Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 08, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Matinas BioPharma Holdings, Inc. | |
Entity Central Index Key | 1,582,554 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 94,035,562 | |
Trading Symbol | MTNB | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 4,263,143 | $ 7,306,507 |
Security deposit | 155,457 | 155,431 |
Prepaid expenses | 475,267 | 502,032 |
Total current assets | 4,893,867 | 7,963,970 |
Leasehold Improvements and equipment - net | 1,705,725 | 1,569,858 |
In-process research and development | 3,017,377 | 3,017,377 |
Goodwill | 1,336,488 | 1,336,488 |
Restricted cash - security deposit | 535,999 | 535,999 |
TOTAL ASSETS | 11,489,456 | 14,423,692 |
CURRENT LIABILITIES | ||
Accounts payable | 473,513 | 582,867 |
Note payable | 42,559 | 170,236 |
Accrued expenses | 462,233 | 959,147 |
Deferred revenue | 29,937 | |
Lease liability | 51,698 | 26,975 |
Total current liabilities | 1,030,003 | 1,769,162 |
LONG TERM LIABILITIES | ||
Deferred tax liability | 848,185 | 848,185 |
Deferred rent liability | 472,480 | 455,554 |
Lease liability - net of current portion | 116,035 | 67,683 |
Stock dividends payable - long term | 589,143 | 601,143 |
TOTAL LIABILITIES | 3,055,846 | 3,741,727 |
STOCKHOLDERS' EQUITY | ||
Common stock par value $0.0001 per share, 250,000,000 shares authorized at March 31, 2018 and December 31, 2017, respectively; 93,981,562 issued and outstanding as of March 31, 2018; 93,371,129 issued and outstanding as of December 31, 2017 | 9,396 | 9,335 |
Additional paid in capital | 58,206,054 | 56,230,347 |
Accumulated deficit | (55,384,546) | (51,274,542) |
Total stockholders' equity | 8,433,610 | 10,681,965 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 11,489,456 | 14,423,692 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Series A Convertible preferred stock, stated value $5.00 per share, 1,600,000 shares authorized as of March 31, 2018 and December 31, 2017, respectively; 1,472,858 and 1,502,858 shares outstanding at March 31, 2018 and December 31, 2017, respectively, (liquidation preference - $7,953,433 at March 31, 2018) | $ 5,602,706 | $ 5,716,825 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 93,981,562 | 93,371,129 |
Common stock, shares outstanding | 93,981,562 | 93,371,129 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 5 | $ 5 |
Preferred stock, shares authorized | 1,600,000 | 1,600,000 |
Preferred stock, shares issued | 1,472,858 | 1,502,858 |
Preferred stock, shares outstanding | 1,472,858 | 1,502,858 |
Preferred stock, liquidation preference value | $ 7,953,433 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue: | ||
Contract research revenue | $ 29,937 | $ 14,969 |
Costs and Expenses: | ||
Research and development | 2,192,888 | 2,384,218 |
General and administrative | 1,957,798 | 2,117,975 |
Total costs and expenses | 4,150,686 | 4,502,193 |
Loss from operations | (4,120,749) | (4,487,224) |
Other income/(expense), net | 10,745 | (8,893) |
Net loss | (4,110,004) | (4,496,117) |
Series A convertible preferred stock accumulated dividends | (147,286) | (159,000) |
Inducement charge from exercise of warrants | (16,741,356) | |
Net loss attributable to common shareholders | $ (4,257,290) | $ (21,396,473) |
Net loss available for common shareholders per share - basic and diluted | $ (0.05) | $ (0.25) |
Weighted average common shares outstanding: | ||
Basic and diluted | 93,542,552 | 84,595,597 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flow (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (4,110,004) | $ (4,496,117) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 47,138 | 11,986 |
Deferred rent | 16,926 | 259 |
Share based compensation expense | 1,747,816 | 1,371,734 |
Changes in operating assets and liabilities | ||
Prepaid expenses | 128,598 | (498,612) |
Other assets | 700 | |
Accounts payable | (109,354) | 771,885 |
Accrued expenses - other liabilities | (526,851) | (193,568) |
Net cash used in operating activities | (2,805,731) | (3,031,733) |
Cash flows from investing activities: | ||
Leasehold improvements and equipment | (101,916) | |
Net cash used in investing activities | (101,916) | |
Cash flows from financing activities: | ||
Net proceeds from exercised of warrants | 14,834,344 | |
Payment of capital lease liability | (8,014) | (2,410) |
Payment of note payable | (127,677) | (70,827) |
Net cash provided by/(used in) financing activities | (135,691) | 14,761,107 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (3,043,338) | 11,729,347 |
Cash, cash equivalents and restricted cash at beginning of period | 7,997,937 | 4,797,061 |
Cash, cash equivalents and restricted cash at end of period | 4,954,599 | 16,526,435 |
Supplemental non-cash financing and investing activities: | ||
Conversion of preferred stock | 150,000 | 50,000 |
Stock dividends issued | 12,000 | |
Additional paid-in-capital for modification of warrants | 16,741,356 | |
Equipment Acquired under capital lease | 81,089 | |
Unearned restricted stock grants | $ 173,333 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Nature of Business | NOTE A – Nature of Business Corporate History Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc.), its operating subsidiaries (“Nanotechnologies”, and together with “Holdings” and “BioPharma”, “the Company” or “we” or “our” or “us”). The Company is a development stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products. |
Liquidity, Plan of Operations a
Liquidity, Plan of Operations and Going Concern | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity, Plan of Operations and Going Concern | NOTE B – Liquidity, Plan of Operations and Going Concern The Company has experienced net losses and negative cash flows from operations each period since its inception. Through March 31, 2018, the Company had an accumulated deficit of approximately $55.4 million and cash used in operations of $2.8 million. The Company’s operations have been financed primarily through the sale of equity securities. The Company’s net loss for the quarter ended March 31, 2018 was $4.1. As a result, substantial doubt exists about the company’s ability to continue as a going concern. The Company has been engaged in developing its lipid nano-crystal (“LNC”) platform delivery technology and a pipeline of product candidates since 2011. To date, the Company has not obtained regulatory approval for any of its product candidates nor generated any revenue from products and the Company expects to incur significant expenses to complete development of its product candidates. The Company may never be able to obtain regulatory approval for the marketing of any of its product candidates in any indication in the United States or internationally and there can be no assurance that the Company will generate revenues or ever achieve profitability. Assuming the Company obtains FDA approval for one or more of its product candidates, which the Company does not expect to receive until 2023 at the earliest, the Company expects that its expenses will continue to increase once the Company reaches commercial launch. The Company also expects that its research and development expenses will continue to increase as it moves forward with additional clinical studies for its current product candidates and developing additional product candidates. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing. To continue to fund its operations, on January 13, 2017, the Company completed a warrant tender offer, with gross cash proceeds of $13.5 million and net proceeds of approximately $12.7 million (see Footnote D for additional details). Additionally in April 2017, the Company has entered into a Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co. “Cantor”, which allows the Company, subject to certain limited restrictions and daily sales limits, to sell shares of common stock having an offering price of up to $30 million. Through March 31, 2018, the Company has sold approximately 871,000 shares of common stock pursuant to the Controlled Equity Offering SM Sales Agreement with Cantor raising over $1.1 million. As of March 31, 2018, the Company had cash and cash equivalents of approximately $4.3 million. We believe the cash and cash equivalents on hand are sufficient to fund planned operations into September 2018. The ability of the Company to continue as a going concern is dependent upon control over our operating expenses, anticipated proceeds from future sales of our common stock through the Controlled Equity Offering and securing additional financing. While the Company believes in the viability of this three prong strategy, and believes that the actions presently being taken by the Company provide the opportunity for it to continue as a going concern, there can be no assurance that the Company will be successful in its implementation. In particular, the utilization of the Controlled Equity Offering may not be viable due to market condition and new financing may not be available on acceptable terms, or at all. These consolidated financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE C - Summary of Significant Accounting Policies [1] Basis of Presentation The accompanying unaudited consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma Inc., and Nanotechnologies, the operational subsidiaries of Holdings. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. These interim unaudited financial statements do not include all the information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction with the audited financial statements for the year ended December 31, 2017, which are included in the Form 10-K filed with the SEC on March 16, 2018. In the opinion of management, the interim unaudited financial statements reflect all normal recurring adjustments necessary to fairly state the Company’s financial position and results of operations for the interim periods presented. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for any future interim periods or for the year ending December 31, 2018. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2017. [2] Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the assessment of the impairment of intangible assets and goodwill and the valuation and assumptions of Level 3 fair value measurement of financial instruments and determination of stock-based compensation, contingent consideration and all acquired assets and liabilities. [3] Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid instruments purchased with original maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Cash and cash equivalents include cash on hand, bank demand deposits and overnight sweep accounts used in the Company’s cash management program. Restricted Cash The Company presents restricted cash with cash and cash equivalents in the Consolidated Statements of Cash Flows. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of March 31, 2018, December 31, 2017, March 31, 2017 and December 31, 2016. (Dollars in thousands) March 31, 2018 Dec. 31, 2017 March 31, 2017 Dec. 31, 2016 Cash and cash equivalents $ 4,263 $ 7,307 $ 15,835 $ 4,105 Restricted cash included in current/long term assets 692 691 691 692 Cash, cash equivalents and restricted cash in the statement of cash flows $ 4,955 $ 7,998 $ 16,526 $ 4,797 [4] Concentration of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained principally at two major U.S. financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to regulatory limits. At all times throughout the year ended December 31, 2017, the Company’s cash balances exceeded the FDIC insurance limit. The Company has not experienced any losses in such accounts. [5] Leasehold Improvements and Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the Company equipment ranges from three to ten years. Capitalized costs associated with leasehold improvements are amortized over the lesser of the useful life of the asset or the remaining life of the lease. [6] Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates. The Company adopted the provisions of Accounting Standard Codification 740-10 and has analyzed its filing positions in jurisdictions where it may be obligated to file returns. The Company believes that its income tax filing position and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties as of March 31, 2018. Since the Company incurred net operating losses in every tax year since inception, all income tax returns are subject to examination and adjustments by the IRS for at least three years following the year in which the tax attributes are utilized. [7] Stock-Based Compensation Stock-based compensation to employees consist of stock option grants and restricted shares that are recognized in the consolidated statement of operations based on their fair values at the date of grant. The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award. [8] Fair Value Measurements ASC 820 “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described below: ● Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. ● Level 2 - Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The carrying amounts of cash and cash equivalents, restricted cash, accounts payable, note payable, lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments. [9] Basic Net Loss per Common Share Basic and diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during the period. Net loss available to common shareholders represents our net loss plus Series A Convertible Preferred Stock accumulated dividends. Series A Convertible Preferred Stock accumulated dividends include dividends accumulated for the period (regardless of whether or not the dividends have been declared). For the quarters ended March 31, 2018 and 2017, $147,286 and $159,000 of dividend for the Series A Convertible Preferred Stock are included in the Net loss attributable to common shareholders. Diluted earnings per common share is the same as basic earnings per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants and conversion of preferred stock, would have an anti-dilutive effect. The following schedule details the number of shares issuable upon the exercise of stock options, warrants and conversion of preferred stock, which have been excluded from the diluted loss per share calculation as the inclusion would be anti-dilutive for the three months ended March 31, 2018 and 2017: 2018 2017 Stock options 11,614 10,326 Preferred Stock issuable upon conversion 14,729 15,900 Warrants 5,958 6,373 Total 32,301 32,599 [10] Revenue Recognition The Company currently has a research grant with its customer, the Cystic Fibrosis Foundation (“CFF”). There are no contract assets or liabilities associated with this grant. The contract has a single performance obligation which is the provision of research and development services related to the Company’s Cystic Fibrosis development program (the “Program”). The Company provides CFF with progress reports for each study it performs, summarizing the progress toward achieving the goals of the Program, and is required to submit a final progress report within 30 days after the completion of the Program. Subject to the submission and acceptance of milestone progress reports, the Company may be entitled to an additional payments of $0.2 million in the aggregate. As this contract is currently the Company’s only contract with a customer, disaggregation of revenue is not required. [11] Research and Development Research and development costs are charged to operations as they are incurred. Legal fees and other direct costs incurred in obtaining and protecting patents are also expensed as incurred, due to the uncertainty with respect to future cash flows resulting from the patents and our included as part of general and administrative expenses in our consolidated statements of operations. [12] Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Partnership expects to be entitled to receive in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e., the original effective date). As such, this ASU was effective for us in the first quarter of 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company adopted the guidance in ASU 2014-09 as of January 1, 2018 and applied the modified retrospective approach. The adoption of this standard did not have a material impact on our consolidated financial position or results of operation. In February 2016, the FASB issued ASU No. 2016-02, “Leases”. The new standard will require most leases to be recognized on the balance sheet which will increase reported assets and liabilities. Lessor accounting remains substantially similar to current guidance. The new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2018, which for us is the first quarter of 2019 and mandates a modified retrospective transition method. We do not intend to early adopt, but preliminarily believe that its adoption will not have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, which amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The Company adopted the guidance in the first quarter of 2018. The adoption did not have a material impact on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Instead an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We are required to apply the amendments for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We have evaluated this standard and believe it will not have a material impact on our consolidated financial position or results of operation. In January 2017, the FASB issued ASU 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The Board is issuing the amendments in this update to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The Company adopted the guidance in the first quarter of 2018. The adoption did not have an impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU 2017-09 “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, which provides clarity and reduces both diversity in practice and cost and complexity when applying guidance in Topic 718. This amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments are effective for all entities for annual periods beginning after December 15, 2017. The Company adopted the guidance in the first quarter of 2018. The adoption did not have a material impact on the Company’s consolidated financial statements. In November 2017, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash” which requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. This pronouncement goes into effect for periods beginning after December 15, 2017, for public entities and one year later for all other entities. The Company adopted the guidance in the first quarter of 2018 on a retrospective basis and provided the required disclosure in Note C (3). [13] Goodwill and Other Intangible Assets Goodwill is assessed for impairment at least annually on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. In accordance with the authoritative accounting guidance we have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If we determine this is the case, we are required to perform further analysis to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized, if any. If we determine that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amounts, further analysis is not required. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. Historically, we conducted our business in a single operating segment and reporting unit. In the quarter ended March 31, 2018, we assessed goodwill impairment by performing a qualitative test for our reporting unit. During our qualitative reviews, we considered the Company’s cash position and our ability to obtain additional financing in the near term to meet our operational and strategic goals and substantiate the value of our business. Based on the results of our assessments, it was determined that it is more-likely- than-not that the fair value of the reporting units are greater than their carrying amounts. There was no impairment of goodwill in quarter ended March 31, 2018. We review other intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill. It allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset. The qualitative factors assist in determining whether it is more-likely-than-not (i.e. > 50% chance) that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. Our indefinite-lived intangible assets are IPR&D intangible assets. In all other instances, we used the qualitative test and concluded that it was more-likely-than-not that all other indefinite-lived assets were not impaired and therefore, there were no impairments in the quartersended March 31, 2018 and 2017, respectively. [14] Preferred Stock Dividends Pursuant to the Certificate of Designations, the Series A Preferred Shares earn dividends at a rate of 8.0% once per year on the anniversary of the Initial Closing, payable to the holders of such Series A Preferred Shares in shares of common stock upon conversion. Dividends do not require declaration by the Board of Directors. Dividends are accrued annually as of the date the dividend is earned in an amount equal to the contractual rate of 8% of the stated value. [15] Deferred Rent The Company records rent on a straight line basis. Differences between monthly rent expenses and rent payments are known as deferred rent. Deferred rent is recorded in either an asset account (e.g., other current or noncurrent assets) when the cumulative difference between rent expenses and rent payments as of a balance sheet date is negative or a liability account (e.g., other current or noncurrent liabilities) when the cumulative difference is positive. Due to our escalating rents, the Company is currently recording a deferred rent liability. Deferred rent balances are classified as long-term liabilities in the accompanying consolidated balance sheets based upon the period when reversal of the liability is expected to occur. [16] Business Combination The Company accounts for acquisitions using the acquisition method of accounting which requires the recognition of tangible and identifiable intangible assets acquired and liabilities assumed at their estimated fair values as of the business combination date. The Company allocates any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed to goodwill. Transaction costs are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in the Company’s operating results from the date of acquisition. The Company’s intangible assets are comprised of acquired in-process research and development, or IPR&D. The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. IPR&D is tested for impairment annually or when events or circumstances indicate that the fair value may be below the carrying value of the asset. We perform our IPR&D Impairment testing in the fourth quarter. As of March 31, 2018 no impairment of IPR&D has been identified. If and when research and development is complete, the associated assets would then be amortized over their estimated useful lives. [17] Reclassifications The Company reclassified deferred rent liability from current liabilities to long-term liabilities for all periods presented. |
2017 Warrant Tender Offer
2017 Warrant Tender Offer | 3 Months Ended |
Mar. 31, 2018 | |
Warrant Tender Offer | |
2017 Warrant Tender Offer | NOTE D – 2017 Warrant Tender Offer On January 13, 2017, the Company completed its tender offer to amend and exercise certain categories of existing warrants. Pursuant to the Offer to Amend and Exercise, an aggregate of 30,966,350 Warrants were tendered by their holders and were amended and exercised in connection therewith for an aggregate exercise price of approximately $15.5 million, including the following: 3,750,000 Formation Warrants; 754,000 Merger Warrants; 7,243,750 2013 Investor Warrants; 500,000 Private Placement Warrants; 14,750,831 2015 Investor Warrants; 722,925 $2.00 Placement Agent (PA) Warrants (of which 721,987 were exercised on a cashless basis); 1,426,687 $1.00 PA Warrants (of which 1,424,812 were exercised on a cashless basis); and 1,818,157 $0.75 PA Warrants (of which 1,774,017 were exercised on a cashless basis). The gross cash proceeds from such exercises were approximately $13.5 million and the net cash proceeds after deducting warrant solicitation agent fees and other estimated offering expenses were approximately $12.7 million. Prior to the Offer to Amend and Exercise, the Company had 58,159,495 shares of common stock outstanding and warrants to purchase an aggregate of 40,255,234 shares of common stock. Immediately following the Offer to Amend and Exercise (after the effect of certain cash and cashless exercises), the Company issued in exchange for the warrants 29,666,782 common shares. The Company considers the warrant amendment to be of an equity nature as the amendment allowed the warrant holder to exercise a warrant and receive a common share which represents an equity for equity exchange. Therefore, the change in the fair value before and after the modification of approximately $16.7 million will be treated as a change in additional paid in capital (APIC) as an inducement charge. The cash received upon exercise in excess of par is also accounted through APIC. The Company retained Aegis Capital Corp. (“Aegis Capital”) to act as its Warrant Agent for the Offer to Amend and Exercise pursuant to a Warrant Agent Agreement. Aegis Capital received a fee equal to 5% of the cash exercise prices paid by holders of the warrants (excluding the placement agent warrants) who participated in the Offer to Amend and Exercise. In addition, the Company agreed to reimburse Aegis Capital for its reasonable out-of-pocket expenses and attorney’s fees, including a $35,000 non- accountable expense allowance. |
Leasehold Improvements and Equi
Leasehold Improvements and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Leasehold Improvements and Equipment | NOTE E – Leasehold improvements and equipment Leasehold improvements and equipment, summarized by major category, consist of the following ($ in thousands) for the three months ended March 31, 2018 and year ended December 31, 2017: March 31, 2018 December 31, 2017 Lab equipment $ 625 577 Furniture and fixtures 20 20 Equipment under capital lease 198 117 Leasehold improvements 1,151 1097 Total 1,994 1,811 Less: accumulated depreciation and amortization 288 241 Leasehold improvements and equipment, net $ 1,706 $ 1,570 Depreciation and amortization expense for the three months ended March 31, 2018 and twelve months ended December 31, 2017 was approximately $47,000 and $100,000, respectively. The Company has entered into capital leases for lab equipment. During the three months ended March 31, 2018 and 2017 the Company recognized interest expense of approximately $2,700 and $504, respectively, associated with the lease payments. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE F – Accrued Expenses Accrued Expenses, summarized by major category, consist of the following for the three months ended March 31, 2018 and year ended December 31, 2017: March 31, 2018 December 31, 2017 G&A compensation accrued payroll and incentives $ 253 $ 721 Other accruals 210 238 Total $ 463 $ 959 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE G – Stockholders’ Equity Preferred Stock In accordance with the Certificate of Incorporation, there are 10,000,000 authorized preferred shares at a par value of $ 0.001. In connection with the 2016 Private Placement, on July 26, 2016, the Company filed a Certificate of Designation (the “Certificate of Designations”) with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series A Preferred Shares. Pursuant to the Certificate of Designations, the Company designated 1,600,000 shares of the Company’s previously undesignated preferred stock as Series A Preferred Stock. As of March 31, 2018, the Company had 1,472,858 shares of Series A Preferred Stock outstanding. Conversion: Each Series A Preferred Share is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the number of Series A Preferred Shares to be converted, multiplied by the stated value of $5.00 (the “Stated Value”), divided by the Conversion Price in effect at the time of the conversion (the initial conversion price will be $0.50, subject to adjustment in the event of stock splits, stock dividends, and fundamental transactions). Based on the current conversion price, each share of the Series A Preferred Stock is convertible into ten shares of common stock. A fundamental transaction means: (i) our merger or consolidation with or into another entity, (ii) any sale of all or substantially all of our assets in one transaction or a series of related transactions, or (iii) any reclassification of our Common Stock or any compulsory share exchange by which Common Stock is effectively converted into or exchanged for other securities, cash or property. Each Series A Preferred Share will automatically convert into common stock upon the earlier of (i) notice by the Company to the holders that the Company has elected to convert all outstanding Series A Preferred Shares; provided however that in the event the Company elects to force automatic conversion pursuant to this clause (i), the conversion date for purposes of calculating the accrued Dividend (as defined below) is deemed to be July 29, 2019, which is the third anniversary of the Initial Closing, (ii) three years from the Initial Closing, (iii) the approval of the Company’s MAT2203 product candidate by the U.S. Food and Drug Administration or the European Medicines Agency (the “Regulatory Approval”) or (iv) the Regulatory Approval of the Company’s MAT2501 product candidate. Beneficial Conversion Feature - Series A Preferred Stock (deemed dividend): Each share of Series A Preferred Stock is convertible into shares of common stock, at any time at the option of the holder at a conversion price of $0.50 per share. On July 29, 2016, August 16, 2016, and September 12, 2016, the date of issuances of the Series A, the publicly traded common stock prices were $0.67, $0.70, and $1.00 per share, respectively. Based on the guidance in ASC 470-20-20, the Company determined that a beneficial conversion feature exists, as the effective conversion price for the Series A preferred shares at issuance was less than the fair value of the common stock into which the preferred shares are convertible. A beneficial conversion feature based on the intrinsic value of the date of issuances for the Series A was approximately $4.4 million. The beneficial conversion amount of approximately $4.4 million was then accreted back to the preferred stock as a deemed dividend and charged to accumulated deficit as the conversion rights were 100% effective at the time of issuance in the third quarter of 2016. Liquidity Value and Dividends: Pursuant to the Certificate of Designations, the Series A Preferred Shares accrue dividends at a rate of 8.0% once per year on the anniversary date of the Initial Closing, payable and only payable to the holders of such Series A Preferred Shares in shares of common stock upon conversion. Dividends of approximately $589,000 have been accrued as paid-in-kind through March 31, 2018 and approximately $19,000 has been earned and converted into common stock at the election of the holders. The Series A Preferred Shares vote on an as converted basis with the Company’s common stock. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred Shares are entitled to (i) first receive distributions out of our assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock and (ii) second, on an as-converted basis alongside the common stock. Pursuant to the Certificate of Designations, the liquidation value of a Series A Preferred Share is equal to the stated value of $5.00 per share (as adjusted for stock splits, stock dividends, combinations or other recapitalizations of the Series A Preferred Stock) plus any earned but unpaid dividends. Royalty: The Series A Preferred Shares include the right, as a group, to receive: (i) 4.5% of the net sales of MAT2203 and MAT2501, in each case from and after the date, respectively, such candidate has received FDA or EMA approval, subject in all cases to a respective to a cap of $ 25 million per calendar year, and (ii) 7.5% of the proceeds, if any, received by the Company in connection with the licensing or other disposition by the Company of MAT2203 and/or MAT2501 (“Royalty Payment Rights”), subject in all cases to a cap of $ 10 million per year. The royalty is payable so long as the Company has valid patents covering MAT2203 and MAT2501, as applicable. The Royalty Payment Rights are unsecured obligations of the Company. The royalty payment will be allocated to the holders based on their pro rata ownership of vested Series A Preferred Shares. The royalty rights that are part of the Series A Preferred Shares will vest, in equal thirds, upon each of the July 29, 2017, July 29, 2018, and July 29, 2019, which are the first, second and third anniversary dates of the Initial Closing, (each a “Vesting Date”); provided however, if the Series A Preferred Shares automatically convert into common stock prior to the 36 month anniversary of the initial closing, then the royalty rights that are part of the outstanding Series A Preferred Shares shall be deemed to be fully vested as of the date of conversion. Even if the Series A Preferred Shares are purchased after the initial closing, the vesting periods for the royalty rights that are part of the Series A Preferred Shares shall still be based on the Vesting Dates. During the first 36 months following the initial closing, the right to receive a royalty will follow the Series A Preferred Shares; after July 29, 2019, the royalty payment rights may be transferred separately from the Series A Preferred Stock subject to available exemption from registration under applicable securities laws. The Company believes that such rights are not separable free-standing instruments requiring bifurcation at the date of transaction. The Company may recognize a deemed dividend for the estimated fair value of the vested portion of the royalty rights in future periods. As of March 31, 2018, no accrual has been recorded for royalty payments as it is not probable at this time that any amount will be paid. Classification: These Series A Preferred Shares are classified within permanent equity on the Company’s condensed consolidated balance sheet as they do not meet the criteria that would require presentation outside of permanent equity under ASC 480 Distinguishing Liabilities from Equity Warrants As of March 31, 2018, the Company had outstanding warrants to purchase an aggregate of 5,957,831 shares of common stock at exercise prices ranging from $0.50 to $2.00 per share The Warrants were exercisable immediately upon issuance and have a five-year term. The Warrants may be exercised at any time in whole or in part upon payment of the applicable exercise price until expiration of the Warrants. No fractional shares will be issued upon the exercise of the Warrants. The exercise price and the number of warrant shares purchasable upon the exercise of the Investor Warrants (as opposed to Placement Agent Warrants) are subject to adjustment upon the occurrence of certain events, which include stock dividends, stock splits, combinations and reclassifications of the Company capital stock or similar “organic changes” to the equity structure of the Company (see Warrant table below). Accordingly, pursuant to ASC 815, the warrants are classified as equity. The Company may call the Warrants, other than the Placement Agent Warrants, at any time the common stock trades above $5.00 (for warrants issued in 2013) or above $ 3.00 (for warrants issued in 2015) for twenty (20) consecutive days following the effectiveness of the registration statement covering the resale of the shares of common stock underlying the Warrants, provided that the Warrants can only be called if such registration statement is current and remains effective at the time of the call and provided further that the Company can only call the Investor Warrants for redemption, if it also calls all other Warrants for redemption on the terms described above. The Placement Agent Warrants do not have a redemption feature. The Placement Agent warrants may be exercised on a “cashless” basis. Such term is a contingent feature and within the control of the Company, therefore does not require liability classification. A summary of equity warrants outstanding as of March 31, 2018 is presented below, all of which are fully vested. Shares Total Warrants Outstanding at December 31, 2016 40,255 Warrants tendered on January 13, 2017 (Note E) (30,966 ) Warrants exercised first quarter, 2017 outside of tender offer (2,916 ) Warrants exercised second quarter, 2017 (412 ) Warrants exercised third quarter, 2017 - Warrants exercised fourth quarter, 2017 (3 ) Total Warrants Outstanding at December 31, 2017 5,958 Warrants exercised first quarter, 2018 - Total Warrants Outstanding at March 31, 2018 5,958 * *Weighted average of exercise price for outstanding warrants is $ 0.70 After the effect of certain cash and cashless exercises of warrants, the Company received net cash proceeds of approximately $12.7 million from the warrants tendered on January 13, 2017 and approximately $2.1 million for warrants exercised outside the tender offer, for a total of approximately $14.8 million of proceeds in the first quarter of 2017. No warrants were tendered in the first quarter of 2018. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | NOTE H – Stock Based Compensation In August 2013, the Company adopted the 2013 Equity Compensation Plan (the “Plan”), which provides for the granting of incentive stock options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights. Options under the Plan may be granted at prices not less than 100% of the fair value of the shares on the date of grant as determined by the Board Committee. The Board Committee determines the period over which the options become exercisable subject to certain restrictions as defined in the Plan, with the current outstanding options generally vesting over three years. The term of the options is no longer than ten years. The Company currently has available 4,958,225 shares of common stock for issuance under the plan. With the approval of the Board of Directors and majority Shareholders, effective May 8, 2014, the Plan was amended and restated. The amendment provides for an automatic increase in the number of shares of common stock available for issuance under the Plan each January (with Board approval), commencing January 1, 2015 in an amount up to four percent (4%) of the total number of shares of common stock outstanding on the preceding December 31st. The Company recognized stock-based compensation expense (options, and restricted share grants) in its condensed consolidated statements of operations as follows ($ in thousands): Three Months Ended March 31, 2018 2017 Research and Development $ 573 $ 435 General and Administrative 1,175 937 Total $ 1,748 $ 1,372 Reserved Awards for Awards Available Issuance Issued for Grant 2013 Equity Compensation Plan 17,890 12,932 * 4,958 * includes both stock grants and option grants The following table summarizes the Company’ stock option activity and related information for the period from December 31, 2017 to March 31, 2018 (number of options in thousands): Weighted Number of average Options Exercise Price Outstanding at December 31, 2017 11,396 $ 1.40 Granted 1,150 1.01 Forfeited 417 2.80 Cancelled 515 0.98 Outstanding at March 31, 2018 11,614 $ 1.33 As of March 31, 2018, the number of vested shares underlying outstanding options was 8,431,031 at a weighted average exercise price of $1.17. The aggregate intrinsic value of in the-money options outstanding as of March 31, 2018 was approximately $0.7 million. The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $0.76 on March 31, 2018, and the exercise price of options, multiplied by the number of options. As of March 31, 2018, there was approximately $4.4 million of total unrecognized share-based compensation. Such costs are expected to be recognized over a weighted average period of approximately 1.28 years. All options expire ten years from date of grant. The majority of the options granted to employees vest entirely and evenly over three years. The Company changed its standard vesting terms at the end of 2017 and recent option grants to employees vest over four years with 25% of the shares vesting on the first annual anniversary and the remaining shares vesting in 36 equal monthly installments. A portion of options granted to consultants vests over four years, with the remaining vesting being based upon the achievement of certain performance milestones, which are tied to either financing or drug development initiatives. The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period, with the exception of options granted subject to a consulting agreement, whereby the option vesting period and the service period defined pursuant to the terms of the consulting agreement may be different. Stock options issued to consultants are revalued quarterly until fully vested, with any change in fair value expensed. The following weighted-average assumptions were used to calculate share based compensation for the three months ended March 31, 2018 and 2017: For the Three Months Ended March, 2018 2017 Volatility 105.85% - 107.95 % 75.03% - 82.26 % Risk-free interest rate 2.29%-2.71 % 1.93%-2.22 % Dividend yield 0.0 % 0.0 % Expected life 6.0 years 6.0 years The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The Company uses the “simplified method” described in Staff Accounting Bulletin (SAB) 107 to estimate expected term of share option grants for employees. For non-employee options, the expected term is the contractual term. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company has limited history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available. The risk-free interest rate assumption is based on the U.S treasury instruments whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company share-based compensation. The Company accounts for forfeitures as they occur. |
