Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 07, 2019 | Jun. 29, 2018 | |
Document And Entity Information Abstract | |||
Entity Registrant Name | Zynerba Pharmaceuticals, Inc. | ||
Entity Central Index Key | 0001621443 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Public Float | $ 111.4 | ||
Entity Common Stock, Shares Outstanding | 21,069,996 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 59,763,773 | $ 62,510,277 |
Incentive and tax receivables | 3,444,620 | 3,983,604 |
Prepaid expenses and other current assets | 3,747,087 | 1,733,701 |
Total current assets | 66,955,480 | 68,227,582 |
Property and equipment, net | 371,963 | 164,527 |
Other assets | 662,200 | |
Total assets | 67,327,443 | 69,054,309 |
Current liabilities: | ||
Accounts payable | 4,461,567 | 3,355,255 |
Accrued expenses | 5,264,215 | 3,915,491 |
Deferred grant revenue | 171,975 | |
Total current liabilities | 9,725,782 | 7,442,721 |
Deferred grant revenue, long-term | 662,000 | |
Total liabilities | 9,725,782 | 8,104,721 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value; 200,000,000 shares authorized; 17,626,873 shares issued and outstanding at December 31, 2018 and 13,553,873 shares issued and outstanding at December 31, 2017 | 17,627 | 13,554 |
Additional paid-in capital | 175,476,075 | 138,916,900 |
Accumulated deficit | (117,892,041) | (77,980,866) |
Total stockholders' equity | 57,601,661 | 60,949,588 |
Total liabilities and stockholders' equity | $ 67,327,443 | $ 69,054,309 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 17,626,873 | 13,553,873 |
Common stock, shares outstanding | 17,626,873 | 13,553,873 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenue | $ 86,000 | $ 0 | $ 7,250 |
Operating expenses: | |||
Research and development | 27,245,043 | 22,806,107 | 16,784,626 |
General and administrative | 13,238,787 | 10,016,902 | 6,430,252 |
Total operating expenses | 40,483,830 | 32,823,009 | 23,214,878 |
Loss from operations | (40,397,830) | (32,823,009) | (23,207,628) |
Other income (expense): | |||
Interest income | 961,323 | 519,554 | 80,222 |
Foreign exchange (loss) gain | (474,668) | 291,151 | (189,497) |
Loss on disposal of equipment | 0 | 0 | (99,147) |
Total other income (expense) | 486,655 | 810,705 | (208,422) |
Loss before income taxes | (39,911,175) | (32,012,304) | (23,416,050) |
Income tax benefit | 0 | 0 | (27,543) |
Net loss | $ (39,911,175) | $ (32,012,304) | $ (23,388,507) |
Net loss per share basic and diluted | $ (2.61) | $ (2.48) | $ (2.58) |
Basic and diluted weighted average shares outstanding | 15,308,886 | 12,914,814 | 9,070,232 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY - USD ($) | Common stock | Additional paid-capital | Accumulated deficit | Total |
Balance at Dec. 31, 2015 | $ 9,200 | $ 62,276,779 | $ (22,580,055) | $ 39,705,924 |
Balance (in shares) at Dec. 31, 2015 | 9,199,919 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||
Issuance of common stock, net of issuance costs | $ 795 | 9,999,730 | 10,000,525 | |
Issuance of common stock, net of issuance costs (in shares) | 794,906 | |||
Stock-based compensation expense | 3,269,366 | 3,269,366 | ||
Net loss | (23,388,507) | (23,388,507) | ||
Balance at Dec. 31, 2016 | $ 9,995 | 75,545,875 | (45,968,562) | 29,587,308 |
Balance (in shares) at Dec. 31, 2016 | 9,994,825 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||
Issuance of common stock, net of issuance costs | $ 3,517 | 57,289,524 | 57,293,041 | |
Issuance of common stock, net of issuance costs (in shares) | 3,516,594 | |||
Exercise of stock options | $ 42 | 434,649 | 434,691 | |
Exercise of stock options (in shares) | 42,454 | |||
Stock-based compensation expense | 5,646,852 | 5,646,852 | ||
Net loss | (32,012,304) | (32,012,304) | ||
Balance at Dec. 31, 2017 | $ 13,554 | 138,916,900 | (77,980,866) | 60,949,588 |
Balance (in shares) at Dec. 31, 2017 | 13,553,873 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||
Issuance of common stock, net of issuance costs | $ 4,062 | 29,933,443 | 29,937,505 | |
Issuance of common stock, net of issuance costs (in shares) | 4,062,500 | |||
Issuance of restricted stock | $ 11 | (11) | ||
Issuance of restricted stock (in shares) | 10,500 | |||
Stock-based compensation expense | 6,625,743 | 6,625,743 | ||
Net loss | (39,911,175) | (39,911,175) | ||
Balance at Dec. 31, 2018 | $ 17,627 | $ 175,476,075 | $ (117,892,041) | $ 57,601,661 |
Balance (in shares) at Dec. 31, 2018 | 17,626,873 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net loss | $ (39,911,175) | $ (32,012,304) | $ (23,388,507) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 99,572 | 94,211 | 75,301 |
Stock-based compensation | 6,625,743 | 5,646,852 | 3,269,366 |
Loss on disposal of equipment | 0 | 0 | 99,147 |
Changes in operating assets and liabilities: | |||
Incentive and tax receivables | 538,984 | (369,661) | (3,257,225) |
Prepaid expenses and other assets | (1,291,186) | (324,304) | (285,041) |
Deferred grant revenue | (833,975) | (7,250) | |
Accounts payable | 1,103,013 | 1,492,171 | 1,044,127 |
Accrued expenses | 1,271,673 | (369,416) | 2,011,916 |
Net cash used in operating activities | (32,397,351) | (25,842,451) | (20,438,166) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (286,658) | (115,356) | (109,628) |
Net cash used in investing activities | (286,658) | (115,356) | (109,628) |
Cash flows from financing activities: | |||
Proceeds from the issuance of common stock, net of offering costs | 29,937,505 | 57,293,041 | 10,000,525 |
Payment of financing costs | (225,439) | ||
Proceeds from the exercise of stock options | 434,691 | ||
Net cash provided by financing activities | 29,937,505 | 57,502,293 | 10,000,525 |
Net (decrease) increase in cash and cash equivalents | (2,746,504) | 31,544,486 | (10,547,269) |
Cash and cash equivalents at beginning of year | 62,510,277 | 30,965,791 | 41,513,060 |
Cash and cash equivalents at end of year | 59,763,773 | 62,510,277 | 30,965,791 |
Supplemental disclosures of cash flow information: | |||
Deferred financing costs included in accounts payable and accrued expenses | 60,000 | $ 15,000 | |
Changes in property and equipment acquired but not paid | $ 20,350 | $ (19,444) |
Nature of Business and Liquidit
Nature of Business and Liquidity | 12 Months Ended |
Dec. 31, 2018 | |
Nature of Business and Liquidity | |
Nature of Business and Liquidity | (1) Nature of Business and Liquidity Zynerba Pharmaceuticals, Inc., together with its subsidiary, Zynerba Pharmaceuticals Pty Ltd (the “Company”, “we”), is a clinical stage specialty pharmaceutical company focused on the development of pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders, including Fragile X syndrome, Autism Spectrum Disorder, 22q11.2 Deletion Syndrome, and a heterogeneous group of rare and ultra-rare epilepsies known as developmental and epileptic encephalopathies . The Company was incorporated on January 31, 2007 under the laws of the State of Delaware as AllTranz, Inc. and changed its name to Zynerba Pharmaceuticals, Inc. in August 2014. The Company has incurred losses and negative cash flows from operations since inception and has an accumulated deficit of $117.9 million as of December 31, 2018. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant revenue from its product candidates currently in development. The Company's primary source of liquidity has been the issuance of equity securities. During the year ended December 31, 2016, the Company entered into an Open Market Sales Agreement (the “2016 Sales Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which the Company sold and issued 794,906 shares of common stock in the open market at a weighted average selling price of $13.39 per share, for gross proceeds of $10.6 million. Net proceeds received after deducting commissions and offering expenses were $10.0 million. In the first quarter of 2017, the Company completed a follow-on public offering, selling 3,220,000 shares at an offering price of $18.00 per share resulting in gross proceeds of $58.0 million. Net proceeds received after deducting underwriting and commissions and offering expenses were $54.2 million. On June 9, 2017, the Company terminated the 2016 Sales Agreement and entered into a new Open Market Sales Agreement (the “Sales Agreement”) with Jefferies pursuant to which the Company may sell, from time to time, up to $50.0 million of its common stock. During 2017, the Company sold and issued 296,594 shares of common stock in the open market at a weighted average selling price of $10.74 per share, for gross proceeds of $3.2 million. Net proceeds after deducting underwriting and commissions and offering expenses were $3.0 million. In July 2018, the Company completed a follow-on public offering, selling 4,062,500 shares of its common stock at an offering price of $8.00 per share, resulting in gross proceeds of $32.5 million. Net proceeds received after deducting underwriting discounts and commissions and offering expenses were $29.9 million. From January 29, 2019 through March 6, 2019, the Company sold and issued 3,439,523 shares of common stock under the Sales Agreement with Jefferies in the open market at a weighted average selling price of $5.44 per share, resulting in gross proceeds of $18.7 million. Net proceeds after deducting commissions and offering expenses were $18.1 million. Management believes that current cash and cash equivalents, including the net proceeds from the issuance of common stock from January 29, 2019 through March 6, 2019, is sufficient to fund operations and capital requirements into the first quarter of 2021 . Substantial additional financings will be needed by the Company to fund its operations, to complete clinical development of and to commercially develop its product candidates. There is no assurance that such financing will be available when needed or on acceptable terms. The Company is subject to those risks associated with any clinical stage pharmaceutical company that has substantial expenditures for research and development. There can be no assurance that the Company's research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees and consultants. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies a. Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-K and Article 10 of Regulation S-X. b. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from such estimates. c. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts payable and accrued expenses approximate fair value given their short‑term nature. d. Cash and Cash Equivalents The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. As of December 31, 2018 and 2017, the Company invested a portion of its cash balances in money market funds that seek to maintain a stable net asset value. These investments have been included as cash equivalents on the consolidated balance sheets. e. Incentive and Tax Receivable The Company’s subsidiary, Zynerba Pharmaceuticals Pty Ltd (the “Subsidiary”), is incorporated in Australia. The Subsidiary is eligible to participate in an Australian research and development tax incentive program. As part of this program, the Subsidiary is eligible to receive a cash refund from the Australian Taxation Office for a percentage of the research and development costs expended by the Subsidiary in Australia. The cash refund is available to eligible companies with an annual aggregate revenue of less than $20.0 million (Australian) during the reimbursable period. The Company’s estimate of the amount of cash refund it expects to receive related to the Australian research and development tax incentive program is included in “Incentive and tax receivables” in the accompanying consolidated balance sheets. As of December 31, 2018, the Company’s estimate of the amount of cash refund it expects to receive in 2019 for 2018 eligible spending as part of this incentive program was $3.1 million and was recorded as a current asset. During the years ended December 31, 2018, 2017 and 2016, the Company received $3.6 million, $3.6 million and $0.4 million, respectively, in research and development tax incentive refunds related to qualified Australian expenses under this incentive program. In addition, the Subsidiary incurs Goods and Services Tax (“GST”) on services provided by Australian vendors. As an Australian entity, the Subsidiary is entitled to a refund of the GST paid. The Company’s estimate of the amount of cash refund it expects to receive related to GST incurred is included in “Incentive and tax receivables” in the accompanying consolidated balance sheets. As of December 31, 2018, the incentive and tax receivables included $0.3 million for refundable GST on expenses incurred with Australian vendors during the three months ended December 31, 2018. f. Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight‑line basis over their estimated useful lives. Leasehold improvements are amortized over the estimated useful life of the assets or the remaining lease term at the time the asset is placed into service, whichever is shorter. Repairs and maintenance costs are expensed as incurred. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in other expenses. g. Impairment of Long‑Lived Assets The Company assesses the recoverability of its long‑lived assets, which include property and equipment, whenever significant events or changes in circumstances indicate an impairment may have occurred. If indicators of an impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the years ended December 31, 2018, 2017 and 2016, the Company determined that there was no impairment of its long‑lived assets. h. Research and Development Research and development costs are expensed as incurred and are primarily comprised of external research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, consultants and employee-related expenses including salaries and benefits. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that the Company considers in preparing these estimates include the number of patients enrolled in studies, milestones achieved and other criteria related to the efforts of its vendors. These estimates will be subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company will record net prepaid or accrued expenses related to these costs. Research and development expenses are recorded net of expected refunds of eligible research and development costs paid to Australian vendors pursuant to the Australian research and development tax incentive program and GST incurred on services provided by Australian vendors. The Company incurred research and development expenses of $27.2 million, $22.8 million and $16.8 million for the years ended December 31, 2018, 2017 and 2016, respectively, which were net of $3.4 million, $3.8 million, and $3.4 million, respectively, associated with the Australian research and development tax incentive program. i. Stock‑Based Compensation The Company measures employee and nonemployee stock‑based awards at grant‑date fair value and records compensation expense on a straight‑line basis over the requisite service period of the award. Stock‑based awards issued to non‑employees, if any, are revalued until the award vests. For restricted stock the Company uses the closing price of the Company’s common stock on the date of grant. The Company uses the Black‑Scholes option pricing model to estimate the fair value of its stock option awards. Estimating the fair value of stock option awards requires management to apply judgment and make estimates, including the expected volatility of the Company’s common stock, the expected term of the Company’s stock options and the expected dividend yield. As a result, if factors change and management uses different assumptions, stock‑based compensation expense could be materially different for future awards. The expected term of stock options was estimated using the “simplified method,” as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post vesting employment termination behavior for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For expected stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected term of the option. j. Revenue Recognition Revenue related to research grants and research services for third party product development are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. Grant revenue received is deferred until the related expenditures are incurred. Revenue was entirely related to work performed in connection with grants received in years prior to 2015. k. Income Taxes The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the consolidated financial statements in the period of enactment. The carrying amount of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. As of December 31, 2018 and 2017, the Company has concluded that a full valuation allowance is necessary for its net deferred tax assets. The Company has no liability for unrecognized tax benefits or tax-related penalties or interest at December 31, 2018 and does not expect a significant change in the balance of unrecognized tax benefits within the next 12 months. l. Net Loss Per Share Basic net loss per share is determined using the weighted average number of shares of common stock outstanding during each period. Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as restricted stock and stock options, which would result in the issuance of incremental shares of common stock. Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of restricted stock and stock options would be anti-dilutive. The following potentially dilutive securities outstanding as of December 31, 2018, 2017 and 2016 have been excluded from the computation of diluted weighted average shares outstanding, as their effects on net loss per share for the periods presented would be anti‑dilutive: December 31, 2018 2017 2016 Stock options 3,152,267 2,386,538 1,808,493 Unvested restricted stock 10,500 108,730 253,702 3,162,767 2,495,268 2,062,195 m. Foreign Currency The Company has determined the functional currency of its Australian subsidiary to be the U.S. dollar. The Company records remeasurement gains and losses on monetary assets and liabilities, such as incentive and tax receivables and accounts payables, which are not in the functional currency of the operation. These remeasurement gains and losses are recorded in the consolidated statements of operations as they occur. n. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision‑making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. o . Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases , which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. The pronouncement is effective for interim and annual periods beginning after December 15, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. The Company will adopt the new leasing standards using a modified retrospective transition approach to be applied to leases existing as of, or entered into after, January 1, 2019. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments , which provides specific guidance related to eight cash flow classification issues. The pronouncement is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of the guidance in ASU No. 2016-15 in the first quarter of 2018 did not have an impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which requires changes in restricted cash and restricted cash equivalents to be explained on the statement of cash flows by including restricted cash and restricted cash equivalents in the beginning-of-period and end-of-period total cash and cash equivalents shown on the statement of cash flows. The pronouncement is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of the guidance in ASU No. 2016-18 in the first quarter of 2018 did not have an impact on the Company’s consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | (3) Fair Value Measurements The Company measures certain assets and liabilities at fair value in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures . ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (the exit price) in an orderly transaction between market participants at the measurement date. The guidance in ASC 820 outlines a valuation framework and creates a fair value hierarchy that serves to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value, the Company maximizes the use of quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities. Level 3 — Valuations based on unobservable inputs and models that are supported by little or no market activity. In accordance with the fair value hierarchy described above, the following table sets forth the Company's financial assets measured at fair value on a recurring basis: Fair Value Measurement Carrying amount as of December 31, 2018 as of December 31, 2018 Level 1 Level 2 Level 3 Cash equivalents (money market accounts) $ 59,554,458 $ 59,554,458 $ — $ — $ 59,554,458 $ 59,554,458 $ — $ — Fair Value Measurement Carrying amount as of December 31, 2017 as of December 31, 2017 Level 1 Level 2 Level 3 Cash equivalents (money market accounts) $ 61,133,457 $ 61,133,457 $ — $ — Certificate of deposit (included in prepaid expenses and other current assets) 20,171 20,171 — — $ 61,153,628 $ 61,153,628 $ — $ — |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | (4) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following as of December 31, 2018 and 2017: December 31, December 31, 2018 2017 Prepaid development expenses $ 2,671,815 $ 907,028 Prepaid insurance 393,451 355,838 Deferred financing costs 255,754 240,439 Other current assets 426,067 230,396 Total prepaid expenses and other current assets $ 3,747,087 $ 1,733,701 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Property and Equipment | (5) Property and Equipment Property and equipment consisted of the following as of December 31, 2018 and 2017: Estimated useful life December 31, December 31, (in years) 2018 2017 Equipment 2-5 $ 178,001 $ 85,417 Computer equipment 3-5 30,319 30,319 Furniture and fixtures 3-5 300,407 199,016 Leasehold improvements various 68,881 12,863 Construction in process 57,015 — Total cost 634,623 327,615 Less accumulated depreciation (262,660) (163,088) Property and equipment, net $ 371,963 $ 164,527 Depreciation expense was $99,572, $94,211 and $75,301 for the years ended December 31, 2018, 2017 and 2016 respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses | |
Accrued Expenses | (6) Accrued Expenses Accrued expenses consisted of the following as of December 31, 2018 and 2017: December 31, December 31, 2018 2017 Accrued compensation $ 2,188,801 $ 1,503,615 Accrued research and development 1,928,305 2,059,536 Grants payable 747,926 — Other 399,183 352,340 Total accrued expenses $ 5,264,215 $ 3,915,491 During 2018, the Company discontinued research and development studies associated with a grant and received a refund for certain prepaid research and development costs. The Company is required to return the grant monies to the grantor and, accordingly, the Company reclassified the $0.7 million deferred grant revenue to accrued expenses to reflect a payable to the grantor. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity | |
Stockholders’ Equity | (7) Stockholders’ Equity Preferred Stock The Company’s board of directors are authorized to issue up to 10.0 million shares of preferred stock, with any rights, preferences and privileges as it may designate. As of December 31, 2018, no shares of preferred stock were issued. Common Stock Transactions During the year ended December 31, 2016, the Company entered into the 2016 Sales Agreement with Jefferies pursuant to which the Company sold and issued 794,906 shares of common stock in the open market at a weighted average selling price of $13.39 per share, for gross proceeds of $10.6 million. Net proceeds received after deducting commissions and offering expenses were $10.0 million. In the first quarter of 2017, the Company completed an additional follow-on public offering, selling 3,220,000 shares at an offering price of $18.00 per share resulting in gross proceeds of $58.0 million. Net proceeds received after deducting underwriting and commissions and offering expenses were $54.2 million. On June 9, 2017, the Company terminated the 2016 Sales Agreement and entered into the Sales Agreement with Jefferies pursuant to which the Company may sell, from time to time, up to $50.0 million of its common stock. During 2017, the Company sold and issued 296,594 shares of common stock in the open market at a weighted average selling price of $10.74 per share, for gross proceeds of $3.2 million. Net proceeds after deducting commissions and offering expenses were $3.0 million. In July 2018, the Company completed a follow-on public offering, selling 4,062,500 shares of its common stock at an offering price of $8.00 per share, resulting in gross proceeds of $32.5 million. Net proceeds received after deducting underwriting discounts and commissions and offering expenses were $29.9 million. From January 29, 2019 through March 6, 2019, the Company sold and issued 3,439,523 shares of common stock under the Sales Agreement with Jefferies in the open market at a weighted average selling price of $5.44 per share, resulting in gross proceeds of $18.7 million. Net proceeds after deducting commissions and offering expenses were $18.1 million. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | (8) Stock-Based Compensation The Company maintains the Amended and Restated 2014 Omnibus Incentive Compensation Plan, as amended (the “2014 Plan”), which allows for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, performance units and other stock‑based awards to employees, officers, non-employee directors, consultants, and advisors. In addition, the 2014 Plan provides selected executive employees with the opportunity to receive bonus awards that are considered qualified performance‑based compensation. T he 2014 Plan is subject to automatic annual increases in the number of shares authorized for issuance under the 2014 Plan on the first trading day of January each year equal to the lesser of 1.5 million shares or 10% of the number of shares of common stock outstanding on the last trading day of December of the preceding year. As of January 1, 2019, the number of shares of common stock that may be issued under the 2014 Plan was automatically increased by 1.5 million shares, increasing the number of shares of common stock available for issuance under the 2014 Plan to 6,304,869 shares. As of December 31, 2018, 1,153,809 shares were available for future issuance under the 2014 Plan. Options issued under the 2014 Plan have a contractual life of 10 years and may be exercisable in cash or as otherwise determined by the board of directors. The Company has granted options to employees and non‑employee directors. Stock options granted to employees vest 25% upon the first anniversary of the grant date and the balance of unvested options vests in quarterly installments over the remaining three years. Stock options granted annually to non-employee directors vest on the earlier of the one-year anniversary of the grant date, or the date of the Company’s next annual stockholders’ meeting that occurs after the grant date. The Company’s non-employee director compensation policy enables directors to receive stock options in lieu of quarterly cash payments. Any option granted to the directors in lieu of cash compensation vests in full on the grant date. The Company records forfeitures as they occur. During 2018, the Company granted 83,280 performance-based stock options to certain employees. These performance options have a 10-year life and an exercise price equal to the fair value of the Company’s stock at the grant date. Vesting of these performance options is dependent on meeting certain performance conditions, which relate to the Company’s research and development progress, which were established by the Company’s board of directors. The Company’s board of directors determines if the performance conditions have been met. Stock-based compensation expense for these options is recorded when management estimates that the vesting of these options is probable based on the status of the Company’s research and development programs and other relevant factors. For year ended December 31, 2018, none of the performance-based metrics were deemed probable. Any change in these estimates will result in a cumulative adjustment in the period