Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2020 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ADIAL PHARMACEUTICALS, INC. |
Entity Central Index Key | 0001513525 |
Amendment Flag | false |
Document Type | S-1 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Incorporation State CountryCode | DE |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | |||
Cash and cash equivalents | $ 4,951,631 | $ 6,777,052 | $ 3,869,043 |
Prepaid research and development | 743,194 | 536,916 | 505,960 |
Prepaid expenses and other current assets | 240,382 | 359,499 | 317,547 |
Total Current Assets | 5,935,207 | 7,673,467 | 4,692,550 |
Intangible assets, net | 6,029 | 6,170 | 6,735 |
Total Other Assets | 6,029 | 6,170 | 6,735 |
Total Assets | 5,941,236 | 7,679,637 | 4,699,285 |
Current Liabilities: | |||
Accounts payable | 196,382 | 190,204 | 99,671 |
Accrued expenses | 193,447 | 348,847 | 158,303 |
Total Current Liabilities | 389,829 | 539,051 | 257,974 |
Commitments and contingencies | |||
Stockholders' Equity | |||
Preferred Stock, 5,000,000 shares authorized with a par value of $0.001 per share, 0 shares outstanding at December 31, 2019 and 2018 | |||
Common Stock, 50,000,000 shares authorized with a par value of $0.001 per share, 10,368,352 and 6,862,499 shares issued and outstanding at December 31, 2019 and 2018, respectively | 10,629 | 10,368 | 6,863 |
Additional paid in capital | 28,444,390 | 27,757,017 | 16,469,818 |
Accumulated deficit | (22,903,612) | (20,626,799) | (12,035,370) |
Total Stockholders' Equity | 5,551,407 | 7,140,586 | 4,441,311 |
Total Liabilities and Stockholders' Equity | $ 5,941,236 | $ 7,679,637 | $ 4,699,285 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | |||
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, shares issued | 10,629,603 | 10,368,352 | 6,862,499 |
Common stock, shares outstanding | 10,629,603 | 10,368,352 | 6,862,499 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Expenses: | ||||
Research and development expenses | $ 1,059,578 | $ 686,914 | $ 3,965,543 | $ 368,459 |
General and administrative expenses | 1,240,667 | 1,562,352 | 4,279,357 | 6,618,763 |
Total Operating Expenses | 2,300,245 | 2,249,266 | 8,244,900 | 6,987,222 |
Loss From Operations | (2,300,245) | (2,249,266) | (8,244,900) | (6,987,222) |
Other Income (Expense) | ||||
Interest income | 23,432 | 8,378 | 95,234 | 7,392 |
Loss on debt extinguishments | (3,484,502) | |||
Warrant modification expense | (441,763) | (441,763) | ||
Interest and financing charges | (1,167,046) | |||
Total other income (expense) | 23,432 | (433,385) | (346,529) | (4,644,156) |
Loss Before Provision For Income Taxes | (2,276,813) | (2,682,651) | (8,591,429) | (11,631,378) |
Benefit from income taxes | ||||
Net Loss | $ (2,276,813) | $ (2,682,651) | $ (8,591,429) | $ (11,631,378) |
Net loss per share, basic and diluted | $ (0.22) | $ (0.33) | $ (0.87) | $ (2.44) |
Weighted average shares, basic and diluted | 10,497,325 | 8,250,708 | 9,852,486 | 4,759,363 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 3,268 | $ (596,829) | $ (403,992) | $ (997,553) |
Balance, shares at Dec. 31, 2017 | 3,268,005 | |||
Stock-based compensation - stock granted for Performance Bonus Plan cancellation | $ 292 | 1,461,253 | 1,461,545 | |
Stock-based compensation - stock granted for Performance Bonus Plan cancellation, shares | 292,309 | |||
Stock-based compensation - stock and warrants granted on IPO | $ 389 | 3,436,017 | 3,436,406 | |
Stock-based compensation - stock and warrants granted on IPO, shares | 388,860 | |||
Equity-based compensation - stock option expense | 251,903 | 251,903 | ||
Equity-based compensation - stock issuances to consultants and employees | $ 119 | 218,381 | 218,500 | |
Equity-based compensation - stock issuances to consultants and employees, shares | 118,750 | |||
Senior Note Beneficial Conversion Feature | 52,050 | 52,050 | ||
Warrant Issue with senior note | 222,950 | 222,950 | ||
Sale of Common Stock & Warrants | $ 1,464 | 7,320,242 | 7,321,706 | |
Sale of Common Stock & Warrants, shares | 1,464,000 | |||
IPO Issuance Cost | (1,053,774) | (1,053,774) | ||
Stock and warrants issued in connection with debt settlements | $ 442 | 4,131,956 | 4,132,398 | |
