Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 23, 2019,~~April 21, 2020, the registrant had ~~43,841,965~~44,067,859 shares of Common Stock ($0.001 par value) outstanding.

This quarterly report on Form 10-Q, in particular "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," and the information incorporated by reference herein contains “forward-looking statements”. The forward-looking statements are contained principally in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this report. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend," "expect," "could," "plan," "potential," "predict," "seek," "should," "would" or the negative version of these words and similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those described in "Risk Factors" and elsewhere in this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this report. Considering the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

	September 30,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	62,872,907		$	62,313,418		$	61,330,267		$	63,792,657
Prepaid expenses and other current assets		401,559			444,942			835,537			511,916
Total current assets		63,274,466			62,758,360			62,165,804			64,304,573
Goodwill		9,600,240			9,600,240			9,600,240			9,600,240
In-process research and development		4,800,000			4,800,000			4,800,000			4,800,000
Property and equipment, net		38,920			53,134			38,118			40,550
Other non-current assets		510,431			10,958			410,319			459,811
Total assets	$	78,224,057		$	77,222,692		$	77,014,481		$	79,205,174
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	230,376		$	616,753		$	377,500		$	451,326
Accrued expenses and other liabilities		1,503,287			1,575,161			1,417,143			1,776,912
Total current liabilities		1,733,663			2,191,914			1,794,643			2,228,238
Long-term deferred revenue		1,694,163			1,694,163			1,694,163			1,694,163
Deferred tax liability		201,792			201,792			201,792			201,792
Other non-current liabilities		243,399			27,211			127,615			186,358
Total liabilities		3,873,017			4,115,080			3,818,213			4,310,551
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at September 30, 2019 and December 31, 2018; 43,448,604 and 42,081,306 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		43,449			42,081
Common stock, $0.001 par value; 100,000,000 shares authorized at March 31, 2020 and December 31, 2019; 43,978,996 and 43,908,065 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively								43,979			43,908
Additional paid-in capital		441,488,806			429,289,968			445,031,594			444,016,341
Accumulated other comprehensive loss		(92,358	)		(93,150	)		(92,801	)		(92,681	)
Accumulated deficit		(367,088,857	)		(356,131,287	)		(371,786,504	)		(369,072,945	)
Total stockholders’ equity		74,351,040			73,107,612			73,196,268			74,894,623
Total liabilities and stockholders' equity	$	78,224,057		$	77,222,692		$	77,014,481		$	79,205,174

	Three months ended						Nine months ended						Three months ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019
Operating expenses:
Research, development and patents	$	1,150,815		$	2,370,035		$	4,250,205		$	5,411,335		$	1,250,745		$	1,633,878
General and administrative		1,494,750			4,657,679			7,556,740			9,683,242			1,673,754			3,345,481
Total operating expenses		2,645,565			7,027,714			11,806,945			15,094,577			2,924,499			4,979,359
Operating loss		(2,645,565	)		(7,027,714	)		(11,806,945	)		(15,094,577	)		(2,924,499	)		(4,979,359	)
Interest income		288,643			268,437			900,462			650,013			223,280			304,245
Other income (expense)		(21,582	)		(20,681	)		(51,087	)		(22,584	)		(12,340	)		(22,076	)
Net loss applicable to common stockholders	$	(2,378,504	)	$	(6,779,958	)	$	(10,957,570	)	$	(14,467,148	)	$	(2,713,559	)	$	(4,697,190	)
Basic and diluted net loss per common share	$	(0.05	)	$	(0.16	)	$	(0.26	)	$	(0.35	)	$	(0.06	)	$	(0.11	)
Shares used to compute basic and diluted net loss per common share		43,343,329			41,879,073			42,963,287			40,866,343			43,949,291			42,467,905
Net loss applicable to common stockholders	$	(2,378,504	)	$	(6,779,958	)	$	(10,957,570	)	$	(14,467,148	)	$	(2,713,559	)	$	(4,697,190	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(782	)		(612	)		792			1,205			(120	)		(1,781	)
Comprehensive loss	$	(2,379,286	)	$	(6,780,570	)	$	(10,956,778	)	$	(14,465,943	)	$	(2,713,679	)	$	(4,698,971	)

	Nine Months Ended September 30, 2019																Three Months Ended March 31, 2020
	Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total stockholders’			Common stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital			income (loss)			deficit			equity			Shares		Amount		capital		income (loss)			deficit			equity
Balance at December 31, 2018		42,081,306	$	42,081	$	429,289,968		$	(93,150	)	$	(356,131,287	)	$	73,107,612
Balance at December 31, 2019																		43,908,065	$	43,908	$	444,016,341	$	(92,681	)	$	(369,072,945	)	$	74,894,623
Share-based compensation	—					2,699,500		—			—				2,699,500		—		—			596,378	—			—				596,378
Issuance of shares under an employee stock purchase plan (ESPP)		2,401	2			16,901		—			—				16,903			1,979		2		6,252	—			—				6,254
Issuance of common stock, net of offering costs	—		—			(8,532	)	—			—				(8,532	)
Issuance of common stock for option exercises		977,454	978			3,919,757		—			—				3,920,735
Issuance of common stock under at-the-market equity distribution and sales agreements, net of offering costs																		68,952		69		412,623		—			—			412,692
Net loss	—		—		—			—				(4,697,190	)		(4,697,190	)	—		—		—		—				(2,713,559	)		(2,713,559	)
Foreign currency translation adjustments	—		—		—				(1,781	)	—				(1,781	)	—		—		—			(120	)	—				(120	)
Balance at March 31, 2019		43,061,161		43,061		435,917,594			(94,931	)		(360,828,477	)		75,037,247
Share-based compensation		—		—		1,842,514			—			—			1,842,514
Issuance of common stock for option exercises		38,000		38		180,332			—			—			180,370
Net loss		—		—		—			—			(3,881,876	)		(3,881,876	)
Foreign currency translation adjustments		—		—		—			3,355			—			3,355
Balance at June 30, 2019		43,099,161		43,099		437,940,440			(91,576	)		(364,710,353	)		73,181,610
Share-based compensation		—		—		373,844			—			—			373,844
Issuance of shares under an employee stock purchase plan (ESPP)		1,541		2		10,415			—			—			10,417
Issuance of common stock, net of offering costs		347,902		348		3,164,107			—			—			3,164,455
Net loss		—		—		—			—			(2,378,504	)		(2,378,504	)
Foreign currency translation adjustments		—		—		—			(782	)		—			(782	)
Balance at September 30, 2019		43,448,604	$	43,449	$	441,488,806		$	(92,358	)	$	(367,088,857	)	$	74,351,040
Balance at March 31, 2020																		43,978,996	$	43,979	$	445,031,594	$	(92,801	)	$	(371,786,504	)	$	73,196,268

