Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 29, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Matinas BioPharma Holdings, Inc. | ||
Entity Central Index Key | 0001582554 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 33,700,000 | ||
Entity Common Stock, Shares Outstanding | 142,937,626 | ||
Trading Symbol | MTNB | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 12,446,838 | $ 7,306,507 |
Restricted cash | 100,000 | 155,431 |
Prepaid expenses | 538,646 | 502,032 |
Total current assets | 13,085,484 | 7,963,970 |
Non-current assets: | ||
Leasehold improvements and equipment - net | 2,042,893 | 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 | 461,000 | 535,999 |
Total non-current assets | 6,857,758 | 6,459,722 |
Total assets | 19,943,242 | 14,423,692 |
Current liabilities: | ||
Accounts payable | 295,652 | 582,867 |
Note payable | 199,842 | 170,236 |
Accrued expenses | 1,086,868 | 959,147 |
Stock dividends payable | 1,174,286 | |
Deferred revenue | 29,937 | |
Lease liability | 83,245 | 26,975 |
Total current liabilities | 2,839,893 | 1,769,162 |
Non-current liabilities: | ||
Deferred tax liability | 341,265 | 848,185 |
Deferred rent liability | 512,704 | 455,554 |
Lease liability - net of current portion | 107,656 | 67,683 |
Stock dividends payable - long term | 601,143 | |
Total non-current liabilities | 961,625 | 1,972,565 |
Total liabilities | 3,801,518 | 3,741,727 |
Stockholders' equity: | ||
Common stock par value $0.0001 per share, 250,000,000 and 250,000,000 shares authorized at December 31, 2018 and December 31, 2017, respectively; 113,287,670 issued and outstanding as of December 31, 2018; 93,371,129 issued and outstanding as of December 31, 2017 | 11,329 | 9,335 |
Additional paid in capital | 72,294,921 | 56,230,347 |
Accumulated deficit | (65,944,759) | (51,274,542) |
Total stockholders' equity | 16,141,724 | 10,681,965 |
Total liabilities and stockholders' equity | 19,943,242 | 14,423,692 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock value | 5,583,686 | 5,716,825 |
Series B Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock value | $ 4,196,547 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 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 | 113,287,670 | 93,371,129 |
Common stock, shares outstanding | 113,287,670 | 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 | 1,467,858 | 1,502,858 |
Preferred stock, shares outstanding | 1,467,858 | 1,502,858 |
Preferred stock, liquidation preference value | $ 8,513,576 | |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 8,000 | |
Preferred stock, shares outstanding | 4,819 | |
Preferred stock, liquidation preference value | $ 4,819,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | ||
Contract research revenue | $ 119,750 | $ 149,687 |
Costs and Expenses: | ||
Research and development | 6,787,474 | 9,010,499 |
General and administrative | 7,978,821 | 7,641,592 |
Total costs and expenses | 14,766,295 | 16,652,091 |
Loss from operations | (14,646,545) | (16,502,404) |
Sale of New Jersey net operating loss | 636,927 | |
Other income, net | 56,552 | 22,032 |
Benefit for income taxes | 506,920 | 356,956 |
Net loss | (14,083,073) | (15,486,489) |
Preferred stock series A & B accumulated dividends | (905,043) | (608,343) |
Inducement charge from exercise of warrants | (16,741,356) | |
Net loss attributable to common shareholders | $ (14,988,116) | $ (32,836,188) |
Net loss available for common shareholders per share - basic and diluted | $ (0.15) | $ (0.36) |
Weighted average common shares outstanding: | ||
Basic and diluted | 98,103,210 | 90,475,035 |
Consolidated Statement of Stock
Consolidated Statement of Stockholder's Equity - USD ($) | Redeemable Convertible Preferred Stock A [Member] | Redeemable Convertible Preferred Stock B [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 6,086,350 | $ 5,817 | $ 36,237,503 | $ (35,179,710) | $ 7,149,960 | |
Balance, shares at Dec. 31, 2016 | 1,600,000 | 58,159,495 | ||||
Stock-based compensation | 2,453,352 | 2,453,352 | ||||
Issuance of common stock as compensation for services | $ 60 | 1,215,577 | 1,215,637 | |||
Issuance of common stock as compensation for services, shares | 596,960 | |||||
Issuance of common stock upon exercise of warrants, net warrant modification inducement charge | $ 3,271 | 14,825,103 | 14,828,374 | |||
Issuance of common stock upon exercise of warrants, net warrant modification inducement charge, shares | 32,757,589 | |||||
Issuance of common stock in exchange for preferred stock | $ (369,525) | $ 97 | 369,428 | |||
Issuance of common stock in exchange for preferred stock, shares | (97,142) | 971,420 | ||||
Stock dividends paid | $ 2 | 7,198 | 7,200 | |||
Stock dividends paid, shares | 14,400 | |||||
Issuance of common stock ATM, net | $ 88 | 1,122,186 | 1,122,274 | |||
Issuance of common stock ATM, net, shares | 871,265 | |||||
Stock dividends issued in common stock | (608,343) | (608,343) | ||||
Net Loss | (15,486,489) | (15,486,489) | ||||
Balance at Dec. 31, 2017 | $ 5,716,825 | $ 9,335 | 56,230,347 | (51,274,542) | 10,681,965 | |
Balance, shares at Dec. 31, 2017 | 1,502,858 | 93,371,129 | ||||
Stock-based compensation | 3,217,309 | 3,217,309 | ||||
Issuance of common stock as compensation for services | $ 84 | 602,295 | 602,379 | |||
Issuance of common stock as compensation for services, shares | 826,819 | |||||
Issuance of common stock ATM, net | $ 1,235 | 9,238,803 | 9,240,038 | |||
Issuance of common stock ATM, net, shares | 12,349,722 | |||||
Stock dividends issued in common stock | $ 4 | 13,996 | 14,000 | |||
Stock dividends issued in common stock, shares | 28,000 | |||||
Issuance of Preferred Series B, net | $ 6,966,668 | 6,966,668 | ||||
Issuance of Preferred Series B, net, shares | 8,000 | |||||
Issuance of common stock in exchange for Preferred Series A | $ (133,139) | $ 35 | 133,104 | |||
Issuance of common stock in exchange for Preferred Series A, shares | (35,000) | 350,000 | ||||
Issuance of common stock in exchange for Preferred Series B | $ (2,770,121) | $ 636 | 2,769,485 | |||
Issuance of common stock in exchange for Preferred Series B, shares | (3,181) | 6,362,000 | ||||
Issuance of warrants to placement agent | 89,582 | 89,582 | ||||
Preferred dividends accrued | (587,144) | (587,144) | ||||
Net Loss | (14,083,073) | (14,083,073) | ||||
Balance at Dec. 31, 2018 | $ 5,583,686 | $ 4,196,547 | $ 11,329 | $ 72,294,922 | $ (65,944,759) | $ 16,141,724 |
Balance, shares at Dec. 31, 2018 | 1,467,858 | 4,819 | 113,287,670 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flow - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (14,083,073) | $ (15,486,489) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 218,308 | 100,605 |
Deferred rent | 57,150 | 157,349 |
Stock-based compensation expense | 3,833,088 | 3,597,480 |
Deferred tax liability | (506,920) | (356,956) |
Changes in operating assets and liabilities | ||
Prepaid expenses | 349,669 | 256,924 |
Other assets | 4,845 | |
Accounts payable | (287,215) | 107,265 |
Accrued expenses and other liabilities | 97,784 | 159,361 |
Net cash used in operating activities | (10,321,209) | (11,459,616) |
Cash flows from investing activities: | ||
Purchases of leasehold improvements and equipment | (535,916) | (942,180) |
Net cash used in investing activities | (535,916) | (942,180) |
Cash flows from financing activities: | ||
Net proceedsfrom issuance of Series B convertible preferred stock and warrants | 7,056,249 | |
Net proceeds from exercise of warrants | 14,828,373 | |
Proceeds from ATM sale, net of commissions of $285,774 | 9,240,038 | 1,122,274 |
Payments of capital lease liability | (59,184) | (17,134) |
Payments of note payable | (370,077) | (330,840) |
Netcash provided by financing activities | 15,867,026 | 15,602,673 |
Net increase in cash, cash equivalents and restricted cash | 5,009,901 | 3,200,877 |
Cash, cash equivalents and restricted cash at beginning of period | 7,997,937 | 4,797,060 |
Cash, cash equivalents and restricted cash at end of period | 13,007,838 | 7,997,937 |
Supplemental non-cash financing and investing activities: | ||
Preferred stock conversion into common stock - series A | 133,139 | 369,525 |
Preferred stock conversion into common stock - series B | 2,770,121 | |
Warrant issued to placement agent | 89,582 | |
Stock dividends accrual | 587,144 | 608,343 |
Stock dividends issued | 7,200 | |
Inducement charges for modification of warrants | 16,741,356 | |
Stock dividends issued and converted to common stock | 14,000 | |
Note payable for insurance premiums | 399,683 | 383,030 |
Equipment acquired under capital lease | 155,427 | 85,420 |
Leasehold improvements paid by landlord | 286,720 | |
Unearned restricted stock grants | $ 58,100 | $ 381,333 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flow (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Cash Flows [Abstract] | ||
Commission for ATM sale | $ 285,774 | $ 285,774 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1 – Description of Business 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 clinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products. |
Liquidity and Plan of Operation
