Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 08, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | BioXcel Therapeutics, Inc. | |
Entity Central Index Key | 0001720893 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 18,035,025 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 40,252 | $ 42,565 |
Prepaid expenses and other current assets | 1,109 | 491 |
Due from Parent | 115 | |
Total current assets | 41,361 | 43,171 |
Property and equipment, net | 1,086 | 327 |
Operating lease right-of-use asset | 1,199 | |
Other assets | 51 | 51 |
Total assets | 43,697 | 43,549 |
Current liabilities | ||
Accounts payable | 4,238 | 1,604 |
Accrued expenses | 3,387 | 3,056 |
Due to Parent | 59 | |
Other current liabilities | 522 | |
Total current liabilities | 8,206 | 4,660 |
Operating lease liability | 1,071 | |
Total liabilities | 9,277 | 4,660 |
Stockholders' equity | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value, 50,000,000 shares authorized; 18,035,025 and 15,663,221 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 18 | 16 |
Additional paid-in-capital | 82,815 | 62,593 |
Accumulated deficit | (48,413) | (23,720) |
Total stockholders' equity | 34,420 | 38,889 |
Total liabilities and stockholders' equity | $ 43,697 | $ 43,549 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 | Mar. 12, 2018 |
BALANCE SHEETS | |||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 18,035,025 | 15,663,221 | |
Common stock, shares outstanding (in shares) | 18,035,025 | 15,663,221 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Operating costs and expenses | ||||
Research and development | $ 7,122 | $ 3,821 | $ 19,302 | $ 8,540 |
General and administrative | 2,012 | 1,298 | 5,886 | 4,109 |
Total operating expenses | 9,134 | 5,119 | 25,188 | 12,649 |
Loss from operations | (9,134) | (5,119) | (25,188) | (12,649) |
Other income | ||||
Dividend and interest income, net | 116 | 232 | 495 | 454 |
Net loss | $ (9,018) | $ (4,887) | $ (24,693) | $ (12,195) |
Net loss per share attributable to common stockholders basic and diluted | $ (0.57) | $ (0.31) | $ (1.57) | $ (0.86) |
Weighted average shares outstanding - basic and diluted | 15,752,196 | 15,645,545 | 15,695,263 | 14,228,192 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Thousands | Common stockIPO | Common stock | Additional Paid in CapitalIPO | Additional Paid in Capital | Accumulated Deficit | IPO | Total |
Beginning Balance at Dec. 31, 2017 | $ 10 | $ 3,458 | $ (4,450) | $ (982) | |||
Beginning Balance (in shares) at Dec. 31, 2017 | 9,907,548 | ||||||
Issuance of common shares | $ 5 | $ 1 | $ 54,097 | 1,949 | $ 54,102 | 1,950 | |
Issuance of common shares (in shares) | 5,454,545 | 283,452 | |||||
Stock-based compensation | 1,319 | 1,319 | |||||
Net loss | (4,282) | (4,282) | |||||
Ending Balance at Mar. 31, 2018 | $ 16 | 60,823 | (8,732) | 52,107 | |||
Ending Balance (in shares) at Mar. 31, 2018 | 15,645,545 | ||||||
Beginning Balance at Dec. 31, 2017 | $ 10 | 3,458 | (4,450) | (982) | |||
Beginning Balance (in shares) at Dec. 31, 2017 | 9,907,548 | ||||||
Net loss | (12,195) | ||||||
Ending Balance at Sep. 30, 2018 | $ 16 | 62,452 | (16,645) | 45,823 | |||
Ending Balance (in shares) at Sep. 30, 2018 | 15,645,545 | ||||||
Beginning Balance at Mar. 31, 2018 | $ 16 | 60,823 | (8,732) | 52,107 | |||
Beginning Balance (in shares) at Mar. 31, 2018 | 15,645,545 | ||||||
Stock-based compensation | 740 | 740 | |||||
Net loss | (3,026) | (3,026) | |||||
Ending Balance at Jun. 30, 2018 | $ 16 | 61,563 | (11,758) | 49,821 | |||
Ending Balance (in shares) at Jun. 30, 2018 | 15,645,545 | ||||||
Stock-based compensation | 889 | 889 | |||||
Net loss | (4,887) | (4,887) | |||||
Ending Balance at Sep. 30, 2018 | $ 16 | 62,452 | (16,645) | 45,823 | |||
Ending Balance (in shares) at Sep. 30, 2018 | 15,645,545 | ||||||
Beginning Balance at Dec. 31, 2018 | $ 16 | 62,593 | (23,720) | $ 38,889 | |||
Beginning Balance (in shares) at Dec. 31, 2018 | 15,663,221 | 15,663,221 | |||||
Stock-based compensation | 682 | $ 682 | |||||
Exercise of stock options | 1 | 1 | |||||
Exercise of stock options (in shares) | 2,581 | ||||||
Net loss | (7,204) | (7,204) | |||||
Ending Balance at Mar. 31, 2019 | $ 16 | 63,276 | (30,924) | 32,368 | |||
Ending Balance (in shares) at Mar. 31, 2019 | 15,665,802 | ||||||
Beginning Balance at Dec. 31, 2018 | $ 16 | 62,593 | (23,720) | $ 38,889 | |||
Beginning Balance (in shares) at Dec. 31, 2018 | 15,663,221 | 15,663,221 | |||||
Net loss | $ (24,693) | ||||||
Ending Balance at Sep. 30, 2019 | $ 18 | 82,815 | (48,413) | $ 34,420 | |||
Ending Balance (in shares) at Sep. 30, 2019 | 18,035,025 | 18,035,025 | |||||
Beginning Balance at Mar. 31, 2019 | $ 16 | 63,276 | (30,924) | $ 32,368 | |||
Beginning Balance (in shares) at Mar. 31, 2019 | 15,665,802 | ||||||
Issuance of common shares | 230 | 230 | |||||
Issuance of common shares (in shares) | 21,744 | ||||||
Stock-based compensation | 1,030 | 1,030 | |||||
Net loss | (8,471) | (8,471) | |||||
Ending Balance at Jun. 30, 2019 | $ 16 | 64,536 | (39,395) | 25,157 | |||
Ending Balance (in shares) at Jun. 30, 2019 | 15,687,546 | ||||||
Issuance of common shares | $ 2 | 17,503 | 17,505 | ||||
Issuance of common shares (in shares) | 2,347,479 | ||||||
Stock-based compensation | 776 | 776 | |||||
Net loss | (9,018) | (9,018) | |||||
Ending Balance at Sep. 30, 2019 | $ 18 | $ 82,815 | $ (48,413) | $ 34,420 | |||
Ending Balance (in shares) at Sep. 30, 2019 | 18,035,025 | 18,035,025 |
STATEMENTS OF CHANGES IN STOC_2
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2018 | |
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) | |||
Issuance costs paid | $ 1,991 | $ 11 | $ 5,898 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (24,693) | $ (12,195) |
Reconciliation of net loss to net cash used in operating activities | ||
Depreciation and amortization | 218 | 9 |
Stock-based compensation expense | 2,488 | 2,949 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (618) | (515) |
Accounts payable, accrued expenses and other | 3,249 | 584 |
Net cash used in operating activities | (19,356) | (9,168) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Property and equipment, net | (868) | (182) |
Net cash used in investing activities | (868) | (182) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock, net | 17,736 | 56,512 |
Exercise of options | 1 | |
Due to (from) Parent | 174 | (556) |
Note Payable — Parent | (371) | |
Net cash provided by financing activities | 17,911 | 55,585 |
Net (decrease) increase in cash and cash equivalents | (2,313) | 46,235 |
Cash and cash equivalents, beginning of the period | 42,565 | 887 |
Cash and cash equivalents, end of the period | 40,252 | 47,122 |
Supplemental cash flow information: | ||
Interest paid | $ 47 | 1 |
Supplemental disclosure of non-cash Financing Activity: | ||
Deferred issuance costs, unpaid as of December 31, 2017 | 391 | |
Deferred issuance costs reclassified to additional paid-in-capital upon completion of initial public offering. | 461 | |
Reclassification of net Parent Investment in the Company to accumulated deficit. | $ 440 |
Organization and Principal Acti
Organization and Principal Activities | 9 Months Ended |
Sep. 30, 2019 | |
Organization and Principal Activities | |
