Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | GT Biopharma, Inc. | |
Entity Central Index Key | 109,657 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 50,117,977 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 1,096,000 | $ 576,000 |
Prepaid expenses | 0 | 0 |
Total Current Assets | 1,096,000 | 576,000 |
Intangible assets | 253,777,000 | 253,777,000 |
Loan costs | 126,000 | 0 |
Deposits | 9,000 | 9,000 |
Fixed assets, net | 6,000 | 6,000 |
Total Other Assets | 253,918,000 | 253,792,000 |
TOTAL ASSETS | 255,014,000 | 254,368,000 |
Current Liabilities: | ||
Accounts payable | 1,887,000 | 2,546,000 |
Accrued expenses | 178,000 | 102,000 |
Line of credit | 31,000 | 31,000 |
Convertible debentures, net of discount of $905,000 | 6,856,000 | 0 |
Total Current Liabilities | 8,952,000 | 2,679,000 |
Total liabilities | 8,952,000 | 2,679,000 |
Stockholders' Deficit: | ||
Common stock - $0.001 par value; 750,000,000 shares authorized; and 50,117,977 and 50,117,977 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 50,000 | 50,000 |
Additional paid-in capital | 534,849,000 | 521,305,000 |
Accumulated deficit | (288,670,000) | (269,499,000) |
Noncontrolling interest | (169,000) | (169,000) |
Total Stockholders' Deficit | 246,062,000 | 251,689,000 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 255,014,000 | 254,368,000 |
Series C | ||
Stockholders' Deficit: | ||
Convertible preferred stock - $0.001 par value; 15,000,000 shares authorized: | 1,000 | 1,000 |
Series J | ||
Stockholders' Deficit: | ||
Convertible preferred stock - $0.001 par value; 15,000,000 shares authorized: | $ 1,000 | $ 1,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Liabilities: | ||
Convertible debentures, current, discount | $ 905,000 | |
Stockholders' Deficit: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 15,000,000 | 15,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 750,000,000 | 750,000,000 |
Common stock, issued | 50,117,977 | 50,117,977 |
Common stock, outstanding | 50,117,977 | 50,117,977 |
Series C | ||
Stockholders' Deficit: | ||
Preferred stock, issued | 96,230 | 96,230 |
Preferred stock, outstanding | 96,230 | 96,230 |
Series J | ||
Stockholders' Deficit: | ||
Preferred stock, issued | 1,163,548 | 1,163,548 |
Preferred stock, outstanding | 1,163,548 | 1,163,548 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue: | ||||
Product revenues | $ 0 | $ 0 | $ 0 | $ 0 |
License revenues | 0 | 0 | 0 | 0 |
TOTAL REVENUE | 0 | 0 | 0 | 0 |
Cost of License Revenue | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Operating Expenses: | ||||
Research and development | 3,251,000 | 241,000 | 6,724,000 | 385,000 |
Selling, general and administrative | 1,906,000 | 1,044,000 | 5,593,000 | 2,438,000 |
Total operating expenses | 5,157,000 | 1,285,000 | 12,317,000 | 2,823,000 |
Loss from Operations | (5,157,000) | (1,285,000) | (12,317,000) | (2,823,000) |
Other income (expense) | ||||
Interest expense | (3,924,000) | (1,178,000) | (6,855,000) | (4,698,000) |
Total other income (expense) | (3,924,000) | (1,178,000) | (6,855,000) | (4,698,000) |
Loss before minority interest and provision for income taxes | (9,081,000) | (2,463,000) | (19,172,000) | (7,521,000) |
Plus: net (income) loss attributable to the noncontrolling interest | 0 | 0 | 0 | 0 |
Loss before provision for income taxes | (9,081,000) | (2,463,000) | (19,172,000) | (7,521,000) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (9,081,000) | $ (2,463,000) | $ (19,172,000) | $ (7,521,000) |
Loss per share | ||||
Basic | $ 50,117,977 | $ 479,053 | $ 50,117,977 | $ 335,450 |
Diluted | $ 50,117,977 | $ 479,053 | $ 50,117,977 | $ 335,450 |
Weighted Average Shares Outstanding – basic and diluted | ||||
Basic | (0.18) | (5.14) | (0.38) | (22.42) |
Diluted | (0.18) | (5.14) | (0.38) | (22.42) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (19,172,000) | $ (7,521,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 2,000 | 1,000 |
Stock compensation expense for options and warrants issued to employees and non-employees | 6,489,000 | 1,524,000 |
Amortization of debt discounts | 6,855,000 | 1,376,000 |
Note Allonge | 0 | 100,000 |
Non-cash interest expense | 0 | 2,197,000 |
Amortization of loan costs | 407,000 | 0 |
Changes in operating assets and liabilities: | ||
Other assets | 0 | 0 |
Accounts payable and accrued expenses | (581,000) | 1,282,000 |
Net cash used in operating activities | (6,000,000) | (1,041,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of fixed assets | (2,000) | 0 |
Net cash used by investing activities | (2,000) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 7,055,000 | 1,061,000 |
Loan costs | (533,000) | 0 |
Repayment of note payable | 0 | 0 |
Net cash provided by financing activities | 6,522,000 | 1,061,000 |
Minority Interest | 0 | 0 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 520,000 | 20,000 |
CASH AND CASH EQUIVALENTS - Beginning of period | 576,000 | 19,000 |
CASH AND CASH EQUIVALENTS - End of period | 1,096,000 | 39,000 |
Supplemental disclosures: | ||
