Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Sep. 25, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ARIDIS PHARMACEUTICALS, INC. | |
Entity Central Index Key | 1,614,067 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,103,783 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 13,470 | $ 25,096 |
Prepaid expenses & other current assets | 960 | 244 |
Total current assets | 14,430 | 25,340 |
Property and equipment, net | 1,280 | 750 |
Intangible assets, net | 41 | 43 |
Other assets | 345 | 345 |
Total assets | 16,096 | 26,478 |
Current liabilities: | ||
Accounts payable | 610 | 933 |
Accrued liabilities | 2,330 | 2,121 |
Deferred revenue | 775 | 120 |
Dividends payable | 1,352 | |
Total current liabilities | 5,067 | 3,174 |
Warrant liability | 8,847 | 11,868 |
Total liabilities | 13,914 | 15,042 |
Total convertible preferred stock | 74,202 | 74,202 |
Commitments and contingencies (Note 9) | ||
Stockholders' deficit: | ||
Additional paid-in capital | (14,285) | (15,140) |
Accumulated deficit | (57,735) | (47,626) |
Total stockholders' deficit | (72,020) | (62,766) |
Total liabilities, convertible preferred stock and stockholders' deficit | $ 16,096 | $ 26,478 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Convertible preferred stock, shares issued (in shares) | 36,196,193 | 36,196,193 |
Convertible preferred stock, shares outstanding (in shares) | 36,196,193 | 36,196,193 |
Convertible preferred stock, aggregate liquidation preference | $ 74,202 | $ 74,202 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 166,373 | 166,373 |
Common stock, shares outstanding (in shares) | 166,373 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue: | ||||
Grant revenue | $ 22 | $ 22 | $ 344 | $ 44 |
Operating expenses: | ||||
Research and development | 3,885 | 3,170 | 10,511 | 7,989 |
General and administrative | 687 | 829 | 1,753 | 1,855 |
Total operating expenses | 4,572 | 3,999 | 12,264 | 9,844 |
Loss from operations | (4,550) | (3,977) | (11,920) | (9,800) |
Other expense (expense): | ||||
Interest and other income, net | 68 | 72 | 142 | 97 |
Change in fair value of warrant liability | 3,058 | (2,178) | 3,021 | (4,593) |
Net loss | (1,424) | (6,083) | (8,757) | (14,296) |
Preferred dividends | (535) | (701) | (1,352) | (1,235) |
Net loss available to common stockholders | $ (1,959) | $ (6,784) | $ (10,109) | $ (15,531) |
Weighted-average shares outstanding used in computing net loss available to common stockholders: | ||||
Basic (in shares) | 166,373 | 166,373 | 166,373 | 166,373 |
Diluted (in shares) | 166,373 | 166,373 | 166,373 | 166,373 |
Net loss per common share: | ||||
Basic (in dollars per share) | $ (8.56) | $ (36.56) | $ (52.63) | $ (85.93) |
Diluted (in dollars per share) | (8.56) | (36.56) | (52.63) | (85.93) |
Preferred dividends: | ||||
Basic (in dollars per share) | (3.22) | (4.21) | (8.13) | (7.42) |
Diluted (in dollars per share) | (3.22) | (4.21) | (8.13) | (7.42) |
Net loss per share available to common stockholders: | ||||
Basic (in dollars per share) | (11.78) | (40.77) | (60.76) | (93.35) |
Diluted (in dollars per share) | $ (11.78) | $ (40.77) | $ (60.76) | $ (93.35) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (8,757) | $ (14,295) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 124 | 10 |
Stock-based compensation expense | 855 | 1,052 |
Change in fair value of preferred stock warrants | (3,021) | 4,593 |
Changes in assets and liabilities: | ||
Accounts receivable | (413) | |
Prepaid expenses and other current assets | (560) | (462) |
Other assets | (378) | |
Deferred revenue | 656 | 936 |
Accounts payable, accrued liabilities and other | (4) | (48) |
Net cash used in operating activities | (10,707) | (9,005) |
Cash flows from investing activities | ||
Purchase of property and equipment | (919) | |
Net cash used in investing activities | (919) | |
Cash flows from financing activities | ||
Proceeds from issuance of preferred stock | 9,896 | |
Net cash provided by financing activities | 9,896 | |
Net increase (decrease) in cash and cash equivalents | (11,626) | 891 |
Cash and cash equivalents at | ||
Cash and cash equivalents at beginning of period | 25,096 | 22,291 |
Cash and cash equivalents at end of period | 13,470 | 23,182 |
Supplemental cash flow information | ||
Cash paid for taxes | 1 | |
Non-cash investing and financing activities | ||
Preferred stock dividends accrued | $ 1,352 | $ 1,235 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation Organization Aridis Pharmaceuticals, Inc. (the “Company” or “we” or “our”) was established as a California limited liability corporation in 2003. The Company converted to a Delaware C corporation on May 21, 2014. Aridis’ principal place of business is in San Jose, California. It is a clinical-stage company focused on developing new breakthrough therapies for infectious diseases and addressing the growing problem of antibiotic resistance. The Company has a diversified portfolio of clinical and pre-clinical stage anti-infective product candidates that are complimented by a fully human monoclonal antibody discovery platform technology. The Company’s two most mature clinical candidates AR-301 and AR-105 are at Phase 3 and Phase 2 clinical trial stage, respectively. The Company’s suite of anti-infective monoclonal antibodies offers opportunities to profoundly alter the current trajectory of increasing antibiotic resistance and improve the health outcome of many of the most serious life-threatening infections particularly in hospital settings. Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements include the amounts of the Company and our wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the preceding fiscal year contained in the Company’s Amended S-1 filed on August 13, 2018 with the United States Securities and Exchange Commission (SEC). The consolidated financial statements include the accounts of the Company and its two wholly‑owned subsidiaries, Aridis Biopharmaceuticals, Inc. and Aridis Pharmaceuticals, C.V. All intercompany balances and transactions have been eliminated in consolidation. The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. Reverse Stock Split On August 3, 2018, the Company effected a 1 for 6.417896 reverse stock split of the Company’s common stock. The par value and the number of authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock share and per-share amounts for all periods presented in this Quarterly Report on Form 10-Q have been adjusted retroactively to reflect the reverse stock split. Liquidity and Capital Resources On August 13, 2018, the Company’s registration statement on Form S-1 relating to its initial public offering of its common shares (the “IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). The IPO closed on August 16, 2018 and the Company issued and sold 2,000,000 common shares at a public offering price of $13.00 per share. Gross proceeds totaled $26.0 million and net proceeds totaled $22.9 million after deducting underwriting discounts and commissions of $1.8 million and other offering expenses of approximately $1.3 million. The underwriters of the IPO partially exercised their over-allotment option, and on August 30, 2018, the Company issued and sold 192,824 common shares at a public offering price of $13.00 per share for gross proceeds totaling approximately $2.5 million and net proceeds of approximately $2.3 million after deducting underwriting discounts and commissions of approximately $0.2 million. Management expects to continue to incur additional substantial losses in the foreseeable future as a result of the Company’s research and development activities. Management plans to finance operations through equity or debt financings or other capital sources, including potential collaborations or other strategic transactions. There can be no assurances that, in the event that the Company requires additional financing, such financing will be available on terms which are favorable to the Company, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay or reduce the scope of its research programs and/or limit or cease its operations. The Company believes that its existing cash and cash equivalents will provide sufficient funds to enable it to meet its obligations for at least the next 12 months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Such estimates include those related to the evaluation of our ability to continue as a going concern, revenue recognition, long-lived assets, income taxes, assumptions used in the Black-Scholes-Merton (“BSM”) model to calculate the fair value of stock-based compensation, Monte Carlo Simulation (“MSM”) model to calculate the fair value of warrants, deferred tax asset valuation allowances, valuation of the Company’s common and convertible preferred stock, fair value assumptions used in the valuation of warrants, preclinical study and clinical trial accruals and various accrued liabilities. Actual results could differ from those estimates. Concentration of Risk The Company’s cash and cash equivalents are maintained at financial institutions in the United States of America. Deposits held by these institutions may exceed the amount of insurance provided on such deposits. For the three and six months ended June 30, 2018 and 2017, one customer accounted for 100% of total revenue. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of checking account and money market account balances. