Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 10, 2016 | |
Entity Registrant Name | Sun BioPharma, Inc. | |
Entity Central Index Key | 1,029,125 | |
Trading Symbol | snbp | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 29,930,306 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 383,000 | $ 925,000 |
Prepaid expenses and other current assets | 165,000 | 74,000 |
Income tax receivable | 904,000 | 733,000 |
Total current assets | 1,452,000 | 1,732,000 |
Total assets | 1,452,000 | 1,732,000 |
Current liabilities: | ||
Accounts payable | 808,000 | 585,000 |
Accrued liabilities | 816,000 | 505,000 |
Demand notes payable | 250,000 | 250,000 |
Accrued interest | 35,000 | 35,000 |
Total current liabilities | 1,909,000 | 1,375,000 |
Long-term liabilities: | ||
Convertible notes payable, net | 2,717,000 | 2,712,000 |
Long-term debt, net | 289,000 | 287,000 |
Accrued interest | 42,000 | 39,000 |
Total long-term liabilities | $ 3,048,000 | $ 3,038,000 |
Commitments and contingencies (Note 7) | ||
Shareholders’ deficit: | ||
Preferred stock, $0.001 par value; 10,000,000 authorized; no shares issued or outstanding as of March 31, 2016 and December 31, 2015 | ||
Common stock, $0.001 par value; 100,000,000 authorized; 29,930,306 and 29,892,806 shares issued and outstanding, as of March 31, 2016 and December 31, 2015, respectively | $ 30,000 | $ 30,000 |
Additional paid-in capital | 11,018,000 | 10,943,000 |
Accumulated deficit | (14,491,000) | (13,667,000) |
Accumulated comprehensive gain (loss), net | (62,000) | 13,000 |
Total shareholders’ deficit | (3,505,000) | (2,681,000) |
Total liabilities and shareholders’ deficit | $ 1,452,000 | $ 1,732,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 29,930,306 | 29,892,806 |
Common stock, shares outstanding (in shares) | 29,930,306 | 29,892,806 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating expenses | ||
General and administrative | $ 481,000 | $ 1,196,000 |
Research and development | 494,000 | 987,000 |
Operating loss | (975,000) | (2,183,000) |
Other income (expense): | ||
Interest income | 1,000 | 2,000 |
Interest expense | (45,000) | (47,000) |
Other income (expense) | 80,000 | (20,000) |
Total other income (expense) | 36,000 | (65,000) |
Loss before income tax benefit | (939,000) | (2,248,000) |
Income tax benefit | 115,000 | 57,000 |
Net loss | (824,000) | (2,191,000) |
Foreign currency translation adjustment loss | (75,000) | (4,000) |
Comprehensive loss | $ (899,000) | $ (2,195,000) |
Basic and diluted net loss per share (in dollars per share) | $ (0.03) | $ (0.37) |
Weighted average shares outstanding – basic and diluted (in shares) | 29,915,820 | 5,999,795 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Shareholders' Deficit (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Balances (in shares) at Dec. 31, 2015 | 29,892,806 | ||||
Balances at Dec. 31, 2015 | $ 30,000 | $ 10,943,000 | $ (13,667,000) | $ 13,000 | $ (2,681,000) |
Net Income (Loss) Attributable to Parent | (824,000) | (824,000) | |||
Foreign currency translation adjustment loss | (75,000) | (75,000) | |||
Issuance of common stock for services (in shares) | 37,500 | ||||
Issuance of common stock for services | $ 75,000 | 75,000 | 75,000 | ||
Balances (in shares) at Mar. 31, 2016 | 29,930,306 | ||||
Balances at Mar. 31, 2016 | $ 30,000 | $ 11,018,000 | $ (14,491,000) | $ (62,000) | $ (3,505,000) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Shareholders' Deficit (Unaudited) (Parentheticals) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
AOCI Attributable to Parent [Member] | |
Foreign currency translation, tax | $ 0 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (824,000) | $ (2,191,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt issuance costs | 7,000 | 7,000 |
Non-cash interest expense | $ 3,000 | 3,000 |
Share-based compensation | 976,000 | |
Changes in operating assets and liabilities: | ||
Income and other tax receivables | $ (199,000) | (57,000) |
Prepaid expenses and other current assets | (22,000) | 3,000 |
Accounts payable and accrued liabilities | 493,000 | 352,000 |
Net cash used in operating activities | $ (542,000) | (907,000) |
Cash flows from financing activities: | ||
Proceeds from the exercise of stock options | 409,000 | |
Proceeds from the exercise of stock purchase warrants | 25,000 | |
Net cash provided by financing activities | 434,000 | |
Effect of exchange rate changes on cash and cash equivalents | (10,000) | |
Net decrease in cash and cash equivalents | $ (542,000) | (483,000) |
Cash and cash equivalents at beginning of period | 925,000 | 1,653,000 |
Cash and cash equivalents at end of period | 383,000 | 1,170,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid during period for interest | 35,000 | $ 37,000 |
Supplemental disclosure of non-cash transactions: | ||
Issuance of common stock for services | $ 75,000 |
Note 1 - Business
Note 1 - Business | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. Business Sun BioPharma, Inc., formerly known as Cimarron Medical, Inc., (“Cimarron”) and its wholly-owned subsidiaries, Sun BioPharma Research, Inc. (“SBR”) and Sun BioPharma Australia Pty Ltd. (collectively with Cimarron and SBR, “we,” “us,” “our,” and the “Company”) exist for the primary purpose of advancing the commercial development of a proprietary polyamine analogue for pancreatic cancer and for a second indication in chronic pancreatitis. We have exclusively licensed the worldwide rights to this compound, which has been designated as SBP-101, from the University of Florida Research Foundation, Inc. (“UFRF”). |
