Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | Monopar Therapeutics | |
Entity Central Index Key | 0001645469 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 001-39070 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,634,075 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Balance Sheet
Balance Sheet - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 12,592,362 | $ 13,213,929 |
Other current assets | 124,194 | 15,711 |
Total current assets | 12,716,556 | 13,229,640 |
Other non-current assets | 122,381 | 122,381 |
Total assets | 12,838,937 | 13,352,021 |
Current liabilities: | ||
Accounts payable, accrued expenses and other current liabilities | 443,520 | 724,165 |
Total current liabilities | 443,520 | 724,165 |
Total liabilities | 443,520 | 724,165 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Common stock, par value of $0.001 per share, 40,000,000 authorized, 10,622,823 and 10,587,632 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 10,622 | 10,587 |
Additional paid-in capital | 39,371,269 | 38,508,825 |
Accumulated other comprehensive loss | (15,011) | (10,970) |
Accumulated deficit | (26,971,463) | (25,880,586) |
Total stockholders' equity | 12,395,417 | 12,627,856 |
Total liabilities and stockholders' equity | $ 12,838,937 | $ 13,352,021 |
Balance Sheet (Parenthetical)
Balance Sheet (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 10,622,823 | 10,587,632 |
Common stock, outstanding | 10,622,823 | 10,587,632 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating expenses: | ||
Research and development | $ 344,407 | $ 835,600 |
General and administrative | 791,607 | 571,709 |
Total operating expenses | 1,136,014 | 1,407,309 |
Loss from operations | (1,136,014) | (1,407,309) |
Other income: | ||
Interest income | 45,137 | 31,074 |
Net loss | (1,090,877) | (1,376,235) |
Other comprehensive income (loss): | ||
Foreign currency translation loss | (4,041) | (2,127) |
Comprehensive loss | $ (1,094,918) | $ (1,378,362) |
Net loss per share: | ||
Basic and diluted | $ (0.10) | $ (0.15) |
Weighted average shares outstanding: | ||
Basic and diluted | 10,608,199 | 9,291,421 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 9,291,421 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 9,291 | $ 28,567,221 | $ (2,396) | $ (21,655,712) | $ 6,918,404 |
Non-cash stock compensation | 233,776 | 233,776 | |||
Net loss | (1,376,235) | (1,376,235) | |||
Accumulated other comprehensive gain (loss) | (2,127) | (2,127) | |||
Ending balance, shares at Mar. 31, 2019 | 9,291,421 | ||||
Ending balance, amount at Mar. 31, 2019 | $ 9,291 | 28,800,997 | (4,523) | (23,031,947) | 5,773,818 |
Beginning balance, shares at Dec. 31, 2019 | 10,587,632 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 10,587 | 38,508,825 | (10,970) | (25,880,586) | 12,627,856 |
Non-cash stock compensation | 338,497 | 338,497 | |||
Issuance of common stock under a Capital on DemandTM Sales Agreement with Jones Trading Institutional Services LLC, net of $16,284 in commissions, shares | 33,903 | ||||
Issuance of common stock under a Capital on DemandTM Sales Agreement with Jones Trading Institutional Services LLC, net of $16,284 in commissions, amount | $ 34 | 526,109 | 526,143 | ||
Issuance of common stock to non-employee directors pursuant to vested restricted stock units, shares | 1,288 | ||||
Issuance of common stock to non-employee directors pursuant to vested restricted stock units, amount | $ 1 | (1) | |||
Offering costs | (2,161) | (2,161) | |||
Net loss | (1,090,877) | (1,090,877) | |||
Accumulated other comprehensive gain (loss) | (4,041) | (4,041) | |||
Ending balance, shares at Mar. 31, 2020 | 10,622,823 | ||||
Ending balance, amount at Mar. 31, 2020 | $ 10,622 | $ 39,371,269 | $ (15,011) | $ (26,971,463) | $ 12,395,417 |
Statement of Cash Flows
Statement of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (1,090,877) | $ (1,376,235) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock compensation expense (non-cash) | 338,497 | 233,776 |
Changes in operating assets and liabilities, net | ||
Other current assets | (42,084) | (21,365) |
Accounts payable and accrued expenses | (331,106) | 167,852 |
Net cash used in operating activities | (1,125,570) | (995,972) |
Cash flows from financing activities: | ||
Gross proceeds from the sales of common stock under a Capital on DemandTM Sales Agreement with JonesTrading Institutional Services LLC | 542,428 | 0 |
Commission on sales of common stock | (16,284) | 0 |
Deferred offering costs | (18,100) | (13,855) |
Net cash provided by financing activities | 508,044 | (13,855) |
Effect of exchange rates | (4,041) | (1,881) |
Net decrease in cash and cash equivalents | (621,567) | (1,011,708) |
Cash and cash equivalents at beginning of period | 13,213,929 | 6,892,772 |
Cash and cash equivalents at end of period | $ 12,592,362 | $ 5,881,064 |
1. Nature of Business and Liqui
1. Nature of Business and Liquidity | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Liquidity | Nature of Business Monopar Therapeutics Inc. (“Monopar” or the “Company”) is a clinical-stage biopharmaceutical company focused on developing proprietary therapeutics designed to extend life or improve quality of life for cancer patients. Monopar currently has three compounds in development: Validive® (clonidine mucobuccal tablet; clonidine MBT), a Phase 3-ready, first-in-class mucoadhesive buccal anti-inflammatory tablet for the prevention and treatment of radiation induced severe oral mucositis (“SOM”) in oropharyngeal cancer patients; camsirubicin (generic name for MNPR-201, GPX-150; 5-imino-13-deoxydoxorubicin), a proprietary Phase 2 clinical stage topoisomerase II-alpha selective analog of doxorubicin engineered specifically to retain anticancer activity while minimizing toxic effects on the heart; and MNPR-101 (formerly huATN-658), a pre-IND stage humanized monoclonal antibody, which targets the urokinase plasminogen activator receptor (“uPAR”), for the treatment of advanced solid cancers. Liquidity The Company has incurred an accumulated deficit of approximately $27.0 million as of March 31, 2020. To date, the Company has primarily funded its operations with the net proceeds from the Company’s initial public offering of its common stock on Nasdaq, private placements of convertible preferred stock and of common stock and from the cash provided in the camsirubicin asset purchase transaction. Management believes that currently available resources will provide sufficient funds to enable the Company to meet its planned obligations past June 2021. The Company’s ability to fund its future operations, including the clinical development of Validive and camsirubicin, is dependent primarily upon its ability to execute its business strategy, to obtain additional funding and/or to execute collaborative research agreements. There can be no certainty that future financing or collaborative research agreements will occur. In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China and by March 2020 COVID-19 was designated a global pandemic, resulting in travel restrictions and temporary shut-downs of non-essential businesses in many states in the United States. The Company is able to remain open but has required their employees to work from home. Due to the volatility of the stock markets resulting from travel restrictions and temporary business shut-downs, the Company faces challenges in raising substantial cash in the near-term. In response to the current COVID-19 pandemic and its effects on clinical trials, Monopar has modified the original adaptive design Phase 3 clinical trial for its lead product candidate, Validive, to be a Phase 2b/3 clinical trial to better fit the typesof trials which can enroll patients in the current environment. This modification will allow the Company to initiate the clinical trial without requiring near-term financing. The decision to proceed to the Phase 3 portion of the clinical trial without a delay will largely be dependent on the Company’s cash position closer to that time, anticipated to be in the second half of 2021. To initiate and complete the Phase 3 portion of the clinical trial, Monopar will require additional funding in the millions or tens of millions of dollars (depending on if the Company has consummated a collaboration or partnership or neither for Validive), which it is planning to pursue in the next 12 to 18 months. Due to many uncertainties, the Company is unable to estimate the pandemic’s financial impact or duration at this time, or its potential impact on the Company’s planned clinical trials. |