in which the estimate is changed, so that as of the end of a period, the cumulative compensation expense recognized for an award or grant equals the amount that would be recognized on a straight-line basis as if the current estimates had been utilized since the beginning of the service period. The aggregate estimated grant date fair value of options for which the satisfaction of the related-performance conditions have not been deemed probable is $663,484. During the years ended December 31, 2018, 2017 and 2016, the Company recorded $6,625,743, $5,646,852 and $3,269,366, respectively, in stock-based compensation expense related to its stock option grants and restricted stock awards, as follows: Stock Option Grants Restricted stock awards 2018 2017 2016 2018 2017 2016 Research and development $ 2,884,689 $ 2,127,386 $ 1,137,639 $ 202,809 $ 157,480 $ 143,469 General and administrative 3,491,432 3,279,626 1,891,887 46,813 82,360 96,371 $ 6,376,121 $ 5,407,012 $ 3,029,526 $ 249,622 $ 239,840 $ 239,840 The following table summarizes the Company’s stock option activity: Weighted- Weighted- Average Average Aggregate Number Exercise Contractual Intrinsic of Shares Price Life (in Years) Value Outstanding as of December 31, 2016 1,808,493 $ 10.22 Granted 639,599 19.01 Exercised (42,454) 10.24 Forfeited (19,100) 15.48 Outstanding as of December 31, 2017 2,386,538 12.53 Granted 875,416 11.34 Expired (109,687) 9.20 Outstanding as of December 31, 2018 3,152,267 12.16 7.67 $ — Exercisable as of December 31, 2018 1,804,146 11.33 6.99 $ — Vested and expected to vest as of December 31, 2018 3,068,987 $ 12.18 The weighted-average grant date fair value of options granted during the years ended December 31, 2018, 2017 and 2016 was $7.84, $12.95 and $6.48, respectively. The fair values of stock options granted were calculated using the Black-Scholes option pricing model with the following weighted-average assumptions: Year ended December 31, 2018 2017 2016 Weighted-average risk-free interest rate Expected term of options (in years) Expected stock price volatility Expected dividend yield As of December 31, 2018, there was $9.3 million of unrecognized stock-based compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.26 years. The following table summarizes the restricted stock award activity under the 2014 Plan: Weighted Average Grant Date Shares Fair Value Unvested as of December 31, 2016 253,702 $ 1.65 Vested (144,972) 1.65 Unvested as of December 31, 2017 108,730 1.65 Granted 10,500 11.86 Vested (108,730) 1.65 Unvested as of December 31, 2018 10,500 $ 11.86 As of December 31, 2018, there was $17,637 of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 0.75 years, and the Company expects all 10,500 unvested restricted stock awards to vest. |
Defined Contribution Retirement
Defined Contribution Retirement Plan | 12 Months Ended |
Dec. 31, 2018 | |
Defined Contribution Retirement Plan | |
Defined Contribution Retirement Plan | (9) Defined Contribution Retirement Plan The Company offers a tax-qualified defined contribution retirement plan, which we refer to as our 401(k) plan, to eligible employees, including our current named executive officers. Our 401(k) plan permits eligible employees to defer their annual eligible compensation subject to the limitations imposed by the Internal Revenue Service. The Company may, but is not required to, make discretionary employer matching contributions on behalf of eligible employees under this plan. On January 1, 2018, the Company commenced making an employer match of 33% for the first 6% of employee contributions. Employer matching contributions vest immediately. During the year ended December 31, 2018, the Company’s contributions to the plan was $84,276, and no contributions were made during the years ended December 31, 2017 and 2016. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | (10) Income Taxes The Company’s U.S. and foreign loss before income taxes are set forth below: Year ended December 31, 2018 2017 2016 United States $ (34,308,847) $ (27,051,148) $ (18,803,227) Foreign (5,602,328) (4,961,156) (4,612,823) Total $ (39,911,175) $ (32,012,304) $ (23,416,050) The Company had $84.0 million and $56.8 million of federal net operating loss carryforwards and $2.3 million and $1.7 million of research tax credit carryforwards as of December 31, 2018 and 2017, respectively. The U.S. federal net operating loss carryforwards and research tax credit carryforwards begin to expire in 2028 and 2027, respectively. The Company has $84.1 million and $57.1 million of state net operating loss carryforwards as of December 31, 2018 and 2017, respectively. The state net operating loss carryforwards begin to expire in 2028 and 2027, respectively. As of December 31, 2018 and 2017, the Company had $1.2 million and $0.4 million, respectively, of Australia net operating loss carryforwards, which have an indefinite life. The Tax Reform Act of 1986 (the Act) provides for limitation on the use of net operating loss and research and development tax credit carryforwards following certain ownership changes (as defined by the Act) that could limit the Company’s ability to utilize these carryforwards. The Company may have experienced various ownership changes, as defined by the Act, as a result of past financings. Accordingly, the Company’s ability to utilize the aforementioned carryforwards may be limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes; therefore, the Company may not be able to take full advantage of these carryforwards for federal income tax purposes. The components of the net deferred income tax asset as of December 31, 2018 and 2017 are as follows: December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carry forwards $ 24,399,299 $ 16,130,487 Research and development credit carry forwards 2,291,226 1,739,824 Stock-based compensation 4,575,617 2,675,304 Other 706,745 259,241 Gross deferred tax assets 31,972,887 20,804,856 Deferred tax liabilities: Property and equipment (59,524) (29,060) Gross deferred tax liabilities (59,524) (29,060) Less valuation allowance (31,913,363) (20,775,796) Net deferred tax asset $ — $ — The 2017 Tax Cuts and Jobs Act, which became effective in 2018, resulted in significant changes to the U.S. corporate income tax system. These changes included a federal statutory rate reduction from 34% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The 2017 Tax Cuts and Jobs Act also transitioned international taxation from a worldwide system to a modified territorial system and included base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low-taxed income (GILTI). The 2017 Tax Cuts and Jobs Act also includes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin, or SAB, No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The Company recognized the provisional tax impacts related to the revaluation of the deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. In regard to the change in the federal income tax rate as it related to our deferred tax assets and liabilities as of December 31, 2017, we decreased our related deferred tax assets by $8.7 million along with a corresponding offset against the valuation allowance for these deferred tax assets. The Company completed the accounting for the impacts of the 2017 Tax Cuts and Jobs Act as allowed under SAB No. 118 in the fourth quarter of 2018, which did not result in any material adjustments to the provisional estimates. In assessing the realizability of deferred tax assets, the Company considers whether it is more‑likely‑than‑not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2018 and 2017, respectively, because the Company has determined that is it more likely than not that these assets will not be fully realized due to historic net operating losses incurred. The valuation allowance increased by $11.1 million and $3.0 million during the years ended December 31, 2018 and 2017, respectively, due primarily to the generation of net operating loss carryforwards during those years. The Company does not have unrecognized tax benefits as of December 31, 2018 and 2017, respectively. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows: Year ended December 31, 2018 2017 2016 Federal income tax benefit at statutory rate 21.0 % 34.0 % 34.0 % State income tax, net of federal benefit 6.8 6.5 7.8 Foreign tax rate differential 0.3 — (0.2) Nondeductible research and development expenses (2.2) (5.1) (4.7) Other permanent differences — (0.1) — Research and development credit benefit 1.4 1.3 3.9 Rate change from 2017 Tax Cuts and Jobs Act 0.3 (27.3) — Change in valuation allowance (27.6) (9.3) (40.7) Effective income tax rate — % — % 0.1 % The Company and its subsidiaries are subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and Australia. The Company’s 2011 to 2018 tax years remain open and subject to examination. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | (11) Commitments and Contingencies a. Federal Grants There was $86,000 in grant revenue recognized during the year ended December 31, 2018. Previous grants received were recorded as deferred revenue and recognized as revenue as the designated preclinical study progressed and amounts were earned. As of December 31, 2017, there was $0.2 million included in deferred grant revenue and prepaid expenses and other current assets for prepaid research and development contracts related to a federal grant. As of December 31, 2017, there also was $0.7 million included in deferred grant revenue, long-term and other assets for prepaid research and development contracts related to this grant. During 2018, the Company discontinued research and development studies associated with the grant and received a refund for certain prepaid research and development costs. As the Company is required to return the grant monies to the grantor, the Company reclassified the $0.7 million deferred grant revenue to accrued expense in the consolidated balance sheet as of December 31, 2018. b. Leases The Company is a party to noncancelable operating leases for office space, under long-term lease arrangements that expire in 2020. As of December 31, 2018, future minimum lease commitments for all noncancelable leases were $305,447 and $128,214 for the years ending December 31, 2019 and 2020, respectively. Total lease expense for the years ended December 31, 2018, 2017 and 2016 was $264,648, $189,775 and $101,609 respectively. c. Employment Agreements The Company has entered into employment contracts with its officers and certain employees that provide for severance and continuation of benefits in the event of termination of employment either by the Company without cause or by the employee for good reason, both as defined in the agreements. In addition, in the event of termination of employment following a change in control, as defined in the employment contracts, either by the Company without cause or by the employee for good reason, any unvested portion of the employee’s stock options become immediately vested. d. Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. The Company believes there are no matters pending or threatened that will have a material impact to the Company’s financial position or results of operations. |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Data (unaudited) | |
Quarterly Financial Data (unaudited) | (12) Quarterly Financial Data (unaudited The following information has been derived from unaudited consolidated financial statements that, in the opinion of management, include all recurring adjustments necessary for a fair statement of such information. 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ — $ — $ — $ 86,000 Operating expenses: Research and development 8,975,513 8,533,466 4,859,902 4,876,162 General and administrative 3,420,623 3,436,340 3,125,780 3,256,044 Total operating expenses 12,396,136 11,969,806 7,985,682 8,132,206 Loss from operations (12,396,136) (11,969,806) (7,985,682) (8,046,206) Other income (expense): Interest income 175,184 186,304 278,214 321,621 Foreign exchange loss (85,382) (223,731) (99,897) (65,658) Total other income (expense) 89,802 (37,427) 178,317 255,963 Net loss $ (12,306,334) $ (12,007,233) $ (7,807,365) $ (7,790,243) Net loss per share basic and diluted $ (0.91) $ (0.89) $ (0.47) $ (0.44) Basic and diluted weighted average shares outstanding 13,467,694 13,504,485 16,587,353 17,616,373 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Operating expenses: Research and development $ 5,491,455 $ 5,732,797 $ 5,753,764 $ 5,828,091 General and administrative 2,211,793 2,632,857 2,795,839 2,376,413 Total operating expenses 7,703,248 8,365,654 8,549,603 8,204,504 Loss from operations (7,703,248) (8,365,654) (8,549,603) (8,204,504) Other income (expense): Interest income 76,885 124,535 161,930 156,204 Foreign exchange gain ( loss) 367,342 (82,360) 76,468 (70,299) Total other income (expense) 444,227 42,175 238,398 85,905 Net loss $ (7,259,021) $ (8,323,479) $ (8,311,205) $ (8,118,599) Net loss per share basic and diluted $ (0.60) $ (0.64) $ (0.63) $ (0.60) Basic and diluted weighted average shares outstanding 12,067,453 13,052,294 13,098,914 13,423,669 Per share amounts are calculated using the weighted average number of common shares outstanding for each period presented. As such, the sum of the quarterly per share amounts above will not necessarily equal the per share amounts for the fiscal year. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | a. Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-K and Article 10 of Regulation S-X. |
Use of Estimates | b. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from such estimates. |
Fair Value of Financial Instruments | c. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts payable and accrued expenses approximate fair value given their short‑term nature. |
Cash and Cash Equivalents | d. Cash and Cash Equivalents The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. As of December 31, 2018 and 2017, the Company invested a portion of its cash balances in money market funds that seek to maintain a stable net asset value. These investments have been included as cash equivalents on the consolidated balance sheets. |
Incentive and Tax Receivables | e. Incentive and Tax Receivable The Company’s subsidiary, Zynerba Pharmaceuticals Pty Ltd (the “Subsidiary”), is incorporated in Australia. The Subsidiary is eligible to participate in an Australian research and development tax incentive program. As part of this program, the Subsidiary is eligible to receive a cash refund from the Australian Taxation Office for a percentage of the research and development costs expended by the Subsidiary in Australia. The cash refund is available to eligible companies with an annual aggregate revenue of less than $20.0 million (Australian) during the reimbursable period. The Company’s estimate of the amount of cash refund it expects to receive related to the Australian research and development tax incentive program is included in “Incentive and tax receivables” in the accompanying consolidated balance sheets. As of December 31, 2018, the Company’s estimate of the amount of cash refund it expects to receive in 2019 for 2018 eligible spending as part of this incentive program was $3.1 million and was recorded as a current asset. During the years ended December 31, 2018, 2017 and 2016, the Company received $3.6 million, $3.6 million and $0.4 million, respectively, in research and development tax incentive refunds related to qualified Australian expenses under this incentive program. In addition, the Subsidiary incurs Goods and Services Tax (“GST”) on services provided by Australian vendors. As an Australian entity, the Subsidiary is entitled to a refund of the GST paid. The Company’s estimate of the amount of cash refund it expects to receive related to GST incurred is included in “Incentive and tax receivables” in the accompanying consolidated balance sheets. As of December 31, 2018, the incentive and tax receivables included $0.3 million for refundable GST on expenses incurred with Australian vendors during the three months ended December 31, 2018. |
Property and Equipment | f. Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight‑line basis over their estimated useful lives. Leasehold improvements are amortized over the estimated useful life of the assets or the remaining lease term at the time the asset is placed into service, whichever is shorter. Repairs and maintenance costs are expensed as incurred. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in other expenses. |
Impairment of Long-Lived Assets | g. Impairment of Long‑Lived Assets The Company assesses the recoverability of its long‑lived assets, which include property and equipment, whenever significant events or changes in circumstances indicate an impairment may have occurred. If indicators of an impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the years ended December 31, 2018, 2017 and 2016, the Company determined that there was no impairment of its long‑lived assets. |
Research and Development | h. Research and Development Research and development costs are expensed as incurred and are primarily comprised of external research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, consultants and employee-related expenses including salaries and benefits. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that the Company considers in preparing these estimates include the number of patients enrolled in studies, milestones achieved and other criteria related to the efforts of its vendors. These estimates will be subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company will record net prepaid or accrued expenses related to these costs. Research and development expenses are recorded net of expected refunds of eligible research and development costs paid to Australian vendors pursuant to the Australian research and development tax incentive program and GST incurred on services provided by Australian vendors. The Company incurred research and development expenses of $27.2 million, $22.8 million and $16.8 million for the years ended December 31, 2018, 2017 and 2016, respectively, which were net of $3.4 million, $3.8 million, and $3.4 million, respectively, associated with the Australian research and development tax incentive program. |