Prepaid Expenses
Prepaid Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses | NOTE I – PREPAID EXPENSES Prepaid expenses, summarized by major category, consist of the following ($ in thousands) for the three months ended March 31, 2018 and year ended December 31, 2017: March 31, 2018 December 31, 2017 Insurance premium $ 170 $ 296 Non-employee stock compensation 173 71 Vendor services/other 132 135 $ 475 $ 502 |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | NOTE J – COMMITMENTS On November 1, 2013, the Company entered into a 7-year lease for office space in Bedminster, New Jersey which commenced in June, 2014 at a monthly rent of $12,723, increasing to approximately $14,200 per month toward the end of the term. On December 15, 2016, the Company entered into a 10 year, 3-month lease to consolidated our locations while expanding our laboratory and manufacturing facilities. The lease started on August 1, 2017, upon completion of construction. The monthly rent starts at approximately $43,000, increasing to approximately $64,000 in the final year. The Company records rent expense on a straight-line basis. Rent expense for the three months ended March 31, 2018 2017 was approximately $186,000 and $103,000, respectively. Listed below is a summary of future minimum rental payments: Year Ending December 31, Lease Commitments ($ in thousands) Remainder of 2018 $ 513 2019 707 2020 732 2021 657 2022 610 Total future minimum lease payments $ 3,219 The Company was obligated to provide a security deposit of $300,000 to obtain the office lease space. This deposit was reduced by $100,000 in 2016 and 2015 and reduced down to approximately $105,457(including interest) in 2018 ($ 55,457 was collected in April of 2018). The balance of $ 50,000 is accounted for as a long term asset, since it is not recoverable until the end of the lease in 2021. To obtain the laboratory and facility site, the Company was obligated to provide a security deposit of approximately $586,000. This security deposit can be reduced $100,000 on each of the first three anniversaries of the rent commencement date. On the fourth anniversary, it can be reduced another $86,000, with the balance over the remaining life of the lease. As of March 31, 2018, $100,000 of this deposit is classified as a current asset with the balance of the deposit classified as a long term asset. On February 18, 2016 the Company entered into a Cooperative Research and Development Agreement (CRADA) with the National Institute of Allergy and Infectious Diseases to support NIH investigators in the conduct of clinical research to investigate the safety, efficacy, and pharmacokinetics of encochleated drug products in patients with fungal, bacterial, or viral infections at an annual funding of $200,000 per year for 3 years. In August 2017, the Company entered into a Finance Agreement in the amount of $383,030, to fund the premium payments for the Director and Officer Liability policy. The term of this agreement is nine months, ending April 10, 2018. Monthly payments including interest at 2.25% are $42,959. On November 10, 2016 the Company entered into a Cooperative Research and Development Agreement (CRADA) with the National Institute of Allergy and Infectious Diseases to support NIH investigators to acquire technical, statistical and administrative support for research activities as well as to pay for supplies and travel expenses for a total amount of $132,568 paid in 4 equal quarterly installments beginning in the fourth quarter 2016 and each quarter during 2017 and 2018. Through our acquisition of Aquarius, we acquired a license from Rutgers University, The State University of New Jersey (successor in interest to the University of Medicine and Dentistry of New Jersey) for the LNC platform delivery technology. The Amended and Restated Exclusive License Agreement between Aquarius and Rutgers provides for, among other things, (1) royalties on a tiered basis between low single digits and the mid-single digits of net sales of products using such licensed technology, (2) a one-time sales milestone fee of $100,000 when and if sales of products using the licensed technology reach the specified sales threshold and (3) an annual license fee of initially $10,000, increasing to $50,000 over the term of the license agreement. On September 12, 2016 the Company conducted a final closing of a private placement offering to accredited investors shares of the Company’s Series A Preferred Stock. As part of this offer, the investors received royalty payment rights if and when the Company generates sales of MAT2203 or MAT250. Pursuant to the terms of the Certificate of Designations of Preferences, Rights and Limitations (the “Certificate of Designations”) for our outstanding Series A Preferred Stock, we may be required to pay royalties of up to $35 million per year. If and when we obtain FDA or EMA approval of MAT2203 and/or MAT2501, which we do not expect to occur before 2020, if ever, and/or if we generate sales of such products, or we receive any proceeds from the licensing or other disposition of MAT2203 or MAT2501, we are required to pay to the holders of our Series A Preferred Stock, subject to certain vesting requirements, in aggregate, a royalty equal to (i) 4.5% of Net Sales (as defined in the Certificate of Designations), subject in all cases to a cap of $25 million per calendar year, and (ii) 7.5% of Licensing Proceeds (as defined in the Certificate of Designations), subject in all cases to a cap of $10 million per calendar year. The Royalty Payment Rights will expire when the patents covering the applicable product expire, which is currently expected to be in 2033. The Company also has employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control, termination without cause or retirement, occur. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | [1] Basis of Presentation The accompanying unaudited consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma Inc., and Nanotechnologies, the operational subsidiaries of Holdings. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. These interim unaudited financial statements do not include all the information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction with the audited financial statements for the year ended December 31, 2017, which are included in the Form 10-K filed with the SEC on March 16, 2018. In the opinion of management, the interim unaudited financial statements reflect all normal recurring adjustments necessary to fairly state the Company’s financial position and results of operations for the interim periods presented. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for any future interim periods or for the year ending December 31, 2018. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2017. |
Use of Estimates | [2] Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the assessment of the impairment of intangible assets and goodwill and the valuation and assumptions of Level 3 fair value measurement of financial instruments and determination of stock-based compensation, contingent consideration and all acquired assets and liabilities. |
Cash, Cash Equivalents and Restricted Cash | [3] Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid instruments purchased with original maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Cash and cash equivalents include cash on hand, bank demand deposits and overnight sweep accounts used in the Company’s cash management program. Restricted Cash The Company presents restricted cash with cash and cash equivalents in the Consolidated Statements of Cash Flows. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of March 31, 2018, December 31, 2017, March 31, 2017 and December 31, 2016. (Dollars in thousands) March 31, 2018 Dec. 31, 2017 March 31, 2017 Dec. 31, 2016 Cash and cash equivalents $ 4,263 $ 7,307 $ 15,835 $ 4,105 Restricted cash included in current/long term assets 692 691 691 692 Cash, cash equivalents and restricted cash in the statement of cash flows $ 4,955 $ 7,998 $ 16,526 $ 4,797 |
Concentration of Credit Risk | [4] Concentration of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained principally at two major U.S. financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to regulatory limits. At all times throughout the year ended December 31, 2017, the Company’s cash balances exceeded the FDIC insurance limit. The Company has not experienced any losses in such accounts. |
Leasehold Improvements and Equipment | [5] Leasehold Improvements and Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the Company equipment ranges from three to ten years. Capitalized costs associated with leasehold improvements are amortized over the lesser of the useful life of the asset or the remaining life of the lease. |
Income Taxes | [6] Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates. The Company adopted the provisions of Accounting Standard Codification 740-10 and has analyzed its filing positions in jurisdictions where it may be obligated to file returns. The Company believes that its income tax filing position and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties as of March 31, 2018. Since the Company incurred net operating losses in every tax year since inception, all income tax returns are subject to examination and adjustments by the IRS for at least three years following the year in which the tax attributes are utilized. |