2. Significant Accounting Polic
2. Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Basis of Presentation These condensed consolidated financial statements include the financial results of Monopar Therapeutics Inc., its wholly-owned French subsidiary, Monopar Therapeutics, SARL, and its wholly-owned Australian subsidiary, Monopar Therapeutics Australia Pty Ltd, and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all disclosures required by GAAP for interim financial reporting. All intercompany accounts have been eliminated. The principal accounting policies applied in the preparation of these condensed consolidated financial statements are set out below and have been consistently applied in all periods presented. The Company has been primarily involved in performing research activities, developing product candidates, and raising capital to support and expand these activities. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal, recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of March 31, 2020 and as of December 31, 2019, the Company’s condensed consolidated results of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, and the Company’s condensed consolidated cash flows for the three months ended March 31, 2020 and 2019. The condensed consolidated results of operations and cash flows for the periods presented are not necessarily indicative of the consolidated results of operations or cash flows which may be reported for the remainder of 2020 or for any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on March 27, 2020. Functional Currency The Company's consolidated functional currency is the U.S. Dollar. The Company's Australian subsidiary and French subsidiary use the Australian Dollar and European Euro, respectively, as their functional currency. At each quarter-end, each foreign subsidiary's balance sheets are translated into U.S. Dollars based upon the quarter-end exchange rate, while their statements of operations and comprehensive loss are translated into U.S. Dollars based upon an average exchange rate during the period. Comprehensive Loss Comprehensive loss represents net loss plus any gains or losses not reported in the statements of operations and comprehensive loss, such as foreign currency translations gains and losses that are typically reflected on the Company’s condensed consolidated statements of stockholders’ equity. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Going Concern Assessment The Company applies Accounting Standards Codification 205-40 ("ASC 205-40"), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of 90 days or less on the date of purchase to be cash equivalents. Cash equivalents as of March 31, 2020 and 2019 consist of one money market account. Deferred Offering Costs Deferred offering costs represent legal, auditing, travel and filing fees related to fundraising efforts that have not yet been concluded. Deferred offering costs are reflected on the Company’s balance sheets as other current assets. Prepaid Expenses Prepayments are expenditures for goods or services before the goods are used or the services are received and are charged to operations as the benefits are realized. Prepaid expenses include insurance premiums and software costs that are expensed monthly over the life of the contract. Prepaid expenses are reflected on the Company’s balance sheets as other current assets. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents at two reputable financial institutions. As of March 31, 2020, the balance at one financial institution was in excess of the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurable limit. The Company has not experienced any losses on its deposits since inception and management believes the Company is not exposed to significant risks with respect to these financial institutions. Fair Value of Financial Instruments For financial instruments consisting of cash and cash equivalents, prepaid expenses, deferred offering costs, other current assets, accounts payable, accrued expenses, and other current liabilities, the carrying amounts are reasonable estimates of fair value due to their relatively short maturities. ASC 820, Fair Value Measurements and Disclosures, as amended, addresses the measurement of the fair value of financial assets and financial liabilities. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect a reporting entity’s pricing an asset or liability developed based on the best information available under the circumstances. The fair value hierarchy consists of the following three levels: Level 1 Level 2 Level 3 Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1, 2 or 3 of the fair value hierarchy during the three months ended March 31, 2020 and 2019. The following table presents the assets and liabilities that are reported at fair value on our condensed consolidated balance sheets on a recurring basis. No values were recorded in Level 2 or Level 3 at March 31, 2020 and December 31, 2019. Assets and Liabilities Measured at Fair Value on a Recurring Basis March 31, 2020 Level 1 Total Assets Cash equivalents(1) $ 12,479,733 $ 12,479,733 Total $ 12,479,733 $ 12,479,733 December 31, 2019 Level 1 Total Assets Cash equivalents(1) $ 13,083,536 $ 13,083,536 Total $ 13,083,536 $ 13,083,536 (1) Cash equivalents represent the fair value of the Company’s investment in a money market account. Net Loss per Share Net loss per share for the three months ended March 31, 2020 and 2019 is calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share for the three months ended March 31, 2020 and 2019 is calculated by dividing net loss by the weighted-average shares of the sum of a) common stock outstanding (10,622,823 shares as of March 31, 2020; 9,291,421 shares as of March 31, 2019) and b) potentially dilutive shares of common stock (such as stock options and restricted stock units) outstanding during the period. As of March 31, 2020 and 2019, potentially dilutive securities included stock-based awards to purchase up to 1,337,007 and 1,105,896 shares of the Company’s common stock, respectively. For the three months ended March 31, 2020 and 2019, potentially dilutive securities are excluded from the computation of fully-diluted net loss per share as their effect is anti-dilutive. Research and Development Expenses Research and development (“R&D”) costs are expensed as incurred. Major components of R&D expenses include salaries and benefits paid to the Company’s R&D staff, fees paid to