Note 2 - Risks and Uncertaintie
Note 2 - Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Nature of Operations [Text Block] | 2. Risks and Uncertainties The Company operates in a highly regulated and competitive environment. The development, manufacturing and marketing of pharmaceutical products require approval from, and are subject to ongoing oversight by, the Food and Drug Administration (“FDA”) in the United States, the Therapeutic Goods Administration (“TGA”) in Australia, the European Medicines Agency (“EMA”) in the European Union, and comparable agencies in other countries. Obtaining approval for a new pharmaceutical product is never certain, may take many years, and is normally expected to involve substantial expenditures. We have incurred losses of $14.5 million since SBR’s inception in 2011. For the three months ended March 31, 2016, we incurred a net loss and negative cash flows from operating activities of $824,000 and $542,000, respectively. We expect to incur substantial losses for the foreseeable future, which will continue to generate negative net cash flows from operating activities, as we continue to pursue research and development activities and seek to commercialize our initial product candidate, SBP-101 . As of March 31, 2016, we had cash and cash equivalents of $383,000, negative working capital of $457,000 and shareholders’ deficit of $3.5 million. The Company’s principal sources of cash have historically included the issuance of convertible debt and equity securities. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts of liabilities that might result from the outcome of these uncertainties. Our current independent registered public accounting firm, included a paragraph emphasizing this going concern uncertainty in their audit report our 2015 financial statements dated March 8, 2016. Our ability to continue as a going concern, realize the carrying value of our assets and discharge our liabilities in the ordinary course of business is dependent upon a number of factors, including our ability to obtain additional financing, the success of our development efforts, our ability to obtain marketing approval for our SBP-101 product candidate in the United States, Australia, the European Union or other markets and ultimately our ability to market and sell our SBP-101 product candidate. These factors, among others, raise substantial doubt about our ability to continue operations as a going concern. See note 4 entitled “Liquidity and Management’s Plans.” |
Note 3 - Basis of Presentation
Note 3 - Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Basis of Presentation and Significant Accounting Policies [Text Block] | 3. Basis of Presentation We have prepared the accompanying interim condensed consolidated financial statements in accordance with US GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. These interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly our consolidated financial position, consolidated results of operations and consolidated cash flows for the periods and as of the dates presented. Our fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2015 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 8, 2016 and our other filings with the SEC. The nature of our business is such that the results of any interim period may not be indicative of the results to be expected for the entire year. Recently Adopted Accounting Pronouncement In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs to be presented as a direct deduction from the carrying amount of the related debt rather than as an asset. In 2016, the company retrospectively adopted this update, as required, and the amounts reclassified from other assets to long-term debt on the condensed consolidated balance sheets. These reclassifications did not impact net income. Recently Issued Accounting Pronouncement In February 2016, the FASB issued ASU No. 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in the Accounting Standards Codification Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of ASU 2016-02 to have a material impact on its Consolidated Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The guidance in ASU 2016-09 is intended to simplify aspects of the accounting for employee share-based payments, including the accounting for income taxes, forfeitures, statutory withholding requirements, and classification on the statement of cash flows. The standard is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact of this standard on our financial condition and results of operations. |
Note 4 - Liquidity and Manageme