Interest paid | 0 | 0 |
Income taxes paid | 0 | 0 |
Issuance of common stock upon conversion of convertible notes | 0 | 2,025,000 |
Issuance of common stock upon conversion of accrued interest | $ 0 | $ 486,000 |
Note 1 - The Company and Summar
Note 1 - The Company and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Summary of Significant Accounting Policies | We are a clinical stage biopharmaceutical company focused on the development and commercialization of novel immunooncology products based off our proprietary Trispecific Killer Engager (TriKE), Tetraspecific Killer Engager (TetraKE) and bispecific Antibody Drug Conjugate (ADC) technology platforms. Constructs include bispecific and trispecific scFv constructs, proprietary drug payloads, bispecific targeted antibodydrug conjugates, as well as tri and tetraspecific antibodydirected cellular cytotoxicity, or ADCC. Our proprietary tri and tetraspecific ADCC platform engages natural killer cells, or NK cells. NK cells are cytotoxic lymphocytes of the innate immune system capable of immune surveillance. NK cells mediate ADCC through the highly potent CD16 activating receptor. Upon activation, NK cells deliver a store of membrane penetrating apoptosis inducing molecules. Unlike T cells, NK cells do not require antigen priming. Also, we have a CNS portfolio consisting of innovative reformulations and/or repurposing of existing therapies. We believe these new therapeutic agents address numerous unmet medical needs that can lead to improved efficacy while addressing tolerability and safety issues that tended to limit the usefulness of the original approved drug. These CNS drug candidates address disease states such as chronic neuropathic pain, myasthenia gravis and motion sickness. In 1965, the corporate predecessor of GT Biopharma, Diagnostic Data, Inc. was incorporated in the State of California. Diagnostic Data changed its incorporation to the State of Delaware in 1972. and changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI Pharmaceuticals merged with International BioClinical, Inc. and Bioxytech S.A. and changed its name to OXIS International, Inc. In July 2017, the Company changed its name to GT Biopharma, Inc. Going Concern The Company’s current operations have focused on business planning, raising capital, establishing an intellectual property portfolio, hiring, and conducting preclinical studies and clinical trials. The Company does not have any product candidates approved for sale and has not generated any revenue from product sales. The Company has sustained operating losses since inception and expects such losses to continue over the foreseeable future. The financial statements of the Company have been prepared on a goingconcern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments that might be necessary should the Company be unable to continue in existence. The Company has incurred substantial losses and negative cash flows from operations since its inception and has an accumulated deficit of $289 million and cash of $1.1 million as of June 30, 2018. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its products currently in development. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include but are not limited to: public offerings of equity and/or debt securities, payments from potential strategic research and development, and licensing and/or marketing arrangements with pharmaceutical companies. Management is also implementing cost saving efforts, including reduction in executive salaries. Management believes that these ongoing and planned financing endeavors, if successful, will provide adequate financial resources to continue as a going concern for at least the next six months from the date the financial statements are issued. however, there can be no assurance in this regard. If the Company is unable to secure adequate additional funding in 2018, its business, operating results, financial condition and cash flows may be materially and adversely affected. Use of Estimates The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities revenues and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Basis of Consolidation and Comprehensive Income The accompanying consolidated financial statements include the accounts of GT Biopharma, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. The Company's financial statements are prepared using the accrual method of accounting. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and disclosures required by U.S. GAAP for complete consolidated financial statements have been condensed or omitted herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2017. The unaudited interim condensed consolidated financial information presented herein reflects all normal adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The Company is responsible for the unaudited interim consolidated financial statements included in this report. The results of operations of any interim period are not necessarily indicative of the results for the full year. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Concentrations of Credit Risk The Company's cash and cash equivalents, marketable securities and accounts receivable are monitored for exposure to concentrations of credit risk. The Company maintains substantially all of its cash balances in a limited number of financial institutions. The balances are each insured by the Federal Deposit Insurance Corporation up to $250,000. The Company had $845,000 of balances in excess of this limit at June 30, 2018. Stock Based Compensation to Employees The Company accounts for its stock-based compensation for employees in accordance with Accounting Standards Codification (“ASC”) 718. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees over the related vesting period. The Company granted no stock options during the six months ended June 30, 2018 and 2017, respectively Impairment of Long Lived Assets The Company's long-lived assets currently consist of capitalized patents and other indefinite lived intangible assets. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any of the Company's long-lived assets are considered to be impaired, the amount of impairment to be recognized is equal to the excess of the carrying amount of the assets over the fair value of the assets. There was no impairment of any of the indefinite lived intangibles during the six months ended June 30, 2018 Income Taxes The Company accounts for income taxes using the asset and liability approach, whereby deferred income tax assets and liabilities are recognized for the estimated future tax effects, based on current enacted tax laws, of temporary differences between financial and tax reporting for current and prior periods. Deferred tax assets are reduced, if necessary, by a valuation allowance if the corresponding future tax benefits may not be realized. Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period, plus the potential dilutive effect of common shares issuable upon exercise or conversion of outstanding stock options and warrants during the period. The weighted average number of potentially dilutive common shares excluded from the calculation of net income (loss) per share totaled in 1,695,686 and 1,030,951 as of June 30, 2018 and 2017, respectively. Patents Acquired patents are capitalized at their acquisition cost or fair value. The legal costs, patent registration fees and models and drawings required for filing patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with patent applications that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident increase in the value of the patents are capitalized. Capitalized cost for pending patents are amortized on a straight-line basis over the remaining twenty year legal life of each patent after the costs have been incurred. Once each patent is issued, capitalized costs are amortized on a straight-line basis over the shorter of the patent's remaining statutory life, estimated economic life or ten years. Fixed Assets Fixed assets is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which are 3 to 10 years for machinery and equipment and the shorter of the lease term or estimated economic life for leasehold improvements. Fair Value The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s Level 1 assets include cash equivalents, primarily institutional money market funds, whose carrying value represents fair value because of their short-term maturities of the investments held by these funds. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Company’s Level 2 liabilities consist of liabilities arising from the issuance of convertible securities and in accordance with ASC 815-40: a warrant liability for detachable warrants, as well as an accrued derivative liability for the beneficial conversion feature. These liabilities are remeasured each reporting period. Fair value is determined using the Black-Scholes valuation model based on observable market inputs, such as share price data and a discount rate consistent with that of a government-issued security of a similar maturity. There were not such liabilities at June 30, 2018. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. Research and Development Research and development costs are expensed as incurred and reported as research and development expense. Research and development costs totaling $6,724,000 and $385,000 for the six months ended June 30, 2018 and 2017, respectively. Revenue Recognition License Revenue License arrangements may consist of non-refundable upfront license fees, exclusive licensed rights to patented or patent pending technology, and various performance or sales milestones and future product royalty payments. Some of these arrangements are multiple element arrangements. Non-refundable, up-front fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compound is delivered. We defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have continuing involvement through research and development services that are required because our know-how and expertise related to the technology is proprietary to us, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement. Payments related to substantive, performance-based milestones in a research and development arrangement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreements when they represent the culmination of the earnings process. As of June 30, 2018, the Company has not generated any licensing revenue. |