consultants and to the entities that conduct certain R&D activities on the Company’s behalf and materials and supplies which are used in R&D activities during the reporting period. The Company accrues and expenses the costs for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with contract research organizations, service providers, and clinical trial sites. The Company determines the estimates through discussions with internal clinical personnel and external service providers as to progress or stage of completion of trials or services and the agreed upon fee to be paid for such services. Costs of setting up clinical trial sites for participation in the trials are expensed immediately as R&D expenses. Clinical trial site costs related to patient screening and enrollment are accrued as patients are screened/entered into the trial. During the three months ended March 31, 2020 and 2019, the Company had no clinical trials in progress. Collaborative Agreements The Company and its collaborative partners are active participants in collaborative arrangements and all parties would be exposed to significant risks and rewards depending on the technical and commercial success of the activities. Contractual payments to the other parties in collaboration agreements and costs incurred by the Company when the Company is deemed to be the principal participant for a given transaction are recognized on a gross basis in R&D expenses. Royalties and license payments are recorded as earned. During the three months ended March 31, 2020 and 2019, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments. Licensing Agreements The Company has various agreements licensing technology utilized in the development of its product or technology programs. The licenses contain success milestone obligations and royalties on future sales. During the three months ended March 31, 2020 and 2019, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments under any of its license agreements. Patent Costs The Company expenses costs relating to issued patents and patent applications, including costs relating to legal, renewal and application fees, as a component of general and administrative expenses in its condensed consolidated statements of operations and comprehensive loss. Income Taxes On December 16, 2015, the Company began using an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements, but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are more likely than not to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently determines deferred income tax assets that were previously determined to be unrealizable are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made. Internal Revenue Code Section 382 (“Section 382”) provides that, after an ownership change, the amount of a loss corporation’s net operating loss (“NOL”) for any post-change year that may be offset by pre-change losses shall not exceed the Section 382 limitation for that year. To date, the Company has not conducted a Section 382 study, however, because the Company will continue to raise significant amounts of equity in the coming years, the Company expects that Section 382 will limit the Company’s usage of NOLs in the future. ASC 740, Income Taxes The Company is subject to U.S. Federal, Illinois and California income taxes. In addition, the Company is subject to local tax laws of France and Australia. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company was incorporated on December 16, 2015 and is subject to U.S. Federal, state and local tax examinations by tax authorities for the years ended December 31, 2019, 2018, 2017 and 2016, and for the short tax period December 16, 2015 to December 31, 2015. The Company does not anticipate significant changes to its current uncertain tax positions through March 31, 2020. The Company plans on filing its tax returns for the year ending December 31, 2019 prior to the extended filing deadlines in all jurisdictions. Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based awards, including stock option and restricted stock unit (“RSUs”) grants. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model or the closing stock price on the date of grant in the case of RSUs. Stock-based compensation costs for awards granted to employees and non-employee directors are based on the fair value of the underlying instrument calculated using the Black-Scholes option-pricing model on the date of grant for stock options and using the closing stock price on the date of grant for RSUs and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating the future stock price volatility, forfeiture rates and expected terms. The expected volatility rates are estimated based on the actual volatility of comparable public companies over recent historical periods of the same length as the expected term. The Company selected these companies based on reasonably comparable characteristics, including market capitalization, stage of corporate development and with historical share price information sufficient to meet the expected term (life) of the stock-based awards. The expected term for options granted to date is estimated using the simplified method. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has not paid dividends and does not anticipate paying a cash dividend in the future vesting period and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior to January 1, 2019, the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vested and was recognized as an expense over the period in which services were rendered. Since January 1, 2019, consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period in which services are rendered. Recent Accounting Pronouncements In August 2018, the FASB issued Accounting Standards Updates ("ASU") No. 2018-13 , Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. |
3. Capital Stock
3. Capital Stock | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | Holders of the common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor. Upon dissolution and liquidation of the Company, holders of the common stock are entitled to a ratable share of the net assets of the Company remaining after payments to creditors of the Company. The holders of shares of common stock are entitled to one vote per share for the election of each director nominated to the board and one vote per share on all other matters submitted to a vote of stockholders. The Company’s amended and restated certificate of incorporation authorizes the Company to issue 40,000,000 shares of common stock with a par value of $0.001 per share. Sales of Common Stock On December 23, 2019, the Company closed the initial public offering of its common stock. The Company sold 1,277,778 shares of its common stock at a public offering price of $8.00 per share pursuant to an underwriting agreement with JonesTrading Institutional Services, LLC (“JonesTrading”). The Company paid JonesTrading a customary commission and reimbursement of a portion of their legal fees incurred in connection with the offering, which in aggregate totaled approximately $0.7 million. Net proceeds on a cash basis were approximately $9.4 million, after deducting underwriting discounts and accrued, unpaid offering expenses. The Company had incurred and paid prior to the initial public offering approximately $0.6 million of fundraising expenses which were capitalized on the Company’s balance sheet as deferred offering costs and were reclassified as fundraising expenses (a contra-equity balance sheet account) upon the closing of the Company’s initial public offering. After deducting previously paid fundraising expenses of approximately $0.6 million, the accrual basis net proceeds were $8.8 million as reported on the Company’s consolidated statement of stockholders’ equity as of December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2020. The Company’s common stock began trading on the Nasdaq Capital Market on December 19, 2019. On January 13, 2020, the Company entered into a Capital on Demand™ Sales Agreement with JonesTrading, as sales agent, pursuant to which Monopar may offer and sell (at its discretion), from time to time, through or to JonesTrading shares of Monopar’s common stock, having an aggregate offering price of up to $19.7 million. Pursuant to this agreement, as of March 31, 2020, the Company sold 33,903 shares of its common stock at an average gross price per share of $16.00 for net proceeds of $526,143, after commissions of $16,284. As of March 31, 2020, the Company had 10,622,823 shares of common stock issued and outstanding. |