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company considers the credit worthiness of its customers, but does not require collateral in advance of a sale. The Company evaluates collectability and maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio when necessary. The allowance is based on the Company’s best estimate of the amount of losses in the Company’s existing accounts receivable, which is based on customer creditworthiness, facts and circumstances specific to outstanding balances, and payment terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2018 and December 31, 2017, there were no accounts receivable or allowances for doubtful accounts. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight‑line method over the estimated useful lives of the assets, generally between three and five years. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the consolidated statement of operations and comprehensive loss in the period realized. Intangible Assets Intangible assets are recorded at cost and amortized over the estimated useful life of the asset. Intangible assets consist of licenses with various institutions whereby the Company has rights to use intangible property obtained from such institutions. Impairment of Long‑Lived Assets The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment is measured by the excess of the carrying amount of the assets over fair value less the costs to sell the assets, generally determined using the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets as of June 30, 2018 and December 31, 2017. Revenue Recognition Revenue is recognized in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. During the three and six months ended June 30, 2018 and 2017, revenue consisted of grant revenue. We recognize revenue under such awards under the milestone method, up to the limit of the prior approval funding amounts, and when we have determined that we have earned the right to receive the recognized portion according to the terms of the original grant awarded. In December 2016, the Company received an award from the Cystic Fibrosis Foundation (“CF Foundation”) for approximately $2,902,000. The agreement contains an upfront payment of $200,000 which is being recognized straight‑line over the term of the contract as we believe the upfront fee relates to services performed throughout the contract period and the upfront fee does not represent a substantive milestone within the agreement. Recognition of revenue for the remaining payments under the agreement will be recognized under the milestone method as substantive milestones are met. The milestones relate to pre‑clinical research activities. The agreement also specifies that we are obligated to cumulatively spend on the development program at least an equal amount as it receives from the non‑profit organization. In the event that we do not spend as much as we received under the agreement, we are obligated to return any overage to the non‑profit organization. For the three months ended June 30, 2018 and 2017, the Company had grant revenue of $22,000 and $22,000, respectively. For the six months ended June 30, 2018 and 2017, the Company had grant revenue of $344,000 and $44,000, respectively. All grant revenue was derived from our award agreement with the CF Foundation. In 2017, the Company entered into a collaborative research and development agreement with GlaxoSmithKline plc (“GSK”). In accordance with the agreement, we received an upfront fee and are due annual fees and amounts for development work to be performed as specifically outlined under the agreement. The work to be performed was delineated into three specific research projects. In assessing the appropriate revenue recognition related to a collaboration agreement, we first determined whether the arrangement includes multiple elements, such as the delivery of intellectual property rights and research and development services. The multiple elements were analyzed to determine whether the deliverables could be separated or whether they must be accounted for as a single unit of accounting. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our balance sheet. Recognition of revenue under the contract will be based on the terms of the contract and will be recognized under the proportional performance method derived from the completion of certain stages as defined within the contract. For the three and six months ended June 30, 2018 and 2017, no collaboration revenue was recorded under the Company’s agreement with GSK. Costs for Collaborative Arrangements Costs incurred under collaborative arrangements include personnel costs, laboratory supplies and fees paid to third parties. These amounts are included in research and development in the accompanying consolidated statement of operations. For the three months ended June 30, 2018 and 2017, the Company incurred expenses of $161,000 and $165,000, respectively. For the six months ended June 30, 2018 and 2017, the Company incurred expenses of $318,000 and $301,000, respectively, related to its collaborative arrangement. Research and Development Research and development costs are charged to operations as incurred. Research and development expenses consist of salaries and benefits, laboratory supplies, consulting fees and fees paid to third parties. Stock‑Based Compensation The Company recognizes compensation expense for all stock‑based awards to employees and directors based on the grant‑date estimated fair values, net of an estimated forfeiture rate. The Company recognizes stock‑based compensation cost for employees and directors on a straight‑line basis over the requisite service period for the award. Stock‑based compensation expense is recognized only for those awards that are ultimately expected to vest. The Company estimates forfeitures based on an analysis of historical employee turnover and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors. The Company will revise the forfeiture estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Changes in forfeiture estimates impact stock‑based compensation cost in the period in which the change in estimate occurs. The BSM option pricing model incorporates various highly sensitive assumptions, including the fair value of the Company’s common stock, expected volatility, expected term and risk‑free interest rates. The weighted‑average expected life of options was calculated using the simplified method as prescribed by the SEC’s Staff Accounting Bulletin No. 107 (“SAB No. 107”). This decision was based on the lack of relevant historical data due to the Company’s limited historical experience. In addition, due to the Company’s limited historical data, the estimated volatility also reflects the application of SAB No. 107, incorporating the historical volatility of comparable companies whose stock prices are publicly available. The risk‑free interest rate for the periods within the expected term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield was zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The Company accounts for stock‑based compensation arrangements with non‑employees by recording the expense of such services based on the estimated fair value of the common stock at the measurement date. The value of the equity instrument, including adjustment to fair value at each balance sheet date, is charged to net loss over the term of the service agreement. Prior to the completion of the Company’s initial public offering of common stock on August 16, 2018, due to the absence of a public market trading for the Company’s common stock, it was necessary to estimate the fair value of the common stock underlying the Company’s stock-based awards when performing fair value calculations. Income Taxes The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by the relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the positions sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. At each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. Comprehensive Loss The Company has no items of comprehensive income or loss other than net loss. Loss Per Share Basic loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted‑average number of common shares outstanding during the period. For diluted loss per share calculation purposes, the net loss available to commons shareholders is adjusted to add back any preferred stock dividends and any interest on convertible debt reflected in the consolidated statement of operations for the respective periods. The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Convertible preferred stock 5,640,274 4,793,457 5,640,274 4,793,457 Stock options to purchase common stock 742,124 487,339 742,124 487,339 Preferred stock warrants 1,359,635 1,301,817 1,359,635 1,301,817 Common stock warrants 607,295 707,896 607,295 707,896 8,349,328 7,290,509 8,349,328 7,290,509 The convertible preferred stock and preferred stock warrants in the previous table reflect the conversion of these instruments into their common stock equivalents as of the dates reported. JOBS Act Accounting Election The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to take advantage of this provision and, as a result, we will adopt the extended transition period available under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided under the JOBS Act. Recent Accounting Pronouncements In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting,” which aligns the measurement and classification guidance for share-based payments to nonemployees with that for employees, with certain exceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities to recognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) they would if they paid cash for the goods or services, but it moves the guidance to ASC 718. The guidance also allows nonpublic entities to account for nonemployee awards using certain practical expedients that are already available for employee awards, but the same accounting policies must be used for awards to both employees and nonemployees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017‑11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of adopting this guidance. In May 2017, the FASB issued ASU 2017‑09, “Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting,” to provide clarity and reduce both diversity in practice and cost complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a stock‑based payment award. ASU 2017‑09 also provides guidance about the types of changes to the terms or conditions of a share‑based payment award that require an entity to apply modification accounting in accordance with Topic 718. For all entities, including emerging growth companies, the standard is effective for annual periods beginning after December 15, 2017, and for interim periods therein. Early adoption is permitted. The adoption of this standard did not have a material effect. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing.” This clarifies the principle for determining whether a good or service is “separately identifiable” from other promises in the contract and, therefore, should be accounted for as a separate performance obligation. In that regard, ASU 2016-10 requires that an entity determine whether its promise is to transfer individual goods or services to the customer, or a combined item (or items) to which the individual goods and services are inputs. In addition, ASU 2016-10 categorizes intellectual property, or IP, into two categories: “functional” and “symbolic.” Functional IP has significant standalone functionality. All other IP is considered symbolic IP. Revenue from licenses of functional IP is generally recognized at a point in time, while revenue from licenses of symbolic IP is recognized over time. The new standard is effective for the Company on January 1, 2019. The Company is currently evaluating the impact of adopting this guidance. |
Fair Value Disclosure
Fair Value Disclosure | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosure | |
Fair Value Disclosure | 3. Fair Value Disclosure The carrying value of the Company’s cash and cash equivalents, prepaid expenses and other current assets, other assets, accounts payable, accrued liabilities, and convertible notes payable approximate fair value due to the short‑term nature of these items. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three‑level valuation hierarchy for disclosure of fair value measurements as follows: Level I Unadjusted quoted prices in active markets for identical assets or liabilities; Level II Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level III Unobservable inputs that are supported by little or no market activity for the related assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Fair Value at June 30, 2018 ($ in thousands) Total Level 1 Level 2 Level 3 Liabilities: Dividends payable $ 1,352 $ — $ — $ 1,352 Warrant liability 8,847 — — 8,847 Totals $ 10,199 $ — $ — $ 10,199 Fair Value at December 31, 2017 ($ in thousands) Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 11,868 $ — $ — $ 11,868 Totals $ 11,868 $ — $ — $ 11,868 Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The preferred stock warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liability and the change in estimated fair value of the warrants could be materially different. |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended |
Jun. 30, 2018 | |
Balance Sheet Components | |
Balance Sheet Components | 4. Balance Sheet Components Property and Equipment, net Property and equipment, net consist of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Lab equipment $ 1,592 $ 940 Computer equipment and software 25 25 1,617 965 Less: Accumulated depreciation (337) (215) $ 1,280 $ 750 Depreciation expense was approximately $72,000 and $4,000 for the three months ended June 30, 2018 and 2017, respectively. Depreciation expense was approximately $122,000 and $8,000 for the six months ended June 30, 2018 and 2017, respectively. Intangible Assets, net Intangible assets, net consist of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Licenses $ 81 $ 81 81 81 Less: Accumulated amortization (40) (38) $ 41 $ 43 Amortization expense was approximately $1,000 and $1,000 for the three months ended June 30, 2018 and 2017, respectively. Amortization expense was approximately $2,000 and $2,000 for the six months ended June 30, 2018 and 2017, respectively. Accrued Liabilities Accrued liabilities consist of the following at June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Research and development services $ 1,632 $ 1,713 Payroll related expenses 165 207 Professional services 532 201 Other 1 — $ 2,330 $ 2,121 |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Warrants | |
Warrants | 5. Warrants Common Stock Warrant Expense In November 2015, an engagement letter was effectuated with the Company’s current Vice Chairman of the Board of Directors. Under the terms of the engagement, upon being appointed the Company’s Vice Chairman and the closing of a minimum of $25 million in gross proceeds from sales of its Series A convertible preferred stock under a private placement memorandum, the Vice Chairman would receive 234,860 common stock warrants. On December 12, 2016, both of the aforementioned conditions had been met and the Company issued 234,860 common stock warrants at an exercise price of $14.50 per share. The fair value of the warrants was determined using a Monte Carlo simulation method which calculates the estimated value based on running numerous simulations and analyzing the various outcomes. The total fair value of award was approximately $661,000 and is being amortized over the five-year vesting period. For each of the three months ended June 30, 2018 and 2017, the Company recorded stock-based compensation expense of approximately $34,000 related to these warrants. For each of the six months ended June 30, 2018 and 2017, the Company recorded stock-based compensation expense of approximately $66,000 related to these warrants. Warrant Liability The following table (in thousands) summarizes the Company’s activity and fair value calculations of its derivative warrants for six months ended June 30, 2018: Warrant Liability Balance, December 31, 2017 $ 11,868 Change in fair value of warrants (3,021) Balance, June 30, 2018 $ 8,847 |
Convertible Preferred Stock
Convertible Preferred Stock | 6 Months Ended |
Jun. 30, 2018 | |
Convertible Preferred Stock | |
Convertible Preferred Stock | 6. Convertible Preferred Stock Each share of Series A convertible preferred stock is entitled to voting rights equivalent to the number of shares of common stock into which each share can be converted. Each share of Series A convertible preferred stock was convertible at the holders’ option at any time into common stock on a one for one basis. On August 3, 2018, the Company effected a 1 for 6.417896 reverse stock split of the Company’s common stock. Accordingly, each share of Series A convertible preferred stock is convertible at the holders’ option at any time after August 3, 2018 on a 1 for 6.417896 basis. Upon the liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, each holder of Series A convertible preferred stock shall be entitled to receive, for each share thereof, out of assets of the Company legally available therefore, a preferential amount in cash equal to (and not more than) $2.05 per share. If upon any such distribution the assets of the Company shall be insufficient to pay the holders of the outstanding shares of Series A convertible preferred stock the full amounts to which they shall be entitled, such holders shall share ratably in any distribution of assets in accordance with the sums which would be payable on such distribution if all sums payable thereon were paid in full. Any remaining assets or funds of the Company available for distribution to stockholders shall be distributed among the holders of Series A convertible preferred stock and common stock pro rata based on the number of shares of common stock held by each (assuming conversion of all such Series A convertible preferred stock and convertible common stock, if any, according to their respective terms). Conversion of Series A convertible preferred stock is automatic upon the completion of a firm commitment underwritten initial public offering of the Company’s shares of common stock at a price equal to or greater than $4.10 per share. In January 2018, the Company received shareholder consent from a majority of Series A convertible preferred stockholders consenting to the automatic conversion of the Series A convertible preferred stock immediately prior to the closing of a firm commitment underwritten initial public offering of the Company’s shares of common stock (Note 10). All holders of Series A convertible preferred stock as of June 30, 2016 began accruing a 3% stock dividend beginning on July 1, 2016. Subsequent acquirers began accruing on the date they acquired their respective shares. Accrued dividends shall be payable annually on December 31. As of June 30, 2018, the Company accrued approximately $1,352,000 as dividends payable for the 542,943 dividend shares that were accrued. During June 2017, 2,033,898 shares of our Series A convertible preferred stock sold at $2.95 per share which contain price based anti-dilution protection rights. Unless agreed to otherwise, if the Company issues additional securities at a purchase price less than the purchase price paid by these respective holders, the Company shall issue additional preferred shares equal to the difference of the number of preferred shares that each respective shareholder would have received if they paid the subsequent lower price, and