	Three Months Ended March 31, 2019
	Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital			income (loss)			deficit			equity
Balance at December 31, 2018		42,081,306	$	42,081	$	429,289,968		$	(93,150	)	$	(356,131,287	)	$	73,107,612
Share-based compensation		—		—		2,699,500			—			—			2,699,500
Issuance of shares under an employee stock purchase plan		2,401		2		16,901			—			—			16,903
Issuance of common stock under at-the-market equity distribution and sales agreements, net of offering costs		—		—		(8,532	)		—			—			(8,532	)
Issuance of common stock for option exercises		977,454		978		3,919,757			—			—			3,920,735
Net loss		—		—		—			—			(4,697,190	)		(4,697,190	)
Foreign currency translation adjustments		—		—		—			(1,781	)		—			(1,781	)
Balance at March 31, 2019		43,061,161	$	43,061	$	435,917,594		$	(94,931	)	$	(360,828,477	)	$	75,037,247

Nine Months Ended September 30, 2018

Common stock

Additional
paid-in

Accumulated
other
comprehensive

Accumulated

Total
stockholders’

Shares

Amount

capital

income (loss)

deficit

equity

Balance at December 31, 2017

36,452,893

$
36,453

$
380,156,510

$
(94,623
)

$
(341,456,200
)

$
38,642,140

Share-based compensation

—

—

2,530,425

—

—

2,530,425

Issuance of shares under an employee stock purchase plan (ESPP)

4,861

5

27,897

—

—

27,902

Issuance of common stock, net of offering costs

4,545,928

4,546

38,494,817

—

—

38,499,363

Issuance of common stock for option exercises

125,391

125

407,071

—

—

407,196

Net loss

—

—

—

—

(4,543,051
)

(4,543,051
)
Foreign currency translation adjustments

—

—

—

5,832

—

5,832

Balance at March 31, 2018

41,129,073

41,129

421,616,720

(88,791
)

(345,999,251
)

75,569,807

Share-based compensation

—

—

823,212

—

—

823,212

Issuance of common stock, net of offering costs

—

—

(18,462
)

—

—

(18,462
)
Exercise of warrants

750,000

750

2,361,750

—

—

2,362,500

Net loss

—

—

—

—

(3,144,139
)

(3,144,139
)
Foreign currency translation adjustments

—

—

—

(4,015
)

—

(4,015
)
Balance at June 30, 2018

41,879,073

41,879

424,783,220

(92,806
)

(349,143,390
)

75,588,903

Share-based compensation

—

—

4,728,260

—

—

4,728,260

Issuance of shares under an employee stock purchase plan (ESPP)

2,233

2

23,105

—

—

23,107

Issuance of common stock, net of offering costs

—

—

(7,929
)

—

—

(7,929
)
Net loss

—

—

—

—

(6,779,958
)

(6,779,958
)
Foreign currency translation adjustments

—

—

—

(612
)

—

(612
)
Balance at September 30, 2018

41,881,306

$
41,881

$
429,526,656

$
(93,418
)

$
(355,923,348
)

$
73,551,771

	Nine months ended
	September 30,						March 31,
	2019			2018			2020			2019
Operating activities:
Net loss	$	(10,957,570	)	$	(14,467,148	)	$	(2,713,559	)	$	(4,697,190	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash stock-based compensation		4,915,858			8,081,897			596,378			2,699,500
Depreciation and amortization		18,347			19,768			5,060			6,134
Change in joint venture investment		—			(19,867	)
Changes in assets and liabilities:
Prepaid expenses and other assets		(452,515	)		(32,494	)		(273,037	)		(109,707	)
Accounts payable, accrued liabilities and other liabilities		(244,725	)		(1,052,514	)		(493,464	)		(928,027	)
Net cash used in operating activities		(6,720,605	)		(7,470,358	)		(2,878,622	)		(3,029,290	)
Investing activities:
Proceeds from dissolution of joint venture		—			636,524
Acquisition of property and equipment		(4,013	)		(10,207	)		(2,594	)		(1,953	)
Net cash (used in) provided by investing activities		(4,013	)		626,317
Net cash used in investing activities								(2,594	)		(1,953	)
Financing activities:
Proceeds from issuance of common stock, exercise of common stock options and warrants, net of issuance costs		7,257,028			41,242,667			412,692			3,912,202
Proceeds from issuance of equity awards under ESPP		27,320			51,010			6,254			16,903
Net cash provided by financing activities		7,284,348			41,293,677			418,946			3,929,105
Effect of exchange rate changes on cash and cash equivalents		(241	)		987			(120	)		(1,617	)
Net change in cash and cash equivalents		559,489			34,450,623			(2,462,390	)		896,245
Cash and cash equivalents, beginning of period		62,313,418			27,991,743			63,792,657			62,313,418
Cash and cash equivalents, end of period	$	62,872,907		$	62,442,366		$	61,330,267		$	63,209,663

MediciNova, Inc. (the “Company” or “MediciNova”) was incorporated in the state of Delaware in September 2000 and is a public company. The Company’s common stock is listed in both the United States and Japan and trades on the NASDAQ Global Market and the JASDAQ Market of the Tokyo Stock Exchange. MediciNova is a biopharmaceutical company focused on ~~acquiring and~~ developing novel, small molecule therapeutics for the treatment of serious diseases with unmet medical needs with a commercial focus on the ~~U.S.~~United States market. The Company’s current strategy is to focus its development activities on MN-166 (ibudilast) for neurological disorders such as progressive multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), chemotherapy-induced peripheral neuropathy, degenerative cervical myelopathy, glioblastoma, and substance dependence and addiction (e.g., methamphetamine dependence, opioid dependence and alcohol dependence), as well as for acute respiratory distress syndrome (ARDS), and MN-001 (tipelukast) for fibrotic diseases such as nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis (IPF). The Company’s pipeline also includes MN-221 (bedoradrine) for the treatment of acute exacerbation of asthma and MN-029 (denibulin) for solid tumor cancers.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions of the Securities and Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2018~~2019 included in the Company’s Annual Report on Form 10-K filed with the SEC. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, ~~2018~~2019 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements.