4. Stock Incentive Plan
4. Stock Incentive Plan | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Incentive Plan | In April 2016, the Company’s Board of Directors and stockholders representing a majority of the Company’s outstanding stock at that time, approved the Monopar Therapeutics Inc. 2016 Stock Incentive Plan, as amended (the “Plan”), allowing the Company to grant up to an aggregate 700,000 shares of stock-based awards in the form of stock options, restricted stock units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants. In October 2017, the Company’s Board of Directors voted to increase the stock award pool to 1,600,000 shares of common stock, which subsequently was approved by the Company’s stockholders. In January 2020, the Company's Plan Administrator Committee granted two new hire stock option grants and a consultant stock option grant to the Company’s acting chief medical office, in aggregate, for the purchase of 15,125 shares of the Company’s common stock with exercise prices ranging from $16.80 to $17.75. The stock options have a 10 year term and vest over 1 to 4 years. In February 2020, the Company's Plan Administrator Committee (with regards to non-officer employees) and the Company's Compensation Committee, as ratified by the Board of Directors (in the case of officers and non-employee directors) granted an aggregate of 189,985 stock options with exercise prices ranging from $12.93 to $14.35 as annual equity grants to executive officers, non-employee directors and staff. All stock options have a 10 year term and vest over 1 to 4 years. The annual equity grants also included an aggregate 45,722 restricted stock units to executive officers, non-employee directors and staff which vest over 1 to 4 years. Under the Plan, the per share exercise price for the shares to be issued upon exercise of an option shall be determined by the Plan Administrator, except that the per share exercise price shall be no less than 100% of the fair market value per share on the grant date. Fair market value is established by the Company’s Board of Directors, using third party valuation reports, recent private financings or the Company’s closing prices on Nasdaq since the Company’s listing on December 19, 2019. Stock options generally expire after ten years. Stock option activity under the Plan was as follows: Options Outstanding Number of Options Weighted-Average Exercise Price Balances at January 1, 2019 1,105,896 $ 2.99 Granted — — Forfeited — — Exercised (18,433) 5.97 Balances at December 31, 2019 1,087,463 2.94 Granted(1) 205,110 14.55 Forfeited — — Exercised — — Balances at March 31, 2020 1,292,573 4.78 (1) 205,110 options vest as follows: options to purchase up to 176,401 shares of the Company’s common stock vest 6/48ths on the six-month anniversary of grant date and 1/48th per month thereafter; options to purchase up to 22,584 shares of the Company’s common stock vest quarterly over one year; and options to purchase up to 6,125 shares of the Company’s common stock vest monthly over one year. The exercise prices per share of the 205,110 options are as follows: for 186,985 options $14.35; for 9,000 options $17.75; for 6,125 options $16.80; and for 3,000 options $12.93. A summary of options outstanding as of March 31, 2020 is shown below: Exercise Prices Number of Shares Subject to Options Outstanding Weighted-Average Contractual Term in Years Number of Shares Subject to Options Fully Vested and Exercisable Weighted-Average Remaining Contractual Term in Years $0.00-$5.00 555,420 6.46 492,280 6.40 $5.01-$10.00 532,043 8.26 305,837 8.22 $10.01-15.00 189,985 9.84 5,648 9.84 $15.01-20.00 15,125 9.80 1,531 9.84 1,292,573 805,296 Restricted stock unit activity under the Plan was as follows: Restricted Stock Units Weighted-Average Grant Date Fair Value per Unit Unvested balance at January 1, 2020 — $ — Granted 45,722 12.93 Vested (1,288) 12.93 Forfeited — — Unvested balance at March 31, 2020 44,434 $ 12.93 During the three months ended March 31, 2020 and 2019, the Company recognized $220,765 and $150,726, respectively, of employee and non-employee director stock-based compensation expense as general and administrative expenses and $100,171 and $62,341, respectively, as research and development expenses. The stock-based compensation expense is allocated on a departmental basis, based on the classification of the holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. The Company recognizes as an expense the fair value of options granted to persons (currently consultants) who are neither employees nor non-employee directors. Stock-based compensation expense for consultants which was recorded as research and development expense for the three months ended March 31, 2020 and 2019 was $17,561 and $20,709, respectively. The fair value of options granted from inception to March 31, 2020 was based on the Black-Scholes option-pricing model assuming the following factors: 4.7 to 6.2 years expected term, 55% to 85% volatility, 1.2% to 2.9% risk free interest rate and zero dividends. The expected term for options granted to date was estimated using the simplified method. There were 205,110 stock option grants during the three months ended March 31, 2020. For the three months ended March 31, 2020 the weighted average grant date fair value was $9.30 per share. There were no stock option grants during the three months ended March 31, 2019. For the three months ended March 31, 2020 and 2019, the fair value of shares vested was $0.2 million and $0.5 million, respectively. At March 31, 2020, the aggregate intrinsic value of outstanding stock options was approximately $4.6 million of which approximately $3.9 million was vested and approximately $0.7 million is expected to vest (representing options to purchase up to 487,277 shares of the Company's common stock), and the weighted-average exercise price in aggregate was $4.78 which includes $2.41 for fully vested stock options and $8.69 for stock options expected to vest. At March 31, 2020, the unamortized unvested balance of stock-based compensation was approximately $3.4 million to be amortized over 3.0 years. |
5. Development and Collaboratio
5. Development and Collaboration Agreements | 3 Months Ended |
Mar. 31, 2020 | |
Development And Collaboration Agreements | |
