be material. Use of different estimates and judgments could yield materially different results in our analysis and could result in materially different asset values or expense. 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 historically had performed its annual impairment review as of October 1 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 determined that Goodwill was impaired during the year ended December 31, 2019. See Note 6 Goodwill, Indefinite-Lived Intangible Assets and Other Long-term 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, 2019 and 2018. 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 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). 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 fulfill 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. 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 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, 2019 and 2018, the Company has recorded accrued program expense of approximately $0.1 million and $0.2 million, respectively, as a component of accrued expenses. In addition, the Company has recorded approximately $0.7 million of deposits held with our clinical trial vendors as a component of prepaid expenses and other current assets as of December 31, 2019 and 2018. 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 historical volatility of the Company. To the extent Company data is not available for the full expected term of the awards the Company uses a weighted-average of the historical volatility of the Company and of a peer group of comparable publicly traded 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. 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 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 10, 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, 2019 and 2018, there were approximately 27,000 JSOP awards issued. For the years ended December 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. As of December 31, 2019 and 2018, approximately 516,000 and 65,000 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. Leases The Company leases administrative facilities under operating leases. Lease agreements may include rent holidays, rent escalation clauses and tenant improvement allowances. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) Commitments and Contingent Liabilities 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 November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction between Topic 808 and Topic 606 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
3. Significant Strategic Drug D
3. Significant Strategic Drug Development Collaborations - Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Significant Strategic Drug Development Collaborations - Related Parties | |
Significant Strategic Drug Development Collaborations - Related Parties | 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 active 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. 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. In November 2019 the Company was notified by Takeda that net sales of the Covered Products by the sublicensee commenced during the third quarter of 2019 and, as a result, royalty payments were expected to be paid to the Company under the Sublicense Agreement. The Company’s policy is 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. As the reported sales were not reliably measurable until the Company received notification from Takeda, the Company recognized $17,000 in royalty revenue during the fourth quarter of 2019. There were no remaining performance obligations and all other revenue recognition criteria were met. SynBio LLC In August 2011, SynBio LLC (“SynBio”), a wholly-owned subsidiary of Pharmsynthez, and the Company entered into a stock subscription and collaborative development agreement (the “Co-Development Agreement”). The Company granted an exclusive license to SynBio to develop, market and commercialize certain drug candidates utilizing molecules based on SynBio’s technology and the Company’s proprietary technologies (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, 2019, 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, 2019 and 2018. 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, 2019, 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, 2019 and 2018. Serum Institute had a share ownership of approximately 0.9% and 6.7% of the total issued Common Stock of the Company as of December 31, 2019 and 2018, respectively. In addition to its’ Common Stock ownership, Serum Institute holds outstanding warrants to purchase the Company’s Common Stock. See Note 10, 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 product 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 former controlling stockholder of the Company with a share ownership of approximately 7.4% and 57.1% of the total outstanding Common Stock of the Company as of December 31, 2019 and 2018, 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 outstanding Series B Preferred Stock, and all of the Company’s outstanding Series A Preferred Stock through its wholly-owned subsidiary, SynBio, as of December 31, 2019 and 2018. See Note 10, Stockholders’ Equity |
4. Acquisitions
4. Acquisitions | 12 Months Ended |
Dec. 31, 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 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 year ended December 31, 2019. |
5. Property and Equipment, net
5. Property and Equipment, net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | 5. Property and Equipment, net Property and equipment, net consists of the following: December 31, 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 (56,270 ) (84,437 ) Property and equipment, net $ 757 $ 4,956 Depreciation expense was approximately $4,000 and $16,000 for the years ended December 31, 2019 and 2018, respectively. During the year ended December 31, 2019, the Company sold certain furniture and fixtures for $2,000 resulting in an approximate $2,000 gain. During the year ended December 31, 2018, the Company sold certain laboratory equipment for $22,500 resulting in an approximate $15,000 gain. |
6. Goodwill, Indefinite-Lived I
6. Goodwill, Indefinite-Lived Intangible Assets and Other Long-Term Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Indefinite-Lived Intangible Assets | 6. Goodwill, Indefinite-Lived Intangible Assets and Other Long-Term Assets Goodwill The Company experienced a significant decline in the market price of its stock during 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 was less than the carrying amount in excess of Goodwill. As a result, the Company recorded a $3.3 million impairment charge during the year ended December 31, 2019, which is presented within operating costs and expenses in the consolidated statements of comprehensive loss. 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 December 31, 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 December 31, 2019 and 2018. No impairment was recorded during the years ended December 31, 2019 and 2018. The IPR&D is not yet commercialized and, therefore, has not yet begun to be amortized as of December 31, 2019. Other Long-Term Assets The Company entered into an agreement with Serum Institute for the prepayment of clinical PSA supply in exchange for Company Common Stock. As of December 31, 2019 and 2018, the Company has classified $0.7 million of prepaid clinical supply as long-term as it does not anticipate utilizing the majority of the PSA supply within the next 12 months. No clinical supply was utilized during the years ended December 31, 2019 and 2018. In October 2019, the Company entered into a Loan Agreement with Pharmsynthez (the “Pharmsynthez Loan”), pursuant to which the Company advanced Pharmsynthez an aggregate principal amount of up to $500,000 to be used for the development of a specific product under the Co-Development Agreement. The Pharmsynthez Loan has a term of 15-months and accrues interest at a rate of 10% per annum. The Pharmsynthez Loan is guaranteed by all of the operating subsidiaries of Pharmsynthez, including SynBio and AS Kevelt, and is secured by all of the equity interests of the Company owned by Pharmsynthez and SynBio. The Company recognized approximately $9,000 of interest income related to this loan during the twelve-months ended December 31, 2019. |