the number of share each respective shareholder originally received. The Company reviewed the embedded anti-dilution protection feature included in the Series A convertible preferred stock sold during 2016 pursuant to ASC 480, Distinguishing Liabilities From Equity , and ASC 815, Derivatives and Hedging, and determined that the provisions of ASC 480 did not result in liability classification, the embedded anti-dilution protection feature did not meet the definition of a derivative as there was no market for the Series A convertible preferred stock to be converted into cash and that the embedded anti-dilution protection feature did not require bifurcation. The liquidation preference provisions of the Series A convertible preferred stock are considered contingent redemption provisions because there are certain elements that are not solely within the control of the Company, such as a change in control of the Company. Accordingly, the Company has presented the Series A convertible preferred stock within the mezzanine portion of the accompanying consolidated balance sheets at the full liquidation value. In June 2017, the Company sold 2,033,898 shares of Series A convertible preferred stock to an investor at a price of $2.95 per share for total gross proceeds of $6.0 million and net proceeds of $5.4 million after financing costs. If by August 12, 2019 the Company has not yet consummated a firm commitment underwritten initial public offering of its common stock, then the number of all outstanding warrants exercisable into Series A convertible preferred stock will increase by 100% (Note 10). |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2018 | |
Common Stock | |
Common Stock | 7. Common Stock As of June 30, 2018, the Company had reserved the following common stock for future issuance: Shares reserved for conversion of preferred stock 5,723,919 Shares reserved for exercise of outstanding warrants to purchase preferred stock 1,359,635 Shares reserved for exercise of outstanding warrants to purchase common stock 607,295 Shares reserved for exercise of outstanding options to purchase common stock 724,124 Shares reserved for issuance of future options 84,055 8,499,028 As of December 31, 2017, the Company had reserved the following common stock for future issuance: Shares reserved for conversion of preferred stock 5,640,274 Shares reserved for exercise of outstanding warrants to purchase preferred stock 1,359,635 Shares reserved for exercise of outstanding warrants to purchase common stock 607,295 Shares reserved for exercise of outstanding options to purchase common stock 603,291 Shares reserved for issuance of future options 144,980 8,355,475 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | 8. Stock‑Based Compensation In May 2014, the Company adopted and the shareholders approved the 2014 Equity Incentive Plan (the 2014 Plan). Under the 2014 Plan, 233,722 shares of the Company’s common stock have been reserved for the issuance of stock options to employees, directors, and consultants, under terms and provisions established by the Board of Directors. Under the terms of the 2014 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options may not be less than 110% of fair market value, as determined by the Board of Directors. The terms of options granted under the 2014 Plan may not exceed ten years. In addition, the 2014 Plan contains an “evergreen” provision allowing for an annual increase in the number of shares of our common stock available for issuance under the 2014 Plan on the first day of each fiscal year beginning in fiscal year 2015. The annual increase in the number of shares shall be equal to the greater of: · 77,908 shares of our common stock; or · such number of shares as is equal to the number of shares sufficient to cause the option pool to equal 20% of the issued and outstanding common stock of the Company, provided, however, that if on any calculation date the number of shares equal to 20% of the total issued and outstanding shares of common stock is less than the number of shares of common stock available for issuance under the 2014 Plan, no change will be made to the aggregate number of shares of common stock issuable under the 2014 Plan for that year (such that the aggregate number of shares of common stock available for issuance under the 2014 Plan will never decrease). The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an option by option basis. Options generally vest ratably over service periods of up to four years and expire ten years from the date of grant. The fair value of the employee options granted during the three and six months ended June 30, 2018 and 2017 were estimated using the following assumptions: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Expected term (in years) N/A N/A 6.25 6.25 Expected volatility N/A N/A 78%‑79% 79%‑80% Risk-free interest-rate N/A N/A 2.22% ‑ 2.62% 1.83% ‑ 2.20% Dividend yield N/A N/A 0% 0% Stock option activity for the year ended December 31, 2017 and the six months ended June 30, 2018 are represented in the following table: Options Outstanding Shares Weighted‑ Available Number Average for Grant of Shares Exercise Price Balance — December 31, 2017 144,980 603,291 $ 9.52 Additional shares reserved 77,908 — $ — Options granted (191,995) 191,995 $ 17.08 Options cancelled 53,162 (53,162) $ 9.98 Balance — June 30, 2018 84,055 742,124 $ 11.45 The Company recognized stock compensation as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Research and development $ 139 $ 81 $ 280 $ 133 General and administrative $ 179 $ 276 $ 509 $ 853 $ 318 $ 357 $ 789 $ 986 As of June 30, 2018, the Company had unrecognized stock-based compensation of approximately $3.6 million. As of June 30, 2018, the intrinsic value of all vested and outstanding options was approximately $2.1 million. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Leases The Company leases office and lab space in San Jose, California under an operating lease arrangement which can be terminated at any time with 90 days’ notice. The Company recognizes rent expense as incurred. For the three months ended June 30, 2018 and 2017, the Company incurred expenses of $77,000 and $74,000, respectively. For the six months ended June 30, 2018 and 2017, the Company incurred expenses of $155,000 and $147,000, respectively. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may incur charges in the future as a result of these indemnification obligations. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. From time to time, the Company may be involved in various legal proceedings, claims and litigation arising in the ordinary course of business. As of June 30, 2018 and December 31, 2017, there were no pending legal proceedings. Grant Income The Company receives various grants that are subject to audit by the grantors or their representatives. Such audits could result in requests for reimbursement for expenditures disallowed under the terms of the grant; however, management believes that these disallowances, if any, would be immaterial. Cystic Fibrosis Foundation Agreement In December 2016, the Company received an award for up to $2,902,097 from the Cystic Fibrosis Foundation to advance research on potential drugs utilizing inhaled gallium citrate anti-infective. Under the award agreement, the Cystic Fibrosis Foundation will make payments to the Company as certain milestones are met. The award agreement also contains a provision whereby if the Company spends less on developing a potential drug utilizing inhaled gallium citrate anti-infective than the Company actually receives under this award agreement, the Company will be required to return the excess portion of the award to the Cystic Fibrosis Foundation. At the end of any reporting period, if the Company determines that the cumulative amount spent on this program is less than the cumulative cash received from the Cystic Fibrosis Foundation, the Company will record the excess amount received as a liability. In the event that development efforts are successful and the Company commercialized a drug from these related development efforts, the Company may be subject to pay to Cystic Fibrosis Foundation a one-time amount equal to the awarded amount. Such amount shall be paid in as few as three but not more than five annual installments, as follows: within ninety days of the end of the calendar year in which the First Commercial Sale occurs, and within ninety days of the end of each subsequent calendar year until the amount is paid, Aridis shall pay up to one-third of the amount but not more than 5% of net sales from compounds containing gallium citrate or gallium nitrate citrate as an active ingredient for that calendar year (except that in the fifth installment, if any, the Company shall pay the remaining unpaid portion of the awarded amount). In addition to the amount payable above, the Company will pay to Cystic Fibrosis Foundation a one-time amount equal to the amount of funding from Cystic Fibrosis Foundation under the agreement, within sixty days after the end of the first calendar year during which aggregate net sales of compounds containing gallium citrate or gallium nitrate citrate as an active ingredient exceed $100 million. In the event that Aridis licenses rights to the product in the field to a third party, sells the product, or consummates a change of control transaction prior to the first commercial sale, Aridis shall pay to Cystic Fibrosis Foundation an amount equal to two times the actual awarded amount under the agreement, if the change of control transaction occurs prior to the completion of the first Phase IIb (or equivalent) clinical study with respect to the product; and four times the actual awarded amount if the change of control transaction occurs after the completion of the Phase IIb clinical trial specified above. The payment shall be made within sixty days after the closing of such a transaction. Joint Venture Agreement In February 2018, the Company entered into a joint venture agreement (the “JV Agreement”) with Shenzen Hepalink Pharmaceutical Group Co., Ltd., the Company’s largest shareholder and a Chinese entity (“Hepalink”), for developing and commercializing products for infectious diseases. Under the terms of the agreement, the Company is obligated to contribute $1 million and the licensing of its technology relating to the Company’s AR-101 and AR-301 product candidates for use in the joint venture entity (the “JV Entity”) and will initially own 49% of the JV Entity. On July 2, 2018, the Company received final approval from the government of the Peoples Republic of China. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 10. Subsequent Events Initial Public Offering In connection with the IPO, the Company effected a reverse stock split of its common stock at a ratio of 1 for 6.417896, effective August 3, 2018. On August 13, 2018, the Company’s registration statement on Form S-1 relating to its IPO was declared effective by the SEC. The IPO closed on August 16, 2018 and the Company issued and sold 2,000,000 common shares at a public offering price of $13.00 per share. Gross proceeds totaled $26.0 million and net proceeds totaled $22.9 million after deducting underwriting discounts and commissions of $1.8 million and other offering expenses of approximately $1.3 million. The underwriters of the IPO partially exercised their over-allotment option, and on August 30, 2018, the Company issued and sold 192,824 common shares at a public offering price of $13.00 per share for gross proceeds totaling approximately $2.5 million and net proceeds of approximately $2.3 million after deducting underwriting discounts and commissions of approximately $0.2 million. In connection with the IPO, the holders of a majority of the Series A Preferred Stock approved the mandatory conversion of the Series A Preferred Stock into one share of common stock for every 6.417896 shares of Series A Preferred Stock which converted immediately prior to the consummation of the IPO. Upon conversion, a total of 5,744,586 shares of common stock were issued for the converted Series A Preferred Stock which includes the accrued dividends upon conversion. All warrants to purchase Series A Preferred Stock became warrants to purchase common stock, adjusted for the one for 6.417896 shares reverse stock split. Amendment to Joint Venture Agreement On August 24, 2018, the Company and Hepalink entered into an amendment to the JV Agreement (the “Amendment”), which was effective as of August 6, 2018. Pursuant to the Amendment, the Company granted an exclusive license of its AR-105 product candidate to the JV Entity, and Hepalink will contribute an additional $1.2 million to the JV Entity. Pursuant to the JV Agreement and the Amendment, Hepalink is obligated to contribute the equivalent of $7.2 million to the JV Entity and the Company is required to contribute (i) $1.0 million in cash and (ii) the license to AR-101, AR-301 and AR-105. Giving effect to the JV Agreement and the Amendment, Hepalink and the Company will continue to own 51% and 49%, respectively, of the capital of the JV Entity. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Such estimates include those related to the evaluation of our ability to continue as a going concern, revenue recognition, long-lived assets, income taxes, assumptions used in the Black-Scholes-Merton (“BSM”) model to calculate the fair value of stock-based compensation, Monte Carlo Simulation (“MSM”) model to calculate the fair value of warrants, deferred tax asset valuation allowances, valuation of the Company’s common and convertible preferred stock, fair value assumptions used in the valuation of warrants, preclinical study and clinical trial accruals and various accrued liabilities. Actual results could differ from those estimates. |
Concentration of Risk | Concentration of Risk The Company’s cash and cash equivalents are maintained at financial institutions in the United States of America. Deposits held by these institutions may exceed the amount of insurance provided on such deposits. For the three and six months ended June 30, 2018 and 2017, one customer accounted for 100% of total revenue. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of checking account and money market account balances. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company considers the credit worthiness of its customers, but does not require collateral in advance of a sale. The Company evaluates collectability and maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio when necessary. The allowance is based on the Company’s best estimate of the amount of losses in the Company’s existing accounts receivable, which is based on customer creditworthiness, facts and circumstances specific to outstanding balances, and payment terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2018 and December 31, 2017, there were no accounts receivable or allowances for doubtful accounts. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight‑line method over the estimated useful lives of the assets, generally between three and five years. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the consolidated statement of operations and comprehensive loss in the period realized. |
Intangible Assets | Intangible Assets Intangible assets are recorded at cost and amortized over the estimated useful life of the asset. Intangible assets consist of licenses with various institutions whereby the Company has rights to use intangible property obtained from such institutions. |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment is measured by the excess of the carrying amount of the assets over fair value less the costs to sell the assets, generally determined using the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets as of June 30, 2018 and December 31, 2017. |
Revenue Recognition | Revenue Recognition Revenue is recognized in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. During the three and six months ended June 30, 2018 and 2017, revenue consisted of grant revenue. We recognize revenue under such awards under the milestone method, up to the limit of the prior approval funding amounts, and when we have determined that we have earned the right to receive the recognized portion according to the terms of the original grant awarded. In December 2016, the Company received an award from the Cystic Fibrosis Foundation (“CF Foundation”) for approximately $2,902,000. The agreement contains an upfront payment of $200,000 which is being recognized straight‑line over the term of the contract as we believe the upfront fee relates to services performed throughout the contract period and the upfront fee does not represent a substantive milestone within the agreement. Recognition of revenue for the remaining payments under the agreement will be recognized under the milestone method as substantive milestones are met. The milestones relate to pre‑clinical research activities. The agreement also specifies that we are obligated to cumulatively spend on the development program at least an equal amount as it receives from the non‑profit organization. In the event that we do not spend as much as we received under the agreement, we are obligated to return any overage to the non‑profit organization. For the three months ended June 30, 2018 and 2017, the Company had grant revenue of $22,000 and $22,000, respectively. For the six months ended June 30, 2018 and 2017, the Company had grant revenue of $344,000 and $44,000, respectively. All grant revenue was derived from our award agreement with the CF Foundation. In 2017, the Company entered into a collaborative research and development agreement with GlaxoSmithKline plc (“GSK”). In accordance with the agreement, we received an upfront fee and are due annual fees and amounts for development work to be performed as specifically outlined under the agreement. The work to be performed was delineated into three specific research projects. In assessing the appropriate revenue recognition related to a collaboration agreement, we first determined whether the arrangement includes multiple elements, such as the delivery of intellectual property rights and research and development services. The multiple elements were analyzed to determine whether the deliverables could be separated or whether they must be accounted for as a single unit of accounting. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our balance sheet. Recognition of revenue under the contract will be based on the terms of the contract and will be recognized under the proportional performance method derived from the completion of certain stages as defined within the contract. For the three and six months ended June 30, 2018 and 2017, no collaboration revenue was recorded under the Company’s agreement with GSK. |
Costs for Collaborative Arrangements | Costs for Collaborative Arrangements Costs incurred under collaborative arrangements include personnel costs, laboratory supplies and fees paid to third parties. These amounts are included in research and development in the accompanying consolidated statement of operations. For the three months ended June 30, 2018 and 2017, the Company incurred expenses of $161,000 and $165,000, respectively. For the six months ended June 30, 2018 and 2017, the Company incurred expenses of $318,000 and $301,000, respectively, related to its collaborative arrangement. |