Note 4 - Liquidity and Management Plans | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Substantial Doubt about Going Concern [Text Block] | 4. Liquidity and Management Plans We will need to obtain additional funds to continue our operations and execute our current business plans. We may seek to raise additional funds through various sources, such as equity and debt financings, or through strategic collaborations and license agreements. We can give no assurances that we will be able to secure additional sources of funds to support our operations, or if such funds are available to us, that such additional financing will be sufficient to meet our needs or on terms acceptable to us. This risk would increase if our clinical data is inconclusive or not positive or economic conditions worsen in the market as a whole or in the pharmaceutical or biotechnology markets individually. On March 1, 2016 we instituted substantial salary deferrals for all senior employees in order to conserve cash. If we are unable to obtain additional financing when needed, we will need to reduce our operations by taking actions that may include, among other things, reducing use of outside professional service providers, reducing staff or further reducing staff compensation, significantly modifying or delaying the development of our SBP-101 product candidate , licensing rights to third parties, including the right to commercialize our SBP-101 product candidate for pancreatic cancer, acute pancreatitis or other applications that we would otherwise seek to pursue, or discontinuing operations entirely. Our future success is dependent upon our ability to obtain additional financing, the success of our development efforts, our ability to obtain marketing approval for our SBP-101 product candidate in the United States or other markets and ultimately our ability to market and sell our SBP-101 product candidate . If we are unable to obtain additional financing when needed, if our clinical trials are not successful or if we are unable to obtain marketing approval, we would not be able to continue as a going concern and would be forced to cease operations and liquidate our company. There can be no assurances that we will be able to obtain additional financing on commercially reasonable terms, or at all. The sale of additional convertible debt or equity securities would likely result in dilution to our current shareholders. On May 5, 2016, our subsidiary received a $772,000 tax refund related to 2015 research and development activities. See Note 11 entitled “Subsequent Events.” |
Note 5 - Summary of Significant
Note 5 - Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | 5. Summary of Significant Accounting Policies Principles of consolidation The accompanying condensed consolidated financial statements include the assets, liabilities and expenses of Sun BioPharma, Inc. and our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Use of estimates The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Debt issuance costs Costs associated with the issuance of debt instruments are capitalized and presented as a direct deduction from the carrying amount of the related debt liability. These costs are amortized on a straight-line basis, which approximates the effective interest method, over the term of the debt agreements and are included in interest expense. Research and development costs Research and development costs to date have consisted primarily of expenses incurred for third-party service providers monitoring and accumulating data related to our preclinical and clinical studies; sponsored research agreements; developing and scaling the manufacturing process necessary to produce sufficient amounts of SBP-101 for use in our pre-clinical studies and human clinical trials; consulting resources with specialized expertise related to execution of our development plan for our SBP-101 product candidate; and costs to license and maintain our licensed intellectual property. Moving forward, research and development expenditures will shift to focus on costs related to the execution of human clinical trials and related efforts to obtain regulatory approval for SBP-101. We charge research and development costs, including clinical trial costs, to expense when incurred. Our human clinical trials are, and will be, performed at clinical trial sites and are administered jointly by us with assistance from contract research organizations (“CROs”). Costs of setting up clinical trial sites are accrued upon execution of the study agreement. Expenses related to the performance of clinical trials generally are accrued based on contracted amounts and the achievement of agreed upon milestones, such as patient enrollment, patient follow-up, etc. We monitor levels of performance under each significant contract, including the extent of patient enrollment and other activities through communications with the clinical trial sites and CROs, and adjust the estimates, if required, on a quarterly basis so that clinical expenses reflect the actual effort expended at each clinical trial site and by each CRO. All material CRO contracts are terminable by us upon written notice and we are generally only liable for actual effort expended by the CROs and certain non-cancelable expenses incurred at any point of termination We expense costs associated with obtaining licenses for patented technologies when it is determined there is no alternative future use of the intellectual property subject to the license. Fair Value Determination of the Company’s Common Stock Prior to becoming a