7. Accrued Expenses
7. Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 7. Accrued Expenses Accrued expenses consist of the following: December 31, December 31, Accrued payroll and benefits $ 68,016 $ 53,541 Accrued professional fees 306,413 394,075 Accrued research costs 80,519 205,067 Other 9,039 11,346 $ 463,987 $ 664,029 |
8. Fair Value Measurements
8. Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 8. Fair Value Measurements ASC Topic 820, Fair Value Measurement, |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. 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, 2019 2018 Domestic (U.S.) $ (4,317,585 ) $ (3,824,673 ) Foreign (U.K.) (2,302,131 ) (3,379,268 ) Foreign (Germany) (3,389,473 ) (96,517 ) Foreign (Switzerland) (2,765,836 ) – Loss before income taxes $ (12,775,025 ) $ (7,300,458 ) 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, 2019 2018 Federal $ (2,682,755 ) $ (1,533,096 ) State (284,724 ) (238,952 ) Increase in tax losses not recognized 1,878,033 1,695,482 Permanent differences, net 1,323 40,015 Goodwill impairment 689,510 – Foreign rate differential 381,190 124,294 Share-based payments, net 11,084 20,441 Enhanced research and development tax credits (54,148 ) (108,184 ) Other items 60,487 – 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, 2019 2018 Deferred tax assets: U.K. net operating loss carryforwards $ 8,984,851 $ 8,039,343 U.K. capital loss carryforwards 1,340,302 1,298,303 U.S. federal net operating loss carryforwards 3,857,973 3,184,691 Switzerland net operating loss carryforwards 23,510 – IPR&D 6,454,240 6,108,078 Share-based payments 2,065,735 1,859,357 Enhanced research and development tax credits 1,219,815 1,109,026 Germany net operating loss carryforwards 545,852 524,093 U.S. state net operating loss carryforwards 1,160,983 1,298,745 Transaction costs 142,013 – Accrued expenses 72,503 59,979 Depreciation 5,070 3,283 Lease liability 5,475 – Total deferred tax assets before valuation allowance 25,878,322 23,484,898 Valuation allowance for deferred tax assets (25,872,847 ) (23,484,898 ) Net deferred tax assets 5,475 – Deferred tax liabilities: Indefinite-lived intangible asset (2,918,518 ) (2,918,518 ) Right of use asset – leases (5,475 ) – Total deferred tax liabilities (2,923,993 ) (2,918,518 ) Net deferred liability $ (2,918,518 ) $ (2,918,518 ) For the years ended December 31, 2019 and 2018, the Company had U.K. net operating loss carryforwards of approximately $52.9 million and $47.3 million, respectively, U.S. federal net operating loss carryforwards of approximately $18.4 million and $16.5 million, respectively, U.S. state net operating loss carryforwards of approximately $18.4 million and $16.2 million, respectively, Germany net operating loss carryforwards of approximately $1.7 million and $1.7 million, respectively, and Switzerland net operating loss carryforwards of approximately $0.3 million and $0 million, respectively. The U.K. and Germany net operating loss carryforwards can be carried forward indefinitely. $5.0 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. The Company’s ability to use its operating loss carryforwards and tax credits generated in Germany and Switzerland are also subject to restrictions under German and Swiss 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, 2019 and 2018, 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 2014 through 2019 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, 2019. 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, 2019, 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. |
10. Stockholders' Equity
10. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 10. 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 Prefunded 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 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% 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. All of the Prefunded Warrants were exercised during the year ended December 31, 2019 resulting in $5,700 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 Purchase 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 2.2 million shares of Common Stock were exercised on a cashless one-for-one basis during the year ended December 31, 2019. 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. 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 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. 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. During the year ended December 31, 2019, all of the prefunded warrants were exercised resulting in $509 of net proceeds to the Company. The holders of Series B Preferred Stock converted approximately 316,000 shares into approximately 26,000 shares of Common Stock during the year ended December 31, 2018. There were no conversions during the year ended December 31, 2019. During the year ended December 31, 2018, approximately 31,000 warrants were exercised resulting in the issuance of approximately 31,000 shares of Common Stock. There were no exercises of warrants during the year ended December 31, 2019. 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 Redemption The Series A Preferred Stock has additional terms covering stock dividends and splits, voting rights, fractional shares and fundamental transactions. As of December 31, 2019 and 2018, there were approximately 1.0 million shares of Series A Preferred Stock issued and outstanding which are convertible into approximately 80,834 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 Subsequent Equity Sales The Series B Preferred Stock has additional terms covering stock dividends and splits, voting rights, fractional shares and fundamental transactions. As of December 31, 2019 and 2018, there were approximately 1.8 million shares of Series B Preferred Stock issued and outstanding which are convertible into approximately 0.6 million and 0.3 million shares of Common Stock, respectively. As of December 31, 2019, the issuable maximum is 0.6 million shares of Commons Stock that can be issued upon the conversion of the currently outstanding Series B Preferred Stock and the exercise of outstanding warrants that were issued in connection with the Series B Preferred Stock. The holders of Series B Preferred Stock converted approximately 0.3 million shares into approximately 26,000 shares of Common Stock during the year ended December 31, 2018. There were no Series B Preferred Stock conversions during the year ended December 31, 2019. 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 year ended December 31, 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 an additional deemed dividend of $1.4 million increasing the net loss attributable to common shareholders for the year ended December 31, 2019. 