The consolidated financial statements include the accounts of MediciNova, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation.

The Company operates in a single operating segment – the acquisition and development of small molecule therapeutics for the treatment of serious diseases with unmet medical needs.

Cash and cash equivalents consist of cash and other highly liquid investments including money market accounts.

Research and development costs are expensed in the period incurred. Research and development costs primarily consist of salaries and related expenses for personnel, facilities and depreciation, research and development supplies, licenses and outside services. Such research and development costs totaled ~~$1.1~~$1.2 million and ~~$2.3~~$1.5 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~Research and development costs totaled~~ ~~$4.0 million and $5.2 million for each of the nine months ended September 30, 2019 and 2018, respectively.~~

Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. The Company includes all external costs related to the filing of patents on developments in Research, Development and

Patents expenses. Such patent-related expenses totaled $0.1 million for each of the three months ended ~~September 30,~~March 31, 2020 and 2019, respectively.

The pandemic caused by an outbreak of a new strain of coronavirus (“COVID-19”) has resulted, and ~~$0.3 million~~is likely to continue to result, in significant national and ~~$0.2 million for each~~global economic disruption and may adversely affect our business. Based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the ~~nine months ended September 30, 2019~~COVID-19 virus. However, the Company is actively monitoring this situation and ~~2018, respectively.~~the possible effects on its financial condition, liquidity, operations, suppliers, industry, and workforce.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. The Company adopted ASU 2016-02 in the first quarter of 2019 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2019. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of right-of-use assets. The Company elected to not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less and to not separate non-lease components from lease. The adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of right-of-use assets of approximately $0.4 million, lease liabilities for operating leases of approximately $0.4 million and a zero cumulative-effect adjustment to accumulated deficit, with no material impact to its consolidated statements of operations. See Note 4 for further information regarding the impact of the adoption of ASU 2016-02 on the Company's financial statements.

In August 2018, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The modified standard eliminates the requirement to disclose changes in unrealized gains and losses included in earnings for recurring Level 3 fair value measurements and requires that changes in unrealized gains and losses be included in other comprehensive income for recurring Level 3 fair value measurements of instruments. The standard also requires the disclosure of the range and weighted average used to develop significant unobservable inputs and how weighted average is calculated for recurring and nonrecurring Level 3 fair value measurements. The amendment iswas effective for fiscal years beginning after December 15, 2019 and interim periods within that fiscal year with early adoption permitted. The Company ~~does not expect the standard to have a~~adopted ASU 2018-13 on January 1, 2020 with no material impact on its consolidated financial statements.

Revenues consist mainly of research and development services performed under a contract with a customer. The Company evaluates the separate performance obligation(s) under each contract, allocates the transaction price to each performance obligation considering the estimated stand-alone selling prices of the services and recognizes revenue upon the satisfaction of such obligations over time or at a point in time dependent on the satisfaction of one of the following criteria: (1) the customer simultaneously receives and consumes the economic benefits provided by the vendor’s performance (2) the vendor creates or enhances an asset controlled by the customer (3) the vendor’s performance does not create an asset for which the vendor has an alternative use, and the vendor has an enforceable right to payment for performance completed to date.

In October 2011, the Company entered into a collaboration agreement with Kissei Pharmaceutical Co., Ltd., (“Kissei”), to perform research and development services relating to MN-221 (bedoradrine) in exchange for a non-refundable upfront payment of $2.5 million. Under the terms of the agreement, the Company is responsible for all costs to be incurred in the performance of these services. The Company assessed the services in accordance with the authoritative guidance and concluded that the two studies to be performed under the agreement represented two separate performance obligations. The transaction price was allocated among the two studies that were deemed separate performance obligations based on the expected costs to be incurred for each obligation. Revenue is recognized proportional to the total costs expected for each performance obligation as incurred over the service period. The first study was completed in 2013 and the timing of the second study is undetermined as of ~~September 30, 2019.~~March 31, 2020. The amount received from Kissei and allocated, net of the amount recorded as revenue, is included on the balance sheet as long-term deferred revenue and will be recognized as revenue as the remaining performance obligation is satisfied. No revenue was recognized for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018~~2019 in connection with the collaboration agreement with Kissei.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Cash ~~and cash~~ equivalents, including money market accounts of ~~$688,865~~$693,794 and ~~$677,594~~$691,649 measured at fair value as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, are classified within Level ~~1 of the fair value hierarchy.~~1.

The Company has operating leases primarily for real estate in the United States and Japan. The United States lease is for the Company’s headquarters in San Diego and is for a term of four years and one month with a term date of December 31, 2021. The Company’s ~~lease in Tokyo, Japan was renewed in May 2019 and has a term of two years with an auto-renewal, two-year extension.~~ The real estate operating leases are included in "Other non-current assets" on the Company's balance sheet and represents the Company’s right to use the underlying assets for the lease term. The Company’s obligation to make lease payments are included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Company's balance sheet. Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term. As of ~~September 30, 2019~~, total right-of-use assets and operating lease liabilities were approximately $0.4 million and $0.5 million, respectively. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses. The Company’s finance lease was deemed immaterial to the consolidated financial statements.

~~Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.~~

~~Information related to the Company's right-of-use assets and related lease liabilities are as follows:~~

As of December 31, 2018, the total estimated future annual minimum lease payments under the Company’s non-cancelable building and copier leases for the years ending after December 31, 2018 are as follows:

In June 2013, the Company adopted the 2013 Equity Incentive Plan, ~~(2013 Plan),~~or 2013 Plan, under which the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. The 2013 Plan is the successor to the Company’s Amended and Restated 2004 Stock Incentive Plan, ~~(2004 Plan).~~or 2004 Plan. A total of 7,200,000 shares of common stock are reserved for issuance under the 2013 Plan. In addition, “returning shares” that may become available from time to time are added back to the plan. “Returning shares” are shares that are subject to outstanding awards granted under the 2004 Plan that expire or terminate prior to exercise or settlement, are forfeited because of the failure to vest, are repurchased, or are withheld to satisfy tax withholding or purchase price obligations in connection with such awards. Although the Company no longer grants equity awards under the 2004 Plan, all outstanding stock awards granted under the 2004 Plan will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the 2004 Plan. As of ~~September 30, 2019, 2,284,292~~March 31, 2020, 1,448,135 shares remain available for future grants under the 2013 Plan.