Stock-Based Compensation | [7] Stock-Based Compensation Stock-based compensation to employees consist of stock option grants and restricted shares that are recognized in the consolidated statement of operations based on their fair values at the date of grant. The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award. |
Fair Value Measurements | [8] Fair Value Measurements ASC 820 “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described below: ● Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. ● Level 2 - Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The carrying amounts of cash and cash equivalents, restricted cash, accounts payable, note payable, lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments. |
Basic Net Loss Per Common Share | [9] Basic Net Loss per Common Share Basic and diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during the period. Net loss available to common shareholders represents our net loss plus Series A Convertible Preferred Stock accumulated dividends. Series A Convertible Preferred Stock accumulated dividends include dividends accumulated for the period (regardless of whether or not the dividends have been declared). For the quarters ended March 31, 2018 and 2017, $147,286 and $159,000 of dividend for the Series A Convertible Preferred Stock are included in the Net loss attributable to common shareholders. Diluted earnings per common share is the same as basic earnings per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants and conversion of preferred stock, would have an anti-dilutive effect. The following schedule details the number of shares issuable upon the exercise of stock options, warrants and conversion of preferred stock, which have been excluded from the diluted loss per share calculation as the inclusion would be anti-dilutive for the three months ended March 31, 2018 and 2017: 2018 2017 Stock options 11,614 10,326 Preferred Stock issuable upon conversion 14,729 15,900 Warrants 5,958 6,373 Total 32,301 32,599 |
Revenue Recognition | [10] Revenue Recognition The Company currently has a research grant with its customer, the Cystic Fibrosis Foundation (“CFF”). There are no contract assets or liabilities associated with this grant. The contract has a single performance obligation which is the provision of research and development services related to the Company’s Cystic Fibrosis development program (the “Program”). The Company provides CFF with progress reports for each study it performs, summarizing the progress toward achieving the goals of the Program, and is required to submit a final progress report within 30 days after the completion of the Program. Subject to the submission and acceptance of milestone progress reports, the Company may be entitled to an additional payments of $0.2 million in the aggregate. As this contract is currently the Company’s only contract with a customer, disaggregation of revenue is not required. |
Research and Development | [11] Research and Development Research and development costs are charged to operations as they are incurred. Legal fees and other direct costs incurred in obtaining and protecting patents are also expensed as incurred, due to the uncertainty with respect to future cash flows resulting from the patents and our included as part of general and administrative expenses in our consolidated statements of operations. |
Recent Accounting Pronouncements | [12] Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Partnership expects to be entitled to receive in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e., the original effective date). As such, this ASU was effective for us in the first quarter of 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company adopted the guidance in ASU 2014-09 as of January 1, 2018 and applied the modified retrospective approach. The adoption of this standard did not have a material impact on our consolidated financial position or results of operation. In February 2016, the FASB issued ASU No. 2016-02, “Leases”. The new standard will require most leases to be recognized on the balance sheet which will increase reported assets and liabilities. Lessor accounting remains substantially similar to current guidance. The new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2018, which for us is the first quarter of 2019 and mandates a modified retrospective transition method. We do not intend to early adopt, but preliminarily believe that its adoption will not have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, which amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The Company adopted the guidance in the first quarter of 2018. The adoption did not have a material impact on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Instead an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We are required to apply the amendments for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We have evaluated this standard and believe it will not have a material impact on our consolidated financial position or results of operation. In January 2017, the FASB issued ASU 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The Board is issuing the amendments in this update to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The Company adopted the guidance in the first quarter of 2018. The adoption did not have an impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU 2017-09 “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, which provides clarity and reduces both diversity in practice and cost and complexity when applying guidance in Topic 718. This amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments are effective for all entities for annual periods beginning after December 15, 2017. The Company adopted the guidance in the first quarter of 2018. The adoption did not have a material impact on the Company’s consolidated financial statements. In November 2017, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash” which requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. This pronouncement goes into effect for periods beginning after December 15, 2017, for public entities and one year later for all other entities. The Company adopted the guidance in the first quarter of 2018 on a retrospective basis and provided the required disclosure in Note C (3). |
Goodwill and Other Intangible Assets | [13] Goodwill and Other Intangible Assets Goodwill is assessed for impairment at least annually on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. In accordance with the authoritative accounting guidance we have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If we determine this is the case, we are required to perform further analysis to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized, if any. If we determine that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amounts, further analysis is not required. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. Historically, we conducted our business in a single operating segment and reporting unit. In the quarter ended March 31, 2018, we assessed goodwill impairment by performing a qualitative test for our reporting unit. During our qualitative reviews, we considered the Company’s cash position and our ability to obtain additional financing in the near term to meet our operational and strategic goals and substantiate the value of our business. Based on the results of our assessments, it was determined that it is more-likely- than-not that the fair value of the reporting units are greater than their carrying amounts. There was no impairment of goodwill in quarter ended March 31, 2018. We review other intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill. It allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset. The qualitative factors assist in determining whether it is more-likely-than-not (i.e. > 50% chance) that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. Our indefinite-lived intangible assets are IPR&D intangible assets. In all other instances, we used the qualitative test and concluded that it was more-likely-than-not that all other indefinite-lived assets were not impaired and therefore, there were no impairments in the quartersended March 31, 2018 and 2017, respectively. |
Preferred Stock Dividends | [14] Preferred Stock Dividends Pursuant to the Certificate of Designations, the Series A Preferred Shares earn dividends at a rate of 8.0% once per year on the anniversary of the Initial Closing, payable to the holders of such Series A Preferred Shares in shares of common stock upon conversion. Dividends do not require declaration by the Board of Directors. Dividends are accrued annually as of the date the dividend is earned in an amount equal to the contractual rate of 8% of the stated value. |
Deferred Rent | [15] Deferred Rent The Company records rent on a straight line basis. Differences between monthly rent expenses and rent payments are known as deferred rent. Deferred rent is recorded in either an asset account (e.g., other current or noncurrent assets) when the cumulative difference between rent expenses and rent payments as of a balance sheet date is negative or a liability account (e.g., other current or noncurrent liabilities) when the cumulative difference is positive. Due to our escalating rents, the Company is currently recording a deferred rent liability. Deferred rent balances are classified as long-term liabilities in the accompanying consolidated balance sheets based upon the period when reversal of the liability is expected to occur. |