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, 2019 and 2018, warrants to purchase 32,412 and 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. On December 31, 2014, SynBio was granted a warrant to purchase 17,033 new shares of Common Stock at an exercise price of $304.92 per share (“SynBio 2014 Warrant”). The SynBio 2014 Warrant was exercisable in four equal tranches, each with separate non-market, performance-based vesting criteria. The Company used its judgment to assess the probability and timing of SynBio achieving these vesting criteria and estimated that it was not probable that the vesting criteria for any tranche would 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, 2019 and 2018. In connection with the SynBio 2014 Warrant grant, warrants to purchase 809 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, therefore, these warrants were forfeited. As a result, the Company did not recognize expense related to the SynBio Partner Warrants during the years ended December 31, 2019 and 2018. On December 31, 2014, the Company granted Serum Institute a warrant to purchase 8,081 new shares of Common Stock at an exercise price of $95.04 per share, as adjusted (“Serum Institute 2014 Warrant”). The Serum Institute 2014 Warrant was exercisable in two equal tranches, each with separate non-market, performance-based vesting criteria. The Company used its judgment to assess the probability and timing of Serum Institute achieving these vesting criteria. These judgments were reassessed at each reporting period until the measurement date was reached. These warrants expired as of December 31, 2019. In connection with the Serum Institute 2014 Warrant grant, warrants to purchase 410 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. These warrants expired as of December 31, 2019. In 2016, the Company issued 17,677 warrants to purchase shares of Common Stock to Serum Institute with an exercise price of $95.04. The new warrants were fully vested and expensed at the time of grant. The Company recognized warrant expense of approximately $10,000 during the year ended December 31, 2018 related to the Serum Institute 2014 Warrant and Serum Institute Partner Warrants. The Company did not recognize warrant expense during the year ended December 31, 2019. No collaboration or consulting service warrants were exercised or granted during the years ended December 31, 2019 and 2018. These outstanding warrants have an average weighted exercise price of $136.45 and expiration dates ranging from May 2020 through May 2021. Warrants Related to Financing Arrangements 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 represented 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. All of the Prefunded Warrants to purchase 570,000 shares were exercised during the year ended December 31, 2019 resulting in net proceeds to the Company of $5,700. 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 2.2 million shares of Common Stock were exercised on a cashless, one-for-one basis during the year ended December 31, 2019. As of December 31, 2019, there were approximately 258,000 Purchase Warrants outstanding. Subsequent to December 31, 2019, Purchase Warrants to purchase an additional 219,000 shares of Common Stock were exercised on a cashless one-for-one basis. 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 year ended December 31, 2019. The Consent Warrants were subsequently modified to reflect an exercise price of $2.91 price per share in connection with the Offering. As a result of this modification, the Company recognized a $2,000 expense that was netted against the proceeds of the Offering. 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 during the year ended December 31, 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 December 31, 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 debt and equity financing warrants to purchase an aggregate of 262,690 shares of Common Stock in connection with debt and equity financing arrangements as of December 31, 2019 and 2018 at a weighted average exercise price of $51.97 and expiration dates ranging from July 2020 through November 2021. Except for the March 2019 registered direct offering and the Offering, there were no debt and equity financing warrants granted or exercised during the year ended December 31, 2019. During the year ended December 31, 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. |
11. Share-Based Expense
11. Share-Based Expense | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Expense | 11. Share-Based Expense Total share-based expense related to stock options, RSUs, Common Stock awards, and non-financing warrants was approximately $0.9 million and $1.4 million for the years ended December 31, 2019 and 2018, respectively. See Note 10, Stockholders’ Equity Share-based expense is classified in the consolidated statements of comprehensive loss as follows: Year Ended December 31, 2019 2018 Research and development expenses $ 126,933 $ 203,030 General and administrative expenses 726,584 1,228,757 $ 853,517 $ 1,431,787 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 stock options issued in 2019 and 2018 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 and non-employee stock options. For all other 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 and non-employees. The expected life of non-employee options is the contractual life of the option. The expected volatility rates are estimated based on the actual volatility of the Company. To the extent Company data is not available for the full expected term of the awards the Company uses a price volatility based on a blended rate of the Company’s 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. The Company accounts for forfeitures as they occur. Employee Stock Options During the years ended December 31, 2019 and 2018, 525,000 and 8,336 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 $1.24 and $31.51, respectively. No stock options were exercised during the years ended December 31, 2019 and 2018. During the years ended December 31, 2019 and 2018, 27,831 and 43,712 total stock options vested, with total fair values of approximately $1.0 million and $1.6 million, respectively. As of December 31, 2019, there was approximately $0.7 million of unrecognized share-based payments related to employee stock options that are expected to vest. The Company expects to recognize this expense over a weighted-average period of approximately 2.4 years. Key assumptions used in the Black-Scholes option pricing model for options granted to employees during the years ending December 31, 2019 and 2018 are as follows: Year Ended December 31, 2019 2018 Weighted-average expected dividend yield (%) – – Weighted-average expected volatility (%) 156.78 118.03 Weighted-average risk-free interest rate (%) 1.71 2.90 Weighted-average expected life of option (years) 5.88 5.90 Weighted-average exercise price ($) 1.31 36.60 The following is a summary of employee stock option activity for the years ended December 31, 2019 and 2018: Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2018 148,381 $ 47.90 8.53 $ 5,273 Granted 8,336 36.60 Expired (9,245 ) 68.76 Outstanding as of December 31, 2018 147,472 45.95 8.17 $ – Granted 525,000 1.31 Expired (10,413 ) 25.32 Outstanding as of December 31, 2019 662,059 $ 10.88 9.34 $ 66,125 Vested or expected to vest as of December 31, 2019 662,059 $ 10.88 9.34 $ 66,125 Exercisable as of December 31, 2018 96,031 $ 49.34 7.92 $ – Exercisable as of December 31, 2019 123,864 $ 47.69 7.10 $ – A summary of the status of the Company’s non-vested employee stock option shares as of December 31, 2019, and the changes during the year ended December 31, 2019, is as follows: Number of Weighted- Balance as of January 1, 2019 51,439 $ 31.92 Granted 525,000 $ 1.24 Forfeited (10,413 ) $ 14.44 Vested (27,831 ) $ 37.37 Balance as of December 31, 2019 538,195 $ 2.05 Restricted Stock Units There are 4,167 RSUs outstanding as of December 31, 2019 and 2018, respectively. There were no RSU grants for the years ended December 31, 2019 and 2018. The RSUs vest annually over a 3-year period and had a grant date fair value of $25.32. During the years ended December 31, 2019 and 2018, 1,389 RSUs were vested in each year and none expired, respectively. 