Note 2 - Intangibles
Note 2 - Intangibles | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets, Net (Including Goodwill) [Abstract] | |
Intangibles | On September 1, 2017, the Company entered into an Agreement and Plan of Merger whereby it acquired 100% of the issued and outstanding capital stock of Georgetown Translational Pharmaceuticals, Inc. (GTP). In exchange for the ownership of GTP, the Company issued a total of 16,927,878 shares of its common stock, having a share price of $15.00 on the date of the transaction, to the three prior owners of GTP which represents 33% of the issued and outstanding capital stock of the Company on a fully diluted basis. . As stated in Note 1, Company's long-lived assets currently consist of capitalized patents and other indefinite lived intangible assets. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any of the Company's long-lived assets are considered to be impaired, the amount of impairment to be recognized is equal to the excess of the carrying amount of the assets over the fair value of the assets. There was no impairment of any of the indefinite lived intangibles during the six months ended June 30, 2018. |
Note 3 - Debt
Note 3 - Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Convertible Notes On January 22, 2018, the Company entered into a Securities Purchase Agreement (“SPA”) with the fourteen accredited investors (individually, a “Buyer” and collectively, the “Buyers”) pursuant to which the Company has agreed to issue to the Buyers senior convertible notes in an aggregate principal amount of $7,760,510 (the “Notes”), which Notes shall be convertible into the Company’s common stock, par value $0.001 per share (the “Common Stock”), and five-year warrants to purchase the Company’s Common Stock representing the right to acquire an aggregate of approximately 1,694,440 shares of Common Stock (the “Warrants”). Pursuant to the terms of SPA the Notes are subject to an original issue discount of 10% resulting in proceeds to the Company of $7,055,000 from the transaction. The Notes are due on July 22, 2018. The Notes are convertible, at the option of the Buyers, at any time prior to payment in full, into shares of common stock of the Company at a price of $4.58 per share (“Conversion Price”). According to the terms of the note agreement, the Notes are subject to certain adjustments depending upon the price and structure of a subsequent financing, including a qualified financing with gross proceeds of at least $20 million Upon the purchase of the Notes, the Buyers received Warrants to purchase 1,694,440 shares of Common Stock. Such Warrants are exercisable for (5) years from the date the shares underlying the Warrants are freely saleable. The initial Exercise Price is $4.58. According to the terms of the warrant agreement, the Warrants are subject to certain adjustments depending upon the price and structure of a subsequent financing, including a qualified financing with gross proceeds of at least $20 million The issuance of the Notes and Warrants were made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. Contemporaneously with the execution and delivery of the SPA, the Company and the Buyers executed and delivered a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. Financing Agreement On November 8, 2010, the Company entered into a financing arrangement with Gemini Pharmaceuticals, Inc., a product development and manufacturing partner of the Company, pursuant to which Gemini Pharmaceuticals made a $250,000 strategic equity investment in the Company and agreed to make a $750,000 purchase order line of credit facility available to the Company. The outstanding principal of all Advances under the Line of Credit will bear interest at the rate of interest of prime plus 2 percent per annum. There is $31,000 due on this credit line at June 30, 2018. |
Note 4 - Stockholders' Equity
Note 4 - Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Preferred Stock On September 1, 2017, the Company authorized 2,000,000 shares of Series J Preferred Stock. Shares of Series J Preferred Stock will have the same voting rights as shares of common stock with each share of Series J Preferred Stock entitled to one vote at a meeting of the shareholders of the Corporation. Shares of Series J Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by our board of directors. The holders of the Series J Preferred Stock will participate, on an as-if-converted-to-common stock basis, in any dividends to the holders of common stock. Each share of the Series J Preferred Stock is convertible into one share of our common stock at any time at the option of the holder. On September 1, 2017 the Company issued a total of 208,224 shares of in exchange for the conversion of debt in the total amount of $250,000. On September 1, 2017 the Company issued a total of 700,278 shares of in exchange for the cancellation of debt in the total amount of $840,000. On September 1, 2017 the Company issued 5,046 shares of upon the exercise of warrants on a cashless basis. On September 1, 2017 the Company also issued 600,000 Series J Preferred Stock In December 2017, the Company converted 350,000 Series J shares of preferred stock into 350,000 shares of common stock. |