Stock-Based Compensation | i. Stock‑Based Compensation The Company measures employee and nonemployee stock‑based awards at grant‑date fair value and records compensation expense on a straight‑line basis over the requisite service period of the award. Stock‑based awards issued to non‑employees, if any, are revalued until the award vests. For restricted stock the Company uses the closing price of the Company’s common stock on the date of grant. The Company uses the Black‑Scholes option pricing model to estimate the fair value of its stock option awards. Estimating the fair value of stock option awards requires management to apply judgment and make estimates, including the expected volatility of the Company’s common stock, the expected term of the Company’s stock options and the expected dividend yield. As a result, if factors change and management uses different assumptions, stock‑based compensation expense could be materially different for future awards. The expected term of stock options was estimated using the “simplified method,” as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post vesting employment termination behavior for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For expected stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected term of the option. |
Revenue Recognition | j. Revenue Recognition Revenue related to research grants and research services for third party product development are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. Grant revenue received is deferred until the related expenditures are incurred. Revenue was entirely related to work performed in connection with grants received in years prior to 2015. |
Income Taxes | k. Income Taxes The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the consolidated financial statements in the period of enactment. The carrying amount of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. As of December 31, 2018 and 2017, the Company has concluded that a full valuation allowance is necessary for its net deferred tax assets. The Company has no liability for unrecognized tax benefits or tax-related penalties or interest at December 31, 2018 and does not expect a significant change in the balance of unrecognized tax benefits within the next 12 months. |
Net Loss per Share | l. Net Loss Per Share Basic net loss per share is determined using the weighted average number of shares of common stock outstanding during each period. Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as restricted stock and stock options, which would result in the issuance of incremental shares of common stock. Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of restricted stock and stock options would be anti-dilutive. The following potentially dilutive securities outstanding as of December 31, 2018, 2017 and 2016 have been excluded from the computation of diluted weighted average shares outstanding, as their effects on net loss per share for the periods presented would be anti‑dilutive: December 31, 2018 2017 2016 Stock options 3,152,267 2,386,538 1,808,493 Unvested restricted stock 10,500 108,730 253,702 3,162,767 2,495,268 2,062,195 |
Foreign Currency | m. Foreign Currency The Company has determined the functional currency of its Australian subsidiary to be the U.S. dollar. The Company records remeasurement gains and losses on monetary assets and liabilities, such as incentive and tax receivables and accounts payables, which are not in the functional currency of the operation. These remeasurement gains and losses are recorded in the consolidated statements of operations as they occur. |
Segment Information | n. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision‑making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. |
Recent Accounting Pronouncements | o . Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases , which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. The pronouncement is effective for interim and annual periods beginning after December 15, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. The Company will adopt the new leasing standards using a modified retrospective transition approach to be applied to leases existing as of, or entered into after, January 1, 2019. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments , which provides specific guidance related to eight cash flow classification issues. The pronouncement is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of the guidance in ASU No. 2016-15 in the first quarter of 2018 did not have an impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which requires changes in restricted cash and restricted cash equivalents to be explained on the statement of cash flows by including restricted cash and restricted cash equivalents in the beginning-of-period and end-of-period total cash and cash equivalents shown on the statement of cash flows. The pronouncement is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of the guidance in ASU No. 2016-18 in the first quarter of 2018 did not have an impact on the Company’s consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding | December 31, 2018 2017 2016 Stock options 3,152,267 2,386,538 1,808,493 Unvested restricted stock 10,500 108,730 253,702 3,162,767 2,495,268 2,062,195 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Summary of financial assets measured at fair value on a recurring basis | Fair Value Measurement Carrying amount as of December 31, 2018 as of December 31, 2018 Level 1 Level 2 Level 3 Cash equivalents (money market accounts) $ 59,554,458 $ 59,554,458 $ — $ — $ 59,554,458 $ 59,554,458 $ — $ — Fair Value Measurement Carrying amount as of December 31, 2017 as of December 31, 2017 Level 1 Level 2 Level 3 Cash equivalents (money market accounts) $ 61,133,457 $ 61,133,457 $ — $ — Certificate of deposit (included in prepaid expenses and other current assets) 20,171 20,171 — — $ 61,153,628 $ 61,153,628 $ — $ — |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | December 31, December 31, 2018 2017 Prepaid development expenses $ 2,671,815 $ 907,028 Prepaid insurance 393,451 355,838 Deferred financing costs 255,754 240,439 Other current assets 426,067 230,396 Total prepaid expenses and other current assets $ 3,747,087 $ 1,733,701 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Schedule of property and equipment | Estimated useful life December 31, December 31, (in years) 2018 2017 Equipment 2-5 $ 178,001 $ 85,417 Computer equipment 3-5 30,319 30,319 Furniture and fixtures 3-5 300,407 199,016 Leasehold improvements various 68,881 12,863 Construction in process 57,015 — Total cost 634,623 327,615 Less accumulated depreciation (262,660) (163,088) Property and equipment, net $ 371,963 $ 164,527 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses | |
Schedule of accrued expenses | December 31, December 31, 2018 2017 Accrued compensation $ 2,188,801 $ 1,503,615 Accrued research and development 1,928,305 2,059,536 Grants payable 747,926 — Other 399,183 352,340 Total accrued expenses $ 5,264,215 $ 3,915,491 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | Stock Option Grants Restricted stock awards 2018 2017 2016 2018 2017 2016 Research and development $ 2,884,689 $ 2,127,386 $ 1,137,639 $ 202,809 $ 157,480 $ 143,469 General and administrative 3,491,432 3,279,626 1,891,887 46,813 82,360 96,371 $ 6,376,121 $ 5,407,012 $ 3,029,526 $ 249,622 $ 239,840 $ 239,840 |
Summary of stock option activity | Weighted- Weighted- Average Average Aggregate Number Exercise Contractual Intrinsic of Shares Price Life (in Years) Value Outstanding as of December 31, 2016 1,808,493 $ 10.22 Granted 639,599 19.01 Exercised (42,454) 10.24 Forfeited (19,100) 15.48 Outstanding as of December 31, 2017 2,386,538 12.53 Granted 875,416 11.34 Expired (109,687) 9.20 Outstanding as of December 31, 2018 3,152,267 12.16 7.67 $ — Exercisable as of December 31, 2018 1,804,146 11.33 6.99 $ — Vested and expected to vest as of December 31, 2018 3,068,987 $ 12.18 |
Schedule of weighted-average assumptions used to calculate fair values of stock options | Year ended December 31, 2018 2017 2016 Weighted-average risk-free interest rate Expected term of options (in years) Expected stock price volatility Expected dividend yield |
Summary of restricted stock activity | Weighted Average Grant Date Shares Fair Value Unvested as of December 31, 2016 253,702 $ 1.65 Vested (144,972) 1.65 Unvested as of December 31, 2017 108,730 1.65 Granted 10,500 11.86 Vested (108,730) 1.65 Unvested as of December 31, 2018 10,500 $ 11.86 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of U.S. and foreign loss before income taxes | Year ended December 31, 2018 2017 2016 United States $ (34,308,847) $ (27,051,148) $ (18,803,227) Foreign (5,602,328) (4,961,156) (4,612,823) Total $ (39,911,175) $ (32,012,304) $ (23,416,050) |
Schedule of components of the net deferred income tax asset | December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carry forwards $ 24,399,299 $ 16,130,487 Research and development credit carry forwards 2,291,226 1,739,824 Stock-based compensation 4,575,617 2,675,304 Other 706,745 259,241 Gross deferred tax assets 31,972,887 20,804,856 Deferred tax liabilities: Property and equipment (59,524) (29,060) Gross deferred tax liabilities (59,524) (29,060) Less valuation allowance (31,913,363) (20,775,796) Net deferred tax asset $ — $ — |
Reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes | Year ended December 31, 2018 2017 2016 Federal income tax benefit at statutory rate 21.0 % 34.0 % 34.0 % State income tax, net of federal benefit 6.8 6.5 7.8 Foreign tax rate differential 0.3 — (0.2) Nondeductible research and development expenses (2.2) (5.1) (4.7) Other permanent differences — (0.1) — Research and development credit benefit 1.4 1.3 3.9 Rate change from 2017 Tax Cuts and Jobs Act 0.3 (27.3) — Change in valuation allowance (27.6) (9.3) (40.7) Effective income tax rate — % — % 0.1 % |
Quarterly Financial Data (una_2
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Data (unaudited) | |