public company, determining the fair value per share or our common stock for use in estimating the fair values of share based payments required making complex and subjective judgments. The Company used the implied valuations based upon the terms from our sales of convertible notes payable to estimate our enterprise value for the dates on which these transactions occurred. The estimated enterprise values considered certain discounts related to control and lack of marketability. Our board of directors also considered the estimated fair value of our common stock in relation to a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector. Our board of directors also retained an independent financial valuation firm to provide independent estimates of our enterprise value. Until an active trading market develops for our common stock, estimating the fair value per share of our common stock will continue to be highly subjective. There is inherent uncertainty in these estimates. Share-based compensation Share-based incentive awards are accounted for under the provisions of FASB ASC 718, Compensation — Stock Compensation, which requires companies to measure and recognize the cost of employee and non-employee services received in exchange for awards of equity instruments based on the grant date fair value of those awards. Compensation cost is recognized ratably using the straight-line attribution method over the expected vesting period, which is considered to be the requisite service period. The fair value of share-based awards is estimated at the date of grant using the Black-Scholes option pricing model. Risk free interest rates are based upon U.S. Treasury rates appropriate for the expected term of each award. Expected volatility is based primarily on the volatility rates of a set of guideline companies, which consist of public and recently public biotechnology companies. The assumed dividend yield is zero, as we do not expect to declare any dividends in the foreseeable future. The expected term of options granted is determined using the “simplified” method. Under this approach, the expected term is presumed to be the mid-point between the average vesting date and the end of the contractual term. Foreign currency translation adjustments The functional currency of Sun BioPharma Australia Pty Ltd is the Australian Dollar (“AUD”). Accordingly, assets and liabilities, and equity transactions of Sun BioPharma Australia Pty Ltd are translated into U.S. dollars at period-end exchange rates. Revenues and expenses are translated at the average exchange rate in effect for the period. The resulting translation gains and losses are recorded as a component of accumulated comprehensive loss presented within the shareholders’ deficit. During the three-month periods ended March 31, 2016 and 2015, any reclassification adjustments from accumulated other comprehensive loss to operations was inconsequential. |
Note 6 - Accrued Liabilities
Note 6 - Accrued Liabilities | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Accrued Liabilities [Text Block] | 6. Accrued Liabilities Accrued liabilities consist of the following (in thousands): March 31, 2016 December 31, 2015 Product and process development expenses $ 354 $ 259 Deferred payroll and related expenses 354 169 Professional services 67 75 Clinical trial related expense 41 — Other — 2 Total accrued liabilities $ 816 $ 505 |
Note 7 - Indebtedness
Note 7 - Indebtedness | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | 7. Debt issuance costs The following table summarizes the deferred financing costs which are presented as a direct deduction from the carrying amount of their related debt liabilities (in thousands): March 31, 2016 December 31, 2015 Convertible Notes Payable Long-Term Debt Convertible Notes Payable Long-Term Debt Loan principal amount $ 2,775 $ 300 $ 2,775 $ 300 Deferred financing costs 105 37 105 37 Accumulated Amortization (47 ) (26 ) (40 ) (26 ) Unamortized balance 58 11 65 11 Loan amount, net $ 2,717 $ 289 $ 2,712 $ 287 We recorded amortization of debt issuance costs of $7,000 for the three months ended March 31, 2016 and 2015, respectively. |
Note 8 - Net Loss Per Share
Note 8 - Net Loss Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | 8. Net Loss P er Share The following table summarizes our calculation of net loss per common share for each of the periods presented (in thousands, except share and per share data): Three Months Ended March 31, 2016 2015 Net loss $ (824 ) $ (2,191 ) Weighted average shares outstanding—basic and diluted 29,915,820 5,999,795 Basic and diluted net loss per share $ ( 0.03 ) $ (0.37 ) The following outstanding potential common shares are not included in diluted net loss per share calculations as their effects would have been anti-dilutive: Three Months Ended March 31, 2016 2015 Employee and non-employee stock options 3,163,600 9,504,152 Common shares issuable upon conversion of notes payable 2,466,667 2,666,667 Common shares issuable under common stock purchase warrants 2,550,000 4,650,000 8,180,267 16,820,819 |
Note 9 - Stockholders' Equity