Development and Collaboration Agreements | Onxeo S.A. In June 2016, the Company executed an option and license agreement with Onxeo S.A. (“Onxeo”), a public French company, which gave Monopar the exclusive option to license (on a world-wide exclusive basis) Validive to pursue treating severe oral mucositis in patients undergoing chemoradiation treatment for head and neck cancers. The pre-negotiated Onxeo license agreement for Validive as part of the option agreement includes clinical, regulatory, developmental and sales milestones that could reach up to $108 million if the Company achieves all milestones, and escalating royalties on net sales from 5% to 10%. On September 8, 2017, the Company exercised the license option, and therefore paid Onxeo the $1 million fee under the option and license agreement. Under the agreement, the Company is required to pay royalties to Onxeo on a product-by-product and country-by-country basis until the later of (1) the date when a given product is no longer within the scope of a patent claim in the country of sale or manufacture, (2) the expiry of any extended exclusivity period in the relevant country (such as orphan drug exclusivity, pediatric exclusivity, new chemical entity exclusivity, or other exclusivity granted beyond the expiry of the relevant patent), or (3) a specific time period after the first commercial sale of the product in such country. In most countries, including the U.S., the patent term is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country, not taking into consideration any potential patent term adjustment that may be filed in the future or any regulatory extensions that may be obtained. The royalty termination provision pursuant to (3) described above is shorter than 20 years and is the least likely cause of termination of royalty payments. The Onxeo license agreement does not have a pre-determined term, but expires on a product-by-product and country-by-country basis; that is, the agreement expires with respect to a given product in a given country whenever the Company’s royalty payment obligations with respect to such product have expired. The agreement may also be terminated early for cause if either the Company or Onxeo materially breach the agreement, or if either the Company or Onxeo become insolvent. The Company may also choose to terminate the agreement, either in its entirety or as to a certain product and a certain country, by providing Onxeo with advance notice. The Company plans to internally develop Validive with the near-term goal of commencing a Phase 2b/3 clinical trial, which, if successful, may allow the Company to apply for marketing approval within the next several years. The Company will need to raise significant funds to support the further development of Validive. As of March 31, 2020, the Company had not reached any of the pre-specified milestones and has not been required to pay Onxeo any funds under this license agreement other than the one-time license fee. XOMA Ltd. The intellectual property rights contributed by Tactic Pharma to the Company included the non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, the Company is obligated to pay XOMA Ltd. clinical, regulatory and sales milestones for MNPR-101 that could reach up to $14.925 million if the Company achieves all milestones. The agreement does not require the payment of sales royalties. There can be no assurance that the Company will reach any milestones under the XOMA agreement. As of March 31, 2020, the Company had not reached any milestones and has not been required to pay XOMA Ltd. any funds under this license agreement. |
6. Related Party Transactions
6. Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | In March 2017, Tactic Pharma, the Company’s largest shareholder at that time, paid $1 million to the Company in advance of the sale of the Company’s common stock at $6 per share under a private placement memorandum. In April, the Company issued to Tactic Pharma 166,667 shares in exchange for the $1 million at $6 per share once the Company began selling stock to unaffiliated parties under the private placement memorandum. In August 2017, Tactic Pharma surrendered 2,888,727 shares of common stock back to the Company as a contribution to the capital of the Company. This resulted in reducing Tactic Pharma’s ownership in Monopar at that time from 79.5% to 69.9%. In August 2017, the Company executed definitive agreements with Gem Pharmaceuticals, LLC (“Gem”), pursuant to which Tactic Pharma and Gem formed a limited liability company, TacticGem, LLC (“TacticGem”). Tactic Pharma contributed 4,111,273 shares of its holdings in Monopar’s common stock to TacticGem and Gem contributed cash and assets to TacticGem. TacticGem then contributed cash and assets to the Company in exchange for stock. The Gem transaction is discussed in detail in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2019. As of March 31, 2020, Tactic Pharma beneficially owned 41.4% of Monopar’s common stock, and TacticGem owned 67.5% of Monopar’s common stock. During the three months ended March 31, 2020 and 2019, the Company was governed by six members of its Board of Directors (“Related Parties”). The Related Parties are also current common stockholders (owning approximately an aggregate 3% of the common stock outstanding as of March 31, 2020). None of the Related Parties received compensation other than market-based salary and benefits or cash and stock-based compensation as non-employee directors. Three of the Board members are also Managing Members of Tactic Pharma as of March 31, 2020. Chandler D. Robinson is the Company’s Co-Founder, Chief Executive Officer, common stockholder, Managing Member of Tactic Pharma, former Manager of the predecessor LLC, Manager of CDR Pharma, LLC and Board member of Monopar as a C Corporation. Andrew P. Mazar is the Company’s Co-Founder, Executive Vice President of Research and Development, Chief Scientific Officer, common stockholder, Managing Member of Tactic Pharma, former Manager of the predecessor LLC and Board member of Monopar as a C Corporation. Michael Brown is a Managing Member of Tactic Pharma (as of February 1, 2019 with no voting power as it relates to the Company), a previous managing member of Monopar as an LLC, common stockholder and Board member of Monopar as a C Corporation. Christopher M. Starr is the Company’s Co-Founder, Executive Chairman of the Board of Directors, common stockholder, former Manager of the predecessor LLC and Board member of Monopar as a C Corporation. During the three months ended March 31, 2019, the Company paid or accrued approximately $33,725 in legal fees to a large national law firm, in which a family member of the Company’s Chief Executive Officer was a law partner through January 31, 2019. The family member personally billed a de minimis amount of time on the Company’s legal engagement with the law firm in this period. |
7. Commitments and Contingencie
7. Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Development and Collaboration Agreements The Onxeo license agreement for Validive includes clinical, regulatory, developmental and sales milestones that could reach up to $108 million if the Company achieves all milestones, and escalating royalties on net sales from 5% to 10%. During the three months ended March 31, 2020, the Company had not reached any of these milestones and has not been required to pay Onxeo any funds under this license agreement other than the $1 million one-time license fee. Grupo Español de Investigación en Sarcomas (“GEIS”) In June 2019, the Company executed a clinical collaboration agreement with GEIS for the development of camsirubicin in patients with advanced soft tissue sarcoma (“ASTS”). GEIS will be the study sponsor and will lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against the current 1st-line treatment for ASTS, doxorubicin. Enrollment of the trial is anticipated to begin in the second half of 2020 and will include approximately 170 ASTS patients. The Company will provide study drug and supplemental financial support for the clinical trial averaging approximately $2 million to $3 million per year. During the three months ended March 31, 2020, the Company provided a nominal amount of financial support and incurred a nominal amount of drug manufacturing costs. The Company can terminate the agreement by providing GEIS with advance notice, and without affecting the Company’s rights and ownership to any intellectual property or clinical data. XOMA Ltd. The intellectual property rights contributed by Tactic Pharma to the Company included the non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, the Company is obligated to pay XOMA Ltd. clinical, regulatory and sales milestones for MNPR-101 but is not required to pay royalties on product sales. During the three months ended March 31, 2020, the Company had not reached any milestones and has not been required to pay XOMA Ltd. any funds under this license agreement. Operating Leases Commencing January 1, 2018, the Company entered into a lease for its executive headquarters at 1000 Skokie Blvd., Suite 350, Wilmette, Illinois. The lease term was January 1, 2018 through December 31, 2019, at which time the lease was on a month-to-month basis. In addition, effective February 2019, the Company leased additional office space in the same building on a month-to-month basis. During the three months ended March 31, 2020 and 2019, the Company recognized operating lease expenses of $13,483 and $11,503, respectively. Effective January 1, 2019, the Company adopted ASU 2016-02, as amended by ASU 2018-10, which requires the Company to record leases on its condensed consolidated balance sheet (a) a lease liability and (b) a right-of-use asset. Because the Company had no lease obligation (other than on a month-to-month basis) past December 31, 2019, the Company had no lease liability and right-of-use asset on its condensed consolidated balance sheet as of March 31, 2020 or December 31, 2019. Legal Contingencies The Company may be subject to claims and assessments from time to time in the ordinary course of business. No claims have been asserted to date. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims nor been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of future claims against these indemnification obligations. In accordance with its amended and restated certificate of incorporation and bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacities. There have been no claims to date. |
2. Significant Accounting Pol_2
2. Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | These condensed consolidated financial statements include the financial results of Monopar Therapeutics Inc., its wholly-owned French subsidiary, Monopar Therapeutics, SARL, and its wholly-owned Australian subsidiary, Monopar Therapeutics Australia Pty Ltd, and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all disclosures required by GAAP for interim financial reporting. All intercompany accounts have been eliminated. The principal accounting policies applied in the preparation of these condensed consolidated financial statements are set out below and have been consistently applied in all periods presented. The Company has been primarily involved in performing research activities, developing product candidates, and raising capital to support and expand these activities. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal, recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of March 31, 2020 and as of December 31, 2019, the Company’s condensed consolidated results of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, and the Company’s condensed consolidated cash flows for the three months ended March 31, 2020 and 2019. The condensed consolidated results of operations and cash flows for the periods presented are not necessarily indicative of the consolidated results of operations or cash flows which may be reported for the remainder of 2020 or for any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on March 27, 2020. |
Functional Currency | The Company's consolidated functional currency is the U.S. Dollar. The Company's Australian subsidiary and French subsidiary use the Australian Dollar and European Euro, respectively, as their functional currency. At each quarter-end, each foreign subsidiary's balance sheets are translated into U.S. Dollars based upon the quarter-end exchange rate, while their statements of operations and comprehensive loss are translated into U.S. Dollars based upon an average exchange rate during the period. |
Comprehensive Loss | Comprehensive loss represents net loss plus any gains or losses not reported in the statements of operations and comprehensive loss, such as foreign currency translations gains and losses that are typically reflected on the Company’s condensed consolidated statements of stockholders’ equity. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Going Concern Assessment | The Company applies Accounting Standards Codification 205-40 ("ASC 205-40"), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern |
Cash Equivalents | The Company considers all highly liquid investments purchased with a maturity of 90 days or less on the date of purchase to be cash equivalents. Cash equivalents as of March 31, 2020 and 2019 consist of one money market account. |
Deferred Offering Costs | Deferred offering costs represent legal, auditing, travel and filing fees related to fundraising efforts that have not yet been concluded. Deferred offering costs are reflected on the Company’s balance sheets as other current assets. |
Prepaid Expenses | Prepayments are expenditures for goods or services before the goods are used or the services are received and are charged to operations as the benefits are realized. Prepaid expenses include insurance premiums and software costs that are expensed monthly over the life of the contract. Prepaid expenses are reflected on the Company’s balance sheets as other current assets. |
Concentration of Credit Risk | Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents at two reputable financial institutions. As of March 31, 2020, the balance at one financial institution was in excess of the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurable limit. The Company has not experienced any losses on its deposits since inception and management believes the Company is not exposed to significant risks with respect to these financial institutions. |