The Company occasionally issues employee performance-based stock options, the vesting of which is based on a determination made by the board of directors as to the achievement of certain corporate objectives at the end of the performance period. The grant date of such awards is the date on which the board of directors makes its determination. For periods preceding the grant date, the expense related to these awards is measured based on their fair value at each reporting date.

Options granted under the 2013 Plan and the 2004 Plan have terms of ten years from the date of grant unless earlier terminated and generally vest over a three or four year period. The exercise price of all options granted through ~~September 30, 2019~~March 31, 2020 and in ~~2018,~~2019, was equal to the market value of the Company’s common stock on the date of grant.

A summary of stock option activity and related information as of ~~September 30, 2019~~March 31, 2020 is as follows:

	Number of Option Shares			Weighted Average Exercise Price		Number of Option Shares			Weighted Average Exercise Price
Outstanding at December 31, 2018		6,609,647		$	4.61
Outstanding at December 31, 2019							6,802,093		$	5.61
Granted		1,337,000			9.67		1,211,000			6.87
Exercised		(1,015,454	)		4.04		-			-
Cancelled		(126,700	)		8.84		(374,843	)		9.16
Outstanding at September 30, 2019		6,804,493		$	5.61
Exercisable at September 30, 2019		5,587,493		$	4.73
Outstanding at March 31, 2020							7,638,250		$	5.64
Exercisable at March 31, 2020							6,412,250		$	5.39

~~During the nine months ended September 30, 2019 and 2018, 1,015,454 and 125,391 options were exercised, from which the Company received gross proceeds of $4.1 million and $0.4 million, respectively.~~

Under the Company’s 2007 Employee Stock Purchase Plan (ESPP), 300,000 shares of common stock were originally reserved for issuance. In addition, the shares reserved automatically increase each year by a number equal to the lesser of: (i) 15,000 shares;

(ii) 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year; or (iii) such lesser amount as determined by the Board. The ESPP permits full-time employees to purchase common stock through payroll deductions (which

cannot exceed 15% of each employee’s compensation) at the lower of 85% of fair market value at the beginning of the offering period or the end of each six-month offering period. The ESPP is considered a compensatory plan and the Company records compensation expense included in the Company’s statement of operations.

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, an aggregate of ~~3,942~~1,979 shares were issued under the ESPP. As of ~~September 30, 2019,~~March 31, 2020, there were ~~202,936~~215,957 shares available for future issuance under the ESPP.

Stock-based compensation expense for stock option awards and ESPP shares are reflected in total operating expenses for each respective year.

The following table summarizes stock-based compensation expenses for the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2020 and 2019, respectively:

	Three months ended				Nine months ended				Three months ended
	September 30,				September 30,				March 31,
	2019		2018		2019		2018		2020		2019
Research, development and patents	$	91,089	$	1,380,311	$	1,424,737	$	2,348,337	$	162,697	$	793,055
General and administrative		282,755		3,347,949		3,491,121		5,733,560		433,681		1,906,445
Total stock-based compensation expense	$	373,844	$	4,728,260	$	4,915,858	$	8,081,897	$	596,378	$	2,699,500

The Company uses the Black-Scholes valuation model for determining the estimated fair value for stock-based awards granted to employees and stock purchased under the ESPP. The following table provides the assumptions used in the Black-Scholes valuation model used to estimate the fair value of options granted and stock purchased under the ESPP during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ and to estimate the fair value of performance-based stock options as of ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

	Nine months ended
	September 30, 2019		September 30, 2018		March 31, 2020	March 31, 2019
Stock Option assumptions:
Risk-free interest rate	1.55 - 2.19%		2.77 - 2.94%		0.37 - 1.68%	2.23 - 2.53%
Expected volatility of common stock	60.64 - 61.9%		60.82 - 66.70%		57.44 - 62.9%	61.82 - 62.3%
Dividend yield	0.0%		0.0%		0.0%	0%
Expected term (in years)	4.8 - 5.3		4.8 - 5.3		4.52 - 5.56	4.5 - 5.5
ESPP assumptions:
Risk-free interest rate	1.83%		1.92%
Expected volatility of common stock	59.70%		76.8%
Dividend yield	0.0%		0.0%
Expected term (in years)		0.5		0.5

As of ~~September 30, 2019,~~March 31, 2020, there was $1.5 million of unamortized compensation cost related to unvested stock option awards which is expected to be recognized over a remaining weighted-average vesting period of ~~0.3~~0.79 years, on a straight-line basis.

On May 22, 2015, the Company entered into an at-the-market issuance sales agreement (the “2015 ATM Agreement”) with MLV & Co. LLC (MLV), pursuant to which the Company ~~may~~could sell common stock through MLV from time to time up to an aggregate offering price of $30.0 million. Sales of the Company’s common stock through MLV, if any, ~~will~~were to be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on NASDAQ, on any other existing trading market for the common stock or to or through a market maker. MLV ~~may~~could also sell the common stock in privately negotiated transactions, subject to the Company’s prior approval. The Company agreed to pay MLV an aggregate commission rate of up to 4.0% of the gross proceeds of any common stock sold under this agreement. Proceeds from sales of common stock ~~will depend~~depended on the number of shares of common stock sold to MLV and the per share purchase price of each transaction.

The Company iswas not obligated to make any sales of common stock under the sales agreement and ~~may~~could terminate the sales agreement at any time upon written notice. On September 16, 2016, the Company amended the original sales agreement with MLV to also include FBR Capital Markets & Co. as a sales agent. The 2015 ATM Agreement was terminated on August 23, 2019.

On August 23, 2019, the Company entered into an at market issuance sales agreement (the “2019 ATM Agreement”) with B. Riley FBR, Inc. (B. Riley FBR) pursuant to which the Company may sell common stock through B. RileyFBR from time to time up to an aggregate offering price of $75.0 million. Sales of the Company’s common stock through B. Riley FBR, if any, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on NASDAQ, on any other existing trading market for the common stock or through a market maker. B. Riley FBR may also sell the common stock in privately negotiated transactions, subject to the Company’s prior approval. The Company agreed to pay B. RileyFBR an aggregate commission rate of up to 3.5% of the gross proceeds of any common stock sold under this agreement. Proceeds from sales of common stock will depend on the number of shares of common stock sold to B. RileyFBR and the per share purchase price of each transaction.