Liquidity and Plan of Operations | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity, Plan of Operations and Going Concern | Note 2 – Liquidity and Plan of Operations The Company has experienced net losses and negative cash flows from operations each period since its inception. Through December 31, 2018, the Company had an accumulated deficit of approximately $65.9 million. The Company’s net losses for the years ended December 31, 2018 and 2017 were approximately $14.1 million and $15.5 million, respectively. 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 product sales 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 development of 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 operations, on June 21, 2018, the Company completed a Series B Preferred Stock offering which raised $7.1 million after deducting issuance costs (see Footnote 9). In addition, during the year the Company utilized its Controlled Equity Offering SM As of December 31, 2018, the Company had cash and cash equivalents of approximately $12.4 million and restricted cash of $0.6 million. On March 19, 2019, the Company completed an underwritten public offering of common stock, generating gross cash proceeds of $30.5 million and net proceeds of approximately $28.2 million. On March 28, 2019, additional shares were sold pursuant to an over-allotment option granted to the underwriters of the public offering, resulting in additional net proceeds to the Company of approximately $2.3 million |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3 – Summary of Significant Accounting Policies Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the consolidated accounts of Holdings and its wholly-owned operational subsidiaries, BioPharma, and Nanotechnologies. The accompanying 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. 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 the valuation of Level 3 fair value measurement of financial instruments and determination of stock-based compensation, contingent consideration and all acquired assets and liabilities. Cash and cash equivalents 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, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts in the Consolidated Statements of Cash Flows as of December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Cash and cash equivalents $ 12,447 $ 7,307 Restricted cash included in current/long term assets 561 691 Cash, cash equivalents and restricted cash in the statement of cash flows $ 13,008 $ 7,998 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, 2018, the Company’s cash balances exceeded the FDIC insurance limit. The Company has not experienced any losses in such accounts. 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 range 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. 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. For the years ended December 31, 2018 and 2017, the Company assessed goodwill impairment by performing a qualitative test for its reporting unit. During the qualitative reviews, The Company considered its cash position and its ability to obtain additional financing in the near term to meet its operational and strategic goals and substantiate the value of its business. Based on the results of the Company’s assessment, it was determined that it is more-likely- than-not that the fair value of the reporting units is greater than their carrying amounts. There was no impairment of goodwill during the years ended December 31, 2018 and 2017. The Company reviews 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 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. The Company’s indefinite-lived intangible assets are IPR&D intangible assets. The Company used the qualitative test and concluded that it was more-likely-than-not that all indefinite-lived assets were not impaired and therefore, there were no impairments during the years ended December 31, 2018 and 2017, respectively. Deferred rent The Company records rent on a straight-line basis. Differences between monthly rent expenses and rent payments are recorded 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 payments and rent expenses as of a balance sheet date is positive or a liability account (e.g., other current or noncurrent liabilities) when the cumulative difference is negative. 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. Preferred stock dividends Pursuant to the Certificate of Designations, the shares of Series A Preferred Stock earn dividends at a rate of 8.0% once per year on the first, second and third anniversary of the Initial Closing, which was July 29, 2016, payable to the holders of such Series A Preferred Stock in shares of common stock upon conversion. In addition, and subject to provisions detailed more fully in Footnote 9, the shares of Series B Preferred Stock earn dividends at rates of 10%, 15% and 20% once per year on the first, second and third anniversary, respectively, of the filing of the certificate of designation, which was June 19, 2008, for the Series B Preferred Stock with the Secretary of State of the State of Delaware, The dividends are payable to holders of such Series B Preferred Stock in shares of common stock upon conversion. Dividends do not require declaration by the Board of Directors and are accrued annually as of the date the dividend is earned in an amount equal to the applicable rate of the stated value. 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. Beneficial conversion feature of convertible preferred stock The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option is measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date. The BCF is recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount is accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over the period specified in the guidance. 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 2018 and 2017 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 December 31, 2018. Since the Company incurred net operating losses in every tax year since inception, the 2013 through 2017 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 generated in those years are utilized. 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 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, current portion of restricted cash, accounts receivable, prepaid expenses, accounts payable, note payable, current portion of lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments. Basic and diluted 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. 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 years ended December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Stock options 13,457 11,396 Preferred Stock and accrued dividend upon conversion 26,665 16,202 Warrants 5,799 5,958 Total 45,921 33,556 Revenue recognition The Company applies ASC 606 to its current research grant. 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 payment of $0.1 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, legal fees and other direct costs 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 are included as part of general and administrative expenses in our consolidated statements of operations. Recent accounting standards In February 2016, the Financial Accounting Standards Board (the “FASB”) established ASC Topic 842, “Leases”, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessees to now recognize operating leases on the balance sheet and disclose key information about leasing arrangements. ASC Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements The new standard is effective for the Company on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either: (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted Topic 842 on January 1, 2019 using the optional transition method to apply new guidance on January 1, 2019 rather than earliest periods presented and elected the ‘package of practical expedients’, which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company will not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable. The Company also elected the practical expedient to not separate lease and non-lease components for all leases. The adoption of this standard will have a material effect on the Company’s financial statements. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to: (1) the recognition of new right-of-use assets and lease liabilities on the balance sheet for operating leases, and (2) providing significant new disclosures about leasing activities. On the date of adoption, the Company will recognize additional operating liabilities, with corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. In August 2016, the FASB issued ASU No. 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 our consolidated financial statements. In November 2016, the FASB issued ASU No. 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 amendment is effective for periods beginning after December 15, 2017 for public entities. The Company adopted the guidance in the first quarter of 2018 on a retrospective basis. In January 2017, the FASB issued ASU No. 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The amendment 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 statements. In May 2017, the FASB issued ASU No. 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 our consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted as long as ASU 2014-09 has been adopted. We are currently considering the impact of adoption but preliminarily believe that it will not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We will be evaluating the impact this standard will have on our consolidated financial statements. Reclassification The company reclassified prior year deferred rent liability from current to long-term to conform with current year presentation. |
Leasehold Improvements and Equi