Organization and Principal Activities | Note 1. Organization and Principal Activities BioXcel Therapeutics, Inc. (the “Company” or “BTI”) is a clinical stage biopharmaceutical company utilizing novel artificial intelligence-based approaches to identify the next wave of medicines across neuroscience and immuno-oncology. The Company’s drug re-innovation approach leverages existing approved drugs and/or clinically validated product candidates together with big data and proprietary machine learning algorithms to identify new therapeutic indices. The Company is a majority-owned subsidiary of BioXcel Corporation (“BioXcel” or “Parent”) and was incorporated under the laws of the State of Delaware on March 29, 2017. The Company’s principal office is in New Haven, Connecticut. Unless otherwise indicated or the context requires otherwise, references in this report to “we,” “our,” “us” and similar expressions refer to BioXcel Therapeutics, Inc. The unaudited financial information for the nine months ended September 30, 2019 and 2018 is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The Company does not have any components of other comprehensive income (loss) recorded within its financial statements, and, therefore, does not separately present a statement of comprehensive income (loss) in its financial statements. Certain reclassifications have been made to the prior year financial information to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. The Company’s primary activities have been the development of a clinical plan and pre-clinical research and development of two advanced programs: BXCL501, a sublingual thin film formulation of dexmedetomidine designed for acute treatment of agitation resulting from neurological and psychiatric disorders, and BXCL701, an immuno-oncology agent designed for treatment of a rare form of prostate cancer and for treatment of pancreatic cancer. These two programs and two emerging programs BXCL502 and BXCL702 (together, the “BTI Business”) have been contributed to the Company from the Parent pursuant to an asset contribution agreement, effective June 30, 2017, with BioXcel, as amended and restated on November 7, 2017 (the “Contribution Agreement”). |
Initial Public Offering
Initial Public Offering | 9 Months Ended |
Sep. 30, 2019 | |
Initial Public Offering | |
Initial Public Offering | Note 2. Initial Public Offering On March 7, 2018, the Company’s registration statement on Form S‑1 relating to its initial public offering of its common stock (the “IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). The IPO closed on March 12, 2018, and the Company issued and sold 5,454,545 shares of common stock at a public offering price of $11.00 per share. Gross proceeds totaled $60,000 and net proceeds totaled $54,102 after deducting underwriting discounts and commissions of $4,200 and other offering costs of approximately $1,698. In connection with and effective upon the completion of its IPO, the Company effectuated a 237 to one stock split. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements have been adjusted retroactively, where applicable, to reflect the stock split. Also, in connection with the completion of its IPO, the Company amended its articles of incorporation to authorize the issuance of up to 50,000,000 shares of common stock with a par value of $.001 each and 10,000,000 shares of preferred stock with a par value of $.001 each. |
Liquidity and Going Concern
Liquidity and Going Concern | 9 Months Ended |
Sep. 30, 2019 | |
Liquidity and Going Concern | |
Liquidity and Going Concern | Note 3. Liquidity and Going Concern In accordance with Accounting Standards Update (“ASU”) 2014‑15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205‑40), management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s financial statements are prepared using Generally Accepted Accounting Principles in the United States of America (“GAAP”) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses and negative operating cash flows since inception. For the nine months ended September 30, 2019, the Company recorded a net loss of approximately $24,693 and used approximately $19,356 of cash in operating activities. As of September 30, 2019, the Company had approximately $40,252 in cash and cash equivalents and working capital of approximately $33,155. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. The Company can give no assurances that any additional capital that it is able to obtain, if any, will be sufficient to meet its needs, or that any such capital will be obtained on acceptable terms. If the Company is unable to obtain adequate capital, it could be forced to cease operations or substantially curtail its activities. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities should the Company be unable to continue as a going concern. Management’s plan to continue as a going concern includes obtaining additional capital resources. Management’s plans to obtain such resources for the Company include obtaining capital from the sale of its equity securities, entering into strategic partnership arrangements and short-term borrowings from banks, stockholders or other related parties, if needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 4. Summary of Significant Accounting Policies Use of Estimates The Company’s financial statements are prepared in accordance with GAAP. The preparation of financial statements requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses in its financial statements and the accompanying notes. The most significant estimates in the financial statements relate to the fair value of equity awards and valuation allowance related to the Company’s deferred tax assets and liabilities. Unaudited Interim Financial Information The accompanying unaudited financial statements do not include all of the information and footnotes required by GAAP. The accompanying year-end balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2019, and the results of its operations for the three and nine months ended September 30, 2019 and 2018 and its cash flows for the nine months ended September 30, 2019 and 2018, respectively. The results for the nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, any other interim periods or any future year or period. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of September 30, 2019, cash equivalents were comprised of money market funds. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until the equity financing was consummated. After consummation of an equity financing, these costs were recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering. As of December 31, 2017, the Company recorded deferred offering costs relating to its IPO of $461. The Company’s IPO was completed in March 2018, and these costs, as well as additional IPO costs including commissions of $4,200 and an additional $1,237 of other expenses incurred in 2018, were charged to Additional paid-in-capital. Effective September 23, 2019, the Company terminated its At-The-Market (“ATM”) program. All costs associated with this program have been amortized and charged to Additional paid-in-capital. Property and Equipment Equipment consists of computers and related equipment that are stated at cost and depreciated using the straight-line method over estimated useful life of 5 years. Furniture is being depreciated using the straight-line method over approximately 7 years. Leasehold improvements are being amortized over the shorter of the life of the lease or the asset. The Company follows the guidance provided by the Financial Accounting Standards Board (“FASB”) ASC Topic 360‑10, Property, Plant, and Equipment . Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated. Impairment charges are recognized at the amount by which the carrying amount of an asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. Since its inception, the Company has not recognized any impairment or disposition of long lived assets. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our lease did not provide an implicit rate, we used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Renewal options were not included in our calculation of the related asset and liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, “ Compensation—Stock Compensation, ” which requires the measurement and recognition of compensation expense based on estimated fair market values for all share-based awards made to employees and directors, including stock options. The Company’s stock-based compensation plan was adopted and became effective in August 2017. Prior to the Company adopting its stock-based compensation plan, the Parent granted stock options to its employees. As a result, related stock-based compensation expense has been allocated to the Company over the required service period over which these BioXcel stock option awards vest in the same manner that salary costs of employees have been allocated to the BTI Business in the carve-out process. Both BioXcel and the Company’s stock option awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. The estimated fair value of stock option awards was determined using the Black-Scholes option pricing model on the date of grant. Significant judgment and estimates were used to estimate the fair value of these awards, as they were not publicly traded. Stock awards granted by the Company subsequent to the IPO are valued using market prices at the date of grant. ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Black-Scholes option-pricing model was used as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the award is recognized as an expense in the statement of operations over the requisite service period. The periodic expense is then determined based on the valuation of the options. The Company adopted FASB ASU 2016-09, Compensation – Stock Compensation as of January 1, 2018 and has elected to account for forfeitures as they occur, by reversing compensation cost when the award is forfeited. The Company adopted FASB ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting as of January 1, 2019 which allows non-employee options to be expensed using the adoption date fair value. This is expected to reduce the volatility of stock based compensation in future periods. Prior to the adoption date, such options were re-measured at each valuation date. The adoption of this standard is not expected to have a significant impact on the Company’s results of operations. Research and Development Costs Research and development expenses include wages, benefits, facilities, supplies, external services, clinical study and manufacturing costs and other expenses that are directly related to its research and development activities. At the end of the reporting period, the Company compares payments made to third party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs. The Company expenses research and development costs as incurred. Patent Costs Costs related to filing and pursuing patent applications are recorded as general and administrative expense and expensed as incurred since recoverability of such expenditures is uncertain. Fair Value Measurements ASC 820 “ Fair Value Measurements ” defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described below: · Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. · Level 2—Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. · Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk in its assessment of fair value. The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. Net Loss per Share The Company computes basic net loss per share by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The potential dilutive securities included outstanding options (for both employees and non-employees) for the three and nine months ended September 30, 2019 and 2018. Such securities have not been included in the loss per share calculation since their impact would be anti-dilutive. There were 3,073,861 and 2,919,016 shares of options that were excluded from the calculation of the loss per share for the three and nine months ended September 30, 2019, respectively. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016‑02 Lease Accounting Topic 842 . This ASU requires the Company to record all leases longer than one year on its balance sheet. Under the new guidance, when the Company records leases on its balance sheet, it will record a liability with a value equal to the present value of payments it will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires the Company to determine if its leases are operating or financing leases, similar to current accounting guidance. The Company will record expense for operating type leases on a straight-line basis as an operating expense and it will record expense for finance type leases as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company adopted the new standard in January 2019 and recorded a ROU asset and related liability in the amount of $1,308 on commencement of a new office lease. |
Transactions with BioXcel
Transactions with BioXcel | 9 Months Ended |
Sep. 30, 2019 | |
Transactions with BioXcel | |
Transactions with BioXcel | Note 5. Transactions with BioXcel The Company has entered into the Contribution Agreement, pursuant to which BioXcel agreed to contribute BioXcel’s rights, title and interest in BXCL501, BXCL701, BXCL502 and BXCL702, and all of the assets and liabilities associated in consideration for (i) 9,480,000 shares of our common stock, (ii) $1,000 upon completion of an initial public offering, (iii) $500 upon the later of the 12 month anniversary of an initial public offering and the first dosing of a patient in the bridging bioavailability/ bioequivalence study for the BXCL501 program, (iv) $500 upon the later of the 12 month anniversary of an initial public offering and the first dosing of a patient in the Phase 2 Proof of Consent open label monotherapy or combination trial with Keytruda for the BXCL701 program and (v) a one-time payment of $5,000 within 60 days after the achievement of $50,000 in cumulative net sales of any product or combination of products resulting from the development and commercialization of any one of the Candidates or a product derived therefrom. With the completion of the Company’s IPO in March 2018, $1,000 was charged to Research and Development costs in connection with (ii) above and was paid on April 5, 2018. The Company paid $500 to BioXcel in connection with (iii) above in April 2019. In July 2019, the Company completed the first dosing of a patient in the combination trial of BXCL701 with Keytruda, and as a result the Company paid $500 to BioXcel in connection with (iv) above in July 2019. We entered into a separation and shared services agreement with BioXcel that took effect on June 30, 2017, as amended and restated on November 7, 2017, (the “Services Agreement”), pursuant to which BioXcel will allow us to continue to use the office space, equipment, services and leased employees based on the agreed upon terms and conditions for a payment of defined monthly and/or hourly fees. The parties have agreed that the services and office space provided under the Services Agreement shall decrease over time until the 12-month anniversary of the date of the Services Agreement. The office space and equipment portion of the Services Agreement ended effectively on April 30, 2018 when the Company moved to new office space to accommodate additional personnel that had been hired. Services to be provided by BioXcel through its subsidiary in India, were originally expected to decrease through June 30, 2019 provided such dates may be extended upon mutual agreement between the parties. The parties are currently discussing extending the term of these services provided however no definitive agreement has been agreed upon as of the date hereof. There