Note 5 - Stock Options and Warr
Note 5 - Stock Options and Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Guarantees [Abstract] | |
Stock Options and Warrants | Stock Options The following table summarizes stock option transactions for the six months ended June 30, 2018: Number of Options Weighted Average Exercise Price Outstanding, December 31, 2017 1,246 $ 1,428.00 Granted - - Exercised - - Expired - - Outstanding, June 30, 2018 1,246 $ 1,428.00 Exercisable, June 30, 2018 1,246 $ 1,428.00 Common Stock Warrants Warrant transactions for the six months ended June 30, 2018 are as follows: Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2017: - $ - Granted 1,694,440 4.58 Forfeited - - Exercised - - Outstanding at June 30, 2018 1,694,440 $ 4.58 Exercisable at June 30, 2018 1,694,440 $ 4.58 |
Note 6 - Commitments and Contin
Note 6 - Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Leases On September 1, 2017, the Company has entered into a three-year lease agreement for its office in Washington, D.C. In addition to minimum rent, certain leases require payment of real estate taxes, insurance, common area maintenance charges and other executory costs. The Company recognizes rent expense under such arrangements on a straight-line basis over the effective term of each lease. This lease was terminated as of June 30, 2018. Rent expense for the six months ended June 30, 2018 and 2017 was $54,000 and $6,000, respectively. Employment Agreements On February 14, 2018, the Company entered into the First Amendment to the Employment Agreement with Dr. Clarence-Smith, amending the Employment Agreement, dated September 1, 2017, between the Company and Dr. Clarence-Smith. Under the First Amendment, Dr. Clarence-Smith’s title has been revised to reflect her new position and she will be paid an annual salary of $500,000, paid in equal monthly installment. All other terms of her original Employment Agreement remain unchanged. On February 14, 2018, the Company entered into a Consultant Agreement with Mr. Cataldo. The term of the Consultant Agreement lasts until August 31, 2020 and is terminable at will and is subject to automatic extension for successive one-year periods. Mr. Cataldo will be paid $41,666.67 per month during the term of the Consultant Agreement and will be entitled to participate in the Company’s bonus plans. On February 15, 2018, the Company entered into an Executive Employment Agreement with Mr. Cross, pursuant to which Mr. Cross will be employed as the Company’s Chief Executive Officer. The term of the Executive Employment Agreement is three years and is terminable at will by either the Company or Mr. Cross and subject to automatic extensions for successive one year periods. will be paid an annual salary of $500,000, paid in equal monthly installment. Mr. Cross is also entitled to participate in the Company’s bonus plans. Under the Executive Employment Agreement, the Company has agreed that i Chief Executive Officer and from the Board of Directors effective July 2, 2018. If any of our executive officers’ employment with us is terminated involuntarily, or any executive resigns with good reason as a result of a change in control, the executive will receive (i) all compensation and benefits earned through the date of termination of employment; (ii) a lump-sum payment equal to the greater of (a) the bonus paid or payable to the executive for the year immediately prior to the year in which the change in control occurred and (b) the target bonus under the performance bonus plan in effect immediately prior to the year in which the change in control occurs; (iii) a lump-sum payment equivalent to the remaining base salary (as it was in effect immediately prior to the change in control) due to the executive from the date of involuntary termination to the end of the term of the employment agreement or one half of the executive’s base salary then in effect, whichever is the greater; and (iv) reimbursement for the cost of medical, life, disability insurance coverage at a level equivalent to that provided by us for a period expiring upon the earlier of (a) one year or (b) the time the executive begins alternative employment where said insurance coverage is available and offered to the executive. |
Note 7 - Change on Accounting M
Note 7 - Change on Accounting Method | 6 Months Ended |
Jun. 30, 2018 | |
Note 7 - Change On Accounting Method | |