Note 9 - Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | 9 . Shareholders’ Equity Stock-Based Payments In the first quarter of 2016, our Board of Directors authorized the issuance of 37,500 shares of our common stock to two vendors who agreed to provide services to the Company upon terms that provided for a portion of their consideration to be paid in shares of our common stock. The fair value of each share of common stock was determined by our Board of Directors, and accordingly, we recorded a charge of $75,000. |
Note 10 - Share-based Compensat
Note 10 - Share-based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 10 . Share -Based Compensation The Sun BioPharma, Inc. 2011 Stock Option Plan (the “Plan”) was adopted by the SBR of Directors in September, 2011 and approved by SBR shareholders in January, 2012. We assumed the Plan as part of the Merger. The Plan permits the granting of incentive and non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other stock awards to eligible employees, directors and consultants. We grant options to purchase shares of common stock under the Plan at no less than the fair market value of the underlying common stock as of the date of grant. Options granted under the Plan have a maximum term of ten years and generally vest over zero to two years for employees. Under the Plan, a total of 14,000,000 shares of common stock were originally reserved for issuance. As of March 31, 2016, 6,102,264 shares remained available for the issuance of future grants under the Plan and options to purchase 3,163,600 shares of common stock were outstanding under the Plan. We recognize share-based compensation based on the value of the portion of awards that are ultimately expected to vest. Guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of a surrendered option. We will re-evaluate this estimate periodically and adjust the forfeiture rate on a prospective basis as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that actually vest. We estimate the fair value of share-based awards at the date of grant using the Black-Scholes option pricing model. There were no options granted during the three month period ended March 31, 2016. |
Note 11 - Subsequent Events
Note 11 - Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | 1 1 . Subsequent Events On May 5, 2016, we received $772,000 of the $904,000 income tax receivable reported as of March 31, 2016. This receivable related to refundable tax credits for the 2015 research and development activities of our subsidiary Sun BioPharma Australia Pty Ltd. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Adopted Accounting Pronouncement In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs to be presented as a direct deduction from the carrying amount of the related debt rather than as an asset. In 2016, the company retrospectively adopted this update, as required, and the amounts reclassified from other assets to long-term debt on the condensed consolidated balance sheets. These reclassifications did not impact net income. Recently Issued Accounting Pronouncement In February 2016, the FASB issued ASU No. 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in the Accounting Standards Codification Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of ASU 2016-02 to have a material impact on its Consolidated Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The guidance in ASU 2016-09 is intended to simplify aspects of the accounting for employee share-based payments, including the accounting for income taxes, forfeitures, statutory withholding requirements, and classification on the statement of cash flows. The standard is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact of this standard on our financial condition and results of operations. |
Consolidation, Policy [Policy Text Block] | Principles of consolidation The accompanying condensed consolidated financial statements include the assets, liabilities and expenses of Sun BioPharma, Inc. and our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates, Policy [Policy Text Block] | Use of estimates The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Debt Issuance Costs [Policy Text Block] | Debt issuance costs Costs associated with the issuance of debt instruments are capitalized and presented as a direct deduction from the carrying amount of the related debt liability. These costs are amortized on a straight-line basis, which approximates the effective interest method, over the term of the debt agreements and are included in interest expense. |
Research and Development Expense, Policy [Policy Text Block] | Research and development costs Research and development costs to date have consisted primarily of expenses incurred for third-party service providers monitoring and accumulating data related to our preclinical and clinical studies; sponsored research agreements; developing and scaling the manufacturing process necessary to produce sufficient amounts of SBP-101 for use in our pre-clinical studies and human clinical trials; consulting resources with specialized expertise related to execution of our development plan for our SBP-101 product candidate; and costs to license and maintain our licensed intellectual property. Moving forward, research and development expenditures will shift to focus on costs related to the execution of human clinical trials and related efforts to obtain regulatory approval