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company generated net proceeds of $~~2.8~~0.4 ~~million and $0.4~~ million under the ~~2015 ATM Agreement and~~ 2019 ATM Agreement, ~~respectively,~~ on sales of ~~347,902~~68,952 shares of the Company’s common stock at a weighted average price of $~~9.51~~6.19 per share. ~~No shares of common stock were sold under the 2015 ATM Agreement in the nine months ended September 30, 2018.~~

The Company computes basic net loss per share using the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares and potentially dilutive securities (common share equivalents) outstanding during the period. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under the Company’s stock option ~~agreements, and warrants.~~agreements. Common share equivalents are excluded from the diluted net loss per share calculation if their effect is anti-dilutive.

Potentially dilutive outstanding securities excluded from diluted net loss per common share due to their anti-dilutive effect totaled ~~6,804,493~~7,638,250 shares and ~~6,609,647~~6,804,193 shares ~~as of September 30,~~for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively.

~~Subsequent to September 30, 2019, the Company sold 393,361 shares of common stock under the 2019 ATM Agreement at a weighted average price of $7.38 per share for net proceeds of $2.8 million.~~

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, ~~2018~~2019 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on February 13, ~~2019.~~2020. Past operating results are not necessarily indicative of results that may occur in future periods.

This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to risks and uncertainties, many of which are beyond our control. Our actual results may differ from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II of this Quarterly Report on Form 10-Q under the caption “Item 1A. Risk Factors” and under the caption “Item 1A. Risk Factors” in our Annual Report on Form 10-K. The differences may be material. Forward-looking statements discuss matters that are not historical facts. Forward-looking statements include, but are not limited to, statements regarding our plans, strategies, objectives, product development programs, clinical trials, industry, financial condition, liquidity and capital resources, future performance and other statements that are not historical facts. Such forward-looking statements include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not rely unduly on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

We are a biopharmaceutical company focused on developing novel, small molecule therapeutics for the treatment of serious diseases with unmet medical needs and a commercial focus on the United States market. Our current strategy is to focus our development activities on MN-166 (ibudilast) for neurological disorders such as progressive multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), chemotherapy-induced peripheral neuropathy, degenerative cervical myelopathy, glioblastoma, and substance dependence and addiction (e.g., methamphetamine dependence, opioid dependence, and alcohol dependence), as well as for acute respiratory distress syndrome (ARDS), and MN-001 (tipelukast) for fibrotic diseases such as nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis (IPF). Our pipeline also includes MN-221 (bedoradrine) for the treatment of acute exacerbation of asthma and MN-029 (denibulin) for solid tumor cancers. We were incorporated in Delaware in September 2000.

We have incurred significant net losses since our inception. As of ~~September 30, 2019, we had an~~March 31, 2020, from inception, our accumulated deficit ~~of $367.1 million and~~was $371.8 million. We expect to incur substantial net losses for the next several years as we continue to develop certain of our existing product development ~~candidates,~~programs, and over the long-term if we expand our research and development programs and acquire or in-license products, technologies or businesses that are complementary to our own.

Our goal is to build a sustainable biopharmaceutical business through the successful development of differentiated products for the treatment of serious diseases with unmet medical needs in high-value therapeutic areas. Key elements of our strategy are as follows:

We intend to advance our diverse MN-166 (ibudilast) program through a combination of investigator-sponsored clinical trials, trials funded through government grants or other grants, and trials funded by us. In addition to providing drug supply and regulatory support, we have funded portions of some of the consortium-sponsored trials. For example, we contributed financially to the Secondary and Primary Progressive Ibudilast NeuroNEXT Trial in Multiple Sclerosis (SPRINT-MS) Phase 2b clinical trial of MN-166 (ibudilast) for the treatment of progressive MS, which was primarily funded by the NIH. In addition, we contributed financially to the clinical ~~trial~~trials of MN-166 (ibudilast) ~~for the treatment of~~that enrolled ALS ~~as well as the ongoing ALS / Biomarker study.~~patients. We intend to pursue additional strategic alliances to help support further clinical development of MN-166 (ibudilast).

We intend to advance development of MN-001 (tipelukast) through a variety of means, which may include investigator-sponsored trials with or without grant funding as well as trials funded by us.

We develop and maintain relationships with pharmaceutical companies that are therapeutic category leaders. ~~Upon completion of proof-of-concept Phase 2 clinical trials, we~~We intend to discuss strategic alliances with leading pharmaceutical companies who seek ~~late-stage~~ product candidates, such as MN-166 (ibudilast), MN-001 (tipelukast), MN-221 (bedoradrine) and MN-029 (denibulin), which could further support ~~further~~our clinical development and product commercialization.

The pandemic caused by an outbreak of a new strain of coronavirus (“COVID-19”) has resulted, and is likely to continue to result, in significant national and global economic disruption and may adversely affect our business. Uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. As such, we are uncertain as what effect the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the response to curb its spread, currently we are not able to estimate the effects of the COVID-19 outbreak to our results of operations, financial condition, or liquidity.

In October 2011, we entered into a collaboration agreement with Kissei Pharmaceutical Co., Ltd., or Kissei, to perform research and development services relating to MN-221 (bedoradrine) in exchange for a non-refundable upfront payment of $2.5 million. Under the terms of the agreement, we are responsible for all costs to be incurred in the performance of these services. ~~The Company~~We assessed the services in accordance with the authoritative guidance and concluded that the two studies to be performed under the agreement represented two separate performance obligations. The transaction price was allocated ~~among~~between the two studies that were deemed separate performance obligations based on the expected costs to be incurred for each obligation. Revenue is recognized proportional to the total costs expected for each performance obligation as incurred over the service period. The first study was completed in 2013 and the timing of the second study ~~has not begun~~is undetermined as of ~~September 30, 2019. We expect that the study will be completed after 2019.~~March 31, 2020. The amount received from Kissei and allocated, net of the amount recorded as revenue, is included on the balance sheet as long-term deferred revenue since it is non-refundable and not expected to be started within the next year and will be recognized as revenue as the remaining performance obligation is satisfied. No revenue was recognized in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ in connection with the collaboration agreement with Kissei.