Change on Accounting Method | Adoption of ASU 2017-11 In connection with the securities purchase agreements and debt transactions during and previous the year ended December 31, 2017, the Company issued warrants, to purchase common stock with a five-year term. Upon issuance of the warrants, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the warrants that potentially could result in a net cash settlement in the event of a fundamental transaction, requiring the Company to classify the warrants as a derivative liability. The Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 during the six months ended June 30, 2018 on a retrospective basis. Accordingly, the Company recorded the warrant derivative and conversion option derivative liabilities to additional paid in capital upon issuance. The following table provides a summary of the derivative liability activity as a result of the adoption of ASU 2017-11: Consolidated Balance Sheet December 31, 2017 Previously Reported Revisions Revised Report Additional Paid in Capital $ 519,702,000 $ 1,603,000 $ 521,305,000 Accumulated Deficit $ (267,896,000 ) $ (1,603,000 ) $ (269,499,000 ) Consolidated Statement of Operations For the Three Months Ended June 30, 2017 Previously Reported Revisions Revised Report Change in Warrant Liability $ (367,000 ) $ 367,000 $ - Earnings Per Share $ (5.91 ) $ 0.77 $ (5.14 ) Consolidated Statement of Operations For the Six Months Ended June 30, 2017 Previously Reported Revisions Revised Report Change in Warrant Liability $ 2,376,000 $ (2,376,000 ) $ - Earnings Per Share $ (15.34 ) $ (7.08 ) $ (22.42 ) |
Note 8 - Subsequent Events
Note 8 - Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Debentures On August 2, 2018, GT Biopharma, Inc. (the “Company”) entered into a Securities Purchase Agreement with the purchasers identified on the signature pages thereto (individually, a “Purchaser,” and collectively, the “Purchasers”) pursuant to which the Company has issued to the Purchasers one year 10% Senior Convertible Debentures in an aggregate principal amount of $5,140,000 (the “Debentures”), which Debentures shall be convertible into the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a price of $2 per share. Also on August 2, 2018, $3,315,141.74 of notes issued on January 22, 2018 were converted into the Debentures at the same terms as discussed above. In addition, the Company utilized a portion of these proceeds to repay $4.411 million of the notes issued on January 12, 2018. |
Note 1 - The Company and Summ14
Note 1 - The Company and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Company And Summary Of Significant Accounting Policies Policies | |
Going Concern | The Company’s current operations have focused on business planning, raising capital, establishing an intellectual property portfolio, hiring, and conducting preclinical studies and clinical trials. The Company does not have any product candidates approved for sale and has not generated any revenue from product sales. The Company has sustained operating losses since inception and expects such losses to continue over the foreseeable future. The financial statements of the Company have been prepared on a goingconcern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments that might be necessary should the Company be unable to continue in existence. The Company has incurred substantial losses and negative cash flows from operations since its inception and has an accumulated deficit of $289 million and cash of $1.1 million as of June 30, 2018. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its products currently in development. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include but are not limited to: public offerings of equity and/or debt securities, payments from potential strategic research and development, and licensing and/or marketing arrangements with pharmaceutical companies. Management is also implementing cost saving efforts, including reduction in executive salaries. Management believes that these ongoing and planned financing endeavors, if successful, will provide adequate financial resources to continue as a going concern for at least the next six months from the date the financial statements are issued. however, there can be no assurance in this regard. If the Company is unable to secure adequate additional funding in 2018, its business, operating results, financial condition and cash flows may be materially and adversely affected. |
Use of Estimates | The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities revenues and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. |
Basis of Consolidation and Comprehensive Income | The accompanying consolidated financial statements include the accounts of GT Biopharma, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. The Company's financial statements are prepared using the accrual method of accounting. |
