| STOCKHOLDERS' EQUITY | NOTE
10 – STOCKHOLDERS’ EQUITY Preferred
Stock At
June 30, 2017, we had 10,000,000 shares of preferred stock, par value $0.001, authorized for issuance, of which no shares of preferred
stock were issued or outstanding. Common
Stock At
June 30, 2017, we had 350,000,000 shares of Common Stock authorized for issuance, of which 204,027,142 shares of Common Stock
were issued and outstanding. Issuances
During 2017 During
the three months ended June 30, 2017, certain individuals exercised stock options to purchase 5,000 shares of Common Stock for
$20,050 in cash. During the six months ended June 30, 2017, certain individuals exercised stock options to purchase 100,046 shares
of Common Stock for $212,360 in cash. Issuances
During 2016 On
January 6, 2016, we entered into an underwriting agreement with Goldman Sachs & Co. and Cowen and Company, LLC, as the representatives
of the several underwriters, or the Underwriters, relating to an underwritten public offering of 15,151,515 shares of Common Stock
at a public offering price of $8.25 per share. Under the terms of the underwriting agreement, we granted the Underwriters a 30-day
option to purchase up to an aggregate of 2,272,727 additional shares of Common Stock, which option was exercised in full. The
net proceeds to us from the offering were approximately $134,864,000, after deducting underwriting discounts and commissions and
other estimated offering expenses payable by us. The offering closed on January 12, 2016 and we issued 17,424,242 shares of Common
Stock. During
the three months ended June 30, 2016, certain individuals exercised stock options to purchase 77,123 shares of Common Stock for
$191,592 in cash. During the six months ended June 30, 2016, certain individuals exercised stock options to purchase 417,168 shares
of Common Stock for $978,042 in cash. Warrants
to Purchase Common Stock As
of June 30, 2017, we had warrants outstanding to purchase an aggregate of 3,115,905 shares of Common Stock with a weighted-average
contractual remaining life of approximately 2.3 years, and exercise prices ranging from $0.24 to $8.20 per share, resulting in
a weighted average exercise price of $2.58 per share. The
valuation methodology used to determine the fair value of our warrants is the Black-Scholes
Model. The Black-Scholes Model requires the use of a number of assumptions, including volatility of the stock price, the risk-free
interest rate and the term of the warrant. During the six months ended June 30, 2017, we granted warrants to purchase 125,000
shares of Common Stock to outside consultants at an exercise price of $6.83 per share. The fair value for these warrants was determined
by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 63.24%; risk free rate of
1.47%; and dividend yield of 0%. The grant date fair value of the warrants was $3.67 per share. The warrants are vesting ratably
over a 12-month period and have an expiration date of March 15, 2022. During the six months ended June 30, 2016, we granted warrants
to purchase 245,000 shares of Common Stock to outside consultants at a weighted average exercise price of $7.90 per share. The
weighted average grant date fair value of these warrants was $4.78 per share. The fair value for these warrants was determined
by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 74.10%-74.15%; risk free rate
of 1.04%- 1.28%; and dividend yield of 0%. These warrants vest and have expiration dates as follows: warrants to purchase 75,000
shares of Common Stock vested on April 21, 2016 and have an expiration date of April 21, 2021, warrants to purchase 50,000 shares
of Common Stock vest ratably over a 24-month period and have an expiration date of April 21, 2021, and warrants to purchase 120,000
shares of Common Stock vest ratable over a 12-month period and have an expiration date of January 21, 2021. During
the three months ended June 30, 2017 and 2016, we recorded $68,089 and $556,125, respectively, and during the six months ended
June 30, 2017 and 2016 we recorded $115,774 and $683,590, respectively, as share-based compensation expense in the accompanying
consolidated financial statements related to warrants. As of June 30, 2017, unamortized costs associated with these warrants totaled
approximately $420,000. In
May 2013, we entered into a consulting agreement with Sancilio and Company, Inc., or SCI, to develop drug platforms to be used
in our hormone replacement drug candidates. These services include support of our efforts to successfully obtain FDA approval