Our research, development and patents expenses consist primarily of license fees related to our product candidates, salaries and related employee benefits, costs associated with the preclinical and clinical development of our product development programs, costs associated with non-clinical activities, such as regulatory expenses, and pre-commercialization manufacturing development activities. We use external service providers to manufacture our compounds to be used in clinical trials and for the majority of the services performed in connection with the preclinical and clinical development of our product candidates. Research, development and patents expenses include fees paid to consultants, contract research organizations, contract manufacturers and other external service providers, including professional fees and costs associated with legal services, patents and patent applications for our intellectual property. Internal research and development expenses include costs of compensation and other expenses for research and development personnel, supplies, facility costs and depreciation. Research, development and patents costs are expensed as incurred and we expect to increase such costs throughout ~~2019~~2020 as our development programs progress.

The following table summarizes our research, development and patents expenses for the periods indicated for each of our product development programs. To the extent that costs, including personnel costs, are not tracked to a specific product development program, such costs are included in the “Other R&D expense” category (in thousands):

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

External development expense:

MN-221

$
4

$
5

$
18

$
29

MN-166

563

624

1,459

1,689

MN-001

46

35

109

251

MN-029

1

1

2

2

Total external development expense

614

665

1,588

1,971

R&D personnel expense

347

1,612

2,213

3,081

R&D facility and depreciation expense

12

11

35

35

Patent expenses

102

52

259

191

Other R&D expense

76

30

155

133

Total research, development and patent expense

$
1,151

$
2,370

$
4,250

$
5,411

	Three months ended
	March 31,
		2020		2019
External development expense:
MN-221	$	3	$	9
MN-166		618		397
MN-001		48		26
MN-029		1		—
Total external development expense		670		432
R&D personnel expense		430		1,075
R&D facility and depreciation expense		12		12
Patent expenses		71		83
Other R&D expense		68		32
Total research, development and patent expense	$	1,251	$	1,634

Our general and administrative costs primarily consist of salaries, stock-based compensation, benefits and consulting and professional fees related to our administrative, finance, human resources, business development, legal, information systems support functions, facilities and insurance costs. General and administrative costs are expensed as incurred.

Our general and administrative expenses may increase in future periods if we are required to expand our infrastructure based on the success of our product development programs and in raising capital to support our product development programs or otherwise in connection with increased business development activities related to partnering, out-licensing or product disposition.

Our discussion and analysis of our financial condition and results of operations is based upon financial statements that have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, and related disclosures. On an on-going basis, we evaluate these estimates, including those related to research and development and patent expense, stock-based compensation, goodwill and purchased intangibles, lease related activities, investments, and fixed assets. Estimates are based on historical experience, information received from third parties and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The items in our financial statements requiring significant estimates and judgments are as follows:

Research, development and patents costs are expensed as incurred based on contractual factors such as estimates of work performed, milestones achieved, patient enrollment and experience with similar contracts. As actual costs become known, accruals are adjusted. To date, our accrued research, development and patents expenses have not differed significantly from the actual expenses incurred.

We grant options to purchase our common stock to our employees and directors under our 2013 Stock Incentive Plan. Additionally, we have outstanding stock options that were granted under our Amended and Restated 2004 Stock Incentive Plan. Under our 2007 Employee Stock Purchase Plan, full-time employees are permitted to purchase common stock through payroll deductions at the lower of 85% of fair market value at the beginning of the offering period or the end of each six-month offering period. The benefits provided under these plans require stock-based compensation for an award of equity instruments, including stock options and employee stock purchase rights issued to employees, to be recognized as a cost in the consolidated financial statements. The cost of these awards is measured according to the grant date fair value of the stock award and is recognized on a straight-line basis over the period during which an employee is required to provide service in exchange for the award, which is usually the vesting period. We occasionally issue employee performance-based stock options, the vesting of which is based on a determination made by our board of directors as to the achievement of certain corporate objectives. The grant date of such awards is the date on which our board of directors makes its determination. For periods preceding the grant date, the expenses related to these awards is measured based on

their fair value at each reporting date. In the absence of an observable market price for the stock award, the grant date fair value of the award would be based upon a valuation methodology that takes into consideration various factors, including the exercise price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the underlying share price, the expected dividends on the underlying shares and the risk-free interest rate.

Valuation of our stock option grants requires us to estimate certain variables, such as estimated volatility and expected life. If any of our estimations change, such changes could have a significant impact on the amount of stock-based compensation expense that we recognize.

Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the identified net tangible and intangible assets of an acquired business. The allocation of purchase price for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Additionally, we must determine whether an acquired entity is considered a business or a set of net assets as a portion of the purchase price can only be allocated to goodwill in a business combination. Goodwill and intangible assets deemed to have indefinite lives, such as in-process research and development (“IPR&D”) are not amortized but are subject to annual impairment tests. The amounts and useful lives assigned to intangible assets that have finite useful lives require the use of estimates and the exercise of judgment. These judgments can significantly affect our net operating results. As of ~~September 30, 2019,~~March 31, 2020, goodwill and IPR&D were $9.6 million and $4.8 million, respectively.

We periodically re-evaluate the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of our indefinite-lived assets. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate income from operations and positive cash flows in future periods as well as the strategic significance of any intangible assets in our business objectives. If assets are considered impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.

Comparison of the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

Research, development and patents expenses were ~~$1.2~~$1.3 million and ~~$2.4~~$1.6 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. The decrease of ~~$1.2~~$0.3 million was due to lower stock compensation expense for performance-based stock options resulting from a decrease in our stock price.

General and administrative expenses were ~~$1.5~~$1.7 million and ~~$4.7~~$3.3 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. The decrease of ~~$3.2~~$1.6 million was primarily due to lower stock compensation expense for performance-based stock options resulting from a decrease in our stock price.

~~Research, development and patents expenses were $4.3 million and $5.4 million for the nine months ended September 30, 2019 and 2018, respectively.~~ ~~The decrease of $1.1 million was due to lower stock compensation expense for performance-based stock options resulting from a decrease in our stock price.~~

~~General and administrative expenses were $7.6 million and $9.7 million for the nine months ended September 30, 2019 and 2018, respectively. The decrease of $2.1 million was primarily due~~ ~~to lower stock compensation expense for performance-based stock options resulting from a decrease in our stock price.~~

Net cash used in operating activities during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$6.7~~$2.9 million compared to ~~$7.5~~$3.0 million during the same period in ~~2018.~~2019. Net cash used in operating activities primarily reflects the net loss and changes in operating assets and liabilities for those periods, which was partially offset by non-cash stock-based compensation expense.