Schedule of Quarterly Financial Data (unaudited) | 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ — $ — $ — $ 86,000 Operating expenses: Research and development 8,975,513 8,533,466 4,859,902 4,876,162 General and administrative 3,420,623 3,436,340 3,125,780 3,256,044 Total operating expenses 12,396,136 11,969,806 7,985,682 8,132,206 Loss from operations (12,396,136) (11,969,806) (7,985,682) (8,046,206) Other income (expense): Interest income 175,184 186,304 278,214 321,621 Foreign exchange loss (85,382) (223,731) (99,897) (65,658) Total other income (expense) 89,802 (37,427) 178,317 255,963 Net loss $ (12,306,334) $ (12,007,233) $ (7,807,365) $ (7,790,243) Net loss per share basic and diluted $ (0.91) $ (0.89) $ (0.47) $ (0.44) Basic and diluted weighted average shares outstanding 13,467,694 13,504,485 16,587,353 17,616,373 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Operating expenses: Research and development $ 5,491,455 $ 5,732,797 $ 5,753,764 $ 5,828,091 General and administrative 2,211,793 2,632,857 2,795,839 2,376,413 Total operating expenses 7,703,248 8,365,654 8,549,603 8,204,504 Loss from operations (7,703,248) (8,365,654) (8,549,603) (8,204,504) Other income (expense): Interest income 76,885 124,535 161,930 156,204 Foreign exchange gain ( loss) 367,342 (82,360) 76,468 (70,299) Total other income (expense) 444,227 42,175 238,398 85,905 Net loss $ (7,259,021) $ (8,323,479) $ (8,311,205) $ (8,118,599) Net loss per share basic and diluted $ (0.60) $ (0.64) $ (0.63) $ (0.60) Basic and diluted weighted average shares outstanding 12,067,453 13,052,294 13,098,914 13,423,669 |
Nature of Business and Liquid_2
Nature of Business and Liquidity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Mar. 06, 2019 | Jul. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 09, 2017 | |
Sales of Stock | |||||||
Accumulated deficit | $ 117,892,041 | $ 77,980,866 | |||||
Proceeds from the issuance of common stock, net of offering costs | $ 29,937,505 | $ 57,293,041 | $ 10,000,525 | ||||
Open Market Offering | |||||||
Sales of Stock | |||||||
Maximum aggregate value of common stock available for offering | $ 50,000,000 | ||||||
Shares issued | 3,439,523 | 296,594 | 794,906 | ||||
Weighted average selling price per share | $ 5.44 | $ 10.74 | $ 13.39 | ||||
Gross proceeds from issuance of common stock | $ 18,700,000 | $ 3,200,000 | $ 10,600,000 | ||||
Proceeds from the issuance of common stock, net of offering costs | $ 18,100,000 | $ 3,000,000 | $ 10,000,000 | ||||
Follow On Public Offering | |||||||
Sales of Stock | |||||||
Shares issued | 4,062,500 | 3,220,000 | |||||
Offering price per share | $ 8 | $ 18 | |||||
Gross proceeds from issuance of common stock | $ 32,500,000 | $ 58,000,000 | |||||
Proceeds from the issuance of common stock, net of offering costs | $ 29,900,000 | $ 54,200,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Incentive and Tax Receivable (Details) - Australian Taxation Office $ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018AUD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Incentive and Tax Receivable | ||||
Aggregate revenue maximum to be eligible to receive a cash refund | $ 20 | |||
Cash refund from research and development incentive program | $ 3.6 | $ 3.6 | $ 0.4 | |
Incentive and Tax Receivables Current | ||||
Incentive and Tax Receivable | ||||
Estimated incentive receivable | 3.1 | |||
Estimated GST receivable | $ 0.3 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Impairment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Research and Development (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Research and Development | |||||||||||
Research and development | $ 4,876,162 | $ 4,859,902 | $ 8,533,466 | $ 8,975,513 | $ 5,828,091 | $ 5,753,764 | $ 5,732,797 | $ 5,491,455 | $ 27,245,043 | $ 22,806,107 | $ 16,784,626 |
Australian Taxation Office | |||||||||||
Research and Development | |||||||||||
Research and development tax incentive refunds | $ 3,400,000 | $ 3,800,000 | $ 3,400,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Unrecognized tax benefits | ||
Unrecognized Tax Benefits | $ 0 | $ 0 |
Interest and penalties accrued | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Anti-dilutive securities (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive securities | 3,162,767 | 2,495,268 | 2,062,195 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive securities | 3,152,267 | 2,386,538 | 1,808,493 |
Restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive securities | 10,500 | 108,730 | 253,702 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Segments (Details) | 12 Months Ended |
Dec. 31, 2018segment | |
Segment Information | |
Number of operating segments | 1 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying value | ||
Fair value on a recurring basis | ||
Cash equivalents (money market accounts) | $ 59,554,458 | $ 61,133,457 |
Certificate of deposit (included in prepaid expenses and other current assets) | 20,171 | |
Total | 59,554,458 | 61,153,628 |
Recurring | Fair Value Measurement | Level 1 | ||
Fair value on a recurring basis | ||
Cash equivalents (money market accounts) | 59,554,458 | 61,133,457 |
Certificate of deposit (included in prepaid expenses and other current assets) | 20,171 | |
Total | $ 59,554,458 | $ 61,153,628 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Prepaid Expenses and Other Current Assets | ||
Prepaid development expenses | $ 2,671,815 | $ 907,028 |
Prepaid insurance | 393,451 | 355,838 |
Deferred financing costs | 255,754 | 240,439 |
Other current assets | 426,067 | 230,396 |
Total prepaid expenses and other current assets | $ 3,747,087 | $ 1,733,701 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment | |||
Total cost | $ 634,623 | $ 327,615 | |
Less accumulated depreciation | (262,660) | (163,088) | |
Property and equipment, net | 371,963 | 164,527 | |
Depreciation expense | 99,572 | 94,211 | $ 75,301 |
Equipment | |||
Property, Plant and Equipment | |||
Total cost | $ 178,001 | 85,417 | |
Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | P2Y | ||
Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | P5Y | ||
Computer equipment | |||
Property, Plant and Equipment | |||
Total cost | $ 30,319 | 30,319 | |
Computer equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | P3Y | ||
Computer equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | P5Y | ||
Furniture and fixtures | |||
Property, Plant and Equipment | |||
Total cost | $ 300,407 | 199,016 | |
Furniture and fixtures | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | P3Y | ||
Furniture and fixtures | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | P5Y | ||
Leasehold improvements | |||
Property, Plant and Equipment | |||
Estimated useful life (in years) | various | ||
Total cost | $ 68,881 | $ 12,863 | |
Construction in process | |||
Property, Plant and Equipment | |||
Total cost | $ 57,015 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses | ||
Accrued compensation | $ 2,188,801 | $ 1,503,615 |
Accrued research and development | 1,928,305 | 2,059,536 |
Grants payable | 747,926 | |
Other | 399,183 | 352,340 |
Total accrued expenses | $ 5,264,215 | $ 3,915,491 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Stockholders' Equity | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Mar. 06, 2019 | Jul. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 09, 2017 | |
Sales of Stock | |||||||
Proceeds from the issuance of common stock, net of offering costs | $ 29,937,505 | $ 57,293,041 | $ 10,000,525 | ||||
Open Market Offering | |||||||
Sales of Stock | |||||||
Maximum aggregate value of common stock available for offering | $ 50,000,000 | ||||||
Shares issued | 3,439,523 | 296,594 | 794,906 | ||||
Weighted average selling price per share | $ 5.44 | $ 10.74 | $ 13.39 | ||||
Gross proceeds from issuance of common stock | $ 18,700,000 | $ 3,200,000 | $ 10,600,000 | ||||
Proceeds from the issuance of common stock, net of offering costs | $ 18,100,000 | $ 3,000,000 | $ 10,000,000 | ||||
Follow On Public Offering | |||||||
Sales of Stock | |||||||
Shares issued | 4,062,500 | 3,220,000 | |||||
Offering price per share | $ 8 | $ 18 | |||||
Gross proceeds from issuance of common stock | $ 32,500,000 | $ 58,000,000 | |||||
Proceeds from the issuance of common stock, net of offering costs | $ 29,900,000 | $ 54,200,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Based Compensation Narrative (Details) - USD ($) | Jan. 01, 2019 | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock options | ||||
Stock-Based Compensation | ||||
Granted (in shares) | 875,416 | 639,599 | ||
Aggregate estimated grant date fair value of options | $ 9,300,000 | |||
2014 Plan | ||||
Stock-Based Compensation | ||||
Threshold increase of authorized shares for issuance | 1,500,000 | |||
Threshold increase of authorized shares for issuance (as a percent) | 10.00% | |||
Additional number of shares authorized for issuance | 1,500,000 | |||
Shares reserved for issuance | 6,304,869 | |||
Shares available for issuance | 1,153,809 | |||
2014 Plan | Stock options | ||||
Stock-Based Compensation | ||||
Contractual life (in years) | 10 years | |||
2014 Plan | Performance-based Stock options | ||||
Stock-Based Compensation | ||||
Granted (in shares) | 83,280 | |||
Contractual life (in years) | 10 years | |||
Shares options vested based upon performance-based metrics | 0 | |||
Aggregate estimated grant date fair value of options | $ 663,484 | |||
Employees | 2014 Plan | Stock options | ||||