can be no assurance that the parties will agree to any extension to the Services Agreement in the future. On or before December 31, 2019, the Company expects to have the option to enter into a collaborative services agreement with BioXcel pursuant to which BioXcel shall perform product identification and related services for us utilizing EvolverAI. We have agreed that this agreement will be negotiated in good faith and that such agreement will incorporate reasonable market-based terms, including consideration for BioXcel reflecting a low, single-digit royalty on net sales and reasonable development and commercialization milestone payments, provided that (i) development milestones shall not exceed $10,000 in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestones shall be based on reaching annual net sales levels, be limited to 3% of the applicable net sales level, and not exceed $30,000 in the aggregate. BioXcel shall continue to make such product identification and related services available to us for at least five years from June 30, 2017 pursuant to the Services Agreement. The parties are currently discussing extending the product identification and related services that BioXcel would provide however no definitive agreement has been agreed upon as of the date hereof. There can be no assurance that the parties will agree to any extension to the collaborative services agreement in the future. In connection with the Services Agreement, BioXcel agreed to provide the Company a line of credit, which was capped at $1,000, or the Total Funding Amount, pursuant to the terms of a grid note, the (“Grid Note”). The Grid Note was payable upon the earlier of (i) the completion of an initial public offering and (ii) December 31, 2018, together with interest on the unpaid balance of each advance made under the Grid Note, which would accrue at a rate per annum equal to the applicable federal rate for short-term loans as of the date thereof, in each case calculated based on a 365‑day year and actual days elapsed. All amounts due to BioXcel under the line of credit, the Grid Note, and for expenses paid on the Company’s behalf were paid following the completion of the Company’s IPO on March 20, 2018. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property and Equipment | |
Property and Equipment | Note 6. Property & Equipment Property and Equipment, net consisted of the following September 30, December 31, 2019 2018 Unaudited Computers and related equipment $ 228 $ 169 Furniture 344 4 Leasehold improvements 641 172 1,213 345 Accumulated depreciation (127) (18) $ 1,086 $ 327 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 7. Commitments and Contingencies Master Service Agreements The Company has entered into a Master Services Agreement (“MSA”) with a Contract Research Organization (“CRO”), dated November 1, 2018 for strategic planning, expert consultation, clinical trial services, statistical programming and analysis, data processing, data management, regulatory, clerical, project management, medical device services, and other research and development services as set forth in specific work orders. This agreement is for a period of five (5) years. Excluding the CRO’s property, all improvements, inventions, processes, techniques, work product, know-how, data and information generated, conceived, reduced to practice or derived under the MSA by the CRO or its personnel and subcontractors, shall be and remain the exclusive property of the Company, and any inventions that may evolve from the foregoing shall belong to the Company. The Company entered into a series of cancellable work orders to support its clinical trial activities, related to the first of the Company’s BXCL 701 clinical trials. This clinical trial is expected to cost approximately $10,000 and is anticipated to take place over the next two years. To date, the Company has incurred $1,806 in costs for the work surrounding this trial. In the first quarter of 2019 the Company entered into a second series of cancellable work orders to support a second clinical trial related the Company’s BXCL 701 product candidate. This clinical trial is expected to aggregate approximate approximately $8,000 and it is anticipated to take place over the next three years. Approximately one half of this cost is to be reimbursed by a partner. The Company has incurred $1,190 of costs in connection with this trial and has also recorded a related receivable of $173. In addition, an MSA was signed with a second CRO during the first quarter of 2019 to include strategic planning, expert consultation, regulatory activities, data interpretation, New Drug Application (“NDA”) services, and research and development services, including clinical, data management, statistical and medical writing activities. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 8. Accrued Expenses and Other Current Liabilities Accrued expenses consist of the following: September 30, 2019 December 31, 2018 Drugs and clinical trial expenses $ 1,429 $ 1,887 Accrued salaries, benefits and travel related costs 1,172 774 Professional and consultant fees 409 181 Legal expenses 377 105 Other administrative accruals — 109 $ 3,387 $ 3,056 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders’ Equity (Deficit) | |
Stockholders’ Equity (Deficit) | Note 9. Stockholders’ Equity (Deficit) Authorized Capital The Company is authorized to issue up to 10,000,000 preferred shares with a par value of $0.001 per share. No preferred shares are issued and outstanding. The Company is authorized to issue up to 50,000,000 shares of common stock with a par value of $0.001 per share. The Company had 18,035,025 shares of common stock outstanding as of September 30, 2019. Description of Common Stock Each share of common stock has the right to one vote. The holders of common stock are entitled to dividends when funds are legally available and when declared by the board of directors. Common Stock Issuances On March 7, 2018, the Company’s registration statement on Form S-1 relating to the Company’s IPO was declared effective by the SEC. The IPO closed on March 12, 2018, and the Company issued and sold 5,454,545 shares of common stock at a public offering price of $11.00 per share, for gross proceeds of $60,000 and net proceeds of $54,102 after deducting underwriting discounts and commissions of $4,200 and other offering costs of $1,698. In January and February 2018, the Company issued 283,452 shares of common stock with an issuance price of $6.88 per share for gross and net proceeds of $1,950. On May 20, 2019, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which the Company may offer and sell shares of its common stock, par value $0.001 per share (the “Common Stock”), having an initial offering price no greater than $20.0 million (the “Shares”), from time to time, through an “at the market offering” program under which Jefferies will act as sales agent. Under the Sale Agreement, the Company set the parameters for the sale of Shares, including the number of Shares to be issued, the time period during which sales are requested to be made, limitations on the number of Shares that may be sold in any one trading day and any minimum price below which sales may not be made. Subject to the terms and conditions of the Sale Agreement, Jefferies may sell the Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, including sales made directly on or through the Nasdaq Capital Market or any other existing trading market for the Common Stock. The Company agreed to pay Jefferies a commission equal to 3.00% of the gross sales proceeds of any Shares sold through Jefferies under the Sale Agreement and has provided Jefferies with