Leasehold Improvements and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Leasehold Improvements and Equipment | Note 4 – Leasehold Improvements and Equipment Leasehold improvements and equipment, summarized by major category, consist of the following for the years ended December 31, 2018 and 2017: Year Ended December 31, (in thousands) 2018 2017 Lab equipment $ 1,054 $ 577 Furniture and fixtures - 20 Equipment under capital lease 272 117 Leasehold improvements 1,156 1,097 Total 2,482 1,811 Less: accumulated depreciation and amortization 439 241 Leasehold improvements and equipment, net $ 2,043 $ 1,570 Depreciation and amortization expense for the years ended December 31, 2018 and 2017 was approximately $218 thousand and $101 thousand, respectively. The Company has entered into capital leases for lab equipment. During the years ended December 31, 2018 and 2017 the Company recognized interest expense of approximately $13 thousand and $6 thousand, respectively, associated with the lease payments. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Note 5 – Accrued Expenses Accrued Expenses, summarized by major category, consist of the following for years ended December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Accrued payroll and incentives $ 633 $ 721 Other accruals 454 238 Total $ 1,087 $ 959 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 6 – Commitments Leases 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 approximately $13 thousand per month, increasing to approximately $14 thousand per month in the final year. On December 15, 2016, the Company entered into a 10 year, 3-month lease to consolidate 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 thousand per month, increasing to approximately $64 thousand in the final year. The Company records rent expense on a straight-line basis. Rent expense for the years ended December 31, 2018 and 2017 was approximately $745 thousand and $504 thousand, respectively. Listed below is a summary of future minimum rental payments: Year ending December 31, Lease Commitments 2019 $ 713 2020 738 2021 663 2022 616 2023 and beyond 3,355 Total future minimum lease payments $ 6,085 Research and development agreements The Company has financial obligations resulting from Cooperative Research and Development Agreements (“CRADA”s) entered into with the with the National Institute of Allergy and Infectious Diseases (“NIH”) as follows: ● On October 29, 2015, the Company agreed to provide funds in the amount of $132,405 per year under a CRADA to support NIH investigators to acquire technical, statistical and administrative support for research activities as well as to pay for supplies and travel expenses. The initial term of the CRADA was three years. The CRADA was amended and renewed on September 17, 2018, for an additional year without creating an additional funding commitment. On November 7, 2018, a second amendment was executed which created an additional funding commitment of $150,000, half of which was paid upon execution of the amendment. The balance is payable in May 2019. ● On February 19, 2016, the Company agreed to provide funds in the amount of $200,000 per year under a CRADA 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. The initial term of the CRADA was three years. The Company is in the final stages of amending and renewing the CRADA for an additional three years with an annual funding commitment of $200,000. Royalty payment rights On September 12, 2016 the Company conducted a final closing of a private placement offering to accredited investors of 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 MAT2501. Pursuant to the terms of the Series A Certificate of Designation for our outstanding Series A Preferred Stock, the Company may be required to pay royalties of up to $35 million per year. If and when the Company obtains FDA or EMA approval of MAT2203 and/or MAT2501, which the Company does not expect to occur before 2020, if ever, and/or if the Company generates sales of such products, or the Company receives any proceeds from the licensing or other disposition of MAT2203 or MAT2501, the Company is 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 Series A Certificate of Designation), 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. License agreement Through the acquisition of Aquarius, the Company 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. Employment agreements 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. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7 – Income Taxes The Company utilizes the liability method of accounting for deferred income taxes. Under this method, deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2018 and 2017, the Company does not believe any material uncertain tax positions were present. Accordingly, interest and penalties have not been accrued due to an uncertain tax position. The components of the income tax provision are as follows: Year Ended December 31, (in thousands) 2018 2017 Current expense (benefit): Federal $ - $ - State - - Foreign - - Total current expense (benefit): $ - $ - Deferred expense (benefit): Federal $ (506,920 ) $ (392,259 ) State 35,303 Foreign - - Total deferred expense (benefit): $ (506,920 ) $ (356,956 ) Total income tax expense (benefit): $ (506,920 ) $ (356,956 ) Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2018 2017 Income at US Statutory Rate 21.00 % 34.00 % State Taxes, net of Federal benefit 8.22 % 8.50 % Permanent Differences -0.48 % -4.55 % Tax Credits 0.68 % 1.07 % Tax Law Change 3.47 -28.90 % Valuation Allowance -30.41 % -7.87 % Discrete items 0.99 % - 3.47 % 2.25 % The Company has no current income taxes payable other than certain state minimum taxes which are included in general and administrative expenses. Significant components of the Company’s deferred tax assets (liabilities) for 2018 and 2017 consist of the following: Year Ended December 31, (in thousands) 2018 2017 Share-based Compensation $ 1,288 $ 498 Depreciation and Amortization (11 ) (1 ) Accrued Liability - 202 Net Operating Loss Carry-forwards 12,270 8,871 R&D Credit Carryforwards 1,314 849 Other 150 154 IPR&D (848 ) (848 ) Total Deferred tax assets $ 14,163 $ 9,726 Valuation allowance (14,504 ) (10,574 ) Net deferred tax asset (liability) $ (341 ) $ (848 ) On December 22, 2017, the Tax Cuts and Jobs Act (“The Act”), was signed into law by President Trump. The Act includes a number of provisions, including the lowering of the U.S. corporate tax rate from 35 percent to 21 percent, effective January 1, 2018 and the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations. In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Act (“SAB118”), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment. The Company remeasured its deferred tax assets and liabilities as of December 31, 2017, applying the reduced corporate income tax rate and recorded a provisional decrease to the deferred tax assets of $4,935,000, with a corresponding adjustment to the valuation allowance. In the fourth quarter of 2018, we completed our analysis to determine the effect of the Tax Act and there were material adjustments as of December 31, 2018, including a reduction of the deferred tax liability due to the indefinite lived net operating loss generated in 2018. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible and is impacted by the Company’s ability to carryback losses to previous years in which the Company had taxable income. Due to the Company’s history of losses and lack of other positive evidence to support taxable income, the Company has recorded a valuation allowance against those deferred tax assets that are not expected to be realized. The valuation allowance was approximately $14.5 million and $10.6 million as of December 31, 2018 and 2017, respectively, representing an increase of $3.9 million. As of December 31, 2018, the Company had Federal net operating loss carryforwards of $50.0 million. The Company also had federal and state research and development tax credit carryforwards of $1,384,000. Net operating losses generated prior to January 1, 2018, amounting to $38.0 million, will expire at various dates beginning in 2033, if not utilized. Net operating losses generated after January 1, 2018, amounting to $12.0 million, are limited to 80% utilization of current year income and no longer have an expiration. Utilization of the net operating losses and general business tax credits carryforwards may be subject to a substantial limitation under Sections 382 and 383 of the Internal Revenue Code of 1986 due to changes in ownership of the Company that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating losses and general business tax credits carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. The Company has not completed a study to determine whether it had undergone an ownership change since the Company’s inception |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 8 – Related Parties Aegis Capital Corp. and Mr. Adam Stern Mr. Adam Stern, a director of the Company, has been Head of Private Equity Banking at Aegis Capital Corp. and CEO of SternAegis Ventures since 2012. The Company has contracted with Aegis Capital in all of its finance raises from 2013 through 2018. Each of these transactions have been disclosed in our previous 10-K filings. A summary of these transactions are as follows: ● Aegis Capital Corp. acted as the Placement Agent for the Company’s 2013 Private Placement which raised gross proceeds of $15 million. As the Placement Agent, Aegis Capital Corp. received an agent fee of $1.5 million and a non-accountable expense allowance of $450,000. In addition, the Placement Agent was issued 750,000 warrants at an exercise price of $2.00 per share and 1,500,000 warrants at an exercise price of $1.00 per share. ● Aegis Capital Corp. acted as the Placement Agent for the Company’s 2015 Private Placement which raised gross proceeds of $10 million. The Placement Agent received a cash fee of $1 million and a non-accountable expense allowance of $300,000. The Placement agent was issued 2 million warrants to purchase shares at $ 0.50 per share and 2 million warrants to purchase shares at $0.75 a share. ● Aegis Capital Corp. acted as the Placement Agent for the Company’s 2016 Series A Preferred Stock private placement which raised gross proceeds of $8 million. The Placement Agent was paid a cash fee of $800,000 and non-accountable expenses of $240,000. In addition, 1,600,000 warrants were issued to the Placement Agent at an exercise price of $0.50 per share. ● Aegis Capital Corp. was retained as our Warrant Agent for the Company’s 2017 Offer to Amend and Exercise warrants, which raised gross proceeds of approximately $13.5 million. The Warrant Agent received a fee of 5% of the cash exercise prices paid by the holders of the warrants, excluding placement agent warrants. In addition, Aegis Capital Corp. was reimbursed for reasonable out-of-pocket legal fees and expenses, including a $35,000 non-accountable expense allowance. ● Aegis Capital Corp. acted as a selected dealer for our public offering of Series B Preferred Stock in June 2018, which raised gross proceeds of $8 million. In connection with the offering the Company agreed to issue placement agent warrants to purchase that number of shares of common stock equal to 1.5% of the aggregate number of shares of common stock underlying the shares of Series B Preferred Stock sold in the offering (not including any shares payable pursuant to the contemplated dividend thereunder). A total of 240,000 warrants were issued, of which Adam Stern and Aegis Capital Corp. were collectively issued 81,080. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Note 9 – Stockholders’ Equity Preferred Stock In accordance with the Certificate of Incorporation, the Company is authorized to issue 10,000,000 preferred shares at a par value of $0.001. In connection with the 2016 Private Placement, on July 26, 2016, the Company filed the Series A Certificate of Designation with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series A Preferred Stock. Pursuant to the Series A Certificate of Designation, the Company designated 1,600,000 shares of the Company’s previously undesignated preferred shares as Series A Preferred Stock. In connection with the 2018 offering, on June 19, 2018, the Company filed the Series B Certificate of Designation with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series B Preferred Stock. Pursuant to the Series B Certificate of Designation, the Company designated 8,000 shares of the Company’s previously undesignated preferred shares as Series B Preferred Stock. Series A Preferred Stock As of December 31, 2018, the Company had 1,467,858 shares of Series A Preferred Stock outstanding. Conversion: Each share of Series A Preferred Stock is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the number of shares of Series A Preferred Stock 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 is $0.50, subject to adjustment in the event of stock splits, stock dividends, and a “fundamental transaction”). Based on the current conversion price and number of shares outstanding, the Series A Preferred Stock is convertible into 14,678,580 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 share of Series A Preferred Stock 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 Stock; 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 the 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 Preferred Stock, 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 Stock 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 Preferred Stock was approximately $4.4 million. During the year ended December 31, 2016, the beneficial conversion amount of approximately $4.4 million was then accreted back to the preferred shares as a deemed dividend and charged to accumulated deficit as the conversion rights were 100% effective at the time of issuance. Liquidity Value and Dividends: Pursuant to the Certificate of Designations, the Series A Preferred Stock accrue dividends at a rate of 8.0% once per year on the anniversary date of the Initial Closing, payable to the holders of such Series A Preferred Stock in shares of common stock upon conversion. Dividends of approximately $1.2 million have been accrued as paid-in-kind through December 31, 2018, with $.6 being accumulated in each of 2018 and 2017. During 2018, dividends of approximately $28 thousand were paid in shares of common stock upon conversions at the election of the holders. The holders of Series A Preferred Stock vote on an as converted basis with the Company’s common stock holders. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred Stock are entitled to (i) first receive distributions out of Company 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 holders. Royalty: The Series A Preferred Stock includes 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, 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”). 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 Stock. The royalty rights that are part of the Series A Preferred Stock 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 Stock automatically converts 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 Stock shall be deemed to be fully vested as of the date of conversion. Even if the Series A Preferred Stock is purchased after the initial closing, the vesting periods for the royalty rights that are part of the Series A Preferred Stock 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 Stock; 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 December 31, 2018 and 2017, no accrual has been recorded for royalty payments as it is not probable at this time that any amount will be paid. Classification: The shares of Series A Preferred Stock are classified within permanent equity on the Company’s 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 Series B Preferred Stock On June 19, 2018, the Company entered into a placement agency agreement with ThinkEquity, a Division of Fordham Financial Management, Inc., as placement agent, relating to the offering, issuance and sale of up to 8,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share with a stated value of $1,000 per share which are convertible into an aggregate of up to 16,000,000 shares of the Company’s common stock, par value $0.0001 per share at an initial conversion price of $0.50 per share of common stock and an additional up to 7,200,000 shares of common stock issuable upon payment of dividends under the Series B Preferred Stock . As of December 31, 2018, there were 4,819 shares of Series B Preferred Stock outstanding. Conversion: Optional Conversion Automatic Conversion Beneficial Conversion Feature. Beneficial Ownership Limitation Liquidity Value and Dividends: Dividends In the event a fundamental transaction is consummated prior to the automatic conversion of the Series B Preferred Stock, the dividends will be accelerated and paid to the extent not previously paid. In addition, holders of Series B Preferred Stock will be entitled to receive dividends equal, on an as-if-converted to shares of common stock basis, and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. Notwithstanding the foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder is entitled would result in such Holder exceeding the Beneficial Ownership Limitation, then such holder shall not be entitled to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the Beneficial Ownership Limitation shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s beneficial ownership thereof would not result in such holder exceeding the Beneficial Ownership Limitation. Pursuant to the Series B Certificate of Designation, the liquidation value of a share of Series B Preferred Stock is equal to the stated value of $1,000 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. Classification: The shares of Series B Preferred Stock 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 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 for 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. Warrants outstanding: As of December 31, 2018, the Company had outstanding warrants to purchase an aggregate of 5,799,429 shares of common stock at exercise prices ranging from $0.50 to $0.75 per share. The warrants are 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 $ 3.00 (for 20 million 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 warrants outstanding as of December 31, 2018 is presented below, all of which are fully vested: Shares (in thousands) Outstanding at January 1, 2017 40,255 Issued - Exercised (3,331 ) Tendered (30,966 ) Expired - Outstanding at December 31, 2017 5,958 ** Issued 240 Exercised - Tendered - Expired (399 ) Outstanding at December 31, 2018 5,799 * * Weighted average exercise price for outstanding warrants is $0.61. ** Weighted average exercise price for outstanding warrants is $0.70. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Note 10 – 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. As of December 31, 2018, the Company had 17,890,137 shares of common stock authorized 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 consolidated statements of operations as follows: Year Ended December 31, (in thousands) 2018 2017 Research and Development $ 896 $ 1,016 General and Administrative 2,937 2,581 Total $ 3,833 $ 3,597 The following table contains information about the Company’s stock plan at December 31, 2018: Awards Reserved for Issuance Awards Issued Awards Available for Grant 2013 Equity Compensation Plan (in thousands) 17,890 15,515 * 2,375 * Includes both stock grants and option grants The following table summarizes the Company’ stock option activity and related information for the period from January 1, 2017 to December 31, 2018 (options in thousands): Number of Options Weighted Average Exercise Price Weighted Average Contractual Term in Years Outstanding at January 1, 2017 8,290 $ 0.85 7.3 Granted 3,568 $ 2.77 Exercised - - Forfeited (436 ) $ 2.37 Cancelled (26 ) 0.63 Expired - - Outstanding at December 31, 2017 11,396 $ 1.40 7.8 Granted 4,300 $ 0.76 Exercised - Forfeited (1,262 ) $ 2.08 Cancelled - Expired (977 ) $ 1.32 Outstanding at December 31, 2018 13,457 $ 1.13 6.2 The following table summarizes outstanding options at December 31, 2018, by their exercise price: Range of Exercise Prices Number Outstanding (in thousands) Weighted Average Exercise Price Per Share $0.41 - $0.63 2,835 $ 0.43 $0.68 - $1.12 6,521 0.88 $1.24 - $1.95 2,585 1.31 $2.74 - $3.32 1,516 3.23 13,457 $ 1.13 As of December 31, 2018, the number of vested shares underlying outstanding options was 9,514,815 at a weighted average exercise price of $1.17. The aggregate intrinsic value of in-the-money options outstanding as of December 31, 2018 was $0.5 million. The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $0.60 on December 31, 2018, and the exercise price of options, multiplied by the number of options. As of December 31, 2018, there was approximately $3.0 million of total unrecognized share-based compensation. Such costs are expected to be recognized over a weighted average period of approximately 2.2 years. All options expire ten years from date of grant. Options granted to employees prior to 2018 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 of grant and the remaining shares vesting in 36 equal monthly installments over the following 3 years. 