~~Net cash used in investing activities~~ ~~was $4,013~~ during the nine months ended September 30, 2019, 2019. Net cash provided by investing activities was $0.6 million during the nine months ended September 30, 2018, resulting primarily from the liquidation of the joint venture company, ~~Zhejiang Sunmy Bio-Medical Co., Ltd.~~

Net cash provided by financing activities was ~~$7.3~~$0.4 million during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$41.3~~$3.9 million during the same period in ~~2018.~~2019. Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 is primarily due to the ~~exercise of 1,015,454 options to purchase common stock for cash proceeds of $4.1 million as well as the~~ sale of ~~347,902~~68,952 shares of common stock under the ~~2015 ATM Agreement and~~ 2019 ATM Agreement for net proceeds of ~~$3.2~~$0.4 million. Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 is primarily due to the ~~public offering~~exercise of ~~4,545,928~~options to purchase 977,454 shares of ~~common stock for net proceeds of approximately $38.5 million as well as cash proceeds of $2.4 million from the exercise of warrants to purchase 750,000 shares of~~our common stock. Cash proceeds from financing activities are used for working capital and general corporate purposes.

On May 22, 2015, we entered into an at-the-market issuance sales agreement (the “2015 ATM Agreement”) with MLV & Co. LLC (MLV), pursuant to which we ~~may~~could sell common stock through MLV from time to time up to an aggregate offering price of $30.0 million. Sales of our common stock through MLV, if any, ~~will~~were to be made by any method that is deemed to be an ~~“at-the-market”~~“at-the-

market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on NASDAQ, on any other existing trading market for the common stock or to or through a market maker. MLV ~~may~~could also sell the

common stock in privately negotiated transactions, subject to our prior approval. We agreed to pay MLV an aggregate commission rate of up to 4.0% of the gross proceeds of any common stock sold under this agreement. Proceeds from sales of common stock ~~will depend~~depended on the number of shares of common stock sold to MLV and the per share purchase price of each transaction. We ~~are~~were not obligated to make any sales of common stock under the sales agreement and ~~may~~could terminate the sales agreement at any time upon written notice. On September 16, 2016, we amended the 2015 ATM agreement to also include FBR Capital Markets & Co. as a sales agent. The 2015 ATM Agreement was terminated on August 23, 2019.

On August 23, 2019, we entered into an at market issuance sales agreement (the “2019 ATM Agreement”) with B. Riley FBR, Inc. (B. Riley FBR) pursuant to which we may sell common stock through B. Riley FBR from time to time up to an aggregate offering price of $75.0 million. Sales of our common stock through B. Riley FBR, if any, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on NASDAQ, on any other existing trading market for the common stock or through a market maker. B. Riley FBR may also sell the common stock in privately negotiated transactions, subject to our prior approval. We agreed to pay B. Riley FBR an aggregate commission rate of up to 3.5% of the gross proceeds of any common stock sold under this agreement. Proceeds from sales of common stock will depend on the number of shares of common stock sold to B. Riley FBR and the per share purchase price of each transaction.

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we generated net proceeds of ~~$2.8 million and~~ $0.4 million under the ~~2015 ATM Agreement and~~ 2019 ATM ~~Agreement respectively,~~agreement, on sales of ~~347,902~~68,952 shares of our common stock at a weighted average price of ~~$9.51~~$6.19 per share.

No shares of common stock were sold under the 2015 ATM Agreement in the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.

As of ~~September 30, 2019,~~March 31, 2020, we had available cash and cash equivalents of ~~$62.9~~$61.3 million and working capital of ~~$61.5~~$60.4 million. As of the date of this report, we believe we have working capital sufficient to fund operations at least through ~~December 31, 2020.~~the end of 2021. However, we cannot provide assurance that these capital resources will be sufficient to conduct all our research and development programs as planned.

At ~~September 30, 2019,~~March 31, 2020, we did not have any relationship with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance variable interest, or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. In addition, we did not engage in trading activities involving non-exchange traded contracts. As a result, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We do not have relationships and transactions with persons and entities that derive benefits from their non-independent relationship with us or our related parties except as disclosed herein.

Our primary exposure to market risks are due to changes in interest rates, which relates primarily to the increase or decrease in the amount of interest income we can earn on our investment portfolio. The primary objective of our investment activities is to preserve principal. Our risk associated with fluctuating interest rates is limited to our investments in interest rate sensitive financial instruments and we do not use interest rate derivative instruments to manage exposure to interest rate changes. We mitigate default risk by investing in investment grade securities. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our interest-rate sensitive financial instruments due to their relatively short-term nature.

Cash and cash equivalents as of ~~September 30, 2019~~March 31, 2020 were ~~$62.9~~$61.3 million and were primarily invested in money market interest bearing accounts and money market funds. A hypothetical 10% adverse change in the average interest rate on our cash and cash equivalents would have had no material effect on net loss for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is (1) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms, and (2) accumulated and communicated to

management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our procedures or our internal controls will prevent or detect all errors and all fraud. Any internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of our controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

As required by Rule 13a-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are not involved in any material legal proceedings as of ~~September 30, 2019.~~March 31, 2020. We may become involved in various disputes and legal proceedings which arise in the ordinary course of business or otherwise. While it is not possible to accurately predict or determine the outcome of these matters, an adverse result in any litigation matter may occur which could harm our business.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, which are incorporated herein by reference and which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. ~~There~~Other than the risk factor set forth below, we do not believe that there have been noany material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The widespread outbreak of an illness or any other communicable disease, such as COVID-19, or any other public health crisis, could adversely affect our business, results of operations and financial condition.

