Stockholders' Equity | (9) Stockholders’ Equity Preferred Stock Series E and Series E-1 Preferred Stock On July 11, 2019, the Company entered into a securities purchase agreement with certain accredited investors pursuant to which Delcath sold to investors an aggregate of 20,000 shares of our Series E convertible preferred stock, par value $0.01 per share, or the “Series E Preferred Stock”, at a price of $1,000 per share and a warrant, or a “2019 E Warrant”, to purchase a number of shares of common stock equal to the number of shares of common stock issuable upon conversion of the Series E Preferred Stock purchased by the investor, or the “July 2019 Private Placement”. In connection with the July 2019 Private Placement, the Company exchanged $11.8 million of debt, interest and Series D Warrants for 11,500 shares of Series E Preferred Stock and related 2019 E Warrants, $0.1 million in accounts payables for 149 shares of Series E Preferred Stock and related 2019 E Warrants and issued 923 shares of Series E Preferred Stock and related 2019 E Warrants to certain investors in exchange for a waiver of rights under exchange agreements signed in December 2018 and March 2019, or the “Debt Exchange”. On August 19, 2019, the Company entered into a securities purchase agreement with certain accredited investors pursuant to which Delcath sold to investors an aggregate of 9,510 shares of Series E-1 convertible preferred stock, par value $0.01 per share, or the Series E-1 Preferred Stock, at a price of $1,000 per share and a warrant, or a “2019 E-1 Warrant”, and together with the 2019 E Warrant, the “2019 Warrants”, to purchase a number of shares of common stock of the Company equal to the number of shares of common stock issuable upon conversion of the Series E-1 Preferred Stock purchased by the investor, or the “August 2019 Private Placement”, and, collectively with the July 2019 Private Placement, the “Private Placements”. Each share of Series E Preferred Stock and Series E-1 Preferred Stock, or, collectively, the “Preferred Stock”, is convertible at any time at the option of the holder into the number of shares of common stock determined by dividing the current conversion price. At December 31, 2019, the conversion price was $23.04 and was subsequently adjusted to $10.00 upon the pricing of a $22.0 million offering on May 5, 2020, as discussed further below. As a result of the price adjustment, the excess of the fair value of the common stock that will be received on conversion, measured on the price reset date, exceeded the original proceeds allocated to the Preferred Stock by $12.0 million. The holders of the Preferred Stock are entitled to receive dividends on shares of Preferred Stock equal (on an “as converted” basis) to and in the same form as dividends paid on shares of the common stock. Any such dividends that are not paid to the holders of the Preferred Stock will increase the stated value. No other dividends will be paid on shares of Preferred Stock. Each 2019 Warrant had an exercise price equal to $23.04 at December 31, 2019. The exercise price was subsequently adjusted to $10.00 upon the pricing of a $22.0 million offering on May 5, 2020, as discussed further below, which resulted in the recognition of a $55 thousand deemed dividend. The 2019 Warrants are exercisable until 5:00 p.m. (NYC time) on December 24, 2024. As of June 30, 2020, there were 25,950 shares of Preferred Stock outstanding and 1.8 million 2019 Warrants outstanding. Public Offering and Nasdaq Uplisting On May 5, 2020, the Company closed a public offering of 1,823,000 shares of common stock, 377,000 pre-funded warrants and Series F warrants to purchase 2,224,900 shares of common stock at an exercise price of $10.00 per share. Delcath received gross proceeds of approximately $22.0 million from the offering, before deducting the underwriting discount and estimated offering expenses. The securities were offered pursuant to a registration statement on Form S-1 (File No. 333-235904) previously filed with the SEC and declared effective on April 30, 2020. In connection with this offering, the Company’s common stock was approved for listing and began trading on the Nasdaq Capital Market on May 1, 2020. As a result of this offering, the Preferred Stock conversion price was adjusted to $10.00 and the exercise price of the 2019 Warrants was adjusted to $10.00 and neither instrument is subject to further price resets. Other Common Stock Issuances During the six months ended June 30, 2020 the Company issued 1,549,609 shares of the Company’s common stock pursuant to conversions of Preferred Stock. During the six months ended June 30, 2020, the Company issued 6,000 shares of common stock associated with the exercise of pre-funded warrants. During the six months ended June 30, 2020, the Company issued 72,976 shares of common stock as compensation. Share-Based Compensation The Company’s 2019 Equity Incentive Plan (the “Plan”) allows for grants in the form of incentive stock options, nonqualified stock options, stock units, stock awards, stock appreciation rights, and other stock-based awards. All of the Company’s officers, directors, employees, consultants and advisors are eligible to receive grants under the Plan. The maximum number of shares reserved for issuance under the Plan is 2,142. Options to purchase shares of common stock are granted at exercise prices not less than 100% of fair value on the dates of grant. As of June 30, 2020, the Plan had approximately 502 shares available for grant. The following is a summary of stock option activity under the Plan for the six months ended June 30, 2020: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2019 1,640 $ 196.70 9.1 $ — Granted — Exercised — Cancelled/Forfeited — Outstanding at June 30, 2020 1,640 $ 196.70 8.6 $ — Exercisable at June 30, 2020 1,640 $ 196.70 8.6 $ — At June 30, 2020, there was no unrecognized compensation expense related to non-vested share-based compensation awards under the Plan. The following is a summary of share-based compensation expense in the statement of operations: Three months ended June 30, Six months ended June 30, (in thousands) 2020 2019 2020 2019 Selling, general and administrative $ 606 $ 58 $ 655 $ 106 Research and development — 17 5 27 Total $ 606 $ 75 $ 660 $ 133 Warrants The following is a summary of warrant activity for the six months ended June 30, 2020: Warrants Exercise Share Weighted Average Exercise Price Weighted Average Remaining (Years) Outstanding at December 31, 2019 1,826,608 $7.00 - $23.04 $ 23.04 5.0 Issued 2,601,900 10.00 Exercised (6,000 ) 0.01 Expired (9 ) 7.00 Outstanding at June 30, 2020 4,422,499 $0.01- $10.00 $ 9.16 4.7 As of June 30, 2020, warrants to purchase 371,000 shares of common stock were pre-funded and the exercise price was $0.01 per share. The remaining warrants were exercisable at $10.00 per share. |