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. Prior to the adoption of ASU 2018-07, compensation expense related to stock options granted to non-employees was subject to re-measurement at each reporting period until the options vested. Commencing January 1, 2019, compensation expense related to stock options to non-employees is no longer subject to re-measurement. During the years ended December 31, 2019 and 2018, 15,500 and 834 total stock options to purchase shares of Common Stock were granted by the Company to non-employees, respectively. During the year ended December 31, 2018, 834 total stock options vested, with total fair values of approximately $36,000. No non-employee stock options vested during the year ended December 31, 2019. For the years ended December 31, 2019 and 2018, the Company recognized approximately $3,000 and $36,000, 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, 2019 and 2018: Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2018 4,731 $ 90.49 6.31 $ – Granted 834 23.16 Expired (263 ) 219.00 Outstanding as of December 31, 2018 5,302 73.52 5.40 $ – Granted 15,500 1.08 Expired (242 ) 225.72 Outstanding as of December 31, 2019 20,560 $ 17.09 4.74 $ – Vested or expected to vest as of December 31, 2019 20,560 $ 17.09 4.74 $ – Exercisable as of December 31, 2018 5,302 $ 73.52 5.40 $ – Exercisable as of December 31, 2019 5,060 $ 66.15 4.63 $ – A summary of the status of the Company’s non-vested non-employee stock option shares as of December 31, 2019, and the changes during the year ended December 31, 2019 is as follows: Number of Weighted- Balance as of January 1, 2019 – $ – Granted 15,500 $ 0.94 Vested – $ – Balance as of December 31, 2019 15,500 $ 0.94 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, 2019 and 2018 are as follows: Number of shares Balance as of January 1, 2018 5,237 Granted 2,167 Issued – Balance as of December 31, 2018 7,404 Granted 9,026 Issued (7,836 ) Balance as of December 31, 2019 8,594 The Company granted 9,026 and 2,167 shares of Common Stock during the years ended December 31, 2019 and 2018, respectively, in exchange for professional services. As all services were rendered in each respective period, expense related to Common Stock awards of approximately $47,000 and $70,000 was recognized during the years ended December 31, 2019 and 2018, respectively. The balance of the Common Stock awards has not been issued as of December 31, 2019. Joint Share Ownership Plan As of December 31, 2019 and 2018, there were approximately 27,000 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, 2019 and 2018, respectively. |
12. Employee Benefit Plans
12. Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | 12. 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 years ended December 31, 2019 and 2018, respectively. 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, 2019 and 2018, respectively. |
13. Commitments and Contingent
13. Commitments and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | 13. Commitments and Contingent Liabilities 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 called for total future minimum rent payments of approximately $52,000 at inception 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 consolidated balance sheet. The Company recognized a ROU asset and a lease liability of approximately $43,000 during the year ended December 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: Year Ended December 31, 2019 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 23,288 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 December 31, 2019 Right-of-use assets Prepaid expenses and other $ 20,042 Current lease liabilities Accrued expenses and other current liabilities $ 20,042 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 the Company’s consolidated financial statements or the Company’s 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 expired in November 2019. During the fourth quarter of 2019, the Company renewed its Miami office lease for twelve-months to November 2020. As this lease has a term of 12-months at inception, the Company will account for it as an operating lease. As of December 31, 2019, total minimum lease payments on this lease was approximately $19,000. |
14. Related Party Transactions
14. Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 14. 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, ownership, and nature of transactions is disclosed within other sections of these footnotes. During the third quarter of 2019, 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 $155,000 related to this agreement during the year ended December 31, 2019. As of December 31, 2019, approximately $195,000 was recorded as an advanced payment and included in Prepaid expenses and other on the December 31, 2019 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. In October 2019, the Company entered into the Pharmsynthez Loan pursuant to which the Company advanced Pharmsynthez an aggregate principal amount of up to $500,000 to be used for the development of a specific product under the Co-Development Agreement. The Pharmsynthez Loan has a term of 15-months and accrues interest at a rate of 10% per annum. The Pharmsynthez Loan is guaranteed by all of the operating subsidiaries of Pharmsynthez, including SynBio and AS Kevelt, and is secured by all of the equity interests of the Company owned by Pharmsynthez and SynBio. The Company recognized approximately $9,000 of interest income related to this loan during the twelve-months ended December 31, 2019. Please refer to Note 3, Significant Strategic Drug Development Collaborations – Related Parties, Stockholder’s Equity |
15. Subsequent Events
15. Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. 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, other than as disclosed in Note 10, Stockholder’s Eq |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Preparation of Financial Statements | Preparation of Financial Statements 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. 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-to-12 basis; and (iv) the number of shares of Common Stock into which each share of Preferred Stock were proportionately reduced on the same basis as the Common Stock. All of the share numbers, share prices, and exercise prices have been adjusted, on a retroactive basis, to reflect this 1-for-12 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 consolidated financial statements of the Company include the accounts of Hesperix, Xenetic UK and Xenetic UK’s 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 The functional currency for the Company’s Switzerland-based subsidiary is the U.S. dollar. The functional currency of the Company’s UK-based 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 8, Fair Value Measurements |
Cash | Cash 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 restricted cash represented a certificate of deposit that secured 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 terminated in May 2019. The following table provides a reconciliation of cash and restricted cash reported in the consolidated balance sheets to the total of the amounts in the consolidated statement of cash flows: December 31, December 31, Cash $ 10,367,920 $ 571,605 Restricted cash – 66,510 Total cash and restricted cash in the statement of cash flows $ 10,367,920 $ 638,115 |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk include cash. The Company maintains cash with various major financial institutions that management believes are of high credit quality. |
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. At acquisition, we generally determine the fair value of intangible assets, including IPR&D, using the “income method.” IPR&D intangible assets are considered indefinite-lived intangible assets and are not amortized 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. IPR&D is not amortized but is reviewed 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. The impairment loss, if any, is measured as the excess of the carrying value of the intangible asset over its fair value. During 2019 and 2018, we used the quantitative method and determined that the fair value of the indefinite-lived intangible assets exceeded its carrying value as October 1, 2019 and 2018. Intangible assets are highly vulnerable to impairment charges, particularly newly acquired assets for IPR&D. Considering the high risk nature of research and development and the industry’s success rate of bringing developmental compounds to market, IPR&D impairment charges are likely to occur in future periods. Estimating the fair value of IPR&D for potential impairment is highly sensitive to changes in projections and assumptions and changes to assumptions could potentially lead to impairment. The Company’s estimates and assumptions are reasonable and otherwise consistent with assumptions market participants would use in their estimates of fair value. However, if future results are not consistent with the Company’s estimates and assumptions, then we may be exposed to an impairment charge, which could be material. Use of different estimates and judgments could yield materially different results in our analysis and could result in materially different asset values or expense. |