Research and Development | Research and Development Research and development costs are charged to operations as incurred. Research and development expenses consist of salaries and benefits, laboratory supplies, consulting fees and fees paid to third parties. |
Stock-Based Compensation | Stock‑Based Compensation The Company recognizes compensation expense for all stock‑based awards to employees and directors based on the grant‑date estimated fair values, net of an estimated forfeiture rate. The Company recognizes stock‑based compensation cost for employees and directors on a straight‑line basis over the requisite service period for the award. Stock‑based compensation expense is recognized only for those awards that are ultimately expected to vest. The Company estimates forfeitures based on an analysis of historical employee turnover and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors. The Company will revise the forfeiture estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Changes in forfeiture estimates impact stock‑based compensation cost in the period in which the change in estimate occurs. The BSM option pricing model incorporates various highly sensitive assumptions, including the fair value of the Company’s common stock, expected volatility, expected term and risk‑free interest rates. The weighted‑average expected life of options was calculated using the simplified method as prescribed by the SEC’s Staff Accounting Bulletin No. 107 (“SAB No. 107”). This decision was based on the lack of relevant historical data due to the Company’s limited historical experience. In addition, due to the Company’s limited historical data, the estimated volatility also reflects the application of SAB No. 107, incorporating the historical volatility of comparable companies whose stock prices are publicly available. The risk‑free interest rate for the periods within the expected term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield was zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The Company accounts for stock‑based compensation arrangements with non‑employees by recording the expense of such services based on the estimated fair value of the common stock at the measurement date. The value of the equity instrument, including adjustment to fair value at each balance sheet date, is charged to net loss over the term of the service agreement. Prior to the completion of the Company’s initial public offering of common stock on August 16, 2018, due to the absence of a public market trading for the Company’s common stock, it was necessary to estimate the fair value of the common stock underlying the Company’s stock-based awards when performing fair value calculations. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by the relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the positions sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. At each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. |
Comprehensive Loss | Comprehensive Loss The Company has no items of comprehensive income or loss other than net loss. |
Loss Per Share | Loss Per Share Basic loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted‑average number of common shares outstanding during the period. For diluted loss per share calculation purposes, the net loss available to commons shareholders is adjusted to add back any preferred stock dividends and any interest on convertible debt reflected in the consolidated statement of operations for the respective periods. The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Convertible preferred stock 5,640,274 4,793,457 5,640,274 4,793,457 Stock options to purchase common stock 742,124 487,339 742,124 487,339 Preferred stock warrants 1,359,635 1,301,817 1,359,635 1,301,817 Common stock warrants 607,295 707,896 607,295 707,896 8,349,328 7,290,509 8,349,328 7,290,509 The convertible preferred stock and preferred stock warrants in the previous table reflect the conversion of these instruments into their common stock equivalents as of the dates reported. |
JOBS Act Accounting Election | JOBS Act Accounting Election The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to take advantage of this provision and, as a result, we will adopt the extended transition period available under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided under the JOBS Act. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting,” which aligns the measurement and classification guidance for share-based payments to nonemployees with that for employees, with certain exceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities to recognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) they would if they paid cash for the goods or services, but it moves the guidance to ASC 718. The guidance also allows nonpublic entities to account for nonemployee awards using certain practical expedients that are already available for employee awards, but the same accounting policies must be used for awards to both employees and nonemployees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017‑11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of adopting this guidance. In May 2017, the FASB issued ASU 2017‑09, “Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting,” to provide clarity and reduce both diversity in practice and cost complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a stock‑based payment award. ASU 2017‑09 also provides guidance about the types of changes to the terms or conditions of a share‑based payment award that require an entity to apply modification accounting in accordance with Topic 718. For all entities, including emerging growth companies, the standard is effective for annual periods beginning after December 15, 2017, and for interim periods therein. Early adoption is permitted. The adoption of this standard did not have a material effect. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing.” This clarifies the principle for determining whether a good or service is “separately identifiable” from other promises in the contract and, therefore, should be accounted for as a separate performance obligation. In that regard, ASU 2016-10 requires that an entity determine whether its promise is to transfer individual goods or services to the customer, or a combined item (or items) to which the individual goods and services are inputs. In addition, ASU 2016-10 categorizes intellectual property, or IP, into two categories: “functional” and “symbolic.” Functional IP has significant standalone functionality. All other IP is considered symbolic IP. Revenue from licenses of functional IP is generally recognized at a point in time, while revenue from licenses of symbolic IP is recognized over time. The new standard is effective for the Company on January 1, 2019. The Company is currently evaluating the impact of adopting this guidance. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of potentially dilutive securities excluded from computation of diluted net loss per share | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Convertible preferred stock 5,640,274 4,793,457 5,640,274 4,793,457 Stock options to purchase common stock 742,124 487,339 742,124 487,339 Preferred stock warrants 1,359,635 1,301,817 1,359,635 1,301,817 Common stock warrants 607,295 707,896 607,295 707,896 8,349,328 7,290,509 8,349,328 7,290,509 |
Fair Value Disclosure (Tables)
Fair Value Disclosure (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosure | |
Schedule of categorization of financial instruments within the valuation hierarchy | Fair Value at June 30, 2018 ($ in thousands) Total Level 1 Level 2 Level 3 Liabilities: Dividends payable $ 1,352 $ — $ — $ 1,352 Warrant liability 8,847 — — 8,847 Totals $ 10,199 $ — $ — $ 10,199 Fair Value at December 31, 2017 ($ in thousands) Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 11,868 $ — $ — $ 11,868 Totals $ 11,868 $ — $ — $ 11,868 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Balance Sheet Components | |
Schedule of property and equipment, net | Property and equipment, net consist of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Lab equipment $ 1,592 $ 940 Computer equipment and software 25 25 1,617 965 Less: Accumulated depreciation (337) (215) $ 1,280 $ 750 |
Schedule of intangible assets, net | Intangible assets, net consist of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Licenses $ 81 $ 81 81 81 Less: Accumulated amortization (40) (38) $ 41 $ 43 |
Schedule of accrued liabilities | Accrued liabilities consist of the following at June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Research and development services $ 1,632 $ 1,713 Payroll related expenses 165 207 Professional services 532 201 Other 1 — $ 2,330 $ 2,121 |
Warrants (Tables)
Warrants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Warrants | |
Schedule of fair value of derivative warrants | The following table (in thousands) summarizes the Company’s activity and fair value calculations of its derivative warrants for six months ended June 30, 2018: Warrant Liability Balance, December 31, 2017 $ 11,868 Change in fair value of warrants (3,021) Balance, June 30, 2018 $ 8,847 |
Common Stock (Tables)
Common Stock (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Common Stock | |