customary indemnification and contribution rights. The Sale Agreement could be terminated at any time by either party upon prior written notice to the other party and was terminated by the Company on September 22, 2019. All deferred issuance costs (including commissions) aggregating $400 associated with implementing the Sale Agreement were charged to Additional paid in capital during the nine months ended September 30, 2019. For the three months ended September 30, 2019, the Company sold 44,449 shares under the Sale Agreement for gross proceeds of $496, issuance costs of $390 or net proceeds of $106. For the nine months ended September 30, 2019, the Company sold 66,193 shares under the Sale Agreement for gross proceeds of $737, issuance costs of $400 or net proceeds of $337. On September 26, 2019, the Company entered into an underwriting agreement with several underwriters in connection with the issuance and sale by the Company in a public offering of 2,303,030 shares of the Company’s common stock at a public offering price of $8.25 per share, less underwriting discounts and commissions, pursuant to an effective shelf registration statement on Form S-3 (Registration No. 333-230674) and a related prospectus supplement filed with the SEC (the “September 2019 Offering”). The September 2019 Offering closed on September 30, 2019. The Company received gross and net proceeds of approximately $19,000 and $17,399 respectively from the September 2019 Offering. The Company intends to use the net proceeds of the September 2019 Offering for general corporate purposes, which may include development and commercialization of their product candidates, research and development, general and administrative expenses, license or technology acquisitions, and working capital and capital expenditures. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 10. Stock-Based Compensation Stock Options The Company’s 2017 Stock Incentive Plan (the “2017 Stock Plan”) became effective in August 2017 and will expire in August 2027. Under the 2017 Stock Plan, the Company may grant incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. As of September 30, 2019, there were 3,442,313 shares of the Company’s common stock authorized for issuance under the 2017 Stock Plan. Options granted under the 2017 Stock Plan have a term of ten years with vesting terms determined by the board of directors, which is generally four years. The fair value of options granted during the nine months ended September 30, 2019 was estimated using the Black-Scholes option-pricing model with the following assumptions. For the Nine Months Ended September 30, 2019 Exercise price per share $ - $ Expected stock price volatility % - % Risk-free rate of interest % - % Fair value of grants per share $ - $ Expected Term (years) - Prior to the Company’s IPO, it did not have a history of market prices of its common stock and, as such, volatility was estimated using historical volatilities of similar public companies. The expected term of the employee awards is estimated based on the simplified method, which calculates the expected term based upon the midpoint of the term of the award and the vesting period. The Company uses the simplified method because it does not have sufficient option exercise data to provide a reasonable basis upon which to estimate the expected term. The expected term of non-employee awards represents the awards contractual term. The expected dividend yield is 0% as the Company has no history of paying dividends nor does management expect to pay dividends over the contractual terms of these options. The risk-free interest rates are based on the United States Treasury yield curve in effect at the time of grant, with maturities approximating the expected term of the stock options. The following table summarizes information about stock option activity under the 2017 Stock Plan for the nine months ended September 30, 2019 (in thousands, except share and per share data): Weighted Average Number Weighted Average Total Remaining of Exercise Intrinsic Contractual Shares Price per Share Value Life (in years) Outstanding as of January 1, 2019 2,744,153 $ 2.33 $ 7,411 8.8 Options granted 361,800 $ 9.95 $ — 9.6 Options forfeited (11,250) $ 8.45 $ — — Options exercised (2,581) $ 0.41 $ — — Outstanding as of September 30, 2019 3,092,122 $ 3.20 $ 14,431 8.2 Options vested and exercisable as of September 30, 2019 2,058,172 $ 1.53 $ 11,995 8.0 There were 350,191 shares available for grant as of September 30, 2019. The Company recognized stock-based compensation expense under the 2017 Stock Plan of $758 and $2,427 for the three and nine months ended September 30, 2019, respectively. The Company recognized stock-based compensation expense under the 2017 Stock Plan of $917 and $2,777 for the three and nine months ended September 30, 2018, respectively . The total grant-date fair value of options was $2,453 for the nine months ended September 30, 2019. Unrecognized compensation expense related to unvested awards as of September 30, 2019 was $3,359 and will be recognized over the remaining vesting periods of the underlying awards. The weighted-average period over which such compensation is expected to be recognized is 1.4 years. BioXcel Charges BioXcel has granted stock options to its employees under its own Equity Incentive Plan (“BioXcel Plan”). Stock-based compensation expense from the BioXcel Plan is allocated to the Company over the period over which those stock option awards vest and are based on the percentage of time spent on Company activities compared to BioXcel activities, which is the same basis used for allocation of salary costs. The BioXcel stock option awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. The estimated fair value of these BioXcel stock option awards was determined using the Black Scholes option pricing model on the date of grant. Significant judgment and estimates were used to estimate the fair value of these awards, as they are not publicly traded. Share based compensation expense (income), net of forfeitures, recognized by the Company in its statements of operations related to BioXcel equity awards totaled approximately $18 and $61 for the three and nine months ended September 30 , 2019, respectively and $(27) and $172 for the three and nine months ended September 30, 2018, respectively. Total share based compensation charges were approximately $776 and $2,488 for the three and nine months ended September 30, 2019, respectively and $890 and $2,949 for the three and nine months ended September 30, 2018, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | Note 11. Income Taxes Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. As a result of the Company’s cumulative losses, management has concluded that a full valuation allowance against the Company’s net deferred tax assets is appropriate. No income tax liabilities existed as of September 30, 2019 and December 31, 2018 due to the Company’s continuing operating losses. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | Note 12. Leases The Company entered into an agreement to lease approximately 11,040 square feet of space on the 12 th floor of the building located at 555 Long Wharf Drive, New Haven, Connecticut that commenced February 22, 2019 (the “Commencement Date”). The premises were occupied in March 2019. The term of the 12 th floor lease continues from the Commencement Date through the last day of the calendar month immediately following the seventh anniversary of the Commencement Date. The Company’s improvement costs were approximately $641 and are being amortized over the life of the lease. Maturities of the operating lease liability are as follows: Year ending December 31, Amount 2019 (excluding the nine months ended September 30, 2019) $ 51 2020 208 2021 196 2022 219 2023 225 Thereafter 506 Total lease payments 1,405 Less imputed interest (173) Total lease liability 1,232 Less current portion (161) Operating lease liability $ 1,071 The current portion of the Company’s operating lease liability of $161 as of September 30, 2019 is included in other current liabilities on the balance sheet. The Company recorded amortization charges and interest expense of $109 and $30, respectively related to its operating lease right-of-use asset for the nine months ended September 30, 2019. The Company has an option to renew the lease for one additional five-year term at 95% of the then-prevailing market rates but not less than the rental rate at the end of the initial lease term. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The Company’s financial statements are prepared in accordance with GAAP. The preparation of financial statements requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses in its financial statements and the accompanying notes. The most significant estimates in the financial statements relate to the fair value of equity awards and valuation allowance related to the Company’s deferred tax assets and liabilities. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited financial statements do not include all of the information and footnotes required by GAAP. The accompanying year-end balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2019, and the results of its operations for the three and nine months ended September 30, 2019 and 2018 and its cash flows for the nine months ended September 30, 2019 and 2018, respectively. The results for the nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, any other interim periods or any future year or period. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of September 30, 2019, cash equivalents were comprised of money market funds. |
Deferred Offering Costs | Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until the equity financing was consummated. After consummation of an equity financing, these costs were recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering. As of December 31, 2017, the Company recorded deferred offering costs relating to its IPO of $461. The Company’s IPO was completed in March 2018, and these costs, as well as additional IPO costs including commissions of $4,200 and an additional $1,237 of other expenses incurred in 2018, were charged to Additional paid-in-capital. Effective September 23, 2019, the Company terminated its At-The-Market (“ATM”) program. All costs associated with this program have been amortized and charged to Additional paid-in-capital. |
Property and Equipment | Property and Equipment Equipment consists of computers and related equipment that are stated at cost and depreciated using the straight-line method over estimated useful life of 5 years. Furniture is being depreciated using the straight-line method over approximately 7 years. Leasehold improvements are being amortized over the shorter of the life of the lease or the asset. The Company follows the guidance provided by the Financial Accounting Standards Board (“FASB”) ASC Topic 360‑10, Property, Plant, and Equipment . Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated. Impairment charges are recognized at the amount by which the carrying amount of an asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. Since its inception, the Company has not recognized any impairment or disposition of long lived assets. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our lease did not provide an implicit rate, we used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Renewal options were not included in our calculation of the related asset and liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, “ Compensation—Stock Compensation, ” which requires the measurement and recognition of compensation expense based on estimated fair market values for all share-based awards made to employees and directors, including stock options. The Company’s stock-based compensation plan was adopted and became effective in August 2017. Prior to the Company adopting its stock-based compensation plan, the Parent granted stock options to its employees. As a result, related stock-based compensation expense has been allocated to the Company over the required service period over which these BioXcel stock option awards vest in the same manner that salary costs of employees have been allocated to the BTI Business in the carve-out process. Both BioXcel and the Company’s stock option awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. The estimated fair value of stock option awards was determined using the Black-Scholes option pricing model on the date of grant. Significant judgment and estimates were used to estimate the fair value of these awards, as they were not publicly traded. Stock awards granted by the Company subsequent to the IPO are valued using market prices at the date of grant. ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Black-Scholes option-pricing model was used as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the award is recognized as an expense in the statement of operations over the requisite service period. The periodic expense is then determined based on the valuation of the options. The Company adopted FASB ASU 2016-09, Compensation – Stock Compensation as of January 1, 2018 and has elected to account for forfeitures as they occur, by reversing compensation cost when the award is forfeited. The Company adopted FASB ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting as of January 1, 2019 which allows non-employee options to be expensed using the adoption date fair value. This is expected to reduce the volatility of stock based compensation in future periods. Prior to the adoption date, such options were re-measured at each valuation date. The adoption of this standard is not expected to have a significant impact on the Company’s results of operations. |
Research and Development Costs | Research and Development Costs Research and development expenses include wages, benefits, facilities, supplies, external services, clinical study and manufacturing costs and other expenses that are directly related to its research and development activities. At the end of the reporting period, the Company compares payments made to third party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs. The Company expenses research and development costs as incurred. |
Patent Costs | Patent Costs Costs related to filing and pursuing patent applications are recorded as general and administrative expense and expensed as incurred since recoverability of such expenditures is uncertain. |
Fair Value Measurements | Fair Value Measurements ASC 820 “ Fair Value Measurements ” defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described below: · Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. · Level 2—Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. · Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk in its assessment of fair value. The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. |