Stock-Based Compensation | ||||
Vesting percentage | 25.00% | |||
Vesting period | 3 years | |||
Board of Directors | 2014 Plan | Stock options | Maximum | ||||
Stock-Based Compensation | ||||
Vesting period | 1 year |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-Based Compensation | |||
Stock-based compensation | $ 6,625,743 | $ 5,646,852 | $ 3,269,366 |
Stock options | |||
Stock-Based Compensation | |||
Stock-based compensation | 6,376,121 | 5,407,012 | 3,029,526 |
Stock options | Research and development | |||
Stock-Based Compensation | |||
Stock-based compensation | 2,884,689 | 2,127,386 | 1,137,639 |
Stock options | General and administrative | |||
Stock-Based Compensation | |||
Stock-based compensation | 3,491,432 | 3,279,626 | 1,891,887 |
Restricted stock | |||
Stock-Based Compensation | |||
Stock-based compensation | 249,622 | 239,840 | 239,840 |
Restricted stock | Research and development | |||
Stock-Based Compensation | |||
Stock-based compensation | 202,809 | 157,480 | 143,469 |
Restricted stock | General and administrative | |||
Stock-Based Compensation | |||
Stock-based compensation | $ 46,813 | $ 82,360 | $ 96,371 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options Activity, Unrecognized Costs, Valuation (Details) - Stock options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Options | |||
Balance (in shares) | 2,386,538 | 1,808,493 | |
Granted (in shares) | 875,416 | 639,599 | |
Exercised (in shares) | (42,454) | ||
Forfeited (in shares) | (109,687) | (19,100) | |
Balance (in shares) | 3,152,267 | 2,386,538 | 1,808,493 |
Options exercisable (in shares) | 1,804,146 | ||
Options vested and expected to vest (in shares) | 3,068,987 | ||
Weighted average exercise price per share | |||
Balance (in dollars per shares) | $ 12.53 | $ 10.22 | |
Granted (in dollars per shares) | 11.34 | 19.01 | |
Exercised (in dollars per share) | 10.24 | ||
Forfeited (in dollars per share) | 9.20 | 15.48 | |
Balance (in dollars per shares) | 12.16 | 12.53 | $ 10.22 |
Options exercisable (in dollars per shares) | 11.33 | ||
Options vested and expected to vest (in dollars per share) | $ 12.18 | ||
Additional disclosures | |||
Options Outstanding Weighted Average Contractual term | 7 years 8 months 1 day | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 6 years 11 months 27 days | ||
Expected stock based compensation expense | $ 9.3 | ||
Recognition period for compensation costs | 2 years 3 months 4 days | ||
Weighted Average Grant Date Fair Value | |||
Granted (in dollars per share) | $ 7.84 | $ 12.95 | $ 6.48 |
Assumptions and Methodology | |||
Weighted average risk-free interest rate (as a percent) | 2.53% | 2.11% | 1.54% |
Expected term of options (in years) | 6 years 1 month 13 days | 6 years 1 month 13 days | 6 years 4 days |
Expected stock price volatility (as a percent) | 78.09% | 77.00% | 77.00% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Activity, Unrecognized Costs (Details) - 2014 Plan - Restricted stock - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Restricted stock award activity | ||
Unvested balance (in shares) | 108,730 | 253,702 |
Granted (in shares) | 10,500 | |
Vested (in shares) | (108,730) | (144,972) |
Unvested balance (in shares) | 10,500 | 108,730 |
Weighted Average Grant Date Fair Value | ||
Unvested balance (in dollars per share) | $ 1.65 | $ 1.65 |
Granted (in dollars per share) | 11.86 | |
Vested (in dollars per share) | 1.65 | 1.65 |
Unvested balance (in dollars per share) | $ 11.86 | $ 1.65 |
Unrecognized compensation expense related to unvested awards | $ 17,637 | |
Recognition period for compensation costs | 9 months | |
Unvested restricted stock awards expected to vest (in shares) | 10,500 |
Defined Contribution Retireme_2
Defined Contribution Retirement Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Contribution Retirement Plan | |||
Employer match percentage of the first 6% of employee contributions | 33.00% | ||
Percentage of employee's gross pay for which the Company makes an employer match | 6.00% | ||
Defined contribution expense | $ 84,276 | $ 0 | $ 0 |
Income Taxes - Loss Before Taxe
Income Taxes - Loss Before Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
U.S. and foreign loss before income taxes | |||
United States | $ (34,308,847) | $ (27,051,148) | $ (18,803,227) |
Foreign | (5,602,328) | (4,961,156) | (4,612,823) |
Loss before income taxes | $ (39,911,175) | $ (32,012,304) | $ (23,416,050) |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Research Tax Credit Carryforward | ||
Operating loss and tax credit carryforwards | ||
Tax credit carryforwards | $ 2.3 | $ 1.7 |
Tax Credit Carryforward, Expiration Date | Dec. 31, 2027 | |
Federal | ||
Operating loss and tax credit carryforwards | ||
Net operating loss carryforwards | $ 84 | 56.8 |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2028 | |
State | ||
Operating loss and tax credit carryforwards | ||
Net operating loss carryforwards | $ 84.1 | $ 57.1 |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2028 | Dec. 31, 2027 |
Foreign | Australian Taxation Office | ||
Operating loss and tax credit carryforwards | ||
Net operating loss carryforwards | $ 1.2 | $ 0.4 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax assets | |||
Net operating loss carry forwards | $ 24,399,299 | $ 16,130,487 | |
Research and development credit carry forwards | 2,291,226 | 1,739,824 | |
Stock-based compensation | 4,575,617 | 2,675,304 | |
Other | 706,745 | 259,241 | |
Gross deferred tax assets | 31,972,887 | 20,804,856 | |
Deferred tax liabilities: | |||
Property and equipment | (59,524) | (29,060) | |
Gross deferred tax liabilities | (59,524) | (29,060) | |
Less valuation allowance | (31,913,363) | (20,775,796) | |
Net deferred tax asset | 0 | 0 | |
Decrease in deferred tax asset and corresponding valuation allowance | 8,700,000 | ||
Increase in valuation allowance | 11,100,000 | 3,000,000 | |
Unrecognized tax benefits | |||
Unrecognized Tax Benefits | $ 0 | $ 0 | |
Reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes | |||
Federal income tax benefit at statutory rate | 21.00% | 34.00% | 34.00% |
State income tax, net of federal benefit | 6.80% | 6.50% | 7.80% |
Foreign tax rate differential | 0.30% | (0.20%) | |
Nondeductible research and development expenses | (2.20%) | (5.10%) | (4.70%) |
Other permanent differences | (0.10%) | ||
Research and development credit benefit | 1.40% | 1.30% | 3.90% |
Rate change from 2017 Tax Cuts and Jobs Act | 0.30% | (27.30%) | |
Change in valuation allowance | (27.60%) | (9.30%) | (40.70%) |
Effective income tax rate | 0.00% | 0.00% | 0.10% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and contingencies | ||||
Revenue | $ 86,000 | $ 86,000 | $ 0 | $ 7,250 |
Deferred grant revenue, current | 171,975 | |||
Deferred grant revenue, long-term | 662,000 | |||
Prepaid expenses and other current assets | 3,747,087 | 3,747,087 | 1,733,701 | |
Other long-term assets | 662,200 | |||
Grants payable | 747,926 | 747,926 | ||
Operating lease commitments due: | ||||
December 31, 2019 | 305,447 | 305,447 | ||
December 31, 2020 | 128,214 | 128,214 | ||
Total lease expense | 264,648 | 189,775 | $ 101,609 | |
Federal Grants | ||||
Commitments and contingencies | ||||
Revenue | 86,000 | |||
Deferred grant revenue, current | 200,000 | |||
Deferred grant revenue, long-term | 700,000 | |||
Prepaid expenses and other current assets | 200,000 | |||
Other long-term assets | $ 700,000 | |||
Grants payable | $ 700,000 | $ 700,000 |
Quarterly Financial Data (una_3
Quarterly Financial Data (unaudited) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Data (unaudited) | |||||||||||
Revenue | $ 86,000 | $ 86,000 | $ 0 | $ 7,250 | |||||||
Operating expenses: | |||||||||||
Research and development | 4,876,162 | $ 4,859,902 | $ 8,533,466 | $ 8,975,513 | $ 5,828,091 | $ 5,753,764 | $ 5,732,797 | $ 5,491,455 | 27,245,043 | 22,806,107 | 16,784,626 |
General and administrative | 3,256,044 | 3,125,780 | 3,436,340 | 3,420,623 | 2,376,413 | 2,795,839 | 2,632,857 | 2,211,793 | 13,238,787 | 10,016,902 | 6,430,252 |
Total operating expenses | 8,132,206 | 7,985,682 | 11,969,806 | 12,396,136 | 8,204,504 | 8,549,603 | 8,365,654 | 7,703,248 | 40,483,830 | 32,823,009 | 23,214,878 |
Loss from operations | (8,046,206) | (7,985,682) | (11,969,806) | (12,396,136) | (8,204,504) | (8,549,603) | (8,365,654) | (7,703,248) | (40,397,830) | (32,823,009) | (23,207,628) |
Other income (expense): | |||||||||||
Interest income | 321,621 | 278,214 | 186,304 | 175,184 | 156,204 | 161,930 | 124,535 | 76,885 | 961,323 | 519,554 | 80,222 |
Foreign exchange gain (loss) | (65,658) | (99,897) | (223,731) | (85,382) | (70,299) | 76,468 | (82,360) | 367,342 | (474,668) | 291,151 | (189,497) |
Total other income (expense) | 255,963 | 178,317 | (37,427) | 89,802 | 85,905 | 238,398 | 42,175 | 444,227 | 486,655 | 810,705 | (208,422) |
Net loss | $ (7,790,243) | $ (7,807,365) | $ (12,007,233) | $ (12,306,334) | $ (8,118,599) | $ (8,311,205) | $ (8,323,479) | $ (7,259,021) | $ (39,911,175) | $ (32,012,304) | $ (23,388,507) |
Per share information: | |||||||||||
Net loss per share basic and diluted | $ (0.44) | $ (0.47) | $ (0.89) | $ (0.91) | $ (0.60) | $ (0.63) | $ (0.64) | $ (0.60) | $ (2.61) | $ (2.48) | $ (2.58) |
Basic and diluted weighted average shares outstanding | 17,616,373 | 16,587,353 | 13,504,485 | 13,467,694 | 13,423,669 | 13,098,914 | 13,052,294 | 12,067,453 | 15,308,886 | 12,914,814 | 9,070,232 |