Schedule of company reserved common stock for future issuance | As of June 30, 2018, the Company had reserved the following common stock for future issuance: Shares reserved for conversion of preferred stock 5,723,919 Shares reserved for exercise of outstanding warrants to purchase preferred stock 1,359,635 Shares reserved for exercise of outstanding warrants to purchase common stock 607,295 Shares reserved for exercise of outstanding options to purchase common stock 724,124 Shares reserved for issuance of future options 84,055 8,499,028 As of December 31, 2017, the Company had reserved the following common stock for future issuance: Shares reserved for conversion of preferred stock 5,640,274 Shares reserved for exercise of outstanding warrants to purchase preferred stock 1,359,635 Shares reserved for exercise of outstanding warrants to purchase common stock 607,295 Shares reserved for exercise of outstanding options to purchase common stock 603,291 Shares reserved for issuance of future options 144,980 8,355,475 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stock-Based Compensation | |
Schedule of fair value of the options granted estimated using assumptions | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Expected term (in years) N/A N/A 6.25 6.25 Expected volatility N/A N/A 78%‑79% 79%‑80% Risk-free interest-rate N/A N/A 2.22% ‑ 2.62% 1.83% ‑ 2.20% Dividend yield N/A N/A 0% 0% |
Schedule of stock option activity | Options Outstanding Shares Weighted‑ Available Number Average for Grant of Shares Exercise Price Balance — December 31, 2017 144,980 603,291 $ 9.52 Additional shares reserved 77,908 — $ — Options granted (191,995) 191,995 $ 17.08 Options cancelled 53,162 (53,162) $ 9.98 Balance — June 30, 2018 84,055 742,124 $ 11.45 |
Schedule of stock-based compensation expense | The Company recognized stock compensation as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Research and development $ 139 $ 81 $ 280 $ 133 General and administrative $ 179 $ 276 $ 509 $ 853 $ 318 $ 357 $ 789 $ 986 |
Description of Business and B23
Description of Business and Basis of Presentation - Organization, Basis of Presentation and Consolidation (Details) | 6 Months Ended |
Jun. 30, 2018segmentitem | |
Description of Business and Basis of Presentation | |
The number of the Company's clinical candidates that are at the pivotal trial stage. | 2 |
Number of wholly-owned subsidiaries included in the consolidated financial statements of the Company | 2 |
Number of operating segments | segment | 1 |
Description of Business and B24
Description of Business and Basis of Presentation - Reverse Stock Split and Liquidity and Capital Resources (Details) $ / shares in Units, $ in Millions | Aug. 30, 2018USD ($)$ / sharesshares | Aug. 16, 2018USD ($)$ / sharesshares | Aug. 03, 2018 |
Description of Business and Basis of Presentation | |||
Ratio of reverse stock split | 6.417896 | ||
Subsequent Event | |||
Description of Business and Basis of Presentation | |||
Ratio of reverse stock split | 6.417896 | ||
Subsequent Event | Common Stock | |||
Description of Business and Basis of Presentation | |||
Ratio of reverse stock split | 6.417896 | ||
IPO | Subsequent Event | |||
Description of Business and Basis of Presentation | |||
Gross proceeds | $ 2.5 | $ 26 | |
Net proceeds | 2.3 | 22.9 | |
Underwriting discounts and commissions | $ 0.2 | 1.8 | |
Other offering expenses | $ 1.3 | ||
IPO | Subsequent Event | Common Stock | |||
Description of Business and Basis of Presentation | |||
Stock issued and sold | shares | 192,824 | 2,000,000 | |
Offering price per share | $ / shares | $ 13 | $ 13 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Concentration of Risk (Details) - Contract revenue - Customer risk - customer | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Summary of Significant Accounting Policies | ||||
Number of customers | 1 | 1 | 1 | 1 |
Concentration risk percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Accounts Receivable, Property and Equipment and Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounts Receivable and Allowance for Doubtful Accounts | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Impairment of Long Lived Assets | ||
Impairments of long lived assets | 0 | 0 |
Accounts receivable | Credit risk | ||
Accounts Receivable and Allowance for Doubtful Accounts | ||
Accounts receivable | $ 0 | $ 0 |
Minimum | ||
Accounts Receivable and Allowance for Doubtful Accounts | ||
Estimated useful life (in years) | 3 years | |
Maximum | ||
Accounts Receivable and Allowance for Doubtful Accounts | ||
Estimated useful life (in years) | 5 years |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017project | Dec. 31, 2016USD ($) | |
Summary of Significant Accounting Policies | ||||||
Revenue from contract with customers | $ 22,000 | $ 22,000 | $ 344,000 | $ 44,000 | ||
GSK | ||||||
Summary of Significant Accounting Policies | ||||||
Number of research projects | project | 3 | |||||
GSK | Collaboration revenue | ||||||
Summary of Significant Accounting Policies | ||||||
Revenue from contract with customers | 0 | 0 | 0 | 0 | ||
CF Foundation | Grant revenue | ||||||
Summary of Significant Accounting Policies | ||||||
Revenue from contract with customers | $ 22,000 | $ 22,000 | $ 344,000 | $ 44,000 | ||
CF Foundation | Contract and Grant Revenue | ||||||
Summary of Significant Accounting Policies | ||||||
Award amount | $ 2,902,000 | |||||
CF Foundation | Upfront payment | Contract revenue | ||||||
Summary of Significant Accounting Policies | ||||||
Revenue from contract with customers | $ 200,000 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Costs for Collaborative Arrangements and Stock-Based Compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock-Based Compensation | ||||
Dividend yield | 0.00% | |||
Research and development | ||||
Summary of Significant Accounting Policies | ||||
Collaborative arrangement expenses | $ 161,000 | $ 165,000 | $ 318,000 | $ 301,000 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies - Loss Per Share (Details) | Aug. 03, 2018 | Jun. 30, 2018shares | Jun. 30, 2017shares | Dec. 31, 2017shares | Dec. 31, 2016shares |
Summary of Significant Accounting Policies | |||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 8,349,328 | 7,290,509 | 8,349,328 | 7,290,509 | |
Ratio of reverse stock split | 6.417896 | ||||
Series A convertible preferred stock | |||||
Summary of Significant Accounting Policies | |||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 5,640,274 | 4,793,457 | 5,640,274 | 4,793,457 | |
2014 Equity Incentive Plan | |||||
Summary of Significant Accounting Policies | |||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 742,124 | 487,339 | 742,124 | 487,339 | |
Preferred stock warrants | |||||
Summary of Significant Accounting Policies | |||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 1,359,635 | 1,301,817 | 1,359,635 | 1,301,817 | |
Common stock warrants | |||||
Summary of Significant Accounting Policies | |||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 607,295 | 707,896 | 607,295 | 707,896 |
Fair Value Disclosure (Details)
Fair Value Disclosure (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Categorization of a financial instrument within the valuation hierarchy | ||
Liabilities | $ 10,199 | $ 11,868 |
Warrants | ||
Categorization of a financial instrument within the valuation hierarchy | ||
Liabilities | 8,847 | 11,868 |
Dividends Payable | ||
Categorization of a financial instrument within the valuation hierarchy | ||
Liabilities | 1,352 | |
Level 3 | ||
Categorization of a financial instrument within the valuation hierarchy | ||
Liabilities | 10,199 | 11,868 |
Level 3 | Warrants | ||
Categorization of a financial instrument within the valuation hierarchy | ||
Liabilities | 8,847 | $ 11,868 |
Level 3 | Dividends Payable | ||
Categorization of a financial instrument within the valuation hierarchy | ||
Liabilities | $ 1,352 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Property and Equipment, net | |||||
Property and Equipment, gross | $ 1,617,000 | $ 1,617,000 | $ 965,000 | ||
Less: Accumulated depreciation | (337,000) | (337,000) | (215,000) | ||
Property and equipment, net | 1,280,000 | 1,280,000 | 750,000 | ||
Depreciation expense | 72,000 | $ 4,000 | 122,000 | $ 8,000 | |
Lab equipment | |||||
Property and Equipment, net | |||||
Property and Equipment, gross | 1,592,000 | 1,592,000 | 940,000 | ||
Computer equipment and software | |||||
Property and Equipment, net | |||||
Property and Equipment, gross | $ 25,000 | $ 25,000 | $ 25,000 |
Balance Sheet Components - Inta
Balance Sheet Components - Intangible Assets, net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Intangible Assets, net | |||||
Intangible assets, gross | $ 81,000 | $ 81,000 | $ 81,000 | ||
Less: Accumulated amortization | (40,000) | (40,000) | (38,000) | ||
Intangible assets, net | 41,000 | 41,000 | 43,000 | ||
Amortization expense | 1,000 | $ 1,000 | 2,000 | $ 2,000 | |
Licenses | |||||
Intangible Assets, net | |||||
Intangible assets, gross | $ 81,000 | $ 81,000 | $ 81,000 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accrued Liabilities | ||
Research and development services | $ 1,632 | $ 1,713 |
Payroll related expenses | 165 | 207 |
Professional services | 532 | 201 |
Other | 1 | |
Accrued Liabilities, Current, Total | $ 2,330 | $ 2,121 |
Warrants - Common Stock Warrant
Warrants - Common Stock Warrant Expense (Details) - USD ($) | Dec. 12, 2016 | Nov. 30, 2015 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Warrants to Purchase Common Stock | |||||||
Total fair value of warrants | $ 8,847,000 | $ 8,847,000 | $ 11,868,000 | ||||
Stock-based compensation expense | 318,000 | $ 357,000 | 789,000 | $ 986,000 | |||
Common stock warrants | |||||||
Warrants to Purchase Common Stock | |||||||
Total fair value of warrants | $ 661,000 | ||||||
Vesting period | 5 years | ||||||
Stock-based compensation expense | $ 34,000 | $ 34,000 | $ 66,000 | $ 66,000 | |||
Common stock warrants | Vice Chairman of BOD | |||||||
Warrants to Purchase Common Stock | |||||||