Basis of Presentation | The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and disclosures required by U.S. GAAP for complete consolidated financial statements have been condensed or omitted herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2017. The unaudited interim condensed consolidated financial information presented herein reflects all normal adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The Company is responsible for the unaudited interim consolidated financial statements included in this report. The results of operations of any interim period are not necessarily indicative of the results for the full year. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. |
Concentrations of Credit Risk | The Company's cash and cash equivalents, marketable securities and accounts receivable are monitored for exposure to concentrations of credit risk. The Company maintains substantially all of its cash balances in a limited number of financial institutions. The balances are each insured by the Federal Deposit Insurance Corporation up to $250,000. The Company had $845,000 of balances in excess of this limit at June 30, 2018. |
Stock Based Compensation to Employees | The Company accounts for its stock-based compensation for employees in accordance with Accounting Standards Codification (“ASC”) 718. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees over the related vesting period. The Company granted no stock options during the six months ended June 30, 2018 and 2017, respectively |
Impairment of Long Lived Assets | The Company's long-lived assets currently consist of capitalized patents and other indefinite lived intangible assets. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any of the Company's long-lived assets are considered to be impaired, the amount of impairment to be recognized is equal to the excess of the carrying amount of the assets over the fair value of the assets. There was no impairment of any of the indefinite lived intangibles during the six months ended June 30, 2018 |
Income Taxes | The Company accounts for income taxes using the asset and liability approach, whereby deferred income tax assets and liabilities are recognized for the estimated future tax effects, based on current enacted tax laws, of temporary differences between financial and tax reporting for current and prior periods. Deferred tax assets are reduced, if necessary, by a valuation allowance if the corresponding future tax benefits may not be realized. |
Net Income (Loss) per Share | Basic net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period, plus the potential dilutive effect of common shares issuable upon exercise or conversion of outstanding stock options and warrants during the period. The weighted average number of potentially dilutive common shares excluded from the calculation of net income (loss) per share totaled in 1,695,686 and 1,030,951 as of June 30, 2018 and 2017, respectively. |
Patents | Acquired patents are capitalized at their acquisition cost or fair value. The legal costs, patent registration fees and models and drawings required for filing patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with patent applications that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident increase in the value of the patents are capitalized. Capitalized cost for pending patents are amortized on a straight-line basis over the remaining twenty year legal life of each patent after the costs have been incurred. Once each patent is issued, capitalized costs are amortized on a straight-line basis over the shorter of the patent's remaining statutory life, estimated economic life or ten years. |
Fixed Assets | Fixed assets is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which are 3 to 10 years for machinery and equipment and the shorter of the lease term or estimated economic life for leasehold improvements. |
Fair Value | The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s Level 1 assets include cash equivalents, primarily institutional money market funds, whose carrying value represents fair value because of their short-term maturities of the investments held by these funds. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Company’s Level 2 liabilities consist of liabilities arising from the issuance of convertible securities and in accordance with ASC 815-40: a warrant liability for detachable warrants, as well as an accrued derivative liability for the beneficial conversion feature. These liabilities are remeasured each reporting period. Fair value is determined using the Black-Scholes valuation model based on observable market inputs, such as share price data and a discount rate consistent with that of a government-issued security of a similar maturity. There were not such liabilities at June 30, 2018. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Research and Development | Research and development costs are expensed as incurred and reported as research and development expense. Research and development costs totaling $6,724,000 and $385,000 for the six months ended June 30, 2018 and 2017, respectively. |