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. During the years ending December 31, 2017 and December 31, 2018, the Company granted restricted stock awards for 826,819 and 596,960 shares of common stock, respectively. These awards are typically granted to members of the Board of Directors as payment in lieu of cash fees or as payment pursuant to a consulting agreement. The Company values restricted stock awards at the fair market value on the date of grant. The Company recorded as general and administrative expense $616 thousand and $1,144 thousand in the consolidated statement of operations for the year ended December 31, 2018 and 2017, respectively. The Company recognizes compensation expense for stock option awards and restricted stock 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 awards granted subject to a consulting agreement, whereby the award 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 Year Ended December 31, 2018 2017 Volatility 105.85% - 111.31 % 67.8% - 109.63 % Risk-free interest rate 2.29% - 3.08 % 1.89% - 2.37 % 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. Hence, the Company uses the “simplified method” described in Staff Accounting Bulletin (SAB) 107 to estimated expected term of share option grants. The expected stock price volatility assumption is based the Company’s historical stock price volatility. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events On March 19, 2019, the Company closed an underwritten public offering of its common stock. This offering was made pursuant to an underwriting agreement between the Company and BTIG, LLC. The offering resulted in the sale of 27,272,727 shares to the public at a price of $1.10 per share. The Company generated gross proceeds of $30.5 million. Net proceeds after deducting underwriting discounts and commissions and other estimated offering expenses are expected to be approximately $28.2 million. In addition, t 2,199,259 shares were sold pursuant to the option at a price of $1.10 per share, resulting in net proceeds to the Company of approximately $2.3 million . |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the consolidated accounts of Holdings and its wholly-owned operational subsidiaries, BioPharma, and Nanotechnologies. The accompanying 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. |
Use of Estimates | 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 the valuation of Level 3 fair value measurement of financial instruments and determination of stock-based compensation, contingent consideration and all acquired assets and liabilities. |
Cash and Cash Equivalents | Cash and cash equivalents 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, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts in the Consolidated Statements of Cash Flows as of December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Cash and cash equivalents $ 12,447 $ 7,307 Restricted cash included in current/long term assets 561 691 Cash, cash equivalents and restricted cash in the statement of cash flows $ 13,008 $ 7,998 |
Concentration of Credit Risk | 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, 2018, the Company’s cash balances exceeded the FDIC insurance limit. The Company has not experienced any losses in such accounts. |
Leasehold Improvements and Equipment | 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 range 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. |
Goodwill and Other Intangible Assets | 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. For the years ended December 31, 2018 and 2017, the Company assessed goodwill impairment by performing a qualitative test for its reporting unit. During the qualitative reviews, The Company considered its cash position and its ability to obtain additional financing in the near term to meet its operational and strategic goals and substantiate the value of its business. Based on the results of the Company’s assessment, it was determined that it is more-likely- than-not that the fair value of the reporting units is greater than their carrying amounts. There was no impairment of goodwill during the years ended December 31, 2018 and 2017. The Company reviews 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 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. The Company’s indefinite-lived intangible assets are IPR&D intangible assets. The Company used the qualitative test and concluded that it was more-likely-than-not that all indefinite-lived assets were not impaired and therefore, there were no impairments during the years ended December 31, 2018 and 2017, respectively. |
Deferred Rent | Deferred rent The Company records rent on a straight-line basis. Differences between monthly rent expenses and rent payments are recorded 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 payments and rent expenses as of a balance sheet date is positive or a liability account (e.g., other current or noncurrent liabilities) when the cumulative difference is negative. 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. |
Preferred Stock Dividends | Preferred stock dividends Pursuant to the Certificate of Designations, the shares of Series A Preferred Stock earn dividends at a rate of 8.0% once per year on the first, second and third anniversary of the Initial Closing, which was July 29, 2016, payable to the holders of such Series A Preferred Stock in shares of common stock upon conversion. In addition, and subject to provisions detailed more fully in Footnote 9, the shares of Series B Preferred Stock earn dividends at rates of 10%, 15% and 20% once per year on the first, second and third anniversary, respectively, of the filing of the certificate of designation, which was June 19, 2008, for the Series B Preferred Stock with the Secretary of State of the State of Delaware, The dividends are payable to holders of such Series B Preferred Stock in shares of common stock upon conversion. Dividends do not require declaration by the Board of Directors and are accrued annually as of the date the dividend is earned in an amount equal to the applicable rate of the stated value. |
Business Combination | 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. |
Beneficial Conversion Feature of Convertible Preferred Stock | Beneficial conversion feature of convertible preferred stock The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option is measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date. The BCF is recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount is accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over the period specified in the guidance. |
Income Taxes | 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 2018 and 2017 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 December 31, 2018. Since the Company incurred net operating losses in every tax year since inception, the 2013 through 2017 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 generated in those years are utilized. |
Stock-based Compensation | 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 | 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, current portion of restricted cash, accounts receivable, prepaid expenses, accounts payable, note payable, current portion of lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments. |
Basic and Diluted Net Loss Per Common Share | Basic and diluted 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. 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 years ended December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Stock options 13,457 11,396 Preferred Stock and accrued dividend upon conversion 26,665 16,202 Warrants 5,799 5,958 Total 45,921 33,556 |
Revenue Recognition | Revenue recognition The Company applies ASC 606 to its current research grant. 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 payment of $0.1 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, Legal Fees and Other Direct Costs | Research and development, legal fees and other direct costs 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 are included as part of general and administrative expenses in our consolidated statements of operations. |
Recent Accounting Standards | Recent accounting standards In February 2016, the Financial Accounting Standards Board (the “FASB”) established ASC Topic 842, “Leases”, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessees to now recognize operating leases on the balance sheet and disclose key information about leasing arrangements. ASC Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements The new standard is effective for the Company on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either: (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted Topic 842 on January 1, 2019 using the optional transition method to apply new guidance on January 1, 2019 rather than earliest periods presented and elected the ‘package of practical expedients’, which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company will not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable. The Company also elected the practical expedient to not separate lease and non-lease components for all leases. The adoption of this standard will have a material effect on the Company’s financial statements. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to: (1) the recognition of new right-of-use assets and lease liabilities on the balance sheet for operating leases, and (2) providing significant new disclosures about leasing activities. On the date of adoption, the Company will recognize additional operating liabilities, with corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. In August 2016, the FASB issued ASU No. 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 our consolidated financial statements. In November 2016, the FASB issued ASU No. 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 amendment is effective for periods beginning after December 15, 2017 for public entities. The Company adopted the guidance in the first quarter of 2018 on a retrospective basis. In January 2017, the FASB issued ASU No. 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The amendment 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 statements. In May 2017, the FASB issued ASU No. 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 our consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted as long as ASU 2014-09 has been adopted. We are currently considering the impact of adoption but preliminarily believe that it will not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We will be evaluating the impact this standard will have on our consolidated financial statements. |