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 historically had performed its annual impairment review as of October 1 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 determined that Goodwill was impaired during the year ended December 31, 2019. See Note 6 Goodwill, Indefinite-Lived Intangible Assets and Other Long-term Assets |
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, 2019 and 2018. 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 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). 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 fulfill 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. 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 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, 2019 and 2018, the Company has recorded accrued program expense of approximately $0.1 million and $0.2 million, respectively, as a component of accrued expenses. In addition, the Company has recorded approximately $0.7 million of deposits held with our clinical trial vendors as a component of prepaid expenses and other current assets as of December 31, 2019 and 2018. |
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 historical volatility of the Company. To the extent Company data is not available for the full expected term of the awards the Company uses a weighted-average of the historical volatility of the Company and of a peer group of comparable publicly traded 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. 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 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 10, 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. 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, 2019 and 2018, there were approximately 27,000 JSOP awards issued. For the years ended December 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. As of December 31, 2019 and 2018, approximately 516,000 and 65,000 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. |
Leases | Leases The Company leases administrative facilities under operating leases. Lease agreements may include rent holidays, rent escalation clauses and tenant improvement allowances. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) Commitments and Contingent Liabilities |
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 | Recent Accounting Standards In November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction between Topic 808 and Topic 606 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Cash reconciliation | December 31, December 31, Cash $ 10,367,920 $ 571,605 Restricted cash – 66,510 Total cash and restricted cash in the statement of cash flows $ 10,367,920 $ 638,115 |
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 |
5. Property and Equipment, net
5. Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | December 31, 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 (56,270 ) (84,437 ) Property and equipment, net $ 757 $ 4,956 |
6. Goodwill and Indefinite-Live
6. Goodwill and Indefinite-Lived Intangible Assets and Other Long-Term Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Reconciliation of Change in Carrying Value of Goodwill | 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 December 31, 2019 $ – |
7. Accrued Expenses (Tables)
7. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | December 31, December 31, Accrued payroll and benefits $ 68,016 $ 53,541 Accrued professional fees 306,413 394,075 Accrued research costs 80,519 205,067 Other 9,039 11,346 $ 463,987 $ 664,029 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of loss before income taxes | Year ended December 31, 2019 2018 Domestic (U.S.) $ (4,317,585 ) $ (3,824,673 ) Foreign (U.K.) (2,302,131 ) (3,379,268 ) Foreign (Germany) (3,389,473 ) (96,517 ) Foreign (Switzerland) (2,765,836 ) – Loss before income taxes $ (12,775,025 ) $ (7,300,458 ) |
Reconciliation of income tax provision (benefit) | Year ended December 31, 2019 2018 Federal $ (2,682,755 ) $ (1,533,096 ) State (284,724 ) (238,952 ) Increase in tax losses not recognized 1,878,033 1,695,482 Permanent differences, net 1,323 40,015 Goodwill impairment 689,510 – Foreign rate differential 381,190 124,294 Share-based payments, net 11,084 20,441 Enhanced research and development tax credits (54,148 ) (108,184 ) Other items 60,487 – Net provision (benefit) for income taxes $ – $ – |
Schedule of deferred tax assets and liabilities | Year ended December 31, 2019 2018 Deferred tax assets: U.K. net operating loss carryforwards $ 8,984,851 $ 8,039,343 U.K. capital loss carryforwards 1,340,302 1,298,303 U.S. federal net operating loss carryforwards 3,857,973 3,184,691 Switzerland net operating loss carryforwards 23,510 – IPR&D 6,454,240 6,108,078 Share-based payments 2,065,735 1,859,357 Enhanced research and development tax credits 1,219,815 1,109,026 Germany net operating loss carryforwards 545,852 524,093 U.S. state net operating loss carryforwards 1,160,983 1,298,745 Transaction costs 142,013 – Accrued expenses 72,503 59,979 Depreciation 5,070 3,283 Lease liability 5,475 – Total deferred tax assets before valuation allowance 25,878,322 23,484,898 Valuation allowance for deferred tax assets (25,872,847 ) (23,484,898 ) Net deferred tax assets 5,475 – Deferred tax liabilities: Indefinite-lived intangible asset (2,918,518 ) (2,918,518 ) Right of use asset – leases (5,475 ) – Total deferred tax liabilities (2,923,993 ) (2,918,518 ) Net deferred liability $ (2,918,518 ) $ (2,918,518 ) |
11. Share-Based Expense (Tables
11. Share-Based Expense (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Share-Based Compensation Expense | Year Ended December 31, 2019 2018 Research and development expenses $ 126,933 $ 203,030 General and administrative expenses 726,584 1,228,757 $ 853,517 $ 1,431,787 |
Common Stock Awards [Member] | |
Common stock awards | Number of shares Balance as of January 1, 2018 5,237 Granted 2,167 Issued – Balance as of December 31, 2018 7,404 Granted 9,026 Issued (7,836 ) Balance as of December 31, 2019 8,594 |
Employee Stock Options [Member] | |
Assumptions used | Year Ended December 31, 2019 2018 Weighted-average expected dividend yield (%) – – Weighted-average expected volatility (%) 156.78 118.03 Weighted-average risk-free interest rate (%) 1.71 2.90 Weighted-average expected life of option (years) 5.88 5.90 Weighted-average exercise price ($) 1.31 36.60 |
Option activity | Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2018 148,381 $ 47.90 8.53 $ 5,273 Granted 8,336 36.60 Expired (9,245 ) 68.76 Outstanding as of December 31, 2018 147,472 45.95 8.17 $ – Granted 525,000 1.31 Expired (10,413 ) 25.32 Outstanding as of December 31, 2019 662,059 $ 10.88 9.34 $ 66,125 Vested or expected to vest as of December 31, 2019 662,059 $ 10.88 9.34 $ 66,125 Exercisable as of December 31, 2018 96,031 $ 49.34 7.92 $ – Exercisable as of December 31, 2019 123,864 $ 47.69 7.10 $ – |
Non-vested option activity | Number of Weighted- Balance as of January 1, 2019 51,439 $ 31.92 Granted 525,000 $ 1.24 Forfeited (10,413 ) $ 14.44 Vested (27,831 ) $ 37.37 Balance as of December 31, 2019 538,195 $ 2.05 |
Non Employee Stock Options [Member] | |
Option activity | Number of Weighted- Weighted- Aggregate Outstanding as of January 1, 2018 4,731 $ 90.49 6.31 $ – Granted 834 23.16 Expired (263 ) 219.00 Outstanding as of December 31, 2018 5,302 73.52 5.40 $ – Granted 15,500 1.08 Expired (242 ) 225.72 Outstanding as of December 31, 2019 20,560 $ 17.09 4.74 $ – Vested or expected to vest as of December 31, 2019 20,560 $ 17.09 4.74 $ – Exercisable as of December 31, 2018 5,302 $ 73.52 5.40 $ – Exercisable as of December 31, 2019 5,060 $ 66.15 4.63 $ – |