for SBP-101. We charge research and development costs, including clinical trial costs, to expense when incurred. Our human clinical trials are, and will be, performed at clinical trial sites and are administered jointly by us with assistance from contract research organizations (“CROs”). Costs of setting up clinical trial sites are accrued upon execution of the study agreement. Expenses related to the performance of clinical trials generally are accrued based on contracted amounts and the achievement of agreed upon milestones, such as patient enrollment, patient follow-up, etc. We monitor levels of performance under each significant contract, including the extent of patient enrollment and other activities through communications with the clinical trial sites and CROs, and adjust the estimates, if required, on a quarterly basis so that clinical expenses reflect the actual effort expended at each clinical trial site and by each CRO. All material CRO contracts are terminable by us upon written notice and we are generally only liable for actual effort expended by the CROs and certain non-cancelable expenses incurred at any point of termination We expense costs associated with obtaining licenses for patented technologies when it is determined there is no alternative future use of the intellectual property subject to the license. |
Fair Value Measurement, Policy [Policy Text Block] | Fair Value Determination of the Company’s Common Stock Prior to becoming a public company, determining the fair value per share or our common stock for use in estimating the fair values of share based payments required making complex and subjective judgments. The Company used the implied valuations based upon the terms from our sales of convertible notes payable to estimate our enterprise value for the dates on which these transactions occurred. The estimated enterprise values considered certain discounts related to control and lack of marketability. Our board of directors also considered the estimated fair value of our common stock in relation to a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector. Our board of directors also retained an independent financial valuation firm to provide independent estimates of our enterprise value. Until an active trading market develops for our common stock, estimating the fair value per share of our common stock will continue to be highly subjective. There is inherent uncertainty in these estimates. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Share-based compensation Share-based incentive awards are accounted for under the provisions of FASB ASC 718, Compensation — Stock Compensation, which requires companies to measure and recognize the cost of employee and non-employee services received in exchange for awards of equity instruments based on the grant date fair value of those awards. Compensation cost is recognized ratably using the straight-line attribution method over the expected vesting period, which is considered to be the requisite service period. The fair value of share-based awards is estimated at the date of grant using the Black-Scholes option pricing model. Risk free interest rates are based upon U.S. Treasury rates appropriate for the expected term of each award. Expected volatility is based primarily on the volatility rates of a set of guideline companies, which consist of public and recently public biotechnology companies. The assumed dividend yield is zero, as we do not expect to declare any dividends in the foreseeable future. The expected term of options granted is determined using the “simplified” method. Under this approach, the expected term is presumed to be the mid-point between the average vesting date and the end of the contractual term. |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign currency translation adjustments The functional currency of Sun BioPharma Australia Pty Ltd is the Australian Dollar (“AUD”). Accordingly, assets and liabilities, and equity transactions of Sun BioPharma Australia Pty Ltd are translated into U.S. dollars at period-end exchange rates. Revenues and expenses are translated at the average exchange rate in effect for the period. The resulting translation gains and losses are recorded as a component of accumulated comprehensive loss presented within the shareholders’ deficit. During the three-month periods ended March 31, 2016 and 2015, any reclassification adjustments from accumulated other comprehensive loss to operations was inconsequential. |
Note 6 - Accrued Liabilities (T
Note 6 - Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Accrued Liabilities [Table Text Block] | March 31, 2016 December 31, 2015 Product and process development expenses $ 354 $ 259 Deferred payroll and related expenses 354 169 Professional services 67 75 Clinical trial related expense 41 — Other — 2 Total accrued liabilities $ 816 $ 505 |
Note 7 - Indebtedness (Tables)
Note 7 - Indebtedness (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Long-term Debt Instruments [Table Text Block] | March 31, 2016 December 31, 2015 Convertible Notes Payable Long-Term Debt Convertible Notes Payable Long-Term Debt Loan principal amount $ 2,775 $ 300 $ 2,775 $ 300 Deferred financing costs 105 37 105 37 Accumulated Amortization (47 ) (26 ) (40 ) (26 ) Unamortized balance 58 11 65 11 Loan amount, net $ 2,717 $ 289 $ 2,712 $ 287 |