Net Loss per Share | Net Loss per Share The Company computes basic net loss per share by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The potential dilutive securities included outstanding options (for both employees and non-employees) for the three and nine months ended September 30, 2019 and 2018. Such securities have not been included in the loss per share calculation since their impact would be anti-dilutive. There were 3,073,861 and 2,919,016 shares of options that were excluded from the calculation of the loss per share for the three and nine months ended September 30, 2019, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016‑02 Lease Accounting Topic 842 . This ASU requires the Company to record all leases longer than one year on its balance sheet. Under the new guidance, when the Company records leases on its balance sheet, it will record a liability with a value equal to the present value of payments it will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires the Company to determine if its leases are operating or financing leases, similar to current accounting guidance. The Company will record expense for operating type leases on a straight-line basis as an operating expense and it will record expense for finance type leases as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company adopted the new standard in January 2019 and recorded a ROU asset and related liability in the amount of $1,308 on commencement of a new office lease. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property and Equipment | |
Schedule of Property and Equipment | September 30, December 31, 2019 2018 Unaudited Computers and related equipment $ 228 $ 169 Furniture 344 4 Leasehold improvements 641 172 1,213 345 Accumulated depreciation (127) (18) $ 1,086 $ 327 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses | September 30, 2019 December 31, 2018 Drugs and clinical trial expenses $ 1,429 $ 1,887 Accrued salaries, benefits and travel related costs 1,172 774 Professional and consultant fees 409 181 Legal expenses 377 105 Other administrative accruals — 109 $ 3,387 $ 3,056 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stock-Based Compensation | |
Schedule of Valuation Assumptions | For the Nine Months Ended September 30, 2019 Exercise price per share $ - $ Expected stock price volatility % - % Risk-free rate of interest % - % Fair value of grants per share $ - $ Expected Term (years) - |
Schedule of Stock Option Activity | Weighted Average Number Weighted Average Total Remaining of Exercise Intrinsic Contractual Shares Price per Share Value Life (in years) Outstanding as of January 1, 2019 2,744,153 $ 2.33 $ 7,411 8.8 Options granted 361,800 $ 9.95 $ — 9.6 Options forfeited (11,250) $ 8.45 $ — — Options exercised (2,581) $ 0.41 $ — — Outstanding as of September 30, 2019 3,092,122 $ 3.20 $ 14,431 8.2 Options vested and exercisable as of September 30, 2019 2,058,172 $ 1.53 $ 11,995 8.0 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Summary of maturities of the operating lease liability | Year ending December 31, Amount 2019 (excluding the nine months ended September 30, 2019) $ 51 2020 208 2021 196 2022 219 2023 225 Thereafter 506 Total lease payments 1,405 Less imputed interest (173) Total lease liability 1,232 Less current portion (161) Operating lease liability $ 1,071 |
Organization and Principal Ac_2
Organization and Principal Activities (Details) | 9 Months Ended |
Sep. 30, 2019item | |
Organization and Principal Activities | |
Number of advanced program | 2 |
Number of emerging programs | 2 |
Initial Public Offering (Detail
Initial Public Offering (Details) $ / shares in Units, $ in Thousands | Mar. 12, 2018USD ($)$ / sharesshares | Feb. 28, 2018USD ($)$ / sharesshares | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($) |
Number of shares issued | shares | 283,452 | |||||
Purchase price (in dollar per share) | $ / shares | $ 6.88 | |||||
Proceeds from issuance of common stock, net | $ 1,950 | $ 17,736 | $ 56,512 | |||
Underwriting discounts and commissions | $ 4,200 | |||||
Deferred offering costs | $ 461 | |||||
Common stock, shares authorized (in shares) | shares | 50,000,000 | 50,000,000 | 50,000,000 | |||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Preferred stock, shares authorized (in shares) | shares | 10,000,000 | 10,000,000 | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
IPO | ||||||
Number of shares issued | shares | 5,454,545 | |||||
Purchase price (in dollar per share) | $ / shares | $ 11 | |||||
Gross proceeds from issuance of common stock | $ 60,000 | |||||
Proceeds from issuance of common stock, net | 54,102 | |||||
Underwriting discounts and commissions | 4,200 | |||||
Deferred offering costs | $ 1,698 | |||||
Stock split | 237 |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Liquidity and Going Concern | |||||||||
Cash and cash equivalents | $ 40,252 | $ 40,252 | $ 42,565 | ||||||
Working capital | 33,155 | 33,155 | |||||||
Net cash used in operating activities | (19,356) | $ (9,168) | |||||||
Net loss | $ (9,018) | $ (8,471) | $ (7,204) | $ (4,887) | $ (3,026) | $ (4,282) | $ (24,693) | $ (12,195) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Jan. 31, 2019 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |||||
Deferred offering costs | $ 461 | ||||
Underwriting discounts and commissions | $ 4,200 | ||||
Other offering expenses | $ 1,237 | ||||
Anti-dilutive securities (in shares) | 3,073,861 | 2,919,016 | |||
Right to Use Asset | $ 1,199 | $ 1,199 | |||
Lease liability | $ 1,232 | $ 1,232 | |||
ASU 2016-02 | Adjustment | |||||
Summary of Significant Accounting Policies | |||||
Right to Use Asset | $ 1,308 | ||||
Lease liability | $ 1,308 | ||||
Computers and related equipment | |||||
Summary of Significant Accounting Policies | |||||
Useful life | 5 years | ||||
Furniture | |||||
Summary of Significant Accounting Policies | |||||
Useful life | 7 years |
Transactions with BioXcel (Deta
Transactions with BioXcel (Details) $ in Thousands | Apr. 05, 2018USD ($) | Nov. 07, 2017USD ($)shares | Jul. 31, 2019USD ($) | Apr. 30, 2019USD ($) | Sep. 30, 2019shares | Dec. 31, 2018shares |
Transactions with BioXcel | ||||||
Common shares, issued | shares | 18,035,025 | 15,663,221 | ||||
BioXcel Corporation | Asset contribution agreement | ||||||
Transactions with BioXcel | ||||||
Common shares, issued | shares | 9,480,000 | |||||
Lump sum payment to parent | $ 5,000 | |||||
Period specified for payment | 60 days | |||||
Cumulative net sales | $ 50,000 | |||||
Payment to (received from) related party | $ (1,000) | $ 500 | $ (500) | |||
Maximum borrowing capacity | $ 1,000 | |||||
BioXcel Corporation | Collaborative services agreement | ||||||
Transactions with BioXcel | ||||||
Term of agreement | 5 years | |||||
BioXcel Corporation | Development milestones | ||||||
Transactions with BioXcel | ||||||
Potential milestone payments | $ 10,000 | |||||
BioXcel Corporation | Sales milestones | ||||||
Transactions with BioXcel | ||||||
Potential milestone payments | $ 30,000 | |||||
Maximum milestone (as as percent) | 3 | |||||
BioXcel Corporation | Payable upon milestones | Asset contribution agreement | ||||||
Transactions with BioXcel | ||||||
Lump sum payment to parent | $ 1,000 | |||||
BioXcel Corporation | Payable upon later 12 months IPO and first dosing for BXCL501 | Asset contribution agreement | ||||||
Transactions with BioXcel | ||||||
Lump sum payment to parent | $ 500 | |||||
Period specified for payment | 12 months | |||||
BioXcel Corporation | Payable upon later of 12 months of IPO and specified milestones | Asset contribution agreement | ||||||
Transactions with BioXcel | ||||||
Lump sum payment to parent | $ 500 | |||||
Period specified for payment | 12 months |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Equipment | ||
Equipment, Gross | $ 1,213 | $ 345 |
Accumulated depreciation | (127) | (18) |
Equipment, net | 1,086 | 327 |
Computers and related equipment | ||
Equipment | ||
Equipment, Gross | 228 | 169 |
Furniture | ||
Equipment | ||
Equipment, Gross | 344 | 4 |
Leasehold improvements | ||
Equipment | ||