Number of common stock warrants maybe issued | 234,860 | ||||||
Number of warrants issued | 234,860 | ||||||
Warrants exercise price | $ 14.50 | ||||||
Series A convertible preferred stock | Vice Chairman of BOD | Minimum | |||||||
Warrants to Purchase Common Stock | |||||||
Gross proceeds from sale of stock | $ 25,000,000 |
Warrants - Warrant Liability (D
Warrants - Warrant Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Warrants | ||||
Balance at beginning of the period | $ 11,868 | |||
Change in fair value of warrants | $ (3,058) | $ 2,178 | (3,021) | $ 4,593 |
Balance at end of the period | $ 8,847 | $ 8,847 |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) | Aug. 03, 2018 | Jun. 30, 2016 | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares |
Convertible Preferred Stock | ||||
Percentage of increase in outstanding preferred stock warrants if underwritten initial public offering not consummated | 100.00% | |||
Series A convertible preferred stock | ||||
Convertible Preferred Stock | ||||
Maximum amount of cash per each convertible preferred stock in case of liquidation, dissolution or winding up of the business | $ / shares | $ 2.05 | |||
Offering price per share | $ / shares | $ 2.95 | |||
Preferred stock dividend rate (in percentage) | 3.00% | |||
Accrued dividend amount | $ | $ 1,352,000 | |||
Preferred stock dividend as shares accrued | shares | 542,943 | |||
Issuance of convertible preferred stock (in shares) | shares | 2,033,898 | |||
Gross proceeds from issuance of convertible preferred stock | $ | $ 6,000,000 | |||
Net proceeds from issuance of convertible preferred stock after financing costs | $ | $ 5,400,000 | |||
Common Stock | IPO | Minimum | ||||
Convertible Preferred Stock | ||||
Offering price per share | $ / shares | $ 4.10 | |||
Common Stock | Series A convertible preferred stock | Subsequent Event | ||||
Convertible Preferred Stock | ||||
Convertible preferred stock conversion ratio | 6.417896 |
Common Stock (Details)
Common Stock (Details) - shares | Jun. 30, 2018 | Jun. 30, 2017 |
Common Stock | ||
Shares reserved for conversion of preferred stock | 5,723,919 | 5,640,274 |
Shares reserved for exercise of outstanding warrants to purchase preferred stock | 1,359,635 | 1,359,635 |
Shares reserved for exercise of outstanding warrants to purchase common stock | 607,295 | 607,295 |
Shares reserved for exercise of outstanding options to purchase common stock | 724,124 | 603,291 |
Shares reserved for issuance of future options | 84,055 | 144,980 |
Common stock for future issuance | 8,499,028 | 8,355,475 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
May 31, 2014 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock-Based Compensation | |||||
Stock-based compensation expense | $ 318 | $ 357 | $ 789 | $ 986 | |
2014 Equity Incentive Plan | |||||
Stock-Based Compensation | |||||
Common stock reserved for issuance of stock options | 233,722 | ||||
Annual increase in the number of shares to the shares of common stock | 77,908 | 77,908 | |||
Annual increase in the number of shares to the percentage of the issued and outstanding common stock | 20.00% | ||||
Vesting period (in years) | 4 years | ||||
Expiration period (in years) | 10 years | ||||
2014 Equity Incentive Plan | Minimum | |||||
Stock-Based Compensation | |||||
Voting rights of all classes of stock (in percent) | 10.00% | ||||
Exercise price for incentive and nonstatutory stock options to the percentage of fair market value | 110.00% |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Fair value of the options granted, estimated using assumptions | ||
Dividend yield | 0.00% | |
2014 Equity Incentive Plan | Employees | ||
Fair value of the options granted, estimated using assumptions | ||
Expected term (in years) | 6 years 3 months | 6 years 3 months |
Expected volatility, minimum | 78.00% | 79.00% |
Expected volatility, maximum | 79.00% | 80.00% |
Risk-free interest-rate, minimum | 2.22% | 1.83% |
Risk-free interest-rate, maximum | 2.62% | 2.20% |
Dividend yield | 0.00% | 0.00% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock option activity (Details) - 2014 Equity Incentive Plan - $ / shares | 1 Months Ended | 6 Months Ended |
May 31, 2014 | Jun. 30, 2018 | |
Shares Available for Grant | ||
Shares Available for Grant, beginning of the period (in shares) | 144,980 | |
Shares Available for Grant, Additional shares reserved (in shares) | 77,908 | 77,908 |
Shares Available for Grant, Options granted (in shares) | (191,995) | |
Shares Available for Grant, Options cancelled (in shares) | 53,162 | |
Shares Available for Grant, end of the period (in shares) | 84,055 | |
Options Outstanding, Number of Shares | ||
Number of Shares, beginning of the period (in shares) | 603,291 | |
Number of Shares, Options granted (in shares) | 191,995 | |
Number of Shares, Options cancelled (in shares) | (53,162) | |
Number of Shares, end of the period (in shares) | 742,124 | |
Options Outstanding, Weighted-Average Exercise Price | ||
Weighted-Average Exercise Price, beginning of the period (in dollars per share) | $ 9.52 | |
Weighted-Average Exercise Price, Options granted (in dollars per share) | 17.08 | |
Weighted-Average Exercise Price, Options cancelled (in dollars per share) | 9.98 | |
Weighted-Average Exercise Price, end of the period (in dollars per share) | $ 11.45 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 318 | $ 357 | $ 789 | $ 986 |
Unrecognized stock-based compensation expenses | 3,600 | 3,600 | ||
Aggregate intrinsic value, based on the fair market value of the common stock of options vested | 2,100 | |||
Research and development | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | 139 | 81 | 280 | 133 |
General and administrative | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 179 | $ 276 | $ 509 | $ 853 |
Commitments and Contingencies -
Commitments and Contingencies - Leases and Contingencies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Commitments and Contingencies | ||||
Notice period for termination of lease | 90 days | |||
Rent expense | $ 77,000,000 | $ 74,000,000 | $ 155,000,000 | $ 147,000,000 |
Commitments and Contingencies43
Commitments and Contingencies - Cystic Fibrosis Foundation Agreement and Joint Venture Agreement (Details) | 1 Months Ended | |
Feb. 28, 2018USD ($) | Dec. 31, 2016USD ($)iteminstallment | |
Cystic Fibrosis Foundation Agreement | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Amount of award received for advance research on potential drugs | $ 2,902,097 | |
Period for payment of annual installments | 90 days | |
Maximum percentage of awarded amount payable for calendar year | 5.00% | |
Maximum percentage of awarded amount of net sales from compounds containing gallium citrate or gallium nitrate citrate as an active ingredient for that calendar year | 33.33% | |
One-time payment period if aggregate sales exceeds the specified limit | 60 days | |
Aggregate net sales limit for one-time payment | $ 100,000,000 | |
Number of multiplication on awarded amount payable if change of control prior to completion of the first Phase IIb (or equivalent) clinical study | item | 2 | |
Number of multiplication on awarded amount payable if change of control after completion of the first Phase IIb (or equivalent) clinical study | item | 4 | |
Period for payment of awarded money on change of control transaction occurs | 60 days | |
Cystic Fibrosis Foundation Agreement | Minimum | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Number of annual installments for repayment of award | installment | 3 | |
Cystic Fibrosis Foundation Agreement | Maximum | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Number of annual installments for repayment of award | installment | 5 | |
Joint Venture Agreement with Shenzen Hepalink Pharmaceutical | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Contributions made in the joint venture | $ 1,000,000 | |
Percentage of ownership interest | 49.00% |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Millions | Aug. 30, 2018USD ($)$ / sharesshares | Aug. 24, 2018USD ($) | Aug. 16, 2018USD ($)$ / sharesshares | Aug. 03, 2018shares | Feb. 28, 2018USD ($) |
Subsequent Events | |||||
Ratio of reverse stock split | 6.417896 | ||||
Subsequent Event | |||||
Subsequent Events | |||||
Ratio of reverse stock split | 6.417896 | ||||
Joint Venture Agreement with Shenzen Hepalink Pharmaceutical | |||||
Subsequent Events | |||||
Contributions made in the joint venture | $ 1 | ||||
Percentage of ownership interest | 49.00% | ||||
Joint Venture Agreement with Shenzen Hepalink Pharmaceutical | Subsequent Event | |||||
Subsequent Events | |||||
Contributions made in the joint venture | $ 1 | ||||
Percentage of ownership interest | 49.00% | ||||
Joint Venture Agreement with Shenzen Hepalink Pharmaceutical | Shenzen Hepalink Pharmaceutical | Subsequent Event | |||||
Subsequent Events | |||||
Additional contribution | $ 1.2 | ||||
Obligation contribute to JV Entity | $ 7.2 | ||||
Percentage of co-venture ownership interest | 51.00% | ||||
Common stock warrants | Subsequent Event | |||||
Subsequent Events | |||||
Ratio of reverse stock split | 6.417896 | ||||
IPO | Subsequent Event | |||||
Subsequent Events | |||||
Gross proceeds | $ 2.5 | $ 26 | |||
Net proceeds | 2.3 | 22.9 | |||
Underwriting discounts and commissions | $ 0.2 | 1.8 | |||
Other Offering Expenses | $ 1.3 | ||||
Common Stock | Subsequent Event | |||||
Subsequent Events | |||||
Ratio of reverse stock split | 6.417896 | ||||
Issuance of shares | shares | 5,744,586 | ||||
Common Stock | IPO | Subsequent Event | |||||
Subsequent Events | |||||
Stock issued and sold | shares | 192,824 | 2,000,000 | |||
Share Price | $ / shares | $ 13 | $ 13 |