Revenue Recognition | License Revenue License arrangements may consist of non-refundable upfront license fees, exclusive licensed rights to patented or patent pending technology, and various performance or sales milestones and future product royalty payments. Some of these arrangements are multiple element arrangements. Non-refundable, up-front fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compound is delivered. We defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have continuing involvement through research and development services that are required because our know-how and expertise related to the technology is proprietary to us, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement. Payments related to substantive, performance-based milestones in a research and development arrangement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreements when they represent the culmination of the earnings process. As of June 30, 2018, the Company has not generated any licensing revenue. |
Note 5 - Stock Options and Wa15
Note 5 - Stock Options and Warrants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stock Options And Warrants Tables | |
Summary of the stock option activity | Number of Options Weighted Average Exercise Price Outstanding, December 31, 2017 1,246 $ 1,428.00 Granted - - Exercised - - Expired - - Outstanding, June 30, 2018 1,246 $ 1,428.00 Exercisable, June 30, 2018 1,246 $ 1,428.00 |
Summary of the warrant activity | Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2017: - $ - Granted 1,694,440 4.58 Forfeited - - Exercised - - Outstanding at June 30, 2018 1,694,440 $ 4.58 Exercisable at June 30, 2018 1,694,440 $ 4.58 |
Note 7 - Change on Accounting16
Note 7 - Change on Accounting Method (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Note 6Change On Accounting Method Tables Abstract | |
Adoption of new accounting standard | Consolidated Balance Sheet December 31, 2017 Previously Reported Revisions Revised Report Additional Paid in Capital $ 519,702,000 $ 1,603,000 $ 521,305,000 Accumulated Deficit $ (267,896,000 ) $ (1,603,000 ) $ (269,499,000 ) Consolidated Statement of Operations For the Three Months Ended June 30, 2017 Previously Reported Revisions Revised Report Change in Warrant Liability $ (367,000 ) $ 367,000 $ - Earnings Per Share $ (5.91 ) $ 0.77 $ (5.14 ) Consolidated Statement of Operations For the Six Months Ended June 30, 2017 Previously Reported Revisions Revised Report Change in Warrant Liability $ 2,376,000 $ (2,376,000 ) $ - Earnings Per Share $ (15.34 ) $ (7.08 ) $ (22.42 ) |
Note 1 - The Company and Summ17
Note 1 - The Company and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Company And Summary Of Significant Accounting Policies Tables | ||||||
Accumulated deficit | $ (288,670,000) | $ (288,670,000) | $ (269,499,000) | |||
Cash and cash equivalent | 1,096,000 | $ 39,000 | $ 1,096,000 | $ 39,000 | $ 576,000 | $ 19,000 |
Diluted shares excluded from calcuation of EPS | 1,695,686 | 1,030,951 | ||||
Research and development | $ 3,251,000 | $ 241,000 | $ 6,724,000 | $ 385,000 |
Note 5 - Stock Options and Wa18
Note 5 - Stock Options and Warrants (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Options Outstanding | |
Exercisable as of June 30, 2018 | shares | 1,246 |
Weighted Average Exercise Price | |
Exercisable as of June 30, 2018 | $ / shares | $ 1,428 |
Stock Options | |
Options Outstanding | |
Outstanding as of December 31, 2017 | shares | 1,246 |
Granted | shares | 0 |
Forfeited | shares | 0 |
Exercised | shares | 0 |
Outstanding as of June 30, 2018 | shares | 1,246 |
Weighted Average Exercise Price | |
Outstanding as of December 31, 2017 | $ / shares | $ 1,428 |
Granted | $ / shares | 0 |
Forfeited | $ / shares | 0 |
Exercised | $ / shares | 0 |
Outstanding as of June 30, 2018 | $ / shares | $ 1,428 |
Note 5 - Stock Options and Wa19
Note 5 - Stock Options and Warrants (Details 1) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Warrants Outstanding | |
Exercisable as of June 30, 2018 | shares | 1,694,440 |
Weighted Average Exercise Price | |
Exercisable as of June 30, 2018 | $ / shares | $ 4.58 |
WarrantMember | |
Warrants Outstanding | |
Outstanding as of December 31, 2017 | shares | 0 |
Granted | shares | 1,694,440 |
Forfeited | shares | 0 |
Exercised | shares | 0 |
Outstanding as of June 30, 2018 | shares | 1,694,440 |
Weighted Average Exercise Price | |
Outstanding as of December 31, 2017 | $ / shares | $ 0 |
Granted | $ / shares | 4.58 |
Forfeited | $ / shares | 0 |
Exercised | $ / shares | 0 |
Outstanding as of June 30, 2018 | $ / shares | $ 4.58 |
Note 6 - Commitments and Cont20
Note 6 - Commitments and Contingencies (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Note 6 - Commitments And Contingencies | ||
Rent expense | $ 54,000 | $ 6,000 |
Note 7 - Change on Accounting21
Note 7 - Change on Accounting Method (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Additional Paid in Capital | $ 534,849,000 | $ 521,305,000 |
Accumulated Deficit | $ (288,670,000) | (269,499,000) |
Previously Reported | ||
Additional Paid in Capital | 519,702,000 | |
Accumulated Deficit | (267,896,000) | |
Revisions | ||
Additional Paid in Capital | 1,603,000 | |
Accumulated Deficit | $ (1,603,000) |