Reclassification | Reclassification The company reclassified prior year deferred rent liability from current to long-term to conform with current year presentation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts in the Consolidated Statements of Cash Flows as of December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Cash and cash equivalents $ 12,447 $ 7,307 Restricted cash included in current/long term assets 561 691 Cash, cash equivalents and restricted cash in the statement of cash flows $ 13,008 $ 7,998 |
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 years ended December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Stock options 13,457 11,396 Preferred Stock and accrued dividend upon conversion 26,665 16,202 Warrants 5,799 5,958 Total 45,921 33,556 |
Leasehold Improvements and Eq_2
Leasehold Improvements and Equipment (Tables) | 12 Months Ended |
Dec. 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 for the years ended December 31, 2018 and 2017: Year Ended December 31, (in thousands) 2018 2017 Lab equipment $ 1,054 $ 577 Furniture and fixtures - 20 Equipment under capital lease 272 117 Leasehold improvements 1,156 1,097 Total 2,482 1,811 Less: accumulated depreciation and amortization 439 241 Leasehold improvements and equipment, net $ 2,043 $ 1,570 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued Expenses, summarized by major category, consist of the following for years ended December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Accrued payroll and incentives $ 633 $ 721 Other accruals 454 238 Total $ 1,087 $ 959 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 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 2019 $ 713 2020 738 2021 663 2022 616 2023 and beyond 3,355 Total future minimum lease payments $ 6,085 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | The components of the income tax provision are as follows: Year Ended December 31, (in thousands) 2018 2017 Current expense (benefit): Federal $ - $ - State - - Foreign - - Total current expense (benefit): $ - $ - Deferred expense (benefit): Federal $ (506,920 ) $ (392,259 ) State 35,303 Foreign - - Total deferred expense (benefit): $ (506,920 ) $ (356,956 ) Total income tax expense (benefit): $ (506,920 ) $ (356,956 ) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2018 2017 Income at US Statutory Rate 21.00 % 34.00 % State Taxes, net of Federal benefit 8.22 % 8.50 % Permanent Differences -0.48 % -4.55 % Tax Credits 0.68 % 1.07 % Tax Law Change 3.47 -28.90 % Valuation Allowance -30.41 % -7.87 % Discrete items 0.99 % - 3.47 % 2.25 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets (liabilities) for 2018 and 2017 consist of the following: Year Ended December 31, (in thousands) 2018 2017 Share-based Compensation $ 1,288 $ 498 Depreciation and Amortization (11 ) (1 ) Accrued Liability - 202 Net Operating Loss Carry-forwards 12,270 8,871 R&D Credit Carryforwards 1,314 849 Other 150 154 IPR&D (848 ) (848 ) Total Deferred tax assets $ 14,163 $ 9,726 Valuation allowance (14,504 ) (10,574 ) Net deferred tax asset (liability) $ (341 ) $ (848 ) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Shareholders Equity Warrants Outstanding | A summary of warrants outstanding as of December 31, 2018 is presented below, all of which are fully vested: Shares (in thousands) Outstanding at January 1, 2017 40,255 Issued - Exercised (3,331 ) Tendered (30,966 ) Expired - Outstanding at December 31, 2017 5,958 ** Issued 240 Exercised - Tendered - Expired (399 ) Outstanding at December 31, 2018 5,799 * * Weighted average exercise price for outstanding warrants is $0.61. ** Weighted average exercise price for outstanding warrants is $0.70. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Recognized Stock-Based Compensation | The Company recognized stock-based compensation expense (options and restricted share grants) in its consolidated statements of operations as follows: Year Ended December 31, (in thousands) 2018 2017 Research and Development $ 896 $ 1,016 General and Administrative 2,937 2,581 Total $ 3,833 $ 3,597 |
Schedule of Equity Compensation Plan by Arrangements | The following table contains information about the Company’s stock plan at December 31, 2018: Awards Reserved for Issuance Awards Issued Awards Available for Grant 2013 Equity Compensation Plan (in thousands) 17,890 15,515 * 2,375 |
Schedule of Stock Option Activity | The following table summarizes the Company’ stock option activity and related information for the period from January 1, 2017 to December 31, 2018 (options in thousands): Number of Options Weighted Average Exercise Price Weighted Average Contractual Term in Years Outstanding at January 1, 2017 8,290 $ 0.85 7.3 Granted 3,568 $ 2.77 Exercised - - Forfeited (436 ) $ 2.37 Cancelled (26 ) 0.63 Expired - - Outstanding at December 31, 2017 11,396 $ 1.40 7.8 Granted 4,300 $ 0.76 Exercised - Forfeited (1,262 ) $ 2.08 Cancelled - Expired (977 ) $ 1.32 Outstanding at December 31, 2018 13,457 $ 1.13 6.2 |
Schedule of Outstanding Options Exercise Price | The following table summarizes outstanding options at December 31, 2018, by their exercise price: Range of Exercise Prices Number Outstanding (in thousands) Weighted Average Exercise Price Per Share $0.41 - $0.63 2,835 $ 0.43 $0.68 - $1.12 6,521 0.88 $1.24 - $1.95 2,585 1.31 $2.74 - $3.32 1,516 3.23 13,457 $ 1.13 |
Schedule of Share Based Payment Assumptions | The following weighted-average assumptions were used to calculate share-based compensation: For the Year Ended December 31, 2018 2017 Volatility 105.85% - 111.31 % 67.8% - 109.63 % Risk-free interest rate 2.29% - 3.08 % 1.89% - 2.37 % Dividend yield 0.0 % 0.0 % Expected life 6.0 years 6.0 years |
Liquidity and Plan of Operati_2
Liquidity and Plan of Operations (Details Narrative) - USD ($) | Jun. 21, 2018 | Jan. 13, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Accumulated deficit | $ (65,944,759) | $ (65,944,759) | $ (51,274,542) | ||
Net loss | (14,083,073) | (15,486,489) | |||
Number of shares issued value | 6,966,668 | ||||
Cash and cash equivalents | 12,446,838 | 12,446,838 | 7,306,507 | ||
Restricted cash | $ 561,000 | 561,000 | $ 691,000 | ||
March 19, 2019 | |||||
Proceeds from issuance initial public offering | 28,200,000 | ||||
Proceeds from public offering of common stock, gross | 30,500,000 | ||||
March 19, 2019 | Over-Allotment Option [Member] | |||||
Proceeds from issuance initial public offering | $ 2,300,000 | ||||
Controlled Equity Offering SM Sales Agreement [Member] | |||||
Number of common stock shares sold | 12,300,000 | ||||
Number of common stock shares sold value | $ 9,200,000 | ||||
Proceeds from issuance initial public offering | $ 30,000,000 | ||||
Sales Agreement [Member] | |||||
Number of common stock shares sold | 13,200,000 | ||||
Number of common stock shares sold value | $ 10,700,000 | ||||
Series B Preferred Stock [Member] | |||||
Number of shares issued value | $ 7,100,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jul. 29, 2016 | Jun. 19, 2008 | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill impairment | ||||
Accrued interest and penalties | ||||
Payments on revenue recognition milestone method | $ 100,000 | |||
Series A Preferred Stock [Member] | ||||
Preferred stock dividend earned percentage | 8.00% | 8.00% | ||
Series A Preferred Stock [Member] | First Anniversary [Member] | ||||
Preferred stock dividend earned percentage | 10.00% | |||
Series A Preferred Stock [Member] | Second Anniversary [Member] | ||||
Preferred stock dividend earned percentage | 15.00% | |||
Series A Preferred Stock [Member] | Third Anniversary [Member] | ||||
Preferred stock dividend earned percentage | 20.00% | |||
Minimum [Member] | ||||
Leasehold improvements and equipment, useful life | 3 years | |||
Maximum [Member] | ||||
Leasehold improvements and equipment, useful life | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Cash and cash equivalents | $ 12,446,838 | $ 7,306,507 |
Restricted cash included in current/long term assets | 561,000 | 691,000 |
Cash, cash equivalents and restricted cash in the statement of cash flows | $ 13,007,838 | $ 7,997,937 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 45,921,000 | 33,556,000 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 13,457,000 | 11,396,000 |
Preferred Stock Issuable Upon Conversion [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 26,665,000 | 16,202,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive earnings per share, amount | 5,799,000 | 5,958,000 |
Leasehold Improvements and Eq_3
Leasehold Improvements and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 218,000 | $ 101,000 |
Interest expense | $ 13,000 | $ 6,000 |
Leasehold Improvements and Eq_4
Leasehold Improvements and Equipment - Schedule of Leasehold Improvements and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Leasehold improvements and equipment, gross | $ 2,482,000 | $ 1,811,000 |
Less: accumulated depreciation and amortization | 439,000 | 241,000 |
Leasehold improvements and equipment, net | 2,042,893 | 1,569,858 |
Lab Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Leasehold improvements and equipment, gross | 1,054,000 | 577,000 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Leasehold improvements and equipment, gross | 20,000 | |
Equipment under Capital Lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Leasehold improvements and equipment, gross | 272,000 | 117,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Leasehold improvements and equipment, gross | $ 1,156,000 | $ 1,097,000 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued payroll and incentives | $ 633,000 | $ 721,000 |
Other accruals | 454,000 | 238,000 |
Total | $ 1,087,000 | $ 959,000 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | Dec. 15, 2016 | Sep. 12, 2016 | Feb. 19, 2016 | Oct. 29, 2015 | Nov. 01, 2013 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 07, 2018 |
Operating leases rent expense | $ 745,000 | $ 504,000 | ||||||
Other commitment | $ 150,000 | |||||||
Revenue recognition, milestone fee on achieving sales threshold | 100,000 | |||||||