Non-vested option activity | Number of Weighted- Balance as of January 1, 2019 – $ – Granted 15,500 $ 0.94 Vested – $ – Balance as of December 31, 2019 15,500 $ 0.94 |
13. Commitments and Contingen_2
13. Commitments and Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Cash flow information regarding leases | Year Ended December 31, 2019 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 23,288 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ 43,330 |
Supplemental information related to operating leases | Leases The Company leases administrative facilities under operating leases. Lease agreements may include rent holidays, rent escalation clauses and tenant improvement allowances. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) Commitments and Contingent Liabilities |
1. The Company (Details Narrati
1. The Company (Details Narrative) - USD ($) | 2 Months Ended | 7 Months Ended |
Mar. 07, 2019 | Jul. 19, 2019 | |
Direct Offering [Member] | ||
Proceeds from stock offering | $ 2,700,000 | $ 13,400,000 |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details - Cash reconcilation) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Cash | $ 10,367,920 | $ 571,605 | |
Restricted cash | 0 | 66,510 | |
Total cash and restricted cash | $ 10,367,920 | $ 638,115 | $ 5,599,572 |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details - Useful Lives) | 12 Months Ended |
Dec. 31, 2019 | |
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_6
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 25, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Basis Of Presentation And Significant Accounting Policies [Line Items] | |||
Reverse stock split | 1-for-12 reverse stock split | ||
Letter of credit | $ 0 | $ 100,000 | |
Letter of credit purpose | Lexington Lease | ||
Impairment of long-lived assets | 0 | $ 0 | |
Accrued expenses and other current liabilities | 484,029 | 665,641 | |
Prepaid expenses and other | $ 722,079 | $ 555,856 | |
Antidilutive shares | 516,000 | 65,000 | |
JSOP [Member] | |||
Basis Of Presentation And Significant Accounting Policies [Line Items] | |||
Awards outstanding | 27,000 | 27,000 | |
Accrued Program Expense [Member] | |||
Basis Of Presentation And Significant Accounting Policies [Line Items] | |||
Accrued expenses and other current liabilities | $ 100,000 | $ 200,000 | |
Deposits held with clinical trial vendors [Member] | |||
Basis Of Presentation And Significant Accounting Policies [Line Items] | |||
Prepaid expenses and other | $ 700,000 | $ 700,000 |
3. Significant Strategic Drug_2
3. Significant Strategic Drug Development Collaborations (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue | $ 17,066 | $ 0 | |
Pharmsynthez [Member] | Series B Preferred Stock [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Common stock outstanding | 1,500,000 | 1,500,000 | |
Serum Institute of India Ltd [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Percent ownership in Xenetic | 0.90% | 0.90% | 6.70% |
Takeda [Member] | Royalty [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue | $ 17,000 | ||
SynBio [Member] | Co-Development Agreement [Member] | Research, development, license and supply agreement [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue | $ 0 | $ 0 | |
Serum Institute of India Ltd [Member] | Royalty [Member] | License and supply agreements [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue | $ 0 | $ 0 | |
Pharmsynthez [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Percent ownership in Xenetic | 7.40% | 7.40% | 57.10% |
4. Acquisitions (Details Narrat
4. Acquisitions (Details Narrative) - USD ($) | 2 Months Ended | 7 Months Ended | 12 Months Ended | |
Mar. 01, 2019 | Jul. 19, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Research and development expense | $ 4,889,340 | $ 2,883,952 | ||
General and administrative expense | 4,731,176 | $ 4,392,375 | ||
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 ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment - at cost | $ 57,027 | $ 89,393 |
Less accumulated depreciation | (56,270) | (84,437) |
Property and equipment, net | 757 | 4,956 |
Office and Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - at cost | 42,289 | 42,289 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - at cost | 0 | 26,841 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - at cost | $ 14,738 | $ 20,263 |
5. Property and Equipment, ne_3
5. Property and Equipment, net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 4,199 | $ 15,827 |
Gain on sale of equipment | 2,000 | 15,437 |
Proceeds from sale of equipment | $ 2,000 | $ 22,500 |
6. Goodwill and Indefinite-Li_2
6. Goodwill and Indefinite-Lived Intangible Assets (Details - Goodwill) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning Balance | $ 3,283,379 | $ 3,283,379 |
Additions | 0 | 0 |
Impairment | (3,283,379) | 0 |
Ending Balance | $ 0 | $ 3,283,379 |
6. Goodwill and Indefinite-Li_3
6. Goodwill and Indefinite-Lived Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2019 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Carrying value of indefinite-lived intangible asset | $ 9,243,128 | $ 9,243,128 | |
Impairment of indefinite-lived intangible asset | 0 | 0 | |
Serum Institute of India Ltd [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Prepaid clinical supply | 700,000 | 700,000 | |
Pharmsynthez Loan [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Note receivable face amount | $ 500,000 | ||
Note receivable interest rate | 10.00% | ||
Interest income | 9,000 | ||
OncoHist [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Carrying value of indefinite-lived intangible asset | 9,200,000 | 9,200,000 | |
Impairment of indefinite-lived intangible asset | $ 0 | $ 0 |
7. Accrued Expenses (Details)
7. Accrued Expenses (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued payroll and benefits | $ 68,016 | $ 53,541 |
Accrued professional fees | 306,413 | 394,075 |
Accrued research costs | 80,519 | 205,067 |
Other | 9,039 | 11,346 |
Total accrued expenses | $ 463,987 | $ 664,029 |
8. Fair Value Measurements (Det
8. Fair Value Measurements (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Inputs Level 3 [Member] | ||
Fair value financial instruments | $ 0 | $ 0 |
9. Income Taxes (Details - Inco
9. Income Taxes (Details - Income by geographic regions) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Loss before income taxes | $ (12,775,025) | $ (7,300,458) |
UNITED STATES [Member] | ||
Loss before income taxes | (4,317,585) | (3,824,673) |
UNITED KINGDOM [Member] | ||
Loss before income taxes | (2,302,131) | (3,379,268) |
GERMANY [Member] | ||
Loss before income taxes | (3,389,473) | (96,517) |
SWITZERLAND [Member] | ||
Loss before income taxes | $ (2,765,836) | $ 0 |
9. Income Taxes (Details - Tax
9. Income Taxes (Details - Tax reconcilation) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Federal | $ (2,682,755) | $ (1,533,096) |
State | (284,724) | (238,952) |
Increase in tax losses not recognized | 1,878,033 | 1,695,482 |
Permanent differences, net | 1,323 | 40,015 |
Goodwill impairment | 689,510 | 0 |
Foreign rate differential | 381,190 | 124,294 |
Share-based payments, net | 11,084 | 20,441 |
Enhanced research and development tax credits | (54,148) | (108,184) |
Other items | 60,487 | 0 |
Net provision (benefit) for income taxes | $ 0 | $ 0 |
9. Income Taxes (Details - Defe
9. Income Taxes (Details - Deferred Tax Assets) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
U.S. federal net operating loss carryforwards | $ 3,857,973 | $ 3,184,691 |
IPR&D | 6,454,240 | 6,108,078 |
Share-based payments | 2,065,735 | 1,859,357 |
Enhanced research and development tax credits | 1,219,815 | 1,109,026 |
U.S. state net operating loss carryforwards | 1,160,983 | 1,298,745 |
Transaction costs | 142,013 | 0 |
Accrued expenses | 72,503 | 59,979 |
Depreciation | 5,070 | 3,283 |
Lease liability | 5,475 | 0 |