for our drug candidates, including a vaginal capsule for the treatment of vulvar and vaginal atrophy, or VVA. In connection with
the agreement, SCI agreed to forfeit its rights to receive warrants to purchase 833,000 shares of Common Stock that were to be
granted pursuant to the terms of a prior consulting agreement dated May 17, 2012. As consideration under the agreement, we agreed
to issue to SCI a warrant to purchase 850,000 shares of Common Stock at $2.01 per share that has vested or will vest, as applicable,
as follows:
1. 283,333 shares were
earned on May 11, 2013 upon acceptance of an Investigational New Drug application by the FDA for an estradiol based drug candidate
in a softgel vaginal capsule for the treatment of VVA; however, pursuant to the terms of the consulting agreement, the shares
did not vest until June 30, 2013. The fair value of $405,066 for the shares vested on June 30, 2013 was determined by using
the Black-Scholes Model on the date of vesting using a term of 5 years; a volatility of 45.89%; risk free rate of 1.12%; and
a dividend yield of 0%. We recorded the entire $405,066 as non-cash compensation as of June 30, 2013;
2. 283,333 shares vested
on June 30, 2013. The fair value of $462,196 for these shares was determined by using the Black-Scholes Model on the date
of vesting using a term of 5 years; a volatility of 45.84%; risk free rate of 1.41%; and a dividend yield of 0%. During the
three months ended June 30, 2017 and 2016, we recorded $0 and $38,509, respectively, as non-cash compensation in the accompanying
consolidated financial statements related to this warrant. During the six months ended June 30, 2017 and 2016, we recorded
$0 and $77,026, respectively, as non-cash compensation in the accompanying consolidated financial statements related to this
warrant. As of June 30, 2016, this warrant was fully amortized; and
3. 283,334 shares will
vest upon the receipt by us of any final FDA approval of a drug candidate that SCI helped us design. It is anticipated that
this event will occur in the near future. In
May 2012, we issued warrants to purchase an aggregate of 1,300,000 shares of Common Stock to SCI for services to be rendered over
approximately five years beginning in May 2012. The warrants vested upon issuance. Services provided are to include (a) services
in support of our drug development efforts, including services in support of our ongoing and future drug development and commercialization
efforts, regulatory approval efforts, third-party investment and financing efforts, marketing efforts, chemistry, manufacturing
and controls efforts, drug launch and post-approval activities, and other intellectual property and know-how transfer associated
therewith; (b) services in support of our efforts to successfully obtain New Drug Approval; and (c) other consulting services
as mutually agreed upon from time to time in relation to new drug development opportunities. The warrants were valued at $1,532,228
on the date of the issuance using an exercise price of $2.57; a term of five years; a volatility of 44.71%; risk free rate of
0.74%; and a dividend yield of 0%. During both the three months ended June 30, 2017 and 2016 and both the six months ended June
30, 2017 and 2016, we recorded $64,449 and $128,898, respectively, as non-cash compensation expense with respect to these warrants
in the accompanying consolidated statements of operations. The contract will expire upon the commercial manufacture of a drug
product. As of June 30, 2017, the SCI warrants issued in 2013 and 2012 were fully amortized. During
the three months ended June 30, 2017, certain individuals exercised warrants to purchase 666,666 shares of Common Stock for $1,338,999
in cash. In addition, during the three months ended June 30, 2017, certain individuals exercised warrants to purchase 6,590,000
shares of Common Stock pursuant to the warrants’ cashless exercise provisions, wherein 4,762,208 shares of Common Stock
were issued. During the three months ended June 30, 2016, certain individuals exercised warrants to purchase 161,372 shares of
Common Stock for $63,000 in cash. During
the six months ended June 30, 2017, certain individuals exercised warrants to purchase 2,476,666 shares of Common Stock for $3,798,999
in cash. In addition, during the six months ended June 30, 2017, certain individuals exercised warrants to purchase 6,590,000
shares of Common Stock pursuant to the warrants’ cashless exercise provisions, wherein 4,762,208 shares of Common Stock
were issued. During the six months ended June 30, 2016, certain individuals exercised warrants to purchase 722,744 shares of Common