License costs | 10,000 | |||||||
Maximum [Member] | ||||||||
License costs | $ 50,000 | |||||||
Series A Preferred Stock [Member] | ||||||||
Accrued royalties | $ 35,000,000 | |||||||
Royalty percentage | 4.50% | 7.50% | ||||||
Proceeds from royalty | $ 25,000,000 | |||||||
Royalty payment rights expire year | 2033 | |||||||
Series A Preferred Stock One [Member] | ||||||||
Royalty percentage | 7.50% | |||||||
Proceeds from royalty | $ 10,000,000 | |||||||
Cooperative Research and Development [Member] | ||||||||
Funds provide for support | $ 200,000 | $ 132,405 | ||||||
Initial term | 3 years | 3 years | ||||||
Other commitment | $ 200,000 | |||||||
June 2014 [Member] | ||||||||
Lease term | 7 years | |||||||
Operating leases rent expense | $ 13,000 | |||||||
Increase in lease rental expense | $ 14,000 | |||||||
August 1, 2017 [Member] | ||||||||
Lease term | 10 years 3 months | |||||||
Operating leases rent expense | $ 43,000 | |||||||
Increase in lease rental expense | $ 64,000 |
Commitments - Schedule of Futur
Commitments - Schedule of Future Minimum Rental Payments (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 713,000 |
2020 | 738,000 |
2021 | 663,000 |
2022 | 616,000 |
2023 and beyond | 3,355,000 |
Total future minimum lease payments | $ 6,085,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Corporate tax rate | 21.00% | 34.00% |
Income tax description | On December 22, 2017, the Tax Cuts and Jobs Act ("The Act"), was signed into law by President Trump. The Act includes a number of provisions, including the lowering of the U.S. corporate tax rate from 35 percent to 21 percent, effective January 1, 2018 and the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations. | |
Provisional decrease in deferred tax assets | $ 4,935,000 | |
Deferred tax assets, valuation allowance | $ 14,504,000 | 10,574,000 |
Valuation allowance, deferred tax asset, increase (decrease), amount | 3,900,000 | |
Operating loss carryforwards | 50,400,000 | |
Tax benefit | (506,920) | $ (356,956) |
Prior to January 1, 2018 [Member] | ||
Operating loss carryforwards | $ 38,000,000 | |
Operating loss carryforwards expiration date description | expire at various dates beginning in 2033 | |
After January 1, 2018 [Member] | ||
Operating loss carryforwards | $ 12,000,000 | |
Percentage of utilization of limited current tear income | 80.00% | |
Federal and State Research and Development Tax Credit Carryforwards [Member] | ||
Tax credit carryforward, amount | $ 1,384,000 |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current expense (benefit): Federal | ||
Current expense (benefit): State | ||
Current expense (benefit): Foreign | ||
Total current expense (benefit): | ||
Deferred expense (benefit): Federal | (506,920) | (392,259) |
Deferred expense (benefit): State | 35,303 | |
Deferred expense (benefit): Foreign | ||
Total deferred expense (benefit): | (506,920) | (356,956) |
Total income tax expense (benefit): | $ (506,920) | $ (356,956) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income at US Statutory Rate | 21.00% | 34.00% |
State Taxes, net of Federal benefit | 8.22% | 8.50% |
Permanent Differences | (0.48%) | (4.55%) |
Tax Credits | 0.68% | 1.07% |
Tax Law Change | 3.47% | (28.90%) |
Valuation allowance | (30.41%) | (7.87%) |
Discrete items | 0.99% | 0.00% |
Effective income tax rate | 3.47% | 2.25% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Share-based Compensation | $ 1,288,000 | $ 498,000 |
Depreciation and Amortization | (11,000) | (1,000) |
Accrued Liability | 202,000 | |
Net Operating Loss Carry-forwards | 12,270,000 | 8,871,000 |
R&D Credit Carry-forwards | 1,314,000 | 849,000 |
Other | 150,000 | 154,000 |
IPR&D | (848,000) | (848,000) |
Total Deferred tax assets | 14,163,000 | 9,726,000 |
Valuation allowance | (14,504,000) | (10,574,000) |
Net deferred tax (liability) | $ (341,000) | $ (848,000) |
Related Party (Details Narrativ
Related Party (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2018 | |
Warrants [Member] | ||
Number of warrants issued | 5,799,429 | |
Number of warrants issued | 240,000 | |
Ageis Capital Corp [Member] | Series B Preferred Stock [Member] | ||
Gross proceeds from private placement | $ 8,000,000 | |
Ageis Capital Corp [Member] | Warrants [Member] | ||
Percentage on warrants to purchase common stock | 1.50% | |
Number of warrants issued | 81,080 | |
Ageis Capital Corp [Member] | 2013 Private Placement [Member] | ||
Gross proceeds from private placement | $ 15,000,000 | |
Agent fee | 1,500,000 | |
Non accountable expense allowance | $ 450,000 | |
Ageis Capital Corp [Member] | 2013 Private Placement [Member] | Warrant One [Member] | ||
Number of warrants issued | 750,000 | |
Exercise price of warrants | $ 2 | |
Ageis Capital Corp [Member] | 2013 Private Placement [Member] | Warrant Two [Member] | ||
Number of warrants issued | 1,500,000 | |
Exercise price of warrants | $ 1 | |
Ageis Capital Corp [Member] | 2015 Private Placement [Member] | ||
Gross proceeds from private placement | $ 10,000,000 | |
Agent fee | 1,000,000 | |
Non accountable expense allowance | $ 300,000 | |
Ageis Capital Corp [Member] | 2015 Private Placement [Member] | Warrant One [Member] | ||
Number of warrants issued | 2,000,000 | |
Exercise price of warrants | $ 0.50 | |
Ageis Capital Corp [Member] | 2015 Private Placement [Member] | Warrant Two [Member] | ||
Number of warrants issued | 2,000,000 | |
Exercise price of warrants | $ 0.75 | |
Ageis Capital Corp [Member] | 2016 Series A Preferred Share Private Placement [Member] | ||
Gross proceeds from private placement | $ 8,000,000 | |
Agent fee | 800,000 | |
Non accountable expense allowance | $ 240,000 | |
Ageis Capital Corp [Member] | 2016 Series A Preferred Share Private Placement [Member] | Warrants [Member] | ||
Number of warrants issued | 1,600,000 | |
Exercise price of warrants | $ 0.50 | |
Ageis Capital Corp [Member] | 2017 Private Placement [Member] | ||
Gross proceeds from private placement | $ 13,500,000 | |
Non accountable expense allowance | $ 35,000 | |
Warrant agent fee, percentage | 5.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Jun. 21, 2018 | Jun. 21, 2018 | Jun. 19, 2018 | Sep. 12, 2016 | Jul. 29, 2016 | May 08, 2014 | Aug. 31, 2013 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 16, 2016 |
Common stock par value | $ 0.0001 | $ 0.0001 | |||||||||
Net proceeds from exercise of warrants | $ 14,828,373 | ||||||||||
Common stock outstanding | 113,287,670 | 93,371,129 | |||||||||
Share-based payment award increase of shares offering date | January 1, 2015 | ||||||||||
Share-based payment award, percentage of outstanding stock maximum | 4.00% | ||||||||||
Stock Options [Member] | |||||||||||
Option vested period | 3 years | ||||||||||
Number of option vested and exercisable | 9,514,815 | ||||||||||
Option vested price per share | $ 1.17 | ||||||||||
Option intrinsic value | $ 500,000 | ||||||||||
Option intrinsic value price per share | $ 0.60 | ||||||||||
Unrecognized share-based compensation | $ 3,000,000 | ||||||||||
Share-based compensation weighted average period | 2 years 2 months 12 days | ||||||||||
Stock options expire term | 10 years | ||||||||||
Employee [Member] | |||||||||||
Option vested period | 4 years | ||||||||||
Stock option shares vesting percentage | 25.00% | ||||||||||
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 | 17,890,137 | ||||||||||
2017 Warrant Tender Offer [Member] | |||||||||||
Number of warrant to purchase of common stock | 30,966,350 | ||||||||||
Fair value of warrants | $ 15,500,000 | ||||||||||
Formation Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 3,750,000 | ||||||||||
Merger Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 754,000 | ||||||||||
2013 Investor Warrants | |||||||||||
Number of warrant to purchase of common stock | 7,243,750 | ||||||||||
Private Placement Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 500,000 | ||||||||||
2015 Investor Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 14,750,831 | ||||||||||
Placement Agent (PA) Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 722,925 | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 2 | ||||||||||
Warrant exercised on cashless basis | 721,987 | ||||||||||
(PA) Warrants One [Member] | |||||||||||
Number of warrant to purchase of common stock | 1,426,687 | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 1 | ||||||||||
Warrant exercised on cashless basis | 1,424,812 | ||||||||||
(PA) Warrants Two [Member] | |||||||||||
Number of warrant to purchase of common stock | 1,818,157 | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.75 | ||||||||||
Warrant exercised on cashless basis | 1,774,017 | ||||||||||
Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 5,799,429 | ||||||||||
Gross proceeds from exercise of warrants | $ 13,500,000 | ||||||||||
Net proceeds from exercise of warrants | $ 12,700,000 | ||||||||||
Common stock outstanding | 58,159,495 | ||||||||||
Additional paid in capital inducement charges | $ 16,700,000 | ||||||||||
Issuance of warrants description | The Company may call the warrants, other than the Placement Agent Warrants, at any time the common stock trades above $ 3.00 (for 20 million warrants issued in 2015) for twenty (20) consecutive days | ||||||||||
Warrants [Member] | 2018 Placement Agent Warrants [Member] | |||||||||||
Warrant term | 5 years | ||||||||||
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 | $ 0.75 | ||||||||||
Warrants [Member] | Ageis Capital Corp [Member] | |||||||||||
Warrant fee percentage | 5.00% | ||||||||||
Expenses and attorney fees | $ 35,000 | ||||||||||
Common Stock [Member] | |||||||||||
Number share issued upon conversion | 971,420 | ||||||||||
Number of warrant to purchase of common stock | 40,255,234 | ||||||||||
Placement Agency Agreement [Member] | |||||||||||
Gross proceeds of shares issued | $ 8,000,000 | ||||||||||
Net proceeds of shares issued | $ 7,100,000 | ||||||||||
Percentage of gross proceeds | 7.00% | ||||||||||
Percentage of non- accountable expenses | 1.00% | ||||||||||
Placement Agency Agreement [Member] | 2018 Placement Agent Warrants [Member] | |||||||||||
Number of warrant to purchase of common stock | 240,000 | 240,000 | |||||||||