Total deferred tax assets before valuation allowance | 25,878,322 | 23,484,898 |
Valuation allowance for deferred tax assets | (25,872,547) | (23,484,898) |
Net deferred tax assets | 5,475 | 0 |
Deferred tax liability: | ||
Indefinite-lived intangible asset | (2,918,518) | (2,918,518) |
Right of use asset - leases | (5,475) | 0 |
Total deferred tax liabilities | (2,923,993) | (2,918,518) |
Net deferred tax assets and liabilities | (2,918,518) | (2,918,518) |
UNITED KINGDOM [Member] | ||
Deferred tax assets: | ||
Foreign net operating loss carryforwards | 8,984,851 | 8,039,343 |
Foreign capital loss carryforwards | 1,340,302 | 1,298,303 |
SWITZERLAND [Member] | ||
Deferred tax assets: | ||
Foreign net operating loss carryforwards | 23,510 | 0 |
GERMANY [Member] | ||
Deferred tax assets: | ||
Foreign net operating loss carryforwards | $ 545,852 | $ 524,093 |
9. Income Taxes (Details Narrat
9. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
UNITED KINGDOM [Member] | ||
Net operating loss carryforwards | $ 52,900,000 | $ 47,300,000 |
UNITED STATES [Member] | ||
Net operating loss carryforwards | $ 18,400,000 | 16,500,000 |
Operating loss expiration dates | Dec. 31, 2032 | |
State [Member] | ||
Net operating loss carryforwards | $ 18,400,000 | 16,200,000 |
Operating loss expiration dates | Dec. 31, 2032 | |
GERMANY [Member] | ||
Net operating loss carryforwards | $ 1,700,000 | 1,700,000 |
SWITZERLAND [Member] | ||
Net operating loss carryforwards | $ 300,000 | $ 0 |
10. Stockholders' Equity (Detai
10. Stockholders' Equity (Details Narrative) - USD ($) | 2 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | ||||
Mar. 05, 2019 | Jul. 03, 2019 | Jun. 25, 2019 | Jul. 17, 2019 | Jul. 16, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 28, 2019 | |
Reverse stock split | 1-for-12 reverse stock split | |||||||
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 | 6,065,441 | |||||||
Proceeds from warrants exercised | $ 6,209 | 1,480,000 | ||||||
Deemed dividend related to Series B Preferred Stock down round provision, value | $ 5,284,379 | $ 0 | ||||||
Preferred stock authorized | 10,000,000 | 10,000,000 | ||||||
Share-based compensation | $ 806,090 | $ 1,362,079 | ||||||
General and administrative expense | $ 4,731,176 | $ 4,392,375 | ||||||
Warrants [Member] | ||||||||
Warrants outstanding | 32,412 | 44,944 | ||||||
Non-Affiliates [Member] | ||||||||
Stock outstanding | 475,000 | |||||||
SynBio [Member] | Warrants [Member] | ||||||||
Share-based compensation | $ 0 | $ 10,000 | ||||||
Series B Preferred Stock [Member] | ||||||||
Stock converted, shares converted | 0 | 316,000 | ||||||
Stock converted, shares issued | 0 | 26,000 | ||||||
Preferred stock authorized | 2,500,000 | |||||||
Preferred stock liquidation preference per share | $ 4 | |||||||
If converted, common stock issuable | 600,000 | 300,000 | ||||||
Series B Preferred Stock [Member] | Down Round Provision [Member] | ||||||||
Deemed dividend related to Series B Preferred Stock down round provision, value | $ 1,400,000 | |||||||
Warrants [Member] | ||||||||
Warrants exercised, shares | 31,000 | |||||||
Common stock issued for exercise of cashless warrant | $ 31,000 | |||||||
Series A Preferred Stock [Member] | ||||||||
Preferred stock authorized | 1,000,000 | |||||||
Preferred stock par value | $ 0.001 | |||||||
Preferred stock liquidation preference per share | $ 4.80 | |||||||
If converted, common stock issuable | 80,834 | |||||||
Consent Warrants [Member] | Certain Holders of Warrants [Member] | ||||||||
Warrants issued | 8,335 | |||||||
Warrant exercise price | $ 10.63 | $ 2.91 | ||||||
Grant date fair value of warrants per share | $ 7.62 | |||||||
Warrants granted fair value | $ 64,000 | |||||||
Fair value adjustment of warrants | $ 2,000 | |||||||
General and administrative expense | $ 64,000 | |||||||
Outstanding debt and equity financing warrants [Member] | ||||||||
Warrants exercised, shares | 0 | 31,000 | ||||||
Proceeds from warrants exercised | $ 1,500,000 | |||||||
Warrants outstanding | 262,690 | 262,690 | ||||||
Warrants weighted average exercise price | $ 51.97 | |||||||
Underwriting Agreement [Member] | ||||||||
Gross proceeds form the sale of stock and warrants | $ 15,000,000 | |||||||
Net proceeds from issuance of common stock and warrants in public offering | $ 13,400,000 | |||||||
Underwriting Agreement [Member] | Shares [Member] | ||||||||
Stock issued new, shares | 1,730,000 | |||||||
Underwriting Agreement [Member] | Prefunded Warrants [Member] | ||||||||
Stock issued new, shares | 570,000 | |||||||
Warrant exercise price | $ 0.01 | |||||||
Proceeds from warrants exercised | $ 5,700 | |||||||
Intrinsic value of warrants | $ 3,100,000 | |||||||
Underwriting Agreement [Member] | Purchase Warrants [Member] | ||||||||
Warrants issued | 2,300,000 | |||||||
Warrant exercise price | $ 13 | |||||||
Warrant term | 5 years | |||||||
Grant date fair value of warrants per share | $ 4.61 | |||||||
Warrants exercised, shares | 2,200,000 | |||||||
Warrants granted fair value | $ 11,300,000 | |||||||
Underwriting Agreement [Member] | Purchase Warrants [Member] | Underwriter [Member] | ||||||||
Warrants exercised, shares | 160,000 | |||||||
Proceeds from warrants exercised | $ 1,600 | |||||||
Underwriting Agreement [Member] | Share and Prefunded Warrant [Member] | ||||||||
Warrant exercise price | $ 6.50 | |||||||
Underwriting Agreement [Member] | Prefunded Warrant and Purchase Warrant [Member] | ||||||||
Warrant exercise price | $ 6.49 | |||||||
Underwriting Agreement [Member] | Additional Securities [Member] | ||||||||
Stock issued new, shares | 345,000 | |||||||
Underwriting Agreement [Member] | Consent Shares [Member] | Certain Holders of Warrants [Member] | ||||||||
Stock issued new, shares | 16,666 | |||||||
Securities Purchase Agreement [Member] | ||||||||
Net proceeds from issuance of common stock and warrants in registered direct offering | $ 2,700,000 | |||||||
Securities Purchase Agreement [Member] | Prefunded Warrants [Member] | ||||||||
Warrants issued | 42,417 | |||||||
Warrant exercise price | $ 0.012 | |||||||
Stock sale price | $ 23.988 | |||||||
Proceeds from warrants exercised | $ 509 | |||||||
Intrinsic value of warrants | $ 1,100,000 | |||||||
Securities Purchase Agreement [Member] | Common Stock [Member] | ||||||||
Stock issued new, shares | 86,667 | |||||||
Stock sale price | $ 24 | |||||||
Private Placement [Member] | Purchasers [Member] | ||||||||
Warrant exercise price | $ 27 | |||||||
Warrant term | 7 years | |||||||
Grant date fair value of warrants per share | $ 22.74 | |||||||
Warrants granted fair value | $ 2,900,000 | |||||||
March 2019 Direct Offering [Member] | Series B Preferred Stock [Member] | ||||||||
Deemed dividend related to Series B Preferred Stock down round provision, value | $ 3,900,000 | |||||||
Direct Offering [Member] | Prefunded Warrants [Member] | ||||||||
Warrants issued | 570,000 | |||||||
Warrant exercise price | $ 0.01 | |||||||
Stock sale price | 6.49 | |||||||
Warrants exercised, shares | 570,000 | |||||||
Proceeds from warrants exercised | $ 5,700 | |||||||
Direct Offering [Member] | Purchase Warrants [Member] | ||||||||
Warrant exercise price | $ 13 | |||||||
Warrant term | 5 years | |||||||
Warrants outstanding | 258,000 | |||||||
Common stock issued for exercise of cashless warrant | $ 2,200,000 |
11. Share-Based Expense (Detail
11. Share-Based Expense (Details - Share based expense) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based compensation | $ 853,517 | $ 1,431,787 |
Research and Development Expense [Member] | ||
Share-based compensation | 126,933 | 203,030 |
General and Administrative Expense [Member] | ||
Share-based compensation | $ 726,584 | $ 1,228,757 |
11. Share-Based Compensation (D
11. Share-Based Compensation (Details - Assumptions Employee) - Employee Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted-average expected dividend yield | 0.00% | 0.00% |
Weighted-average expected volatility | 156.78% | 118.03% |
Weighted-average risk-free interest rate | 1.71% | 2.90% |