Note 8 - Net Loss Per Share (Ta
Note 8 - Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended March 31, 2016 2015 Net loss $ (824 ) $ (2,191 ) Weighted average shares outstanding—basic and diluted 29,915,820 5,999,795 Basic and diluted net loss per share $ ( 0.03 ) $ (0.37 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Three Months Ended March 31, 2016 2015 Employee and non-employee stock options 3,163,600 9,504,152 Common shares issuable upon conversion of notes payable 2,466,667 2,666,667 Common shares issuable under common stock purchase warrants 2,550,000 4,650,000 8,180,267 16,820,819 |
Note 2 - Risks and Uncertaint23
Note 2 - Risks and Uncertainties (Details Textual) - USD ($) | 3 Months Ended | 63 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net Income (Loss) Attributable to Parent | $ (824,000) | $ (2,191,000) | $ (14,500,000) | ||
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | (542,000) | (907,000) | |||
Cash and Cash Equivalents, at Carrying Value | 383,000 | $ 1,170,000 | 383,000 | $ 925,000 | $ 1,653,000 |
Working Capital | (457,000) | (457,000) | |||
Stockholders' Equity Attributable to Parent | $ (3,505,000) | $ (3,505,000) | $ (2,681,000) |
Note 4 - Liquidity and Manage24
Note 4 - Liquidity and Management Plans (Details Textual) | May. 05, 2016USD ($) |
Subsequent Event [Member] | Sun BioPharma Australia Pty Ltd. [Member] | |
Proceeds from Income Tax Refunds | $ 772,000 |
Note 5 - Summary of Significa25
Note 5 - Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended |
Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% |
Note 6 - Accrued Liabilities (D
Note 6 - Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Product and Process Development [Member] | ||
Accrued liabilities | $ 354 | $ 259 |
Deferred payroll and Related Expense [Member] | ||
Accrued liabilities | 354 | 169 |
Professional Services [Member] | ||
Accrued liabilities | 67 | $ 75 |
Clinical Trial Related Expense [Member] | ||
Accrued liabilities | $ 41 | |
Other Accrued Liabilities [Member] | ||
Accrued liabilities | $ 2 | |
Accrued liabilities | $ 816 | $ 505 |
Note 7 - Indebtedness (Details
Note 7 - Indebtedness (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Amortization of Debt Issuance Costs | $ 7,000 | $ 7,000 |
Note 7 - Deferred Financing Cos
Note 7 - Deferred Financing Costs (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Convertible Debt [Member] | |||
Loan principal amount | $ 2,775 | $ 2,775 | |
Deferred financing costs | 105 | 105 | |
Accumulated Amortization | (47) | (40) | |
Unamortized balance | 58 | 65 | |
Loan amount, net | 2,717 | 2,712 | |
Long-term Debt, Net [Member] | |||
Loan principal amount | 300 | 300 | |
Deferred financing costs | 37 | 37 | |
Accumulated Amortization | (26) | (26) | |
Unamortized balance | 11 | 11 | |
Loan amount, net | 289 | $ 287 | |
Loan amount, net | 2,717 | $ 2,712 | |
Loan amount, net | $ 289 | $ 287 |
Note 8 - Net Loss Per Share - C
Note 8 - Net Loss Per Share - Calculation of Net Loss per Common Share (Details) - USD ($) | 3 Months Ended | 63 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | |
Net loss | $ (824,000) | $ (2,191,000) | $ (14,500,000) |
Weighted average shares outstanding – basic and diluted (in shares) | 29,915,820 | 5,999,795 | |
Basic and diluted net loss per share (in dollars per share) | $ (0.03) | $ (0.37) |
Note 8 - Net Loss Per Share - A
Note 8 - Net Loss Per Share - Anti-dilutive Shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Compensation Plan [Member] | ||
Anti-dilutive shares (in shares) | 3,163,600 | 9,504,152 |
Convertible Debt Securities [Member] | ||
Anti-dilutive shares (in shares) | 2,466,667 | 2,666,667 |
Warrant [Member] | ||
Anti-dilutive shares (in shares) | 2,550,000 | 4,650,000 |
Anti-dilutive shares (in shares) | 8,180,267 | 16,820,819 |
Note 9 - Stockholders' Equity (
Note 9 - Stockholders' Equity (Details Textual) | 3 Months Ended |
Mar. 31, 2016USD ($)shares | |
Common Stock [Member] | |
Stock Issued During Period, Shares, Issued for Services | shares | 37,500 |
Stock Issued During Period, Value, Issued for Services | $ 75,000 |
Stock Issued During Period, Value, Issued for Services | $ 75,000 |
Note 10 - Share-based Compens32
Note 10 - Share-based Compensation (Details Textual) - Sun BioPharma, Inc. 2011 Stock Option Plan [Member] - shares | 3 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2011 | |
Employee Stock Option [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 0 years | |
Employee Stock Option [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 2 years | |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | |
Common Stock, Capital Shares Reserved for Future Issuance | 6,102,264 | 14,000,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 3,163,600 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 |
Note 11 - Subsequent Events (De
Note 11 - Subsequent Events (Details Textual) - USD ($) | May. 05, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Subsequent Event [Member] | Sun BioPharma Australia Pty Ltd. [Member] | |||
Proceeds from Income Tax Refunds | $ 772,000 | ||
Income Taxes Receivable, Current | $ 904,000 | $ 733,000 |