Equipment, Gross | $ 641 | $ 172 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Nov. 01, 2018 | Mar. 31, 2019 | Sep. 30, 2019 |
CRO | |||
Commitments and Contingencies | |||
Expected term | 5 years | ||
CRO Initial clinical trials | |||
Commitments and Contingencies | |||
Expected term | 2 years | ||
Expected cost | $ 10,000 | ||
Cost incurred to date | 1,806 | ||
CRO Second clinical trials | |||
Commitments and Contingencies | |||
Expected term | 3 years | ||
Expected cost | $ 8,000 | ||
Cost incurred | 1,190 | ||
Reimbursed cost (as a percent) | 50.00% | ||
Reimbursement receivable | $ 173 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Expenses and Other Current Liabilities | ||
Drugs and clinical trial expenses | $ 1,429 | $ 1,887 |
Accrued salaries, benefits and travel related costs | 1,172 | 774 |
Professional and consultant fees | 409 | 181 |
Legal expenses | 377 | 105 |
Other administrative accruals | 109 | |
Accrued expenses | 3,387 | $ 3,056 |
Operating lease liabilities current portion | 161 | |
Insurance premiums payable | $ 361 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Authorized (Details) | 9 Months Ended | ||
Sep. 30, 2019Vote$ / sharesshares | Dec. 31, 2018$ / sharesshares | Mar. 12, 2018$ / sharesshares | |
Stockholders’ Equity (Deficit) | |||
Preferred shares, authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred shares, par value (dollar per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred shares, issued | 0 | 0 | |
Preferred shares, outstanding | 0 | 0 | |
Common shares, authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock outstanding | 18,035,025 | 15,663,221 | |
Number of vote per common stock | Vote | 1 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 26, 2019 | May 20, 2019 | Mar. 12, 2018 | Feb. 28, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 22, 2019 | Dec. 31, 2017 |
Number of shares issued | 283,452 | |||||||||||
Purchase price (in dollar per share) | $ 6.88 | |||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Issuance costs paid | $ 1,991 | $ 11 | $ 5,898 | |||||||||
Proceeds from issuance of common stock, net | $ 1,950 | $ 17,736 | $ 56,512 | |||||||||
Underwriting discounts and commissions | $ 4,200 | |||||||||||
Deferred offering costs | $ 461 | |||||||||||
IPO | ||||||||||||
Number of shares issued | 5,454,545 | |||||||||||
Purchase price (in dollar per share) | $ 11 | |||||||||||
Gross proceeds from issuance of common stock | $ 60,000 | |||||||||||
Proceeds from issuance of common stock, net | 54,102 | |||||||||||
Underwriting discounts and commissions | 4,200 | |||||||||||
Deferred offering costs | $ 1,698 | |||||||||||
Jefferies Sale Agreement | ||||||||||||
Number of shares issued | 44,449 | 66,193 | ||||||||||
Common stock, par value | $ 0.001 | |||||||||||
Commission on gross sales proceeds (as a percent) | 3.00% | |||||||||||
Issuance costs paid | $ 390 | $ 400 | ||||||||||
Gross proceeds from issuance of common stock | 496 | 737 | ||||||||||
Proceeds from issuance of common stock, net | $ 106 | $ 337 | ||||||||||
Deferred offering costs | $ 400 | |||||||||||
Jefferies Sale Agreement | Maximum | ||||||||||||
Proceeds from issuance of common stock, net | $ 20,000 | |||||||||||
September 2019 Offering | ||||||||||||
Number of shares issued | 2,303,030 | |||||||||||
Purchase price (in dollar per share) | $ 8.25 | |||||||||||
Gross proceeds from issuance of common stock | $ 19,000 | |||||||||||
Proceeds from issuance of common stock, net | $ 17,399 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair value assumptions (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Feb. 28, 2018 | |
Stock-Based Compensation | ||
Authorized shares | 3,442,313 | |
Fair value of grants per share | $ 6.88 | |
Options | ||
Stock-Based Compensation | ||
Terms of award | ten | |
Vesting period | 4 years | |
Expected stock price volatility, minimum (as a percent) | 78.05% | |
Expected stock price volatility, maximum (as a percent) | 79.48% | |
Risk-free rate of interest, minimum (as a percent) | 1.51% | |
Risk-free rate of interest, maximum (as a percent) | 2.53% | |
Expected dividend yield (as a percent) | 0.00% | |
Options | Minimum | ||
Stock-Based Compensation | ||
Exercise price per share (in dollars per share) | $ 7.91 | |
Fair value of grants per share | $ 5.31 | |
Expected Term (years) | 5 years | |
Options | Maximum | ||
Stock-Based Compensation | ||
Exercise price per share (in dollars per share) | $ 11.28 | |
Fair value of grants per share | $ 8.17 | |
Expected Term (years) | 7 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - Options - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Outstanding, beginning balance (in shares) | 2,744,153 | |
Options granted (in shares) | 361,800 | |
Options forfeited (in shares) | (11,250) | |
Options exercised (in shares) | (2,581) | |
Outstanding, ending balance (in shares) | 3,092,122 | 2,744,153 |
Options vested and exercisable (in shares) | 2,058,172 | |
Weighted Average Exercise Price per Share | ||
Outstanding, beginning balance (in dollars per shares) | $ 2.33 | |
Options granted (in dollars per share) | 9.95 | |
Options forfeited (in dollars per shares) | 8.45 | |
Options exercised (in dollars per shares) | 0.41 | |
Outstanding, end balance (in dollars per shares) | 3.20 | $ 2.33 |
Options vested and exercisable (in dollars per shares) | $ 1.53 | |
Options | ||
Intrinsic value, Outstanding, beginning balance | $ 7,411 | |
Intrinsic value, Outstanding, end balance | 14,431 | $ 7,411 |
Intrinsic value, vested and exercisable | $ 11,995 | |
Weighted average remaining contractual life, Outstanding, Beginning | 8 years 2 months 12 days | 8 years 9 months 18 days |
Weighted average remaining contractual life, granted | 9 years 7 months 6 days | |
Weighted average remaining contractual life, vested and exercisable | 8 years |
Stock-Based Compensation - Info
Stock-Based Compensation - Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock-Based Compensation | ||||
Available for grant (in shares) | 350,191 | 350,191 | ||
Share-based compensation costs recognized | $ 776 | $ 890 | $ 2,488 | $ 2,949 |
Weighted-average grant-date fair value | 2,453 | |||
Remaining unamortized expense | 3,359 | $ 3,359 | ||
Remaining unamortized expense period | 1 year 4 months 24 days | |||
Options | ||||
Stock-Based Compensation | ||||
Number of options granted (in shares) | 361,800 | |||
Share-based compensation costs recognized | 758 | 917 | $ 2,427 | 2,777 |
Options | BioXcel Corporation | ||||
Stock-Based Compensation | ||||
Share-based compensation costs recognized | $ 18 | $ 61 | $ (27) | $ 172 |
Income Taxes - (Details)
Income Taxes - (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Income Taxes | ||
Income tax liabilities | $ 0 | $ 0 |
Leases - (Details)
Leases - (Details) $ in Thousands | Feb. 22, 2019USD ($)ft² |
Leases | |
Area of lease | ft² | 11,040 |
Improvement costs | $ | $ 641 |
Leases - Maturities (Details)
Leases - Maturities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Maturities of the operating lease liability | |
2019 (excluding the nine months ended September 30, 2019) | $ 51 |
2020 | 208 |
2021 | 196 |
2022 | 219 |
2023 | 225 |
Thereafter | 506 |
Total lease payments | 1,405 |
Less imputed interest | (173) |
Total lease liability | 1,232 |
Less current portion | $ (161) |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current |
Operating lease liability | $ 1,071 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | Feb. 22, 2019item | Sep. 30, 2019USD ($) |
Leases | ||
Amortization charges | $ 109 | |
Interest expense | $ 30 | |
Option to renew the lease | true | |
Number of renewal options | item | 1 | |
Renewal term | 5 years | |
Lease renewed at percentage of market rates | 95.00% |