Fair value of warrants | $ 89,000 | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.75 | $ 0.75 | |||||||||
Warrant term | 5 years | 5 years | |||||||||
Series A Preferred Stock [Member] | |||||||||||
Preferred stock shares authorized | 10,000,000 | ||||||||||
Preferred stock par value | $ 0.001 | ||||||||||
Preferred stock shares designated | 1,600,000 | ||||||||||
Preferred stock, shares outstanding | 1,467,858 | ||||||||||
Preferred stock conversion basis | Series A Preferred Stock 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 is $0.50, subject to adjustment in the event of stock splits, stock dividends, and a "fundamental transaction"). | ||||||||||
Conversion price per share | $ 0.50 | ||||||||||
Number of preferred stock shares converted | 14,678,580 | ||||||||||
Sale of stock price per share | $ 1 | $ 0.67 | $ 0.70 | ||||||||
Intrinsic value | $ 4,400,000 | ||||||||||
Beneficial conversion feature amount | $ 4,400,000 | ||||||||||
Beneficial conversion feature percentage | 100.00% | ||||||||||
Dividend rate | 8.00% | 8.00% | |||||||||
Paid in kind dividend | $ 1,200,000 | ||||||||||
Dividends paid in shares of common stock | 28,000 | ||||||||||
Dividend accumulated | $ 6,000 | ||||||||||
Royalty percentage | 4.50% | 7.50% | |||||||||
Series A Preferred Stock [Member] | Sales Revenue, Net [Member] | |||||||||||
Royalty percentage | 4.50% | ||||||||||
Series B Preferred Stock [Member] | |||||||||||
Preferred stock shares designated | 8,000 | ||||||||||
Preferred stock, shares outstanding | 4,819 | ||||||||||
Conversion price per share | $ 0.50 | ||||||||||
Number of preferred stock shares converted | 2,000 | ||||||||||
Dividend accumulated | $ 3,000 | ||||||||||
Stock conversion percentage | 0.501 | ||||||||||
Beneficial ownership limitation description | The Beneficial Ownership Limitation, or such holder, together with such holder's affiliates, and any persons acting as a group together with such holder or affiliates, would beneficially own in excess of the Beneficial Ownership Limitation. The "Beneficial Ownership Limitation" is 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion of Series B Preferred Stock held by the applicable holder. A holder may, prior to issuance of the Series B Preferred Stock or, with 61 days prior notice to us, elect to increase or decrease the Beneficial Ownership Limitation; provided, however, that in no event may the Beneficial Ownership Limitation exceed 9.99%. | ||||||||||
Liquidity value and dividends, description | (i) a number of shares of common stock equal to 10% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on the 12 month anniversary of the COD Effective Date, (ii) a number of shares of common stock equal to 15% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on the 24-month anniversary of the COD Effective Date and (iii) a number of shares of common stock equal to 20% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on the 36-month anniversary of the COD Effective Date. In the event a purchaser in this offering no longer holds Series B Preferred Stock as of the 12-month anniversary, the 24-month anniversary or the 36-month anniversary, such purchaser will not be entitled to receive any dividends on such anniversary date. | ||||||||||
Liquidation value of preferred share value | $ 1,000 | ||||||||||
Series B Preferred Stock [Member] | Holders [Member] | |||||||||||
Conversion price per share | $ 0.50 | ||||||||||
Number of preferred stock shares converted | 9,638,000 | ||||||||||
Series B Convertible Preferred Stock [Member] | |||||||||||
Preferred stock shares authorized | 8,000 | ||||||||||
Preferred stock par value | $ 1,000 | $ 1,000 | |||||||||
Preferred stock, shares outstanding | 4,819 | ||||||||||
Series B Convertible Preferred Stock [Member] | Placement Agency Agreement [Member] | |||||||||||
Preferred stock par value | $ 0.0001 | ||||||||||
Number share issued upon conversion | 8,000 | ||||||||||
Preferred stock stated value | $ 1,000 | ||||||||||
Common Stock [Member] | Placement Agency Agreement [Member] | |||||||||||
Conversion price per share | $ 0.50 | ||||||||||
Number share issued upon conversion | 16,000,000 | ||||||||||
Common stock par value | $ 0.0001 | ||||||||||
Number of common shares issued | 7,200,000 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Shareholders Equity Warrants Outstanding (Details) - Warrants [Member] - shares | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | |||
Stock Holders Equity [Line Items] | ||||
Outstanding, beginning | 5,958,000 | [1] | 40,250,000 | |
Issued | 240,000 | |||
Exercised | (3,331,000) | |||
Tendered | (30,966,000) | |||
Expired | (399,000) | |||
Outstanding, ending | 5,799,000 | [2] | 5,958,000 | [1] |
[1] | Weighted average exercise price for outstanding warrants is $0.70. | |||
[2] | Weighted average exercise price for outstanding warrants is $0.61. |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Shareholders Equity Warrants Outstanding (Details) (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Equity [Abstract] | ||
Weighted average of exercise price | $ 0.61 | $ 0.70 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - USD ($) | May 08, 2014 | Aug. 31, 2013 | Dec. 31, 2018 | Dec. 31, 2017 |
Share-based payment award increase of shares offering date | January 1, 2015 | |||
Share-based payment award, percentage of outstanding stock maximum | 4.00% | |||
Number of restricted stock awards granted | 596,960 | 826,819 | ||
General and administrative expense | $ 616,000 | $ 1,144 | ||
Stock Options [Member] | ||||
Option vested period | 3 years | |||
Number of option vested and exercisable | 9,514,815 | |||
Option vested price per share | $ 1.17 | |||
Option intrinsic value | $ 500,000 | |||
Option intrinsic value price per share | $ 0.60 | |||
Unrecognized share-based compensation | $ 3,000,000 | |||
Share-based compensation weighted average period | 2 years 2 months 12 days | |||
Stock options expire term | 10 years | |||
Employee [Member] | ||||
Option vested period | 4 years | |||
Stock option shares vesting percentage | 25.00% | |||
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 | 17,890,137 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Recognized Stock-Based Compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 3,833,000 | $ 3,597,000 |
Research and Development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 896,000 | 1,016,000 |
General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 2,937,000 | $ 2,581,000 |
Stock-based Compensation - Sc_2
Stock-based Compensation - Schedule of Equity Compensation Plan by Arrangements (Details) - 2013 Equity Compensation Plan [Member] | 12 Months Ended | |
Dec. 31, 2018shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards Reserved for Issuance | 17,890,000 | |
Awards Issued | 15,515,000 | [1] |
Awards Available for Grant | 2,375,000 | |
[1] | Includes both restricted stock grants and option grants |
Stock-based Compensation - Sc_3
Stock-based Compensation - Schedule of Stock Option Activity (Details) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding at Beginning | 11,396,000 | 8,290,000 |
Number of Options, Granted | 4,300,000 | 3,568,000 |
Number of Options, Exercised | ||
Number of Options, Forfeited | (1,262,000) | (436,000) |
Number of Options, Cancelled | (26,000) | |
Number of Options, Expired | (977,000) | |
Number of Options, Outstanding at Ending | 13,457,000 | 11,396,000 |
Weighted average Exercise Price, Outstanding at Beginning | $ 1.40 | $ 0.85 |
Weighted average Exercise Price, Granted | 0.76 | 2.77 |
Weighted average Exercise Price, Exercised | ||
Weighted average Exercise Price, Forfeited | 2.08 | 2.37 |
Weighted average Exercise Price, Cancelled | 0.63 | |
Weighted average Exercise Price, Expired | 1.32 | |
Weighted average Exercise Price, Outstanding at Ending | $ 1.13 | $ 1.40 |
Weighted Average Contractual Term in Years, Beginning | 7 years 9 months 18 days | 7 years 3 months 19 days |
Weighted Average Contractual Term in Years, Ending | 6 years 2 months 12 days | 7 years 9 months 18 days |
Stock-based Compensation - Sc_4
Stock-based Compensation - Schedule of Outstanding Options Exercise Price (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Number of options outstanding | shares | 13,457,000 |
Weighted Average Exercise Price Per Share | $ 1.13 |
Exercise Price One [Member] | |
Exercise price, minimum | 0.41 |
Exercise price, maximum | $ 0.63 |
Number of options outstanding | shares | 2,835,000 |
Weighted Average Exercise Price Per Share | $ 0.43 |
Exercise Price Two [Member] | |
Exercise price, minimum | 0.68 |
Exercise price, maximum | $ 1.12 |
Number of options outstanding | shares | 6,521,000 |
Weighted Average Exercise Price Per Share | $ 0.88 |
Exercise Price Three [Member] | |
Exercise price, minimum | 1.24 |
Exercise price, maximum | $ 1.95 |
Number of options outstanding | shares | 2,585,000 |
Weighted Average Exercise Price Per Share | $ 1.31 |
Exercise Price Four [Member] | |
Exercise price, minimum | 2.74 |
Exercise price, maximum | $ 3.32 |
Number of options outstanding | shares | 1,516,000 |
Weighted Average Exercise Price Per Share | $ 3.23 |
Stock-based Compensation - Sc_5
Stock-based Compensation - Schedule of Share Based Payment Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Volatility, minimum | 105.85% | 67.80% |
Volatility, maximum | 111.31% | 109.63% |
Risk-free interest rate, minimum | 2.29% | 1.89% |
Risk-free interest rate, maximum | 3.08% | 2.37% |
Dividend yield | 0.00% | 0.00% |
Expected life | 6 years | 6 years |
Subsequent Events - (Details Na
Subsequent Events - (Details Narrative) - Subsequent Event [Member] - USD ($) | Mar. 28, 2019 | Mar. 19, 2019 |
Offering sale of public shares | 2,199,259 | |
Price per share | $ 1.10 | |
Gross proceeds from offering | $ 2,300,000 | |
BTIG, LLC [Member] | ||
Offering sale of public shares | 27,272,727 | |
Price per share | $ 1.10 | |
Gross proceeds from offering | $ 30,500,000 | |
Net proceeds from offering | 28,200,000 | |
BTIG, LLC [Member] | Underwriters [Member] | ||
Net proceeds from options exercised | $ 4,200,000 | |
BTIG, LLC [Member] | Underwriters [Member] | Maximum [Member] | ||
Number of options to purchase common stock | 4,090,909 |