Fair Value of Financial Instruments | For financial instruments consisting of cash and cash equivalents, prepaid expenses, deferred offering costs, other current assets, accounts payable, accrued expenses, and other current liabilities, the carrying amounts are reasonable estimates of fair value due to their relatively short maturities. ASC 820, Fair Value Measurements and Disclosures, as amended, addresses the measurement of the fair value of financial assets and financial liabilities. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect a reporting entity’s pricing an asset or liability developed based on the best information available under the circumstances. The fair value hierarchy consists of the following three levels: Level 1 Level 2 Level 3 Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1, 2 or 3 of the fair value hierarchy during the three months ended March 31, 2020 and 2019. The following table presents the assets and liabilities that are reported at fair value on our condensed consolidated balance sheets on a recurring basis. No values were recorded in Level 2 or Level 3 at March 31, 2020 and December 31, 2019. Assets and Liabilities Measured at Fair Value on a Recurring Basis March 31, 2020 Level 1 Total Assets Cash equivalents(1) $ 12,479,733 $ 12,479,733 Total $ 12,479,733 $ 12,479,733 December 31, 2019 Level 1 Total Assets Cash equivalents(1) $ 13,083,536 $ 13,083,536 Total $ 13,083,536 $ 13,083,536 (1) Cash equivalents represent the fair value of the Company’s investment in a money market account. |
Net Loss per Share | Net loss per share for the three months ended March 31, 2020 and 2019 is calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share for the three months ended March 31, 2020 and 2019 is calculated by dividing net loss by the weighted-average shares of the sum of a) common stock outstanding (10,622,823 shares as of March 31, 2020; 9,291,421 shares as of March 31, 2019) and b) potentially dilutive shares of common stock (such as stock options and restricted stock units) outstanding during the period. As of March 31, 2020 and 2019, potentially dilutive securities included stock-based awards to purchase up to 1,337,007 and 1,105,896 shares of the Company’s common stock, respectively. For the three months ended March 31, 2020 and 2019, potentially dilutive securities are excluded from the computation of fully-diluted net loss per share as their effect is anti-dilutive. |
Research and Development Expenses | Research and development (“R&D”) costs are expensed as incurred. Major components of R&D expenses include salaries and benefits paid to the Company’s R&D staff, fees paid to consultants and to the entities that conduct certain R&D activities on the Company’s behalf and materials and supplies which are used in R&D activities during the reporting period. The Company accrues and expenses the costs for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with contract research organizations, service providers, and clinical trial sites. The Company determines the estimates through discussions with internal clinical personnel and external service providers as to progress or stage of completion of trials or services and the agreed upon fee to be paid for such services. Costs of setting up clinical trial sites for participation in the trials are expensed immediately as R&D expenses. Clinical trial site costs related to patient screening and enrollment are accrued as patients are screened/entered into the trial. During the three months ended March 31, 2020 and 2019, the Company had no clinical trials in progress. |
Collaborative Arrangements | The Company and its collaborative partners are active participants in collaborative arrangements and all parties would be exposed to significant risks and rewards depending on the technical and commercial success of the activities. Contractual payments to the other parties in collaboration agreements and costs incurred by the Company when the Company is deemed to be the principal participant for a given transaction are recognized on a gross basis in R&D expenses. Royalties and license payments are recorded as earned. During the three months ended March 31, 2020 and 2019, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments. |
Licensing Agreements | The Company has various agreements licensing technology utilized in the development of its product or technology programs. The licenses contain success milestone obligations and royalties on future sales. During the three months ended March 31, 2020 and 2019, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments under any of its license agreements. |
Patent Costs | The Company expenses costs relating to issued patents and patent applications, including costs relating to legal, renewal and application fees, as a component of general and administrative expenses in its condensed consolidated statements of operations and comprehensive loss. |
Income Taxes | On December 16, 2015, the Company began using an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements, but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are more likely than not to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently determines deferred income tax assets that were previously determined to be unrealizable are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made. Internal Revenue Code Section 382 (“Section 382”) provides that, after an ownership change, the amount of a loss corporation’s net operating loss (“NOL”) for any post-change year that may be offset by pre-change losses shall not exceed the Section 382 limitation for that year. To date, the Company has not conducted a Section 382 study, however, because the Company will continue to raise significant amounts of equity in the coming years, the Company expects that Section 382 will limit the Company’s usage of NOLs in the future. ASC 740, Income Taxes The Company is subject to U.S. Federal, Illinois and California income taxes. In addition, the Company is subject to local tax laws of France and Australia. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company was incorporated on December 16, 2015 and is subject to U.S. Federal, state and local tax examinations by tax authorities for the years ended December 31, 2019, 2018, 2017 and 2016, and for the short tax period December 16, 2015 to December 31, 2015. The Company does not anticipate significant changes to its current uncertain tax positions through March 31, 2020. The Company plans on filing its tax returns for the year ending December 31, 2019 prior to the extended filing deadlines in all jurisdictions. |
Stock-Based Compensation | The Company accounts for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based awards, including stock option and restricted stock unit (“RSUs”) grants. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model or the closing stock price on the date of grant in the case of RSUs. Stock-based compensation costs for awards granted to employees and non-employee directors are based on the fair value of the underlying instrument calculated using the Black-Scholes option-pricing model on the date of grant for stock options and using the closing stock price on the date of grant for RSUs and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating the future stock price volatility, forfeiture rates and expected terms. The expected volatility rates are estimated based on the actual volatility of comparable public companies over recent historical periods of the same length as the expected term. The Company selected these companies based on reasonably comparable characteristics, including market capitalization, stage of corporate development and with historical share price information sufficient to meet the expected term (life) of the stock-based awards. The expected term for options granted to date is estimated using the simplified method. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has not paid dividends and does not anticipate paying a cash dividend in the future vesting period and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior to January 1, 2019, the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vested and was recognized as an expense over the period in which services were rendered. Since January 1, 2019, consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period in which services are rendered. |