We could be negatively impacted by the widespread outbreak of an illness or any other communicable disease, or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains. In December 2019, an outbreak of COVID-19 began in Wuhan, Hubei Province, China. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. The extent of the impact of the COVID-19 pandemic on our financial condition, liquidity, and future results of operations, including our ability to continue to advance our product development programs in the expected time frame, will depend on future developments, including the duration and spread of the pandemic and related restrictions on travel and transports, all of which are uncertain and cannot be predicted. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		33-0927979
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

4275 Executive Square, Suite 300 La Jolla, CA		92037
(Address of Principal Executive Offices)		(Zip Code)


Common Stock, $0.001 par value	MNOV	The Nasdaq Stock Market LLC
(Title of each class)	(Trading symbol(s))	(Name of each exchange on which registered)

Large accelerated filer	☐	Accelerated filer	☒ ☐

Non-accelerated filer	☐	Smaller reporting company	☒


	•	The widespread outbreak of an illness or any other communicable disease, such as COVID-19, or any other public health crisis, could adversely affect our business;
	•	Inability to raise additional capital if needed;
	•	Inability to generate revenues from product sales to continue business operations;
	•	Inability to develop and commercialize our product candidates;
	•	Failure or delay in completing clinical trials or obtaining Food and Drug Administration or foreign regulatory approval for our product candidates in a timely manner;
	•	Unsuccessful clinical trials stemming from clinical trial designs, failure to enroll a sufficient number of patients, undesirable side effects and other safety concerns;
	•	Inability to demonstrate sufficient efficacy of product candidates;
	•	Reliance on the success of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates;
	•	Delays in commencement or completion of clinical trials or suspension or termination of clinical trials;
	•	Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;
	•	Competitors may develop products rendering our product candidates obsolete and noncompetitive;
	•	Inability to successfully attract partners and enter into collaborations on acceptable terms;
	•	Dependence on third parties to conduct clinical trials and to manufacture product candidates;
	•	Dependence on third parties to market and distribute products;
	•	Our product candidates, if approved, may not gain market acceptance or obtain adequate coverage for third party reimbursement;
	•	Disputes or other developments concerning our intellectual property rights;
	•	Actual and anticipated fluctuations in our quarterly or annual operating results;
	•	Price and volume fluctuations in the overall stock markets;
	•	Litigation or public concern about the safety of our potential products;
	•	International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange;
	•	High quality material for our products may become difficult to obtain or expensive;


	•	Strict government regulations on our business;
	•	Regulations governing the production or marketing of our product candidates;


	•	Loss of, or inability to attract, key personnel; and
	•	Economic, political, foreign exchange and other risks associated with international operations.

PART I. FINANCIAL INFORMATION		6

ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1715
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2119
ITEM 4.	CONTROLS AND PROCEDURES	2119

PART II. OTHER INFORMATION		2321

ITEM 1.	LEGAL PROCEEDINGS	2321
ITEM 1A.	RISK FACTORS	2321
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2321
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2321
ITEM 4.	MINE SAFETY DISCLOSURES	2321
ITEM 5.	OTHER INFORMATION	2321
ITEM 6.	EXHIBITS	2422

SIGNATURES		2523

	Nine Months Ended September 30, 2018
	Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital			income (loss)			deficit			equity
Balance at December 31, 2017		36,452,893	$	36,453	$	380,156,510		$	(94,623	)	$	(341,456,200	)	$	38,642,140
Share-based compensation		—		—		2,530,425			—			—			2,530,425
Issuance of shares under an employee stock purchase plan (ESPP)		4,861		5		27,897			—			—			27,902
Issuance of common stock, net of offering costs		4,545,928		4,546		38,494,817			—			—			38,499,363
Issuance of common stock for option exercises		125,391		125		407,071			—			—			407,196
Net loss		—		—		—			—			(4,543,051	)		(4,543,051	)
Foreign currency translation adjustments		—		—		—			5,832			—			5,832
Balance at March 31, 2018		41,129,073		41,129		421,616,720			(88,791	)		(345,999,251	)		75,569,807
Share-based compensation		—		—		823,212			—			—			823,212
Issuance of common stock, net of offering costs		—		—		(18,462	)		—			—			(18,462	)
Exercise of warrants		750,000		750		2,361,750			—			—			2,362,500
Net loss		—		—		—			—			(3,144,139	)		(3,144,139	)
Foreign currency translation adjustments		—		—		—			(4,015	)		—			(4,015	)
Balance at June 30, 2018		41,879,073		41,879		424,783,220			(92,806	)		(349,143,390	)		75,588,903
Share-based compensation		—		—		4,728,260			—			—			4,728,260
Issuance of shares under an employee stock purchase plan (ESPP)		2,233		2		23,105			—			—			23,107
Issuance of common stock, net of offering costs		—		—		(7,929	)		—			—			(7,929	)
Net loss		—		—		—			—			(6,779,958	)		(6,779,958	)
Foreign currency translation adjustments		—		—		—			(612	)		—			(612	)
Balance at September 30, 2018		41,881,306	$	41,881	$	429,526,656		$	(93,418	)	$	(355,923,348	)	$	73,551,771

Level 1:	Observable inputs such as quoted prices in active markets;

Level 2:	Inputs are quoted prices for similar items in active markets or quoted prices for identical or similar items in markets that are not active near the measurement date; and

Level 3:	Unobservable inputs due to little or no market data, which require the reporting entity to develop its own assumptions.

Maturities of operating lease liabilities as of September 30, 2019 were as follows:
2019	$	59,947
2020		243,917
2021		190,592
		494,456
Less imputed interest		(43,903	)
Total lease liabilities	$	450,553

Current operating lease liabilities	$	211,246
Non-current operating lease liabilities		239,307
Total operating lease liabilities	$	450,553

Weighted-average remaining lease term		2.05
Discount rate		8.8	%

Years ending December 31:
2019	$	182,847
2020		144,234
2021		149,951
2022		1,532
2023		1,404
Total minimum payments	$	479,968

Exhibit Number		Description

3.1		Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q filed August 9, 2012).

3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed April 25, 2019).

~~10.1~~		At Market Issuance Sales Agreement, dated August 23, 2019, by and between MediciNova, Inc. and B. Riley FBR, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed August 23, 2019).
31.1		Certification of the Principal Executive Officer and Acting Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Acting Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer and Acting Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).

101		The following financial statements from the MediciNova, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2019~~March 31, 2020 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Loss; (iii) Consolidated Statements of Stockholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) the notes to the consolidated financial statements.

	MEDICINOVA, INC.

Date: ~~October 24, 2019~~April 23, 2020	By:	/s/ YUICHI IWAKI
		Yuichi Iwaki, M.D., Ph.D.
		President and Chief Executive Officer
		(on behalf of the registrant and
		as the registrant’s Principal Executive Officer and Acting Principal Financial Officer)

	~~By:~~	~~/s/ CARLA~~ R~~EYES~~
		~~Carla Reyes~~
		~~Chief Financial Officer~~
		~~(on behalf of the registrant and~~
		~~as the registrant’s Principal Financial Officer)~~