Weighted-average expected life of option | 5 years 10 months 17 days | 5 years 10 months 25 days |
Weighted-average exercise price | $ 1.31 | $ 36.60 |
11. Share-Based Compensation _2
11. Share-Based Compensation (Details - Employee option activity) - Employee Stock Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Options outstanding, beginning balance | 147,472 | 148,381 |
Options granted | 525,000 | 8,336 |
Options expired | (10,413) | (9,245) |
Options outstanding, ending balance | 662,059 | 147,472 |
Options vested or expected to vest | 662,059 | |
Options exercisable | 123,864 | 96,031 |
Weighted-average exercise price outstanding, beginning balance | $ 45.95 | $ 47.90 |
Weighted-average exercise price, granted | 1.31 | 36.60 |
Weighted-average exercise price, expired | 25.32 | 68.76 |
Weighted-average exercise price, ending balance | 10.88 | 45.95 |
Weighted-average exercise price, vested or expected to vest | 10.88 | |
Weighted-average exercise price, exercisable | $ 47.69 | $ 49.34 |
Weighted-average remaining life outstanding | 9 years 4 months 2 days | 8 years 2 months 1 day |
Weighted-average remaining life, vested or expected to vest | 9 years 4 months 2 days | |
Weighted-average remaining life, exercisable | 7 years 1 month 6 days | 7 years 11 months 1 day |
Aggregate intrinsic value, outstanding beginning balance | $ 0 | $ 5,273 |
Aggregate intrinsic value, outstanding ending balance | 66,125 | 0 |
Aggregate intrinsic value, vested or expected to vest | 66,125 | |
Aggregate intrinsic value, exercisable | $ 0 | $ 0 |
11. Share-Based Compensation _3
11. Share-Based Compensation (Details - Non-Vested employee Option activity) - Employee Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Non-vested options outstanding, beginning balance | 51,439 | |
Options granted | 525,000 | 8,336 |
Options forfeited | (10,413) | |
Options vested | (27,831) | (43,712) |
Non-vested options outstanding, ending balance | 538,195 | 51,439 |
Non-vested weighted-average grant date fair value per share, beginning balance | $ 31.92 | |
Weighted-average grant date fair value per share, options granted | 1.24 | $ 31.51 |
Weighted-average grant date fair value per share, options forfeited | 14.44 | |
Weighted-average grant date fair value per share, options vested | 37.37 | |
Non-vested weighted-average grant date fair value per share, ending balance | $ 2.05 | $ 31.92 |
11. Share-Based Compensation _4
11. Share-Based Compensation (Details - Non-employee option activity) - Non Employee Stock Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Options outstanding, beginning balance | 5,302 | 4,731 |
Options granted | 15,500 | 834 |
Options expired | (242) | (263) |
Options outstanding, ending balance | 20,560 | 5,302 |
Options vested or expected to vest | 20,560 | |
Options exercisable | 5,060 | 5,302 |
Weighted-average exercise price outstanding, beginning balance | $ 73.52 | $ 90.49 |
Weighted-average exercise price, granted | 1.08 | 23.16 |
Weighted-average exercise price, forfeited/expired | 225.72 | 219 |
Weighted-average exercise price, ending balance | 17.09 | 73.52 |
Weighted-average exercise price, vested or expected to vest | 17.09 | |
Weighted-average exercise price, exercisable | $ 66.15 | $ 73.52 |
Weighted-average remaining life outstanding | 4 years 8 months 26 days | 5 years 4 months 24 days |
Weighted-average remaining life, vested or expected to vest | 4 years 8 months 26 days | 5 years 4 months 24 days |
Weighted-average remaining life, exercisable | 4 years 7 months 17 days | |
Aggregate intrinsic value, outstanding beginning balance | $ 0 | $ 0 |
Aggregate intrinsic value, outstanding ending balance | 0 | 0 |
Aggregate intrinsic value, vested or expected to vest | 0 | 0 |
Aggregate intrinsic value, exercisable | $ 0 | $ 0 |
11. Share-Based Compensation _5
11. Share-Based Compensation (Details - Non-vested non-employee) - Non Employee Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Non-vested options outstanding, beginning balance | 0 | |
Options granted | 15,500 | 834 |
Options vested | 0 | 834 |
Non-vested options outstanding, ending balance | 15,500 | 0 |
Non-vested weighted-average grant date fair value per share, beginning balance | ||
Weighted-average grant date fair value per share, options granted | 0.94 | |
Non-vested weighted-average grant date fair value per share, ending balance | $ 0.94 |
11. Share-Based Compensation _6
11. Share-Based Compensation (Details - Common stock awards) - Common Stock Awards [Member] - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock awards outstanding, beginning balance | 7,404 | 5,237 |
Common stock awards granted | 9,026 | 2,167 |
Common stock awards issued | (7,836) | 0 |
Common stock awards outstanding, ending balance | 8,594 | 7,404 |
11. Share-Based Compensation _7
11. Share-Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based compensation expense | $ 853,517 | $ 1,431,787 | |
Employee Stock Options [Member] | |||
Options granted | 525,000 | 8,336 | |
Weighted average grant date fair value | $ 1.24 | $ 31.51 | |
Options exercised | 0 | 0 | |
Options vested | 27,831 | 43,712 | |
Fair value of options vested | $ 1,000,000 | $ 1,600,000 | |
Unrecognized compensation expense | $ 700,000 | ||
Unrecognized compensation expense recognition period | 2 years 4 months 24 days | ||
Restricted Stock Units (RSUs) [Member] | |||
Other than options granted, shares | 0 | 0 | |
Other than options, shares vested | 1,389 | 1,389 | |
Other than options, shares expired | 0 | 0 | |
Other than options, shares outstanding | 4,167 | 4,167 | |
Non Employee Stock Options [Member] | |||
Share-based compensation expense | $ 3,000 | $ 36,000 | |
Options granted | 15,500 | 834 | |
Weighted average grant date fair value | $ 0.94 | ||
Options exercised | 0 | ||
Options vested | 0 | 834 | |
Fair value of options vested | $ 36,000 | ||
Common Stock Awards [Member] | |||
Share-based compensation expense | $ 47,000 | $ 70,000 | |
Other than options granted, shares | 9,026 | 2,167 | |
Other than options, shares outstanding | 8,594 | 7,404 | 5,237 |
JSOP [Member] | |||
Share-based compensation expense | $ 0 | $ 0 | |
Other than options, shares outstanding | 27,000 | 27,000 |
12. Employee Benefit Plans (Det
12. Employee Benefit Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
401k Plan [Member] | ||
Contribution to defined contribution plan | $ 0 | $ 0 |
UK Plan [Member] | ||
Contribution to defined contribution plan | $ 0 | $ 0 |
13. Commitments and Contingen_3
13. Commitments and Contingent Liabilities (Details - Cash flow Information) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating cash flow information: | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 23,288 | |
Non-cash activity: | ||
Right of use asset acquired in exchange for lease liability | $ 43,330 | $ 0 |
13. Commitments and Contingen_4
13. Commitments and Contingent Liabilities (Details - lease information) | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Right-of-use assets | $ 20,042 |
Current lease liabilities | 20,042 |
Non-current lease liabilities | $ 0 |
13. Commitments and Contingen_5
13. Commitments and Contingent Liabilities (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease termination date | Sep. 30, 2020 |
Lexington Lease [Member] | |
Lease start date | Jan. 1, 2019 |
Lease termination date | Sep. 20, 2020 |
Rent expense | $ 19,000 |
Lease borrowing rate | 10.20% |
Miami, Fl [Member] | |
Lease termination date | Nov. 30, 2020 |
14. Related Party Transactions
14. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Research and development expense | $ 4,889,340 | $ 2,883,952 |
Advanced payment | 722,079 | $ 555,856 |
Pharmsynthez [Member] | Sponsored Research Agreement [Member] | ||
Research and development expense | 155,000 | |
Payment for research agreement | 350,000 | |
Advanced payment | 195,000 | |
Pharmsynthez [Member] | Co-Development Agreement [Member] | ||
Payment for note receivable | $ 500,000 | |
Note receivable interest rate | 10.00% | |
Interest income | $ 9,000 | |
Hesperix [Member] | ||
Loan payable | $ 225,000 |