Business Combination | [16] Business Combination The Company accounts for acquisitions using the acquisition method of accounting which requires the recognition of tangible and identifiable intangible assets acquired and liabilities assumed at their estimated fair values as of the business combination date. The Company allocates any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed to goodwill. Transaction costs are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in the Company’s operating results from the date of acquisition. The Company’s intangible assets are comprised of acquired in-process research and development, or IPR&D. The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. IPR&D is tested for impairment annually or when events or circumstances indicate that the fair value may be below the carrying value of the asset. We perform our IPR&D Impairment testing in the fourth quarter. As of March 31, 2018 no impairment of IPR&D has been identified. If and when research and development is complete, the associated assets would then be amortized over their estimated useful lives. |
Reclassifications | [17] Reclassifications The Company reclassified deferred rent liability from current liabilities to long-term liabilities for all periods presented. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of March 31, 2018, December 31, 2017, March 31, 2017 and December 31, 2016. (Dollars in thousands) March 31, 2018 Dec. 31, 2017 March 31, 2017 Dec. 31, 2016 Cash and cash equivalents $ 4,263 $ 7,307 $ 15,835 $ 4,105 Restricted cash included in current/long term assets 692 691 691 692 Cash, cash equivalents and restricted cash in the statement of cash flows $ 4,955 $ 7,998 $ 16,526 $ 4,797 |
Schedule of Antidilutive Securities | The following schedule details the number of shares issuable upon the exercise of stock options, warrants and conversion of preferred stock, which have been excluded from the diluted loss per share calculation as the inclusion would be anti-dilutive for the three months ended March 31, 2018 and 2017: 2018 2017 Stock options 11,614 10,326 Preferred Stock issuable upon conversion 14,729 15,900 Warrants 5,958 6,373 Total 32,301 32,599 |
Leasehold Improvements and Eq18
Leasehold Improvements and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Leasehold Improvements and Equipment | Leasehold improvements and equipment, summarized by major category, consist of the following ($ in thousands) for the three months ended March 31, 2018 and year ended December 31, 2017: March 31, 2018 December 31, 2017 Lab equipment $ 625 577 Furniture and fixtures 20 20 Equipment under capital lease 198 117 Leasehold improvements 1,151 1097 Total 1,994 1,811 Less: accumulated depreciation and amortization 288 241 Leasehold improvements and equipment, net $ 1,706 $ 1,570 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued Expenses, summarized by major category, consist of the following for the three months ended March 31, 2018 and year ended December 31, 2017: March 31, 2018 December 31, 2017 G&A compensation accrued payroll and incentives $ 253 $ 721 Other accruals 210 238 Total $ 463 $ 959 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Summary of Shareholders Equity Warrants Outstanding | A summary of equity warrants outstanding as of March 31, 2018 is presented below, all of which are fully vested. Shares Total Warrants Outstanding at December 31, 2016 40,255 Warrants tendered on January 13, 2017 (Note E) (30,966 ) Warrants exercised first quarter, 2017 outside of tender offer (2,916 ) Warrants exercised second quarter, 2017 (412 ) Warrants exercised third quarter, 2017 - Warrants exercised fourth quarter, 2017 (3 ) Total Warrants Outstanding at December 31, 2017 5,958 Warrants exercised first quarter, 2018 - Total Warrants Outstanding at March 31, 2018 5,958 * *Weighted average of exercise price for outstanding warrants is $ 0.70 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-Based Compensation Expense | The Company recognized stock-based compensation expense (options, and restricted share grants) in its condensed consolidated statements of operations as follows ($ in thousands): Three Months Ended March 31, 2018 2017 Research and Development $ 573 $ 435 General and Administrative 1,175 937 Total $ 1,748 $ 1,372 |
Schedule of Equity Compensation Plan by Arrangements | Reserved Awards for Awards Available Issuance Issued for Grant 2013 Equity Compensation Plan 17,890 12,932 * 4,958 * includes both stock grants and option grants |
Schedule of Stock Option Activity | The following table summarizes the Company’ stock option activity and related information for the period from December 31, 2017 to March 31, 2018 (number of options in thousands): Weighted Number of average Options Exercise Price Outstanding at December 31, 2017 11,396 $ 1.40 Granted 1,150 1.01 Forfeited 417 2.80 Cancelled 515 0.98 Outstanding at March 31, 2018 11,614 $ 1.33 |
Schedule of Share Based Payment Assumptions | The following weighted-average assumptions were used to calculate share based compensation for the three months ended March 31, 2018 and 2017: For the Three Months Ended March, 2018 2017 Volatility 105.85% - 107.95 % 75.03% - 82.26 % Risk-free interest rate 2.29%-2.71 % 1.93%-2.22 % Dividend yield 0.0 % 0.0 % Expected life 6.0 years 6.0 years |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses | Prepaid expenses, summarized by major category, consist of the following ($ in thousands) for the three months ended March 31, 2018 and year ended December 31, 2017: March 31, 2018 December 31, 2017 Insurance premium $ 170 $ 296 Non-employee stock compensation 173 71 Vendor services/other 132 135 $ 475 $ 502 |
Commitments (Tables)
Commitments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments | Listed below is a summary of future minimum rental payments: Year Ending December 31, Lease Commitments ($ in thousands) Remainder of 2018 $ 513 2019 707 2020 732 2021 657 2022 610 Total future minimum lease payments $ 3,219 |
Liquidity, Plan of Operations24
Liquidity, Plan of Operations and Going Concern (Details Narrative) - USD ($) | Jan. 13, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Accumulated deficit | $ 55,384,546 | $ 51,274,542 | |||
Net cash used in operating activities | 2,805,731 | $ 3,031,733 | |||
Net loss | 4,110,004 | 4,496,117 | |||
Proceeds from exercise of warrants | $ 13,500,000 | 14,834,344 | |||
Estimated net proceeds from issuance of warrants | $ 12,700,000 | ||||
Proceeds from issuance initial public offering | $ 30,000,000 | ||||
Number of common stock shares sold | 871,000 | ||||
Number of common stock shares sold value | $ 1,100,000 | ||||
Cash and cash equivalents | $ 4,263,143 | $ 15,834,798 | $ 7,306,507 | $ 4,105,451 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Accrued interest and penalties | |||
Preferred stock accumulated dividends | $ 147,286 | $ 159,000 | |
Payments on revenue recognition milestone method | 200,000 | ||
Goodwill impairment | |||
Series A Convertible Preferred Stock [Member] | |||
Preferred stock accumulated dividends | $ 147,286 | $ 159,000 | |
Series A Preferred Stock [Member] | |||
Preferred stock dividend rate percentage | 8.00% | ||
Preferred stock dividend earned percentage | 8.00% | ||
Maximum [Member] | |||
Property, plant and equipment, useful life | 3 years | ||
Minimum [Member] | |||
Property, plant and equipment, useful life | 10 years |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 4,263,143 | $ 7,306,507 | $ 15,834,798 | $ 4,105,451 |
Restricted cash included in current/long term assets | 692,000 | 691,000 | 691,000 | 692,000 |
Cash, cash equivalents and restricted cash in the statement of cash flows | $ 4,954,599 | $ 7,997,937 | $ 16,526,435 | $ 4,797,061 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 32,301,000 | 32,599,000 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 11,614,000 | 10,326,000 |
Preferred Stock Issuable Upon Conversion [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 14,729,000 | 15,900,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 5,958,000 | 6,373,000 |
2017 Warrant Tender Offer (Deta
2017 Warrant Tender Offer (Details Narrative) - USD ($) | Jan. 13, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of warrants issued | 30,966,350 | |||||
Warrant outstanding | $ 15,500,000 | |||||
Proceeds from warrant exercises | 13,500,000 | $ 14,834,344 | ||||
Proceeds from issuance of warrants | $ 12,700,000 | |||||
Common stock, shares, outstanding | 93,981,562 | 93,371,129 | ||||
Additional paid in capital, warrant issued | $ 16,700,000 | |||||
Fee on warrant exercise, percentage | 5.00% | |||||
Non- accountable expenses | $ 35,000 | |||||
Warrants [Member] | ||||||
Number of warrants issued | 5,957,831 | |||||
Number of warrant outstanding | 5,958,000 | [1] | 5,958,000 | 40,255,000 | ||
Conversion of stock, shares converted | 29,666,782 | |||||
Common Stock [Member] | ||||||
Number of warrants issued | 40,255,234 | |||||
Common stock, shares, outstanding | 58,159,495 | |||||
Formation Warrants [Member] | ||||||
Number of warrant outstanding | 3,750,000 | |||||
Merger Warrants [Member] | ||||||
Number of warrant outstanding | 754,000 | |||||
2013 Investor Warrants [Member] | ||||||
Number of warrant outstanding | 7,243,750 | |||||
Private Placement Warrants [Member] | ||||||
Number of warrant outstanding | 500,000 | |||||
2015 Investor Warrants [Member] | ||||||
Number of warrant outstanding | 14,750,831 | |||||
Placement Agent [Member] | ||||||
Number of warrant outstanding | 722,925 | |||||
Warrant exercise price per share | $ 2 | |||||
Cashless exercises of warrants | 721,987 | |||||
Placement Agent One [Member] | ||||||
Number of warrant outstanding | 1,426,687 | |||||
Warrant exercise price per share | $ 1 | |||||
Cashless exercises of warrants | 1,424,812 | |||||
Placement Agent Two [Member] | ||||||
Number of warrant outstanding | 1,818,157 | |||||
Warrant exercise price per share | $ 0.75 | |||||
Cashless exercises of warrants | 1,774,017 | |||||
[1] | Weighted average of exercise price for outstanding warrants is $ 0.70 |
Leasehold Improvements and Eq29
Leasehold Improvements and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 47,000 | $ 100,000 | |
Interest expense | $ 2,700 | $ 504 |
Leasehold Improvements and Eq30
Leasehold Improvements and Equipment - Schedule of Leasehold Improvements and Equipment (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Equipment, gross | $ 1,994,000 | $ 1,811,000 |
Less: accumulated depreciation and amortization | 288,000 | 241,000 |
Leasehold improvements and equipment, net | 1,705,725 | 1,569,858 |