Stock for $1,373,000 in cash. Options
to Purchase Common Stock In
2009, we adopted the 2009 Long Term Incentive Compensation Plan, or the 2009 Plan, to provide financial incentives to
employees, directors, advisers, and consultants of our company who are able to contribute towards the creation of or who have
created stockholder value by providing them stock options and other stock and cash incentives, or the Awards. The Awards
available under the 2009 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units,
performance stock, performance units, and other stock or cash awards as described in the 2009 Plan. There are 25,000,000
shares authorized for issuance thereunder. Generally, the options vest annually over four years or as determined by our board
of directors, upon each option grant. Options may be exercised by paying the price for shares or on a cashless exercise basis
after they have vested and prior to the specified expiration date provided and applicable exercise conditions are met, if
any. The expiration date is generally ten years from the date the option is issued. As of June 30, 2017, there were
non-qualified stock options to purchase 18,611,959 shares of Common Stock outstanding under the 2009 Plan. As of June 30,
2017, there were 2,139,503 shares of Common Stock available to be issued under the 2009 Plan. In
2012, we adopted the 2012 Stock Incentive Plan, or the 2012 Plan, a non-qualified plan that was amended in August 2013. The 2012
Plan was designed to serve as an incentive for retaining qualified and competent key employees, officers, directors, and certain
consultants and advisors of our company. The Awards available under the 2012 Plan consist of stock options, stock appreciation
rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described
in the 2012 Plan. Generally, the options vest annually over four years or as determined by our board of directors, upon each option
grant. Options may be exercised by paying the price for shares or on a cashless exercise basis after they have vested and prior
to the specified expiration date provided and applicable exercise conditions are met, if any. The expiration date is generally
ten years from the date the option is issued. There are 10,000,000 shares of Common Stock authorized for issuance thereunder.
As of June 30, 2017, there were non-qualified stock options to purchase 4,790,141 shares of Common Stock outstanding under the
2012 Plan. As of June 30, 2017, there were 5,128,333 shares of Common Stock available to be issued under the 2012 Plan. The
valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires
the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected life
of the stock options. The assumptions used in the Black-Scholes Model for options granted during the six months ended June 30,
2017 and 2016 are set forth in the table below.
Six
Months Ended
June
30, 2017 June
30, 2016
Risk-free interest
rate 1.84-2.01% 1.26-1.70%
Volatility 61.56-63.95% 70.44-71.22%
Term (in years) 5.5-6.25 6.25
Dividend yield 0.00% 0.00% A
summary of activity under the 2009 and 2012 Plans and related information follows:
Number
of Shares Underlying Stock Options Weighted
Average Exercise Price Weighted
Aggregate
Intrinsic Value
Balance at December 31, 2016 21,767,854 $ 3.56 5.8 $ 60,495,730
Granted 2,184,500 $ 6.61
Exercised (100,046 ) $ 2.12 $ 437,667
Expired/Forfeited (450,208 ) $ 6.54
Balance at June
30, 2017 23,402,100 $ 3.79 5.6 $ 52,165,428
Vested
and Exercisable at June 30, 2017 18,731,808 $ 3.13 4.9 $ 51,750,547
Unvested at June 30, 2017 4,670,292 $ 6.43 8.8 $ 414,881 At
June 30, 2017, our outstanding stock options had exercise prices ranging from $0.10 to $8.92 per share. The weighted average grant
date fair value per share of options granted was $3.82 and $5.08 during the six months ended June 30, 2017 and 2016, respectively.
Share-based compensation expense for options recognized in our results of operations is based on vested awards. Share-based compensation
expense related to options for the three months ended June 30, 2017 and 2016 was $1,505,625 and $4,160,071, respectively, and
for the six months ended June 30, 2017 and 2016 was $2,806,685 and $8,311,330, respectively. At June 30, 2017, total unrecognized
estimated compensation expense related to unvested options granted prior to that date was approximately $14,365,000 which may
be adjusted for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of 2.4 years.
No tax benefit was realized due to a continued pattern of operating losses. |