Recent Accounting Pronouncements | In August 2018, the FASB issued ASU No. 2018-13 , Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. |
2. Significant Accounting Pol_3
2. Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Assets and liabilities measured at fair value on a recurring basis | March 31, 2020 Level 1 Total Assets Cash equivalents(1) $ 12,479,733 $ 12,479,733 Total $ 12,479,733 $ 12,479,733 December 31, 2019 Level 1 Total Assets Cash equivalents(1) $ 13,083,536 $ 13,083,536 Total $ 13,083,536 $ 13,083,536 (1) Cash equivalents represent the fair value of the Company’s investment in a money market account. |
4. Stock Incentive Plan (Tables
4. Stock Incentive Plan (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity | Options Outstanding Number of Options Weighted-Average Exercise Price Balances at January 1, 2019 1,105,896 $ 2.99 Granted — — Forfeited — — Exercised (18,433) 5.97 Balances at December 31, 2019 1,087,463 2.94 Granted(1) 205,110 14.55 Forfeited — — Exercised — — Balances at March 31, 2020 1,292,573 4.78 (1) 205,110 options vest as follows: options to purchase up to 176,401 shares of the Company’s common stock vest 6/48ths on the six-month anniversary of grant date and 1/48th per month thereafter; options to purchase up to 22,584 shares of the Company’s common stock vest quarterly over one year; and options to purchase up to 6,125 shares of the Company’s common stock vest monthly over one year. The exercise prices per share of the 205,110 options are as follows: for 186,985 options $14.35; for 9,000 options $17.75; for 6,125 options $16.80; and for 3,000 options $12.93. |
Summary of options outstanding | Exercise Prices Number of Shares Subject to Options Outstanding Weighted-Average Contractual Term in Years Number of Shares Subject to Options Fully Vested and Exercisable Weighted-Average Remaining Contractual Term in Years $0.00-$5.00 555,420 6.46 492,280 6.40 $5.01-$10.00 532,043 8.26 305,837 8.22 $10.01-15.00 189,985 9.84 5,648 9.84 $15.01-20.00 15,125 9.80 1,531 9.84 1,292,573 805,296 |
Summary of restricted stock unit activity | Restricted Stock Units Weighted-Average Grant Date Fair Value per Unit Unvested balance at January 1, 2020 — $ — Granted 45,722 12.93 Vested (1,288) 12.93 Forfeited — — Unvested balance at March 31, 2020 44,434 $ 12.93 |
1. Nature of Business and Liq_2
1. Nature of Business and Liquidity (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
State of incorporation | DE | |
Date of incorporation | Dec. 5, 2014 | |
Accumulated loss | $ (26,971,463) | $ (25,880,586) |
2. Significant Accounting Pol_4
2. Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash equivalents | $ 12,479,733 | $ 13,083,536 |
Total | 12,479,733 | 13,083,536 |
Level 1 | ||
Assets | ||
Cash equivalents | 12,479,733 | 13,083,536 |
Total | $ 12,479,733 | $ 13,083,536 |
2. Significant Accounting Pol_5
2. Significant Accounting Policies (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | ||
Potentially dilutive securities | 1,337,007 | 1,105,896 |
3. Capital Stock (Details Narra
3. Capital Stock (Details Narrative) - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Stockholders' Equity Note [Abstract] | ||
Common stock, issued | 10,622,823 | 10,587,632 |
Common stock, outstanding | 10,622,823 | 10,587,632 |
4. Stock Incentive Plan (Detail
4. Stock Incentive Plan (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options outstanding, beginning | 1,087,463 | 1,105,896 |
Stock options, granted | 205,110 | 0 |
Stock options, forfeited | 0 | 0 |
Stock options, exercised | 0 | (18,433) |
Stock options outstanding, ending | 1,292,573 | 1,087,463 |
Weighted average exercise price outstanding, beginning | $ 2.94 | $ 2.99 |
Weighted average exercise price, granted | 14.55 | 0 |
Weighted average exercise price, forfeited | 0 | 0 |
Weighted average exercise price, exercised | 0 | 5.97 |
Weighted average exercise price outstanding, ending | $ 4.78 | $ 2.94 |
4. Stock Incentive Plan (Deta_2
4. Stock Incentive Plan (Details 1) - shares | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Number of shares outstanding | 1,292,573 | 1,087,463 | 1,105,896 |
Number of shares fully vested and exercisable | 805,296 | ||
Option 1 | |||
Exercise price | $0.00-$5.00 | ||
Number of shares outstanding | 555,420 | ||
Weighted average remaining contractual life | 6 years 5 months 16 days | ||
Number of shares fully vested and exercisable | 492,280 | ||
Weighted average remaining contractual life | 6 years 4 months 24 days | ||
Option 2 | |||
Exercise price | $5.01-$10.00 | ||
Number of shares outstanding | 532,043 | ||
Weighted average remaining contractual life | 8 years 3 months 4 days | ||
Number of shares fully vested and exercisable | 305,837 | ||
Weighted average remaining contractual life | 8 years 2 months 19 days | ||
Option 3 | |||
Exercise price | $10.01-15.00 | ||
Number of shares outstanding | 189,985 | ||
Weighted average remaining contractual life | 9 years 10 months 2 days | ||
Number of shares fully vested and exercisable | 5,648 | ||
Weighted average remaining contractual life | 9 years 10 months 2 days | ||
Option 4 | |||
Exercise price | $15.01-20.00 | ||
Number of shares outstanding | 15,125 | ||
Weighted average remaining contractual life | 9 years 9 months 18 days | ||
Number of shares fully vested and exercisable | 1,531 | ||
Weighted average remaining contractual life | 9 years 10 months 2 days |
4. Stock Incentive Plan (Deta_3
4. Stock Incentive Plan (Details 2) - Restricted Stock Units | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Unvested balance at January 1, 2020 | shares | 0 |
Granted | shares | 45,722 |
Vested | shares | (1,288) |
Forfeited | shares | 0 |
Unvested balance at March 31, 2020 | shares | 44,434 |
Weighted-Average Grant Date Fair Value per Unit at January 1, 2020 | $ / shares | $ 0 |
Weighted-Average Grant Date Fair Value per Unit, Granted | $ / shares | 12.93 |
Weighted-Average Grant Date Fair Value per Unit, Vested | $ / shares | 12.93 |
Weighted-Average Grant Date Fair Value per Unit, Forfeited | $ / shares | 0 |
Weighted-Average Grant Date Fair Value per Unit at March 31, 2020 | $ / shares | $ 12.93 |
4. Stock Option Plan (Details N
4. Stock Option Plan (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Employee and non-employee director stock-based compensation expense | $ 220,765 | $ 150,726 |
Stock-based compensation expense for non-employees | $ 17,561 | 20,709 |
Weighted average grant date fair | $ 9.30 | |
Fair value of shares vested | $ 200,000 | 500,000 |
Aggregate intrinsic value of outstanding stock options | 4,600,000 | |
Unamortized unvested balance of stock base compensation | $ 3,400,000 | |
Unamortized unvested balance of stock base compensation, period | 3 years | |
Minimum | ||
Expected term | 4 years 8 months 12 days | |
Volatility | 55.00% | |
Dividends | 0.00% | |
Risk free interest rate | 1.20% | |
Maximum | ||
Expected term | 6 years 2 months 12 days | |
Volatility | 85.00% | |
Dividends | 0.00% | |
Risk free interest rate | 2.90% | |
Research and Development Expenses | ||
Employee and non-employee director stock-based compensation expense | $ 100,171 | $ 62,341 |
6. Related Party Transactions (
6. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Chief Executive Officer | ||
Related party transaction | $ 0 | $ 33,725 |
7. Commitments and Contingenc_2
7. Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease expense | $ 13,483 | $ 11,503 |