Lab Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Equipment, gross | 625,000 | 577,000 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Equipment, gross | 20,000 | 20,000 |
Equipment under Capital Lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Equipment, gross | 198,000 | 117,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Equipment, gross | $ 1,151,000 | $ 1,097,000 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
G&A compensation accrued payroll and incentives | $ 253 | $ 721 |
Other accruals | 210 | 238 |
Total | $ 463 | $ 959 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Jan. 13, 2017 | Sep. 12, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Aug. 16, 2016 | Jul. 29, 2016 |
Number of warrant to purchase of common stock | 30,966,350 | ||||||
Estimated net proceeds from issuance of warrants | $ 12,700,000 | ||||||
Proceeds from exercise of warrants | $ 13,500,000 | $ 14,834,344 | |||||
Warrants [Member] | |||||||
Number of warrant to purchase of common stock | 5,957,831 | ||||||
Warrants exercised in first quarter | (2,916,000) | ||||||
Series A Preferred Stock [Member] | |||||||
Preferred stock shares designated | 1,600,000 | ||||||
Preferred stock, shares outstanding | 1,472,858 | ||||||
Preferred stock conversion basis | Series A Preferred Shares to be converted, multiplied by the stated value of $5.00 (the Stated Value), divided by the Conversion Price in effect at the time of the conversion (the initial conversion price will be $0.50, subject to adjustment in the event of stock splits, stock dividends, and fundamental transactions). | ||||||
Conversion price per share | $ 0.50 | ||||||
Sale of stock price per share | $ 1 | $ 0.70 | $ 0.67 | ||||
Intrinsic value | $ 4,400,000 | ||||||
Beneficial conversion feature amount | $ 4,400,000 | ||||||
Beneficial conversion feature percentage | 100.00% | ||||||
Dividend rate | 8.00% | ||||||
Dividends | $ 589,000 | ||||||
Paid in kind dividend | $ 19,000 | ||||||
Liquidation value of preferred share value | $ 5 | ||||||
Royalty percentage | 7.50% | 7.50% | |||||
Proceeds from royalty | $ 10,000,000 | $ 10,000,000 | |||||
Series A Preferred Stock [Member] | Sales Revenue, Net [Member] | |||||||
Royalty percentage | 4.50% | 4.50% | |||||
Proceeds from royalty | $ 25,000,000 | $ 25,000,000 | |||||
Preferred Stock [Member] | |||||||
Preferred stock shares authorized | 10,000,000 | ||||||
Preferred stock par value | $ 0.001 | ||||||
Warrants [Member] | Minimum [Member] | |||||||
Class of warrant or right, exercise price of warrants or rights | 0.50 | ||||||
Warrants [Member] | Maximum [Member] | |||||||
Class of warrant or right, exercise price of warrants or rights | $ 2 | ||||||
Warrants [Member] | |||||||
Warrant term | 5 years | ||||||
Issuance of warrants description | The Company may call the Warrants, other than the Placement Agent Warrants, at any time the common stock trades above $5.00 (for warrants issued in 2013) or above $ 3.00 (for warrants issued in 2015) for twenty (20) consecutive days | ||||||
Warrants exercised in first quarter | 2,100,000 | ||||||
Proceeds from exercise of warrants | $ 14,800,000 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Shareholders Equity Warrants Outstanding (Details) - Warrants [Member] - shares shares in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | ||
Stock Holders Equity [Line Items] | |||
Total Warrants Outstanding, beginning | 5,958 | 40,255 | |
Warrants tendered on January 13, 2017 | (30,966) | ||
Warrants exercised first quarter | (2,916) | ||
Warrants exercised second quarter, 2017 | (412) | ||
Warrants exercised third quarter, 2017 | |||
Warrants exercised fourth quarter, 2017 | (3) | ||
Total Warrants Outstanding, ending | 5,958 | [1] | 5,958 |
[1] | Weighted average of exercise price for outstanding warrants is $ 0.70 |
Stockholders' Equity - Summar34
Stockholders' Equity - Summary of Shareholders Equity Warrants Outstanding (Details) (Parenthetical) | Mar. 31, 2018$ / shares |
Equity [Abstract] | |
Weighted average of exercise price | $ 0.70 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | May 08, 2014 | Aug. 31, 2013 | Mar. 31, 2018 |
Share-based payment award increase of shares offering date | January 1, 2015 | ||
Share-based payment award, percentage of outstanding stock maximum | 4.00% | ||
Employee [Member] | |||
Option vested period | 4 years | ||
Stock option shares vesting percentage | 25.00% | ||
Stock Options [Member] | |||
Option vested period | 3 years | ||
Number of option vested | 8,431,031 | ||
Option vested price per share | $ 1.17 | ||
Option intrinsic value | $ 700,000 | ||
Option intrinsic value price per share | $ 0.76 | ||
Unrecognized share-based compensation | $ 4,400,000 | ||
Share-based compensation weighted average period | 1 year 3 months 11 days | ||
Stock options expire term | 10 years | ||
2013 Equity Compensation Plan [Member] | |||
Option granted description | Granted at prices not less than 100% of the fair value | ||
Option vested period | 3 years | ||
Option term | The term of the options is no longer than ten years. | ||
Number of common stock issued under plan | 4,958,225 |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 1,748 | $ 1,372 |
Research and Development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 573 | 435 |
General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 1,175 | $ 937 |
Stock Based Compensation - Sc37
Stock Based Compensation - Schedule of Equity Compensation Plan by Arrangements (Details) - 2013 Equity Compensation Plan [Member] shares in Thousands | 3 Months Ended | |
Mar. 31, 2018shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Reserved for Issuance | 17,890 | |
Awards Issued | 12,932 | [1] |
Awards Available for Grant | 4,958 | |
[1] | includes both stock grants and option grants |
Stock Based Compensation - Sc38
Stock Based Compensation - Schedule of Stock Option Activity (Details) - Stock Options [Member] | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options, Outstanding at Beginning | shares | 11,396,000 |
Number of Options, Granted | shares | 1,150,000 |
Number of Options, Forfeited | shares | 417,000 |
Number of Options, Cancelled | shares | 515,000 |
Number of Options, Outstanding at Ending | shares | 11,614,000 |
Weighted average Exercise Price, Outstanding at Beginning | $ / shares | $ 1.40 |
Weighted average Exercise Price, Granted | $ / shares | 1.01 |
Weighted average Exercise Price, Forfeited | $ / shares | 2.80 |
Weighted average Exercise Price, Cancelled | $ / shares | 0.98 |
Weighted average Exercise Price, Outstanding at Ending | $ / shares | $ 1.33 |
Stock Based Compensation - Sc39
Stock Based Compensation - Schedule of Share Based Payment Assumptions (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Expected life | 6 years | 6 years |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility | 105.85% | 75.03% |
Risk-free interest rate | 2.29% | 1.93% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility | 107.95% | 82.26% |
Risk-free interest rate | 2.71% | 2.22% |
Prepaid Expenses - Schedule of
Prepaid Expenses - Schedule of Prepaid Expenses (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Prepaid expenses | $ 475,267 | $ 502,032 |
Insurance Premium [Member] | ||
Prepaid expenses | 170,000 | 296,000 |
Non-employee Stock Compensation [Member] | ||
Prepaid expenses | 173,000 | 71,000 |
Vendor Services/Other [Member] | ||
Prepaid expenses | $ 132,000 | $ 135,000 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | Dec. 15, 2016 | Nov. 10, 2016 | Sep. 12, 2016 | Feb. 18, 2016 | Aug. 31, 2017 | Nov. 01, 2013 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Lease term | 10 years | 7 years | |||||||
Lease expiration date | Aug. 1, 2017 | ||||||||
Operating leases rent expense | $ 43,000 | $ 12,723 | $ 186,000 | $ 103,000 | |||||
Increase decrease in lease rental expense | $ 64,000 | $ 14,200 | |||||||
Security deposit | 155,457 | $ 155,431 | |||||||
Current assets | 4,893,867 | $ 7,963,970 | |||||||
Revenue recognition, milestone fee on achieving sales threshold | $ 100,000 | ||||||||
Series A Preferred Stock [Member] | |||||||||
Debt instrument, interest rate, stated percentage | 8.00% | ||||||||
Royalty percentage | 7.50% | 7.50% | |||||||
Proceeds from royalty | $ 10,000,000 | $ 10,000,000 | |||||||
Royalty payment rights expire year | 2,033 | ||||||||
Series A Preferred Stock [Member] | Sales Revenue, Net [Member] | |||||||||
Royalty percentage | 4.50% | 4.50% | |||||||
Proceeds from royalty | $ 25,000,000 | $ 25,000,000 | |||||||
Minimum [Member] | |||||||||
License costs | 10,000 | ||||||||
Maximum [Member] | |||||||||
License costs | 50,000 | ||||||||
Maximum [Member] | Series A Preferred Stock [Member] | |||||||||
Accrued royalties | $ 35,000,000 | ||||||||
Cooperative Research and Development Agreement [Member] | |||||||||
Other commitment | $ 200,000 | ||||||||
Debt instrument, term | 3 years | ||||||||
Travel expenses | $ 132,568 | ||||||||
Finance Agreement [Member] | |||||||||
Debt instrument, term | 9 months | ||||||||
Debt instrument, face amount | $ 383,030 | ||||||||
Debt instrument, maturity date | Apr. 10, 2018 | ||||||||
Debt instrument, interest rate, stated percentage | 2.25% | ||||||||
Debt instrument, periodic payment, interest | $ 42,959 | ||||||||
Office Lease [Member] | |||||||||
Security deposit | $ 300,000 | ||||||||
Security deposits reduced by straight line basis description | This deposit was reduced by $100,000 in 2016 and 2015 and reduced down to approximately $105,457(including interest) in 2018 ($ 55,457 was collected in April of 2018). | ||||||||
Long term asset | $ 50,000 | ||||||||
Laboratory and Facility [Member] | |||||||||
Security deposit | $ 586,000 | ||||||||
Security deposits reduced by straight line basis description | This security deposit can be reduced $100,000 on each of the first three anniversaries of the rent commencement date. On the fourth anniversary, it can be reduced another $86,000, with the balance over the remaining life of the lease. | ||||||||
Current assets | $ 100,000 |
Commitments - Schedule of Futur
Commitments - Schedule of Future Minimum Rental Payments (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 513 |
2,019 | 707 |
2,020 | 732 |
2,021 | 657 |
2,022 | 610 |
Total future minimum lease payments | $ 3,219 |