Stock and warrants issued in connection with debt settlements, shares | 442,220 | |||
Conversion of convertible notes on upon IPO | $ 701 | 544,606 | 545,307 | |
Conversion of convertible notes on upon IPO, shares | 700,855 | |||
Conversion of June 2018 Senior Note | $ 163 | 324,837 | 325,000 | |
Conversion of June 2018 Senior Note, shares | 162,500 | |||
Exercise of warrants | $ 25 | 156,226 | 156,251 | |
Exercise of warrants, shares | 25,000 | |||
Net loss | (11,631,378) | |||
Balance at Dec. 31, 2018 | $ 6,863 | 16,469,818 | (12,035,370) | 4,441,311 |
Balance, shares at Dec. 31, 2018 | 6,862,499 | |||
Equity-based compensation - stock option expense | 129,150 | 129,150 | ||
Equity-based compensation - stock issuances to consultants and employees | $ 94 | 154,760 | 154,854 | |
Equity-based compensation - stock issuances to consultants and employees, shares | 93,750 | |||
Warrant modification expense | 441,763 | 441,763 | ||
Sale of common stock & warrants | $ 2,845 | 9,243,404 | 9,246,249 | |
Sale of common stock & warrants, shares | 2,845,000 | |||
Offering issuance cost | (1,050,576) | (1,050,576) | ||
Exercise of warrants | $ 367 | 1,050,270 | 1,050,637 | |
Exercise of warrants, shares | 367,577 | |||
Net loss | (2,682,651) | (2,682,651) | ||
Balance at Mar. 31, 2019 | $ 10,169 | 26,438,589 | (14,718,021) | 11,730,737 |
Balance, shares at Mar. 31, 2019 | 10,168,826 | |||
Balance at Dec. 31, 2018 | $ 6,863 | 16,469,818 | (12,035,370) | 4,441,311 |
Balance, shares at Dec. 31, 2018 | 6,862,499 | |||
Equity-based compensation - stock option expense | 1,078,573 | 1,078,573 | ||
Stock-based compensation - common stock issued for services | $ 234 | 523,511 | 523,745 | |
Stock-based compensation - common stock issued for services, shares | 234,437 | |||
Warrant modification expense | 441,763 | 441,763 | ||
Sale of common stock & warrants | $ 2,845 | 9,243,404 | 9,246,249 | |
Sale of common stock & warrants, shares | 2,845,000 | |||
Offering issuance cost | (1,050,576) | (1,050,576) | ||
Exercise of warrants | $ 426 | 1,050,524 | 1,050,950 | |
Exercise of warrants, shares | 426,416 | |||
Net loss | (8,591,429) | (8,591,429) | ||
Balance at Dec. 31, 2019 | $ 10,368 | 27,757,017 | (20,626,799) | 7,140,586 |
Balance, shares at Dec. 31, 2019 | 10,368,352 | |||
Equity-based compensation - stock option expense | 342,007 | 342,007 | ||
Equity-based compensation - stock issuances to consultants and employees | $ 261 | 345,366 | 345,627 | |
Equity-based compensation - stock issuances to consultants and employees, shares | 261,251 | |||
Net loss | (2,276,813) | (2,276,813) | ||
Balance at Mar. 31, 2020 | $ 10,629 | $ 28,444,390 | $ (22,903,612) | $ 5,551,407 |
Balance, shares at Mar. 31, 2020 | 10,629,603 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss | $ (2,276,813) | $ (2,682,651) | $ (8,591,429) | $ (11,631,378) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Equity-based compensation | 570,633 | 284,004 | 1,602,318 | 5,368,354 |
Non-cash interest expense | 776,214 | |||
Non-cash warrant modification expense | 441,763 | 441,763 | ||
Amortization of intangible assets | 141 | 142 | 565 | 563 |
Amortization of debt discounts | 352,673 | |||
Loss on debt extinguishments | 3,484,502 | |||
Changes in operating assets and liabilities: | ||||
Prepaid research and development expenses | (206,278) | 126,290 | (30,956) | (505,960) |
Prepaid expenses and other current assets | 119,117 | 38,125 | (41,952) | (308,547) |
Accrued expenses | (38,399) | 110,633 | 190,544 | 155,736 |
Accounts payable | 6,178 | (39,415) | 90,533 | (190,544) |
Net cash used in operating activities | (1,825,421) | (1,721,109) | (6,338,614) | (2,498,387) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Net proceeds from sale of common stock and warrants | 8,195,673 | 8,195,673 | 6,267,932 | |
Proceeds from Senior Note | 275,000 | |||
Proceeds from Senior Secured Notes, including related party | 410,000 | |||
Repayment of Senior Secured Bridge Note | (150,000) | |||
Repayment of Senior Secured Notes, including related party | (510,000) | |||
Repayment of Senior Secured Bridge Note | (100,000) | |||
Proceeds from warrant exercise | 1,050,637 | 1,050,950 | 156,250 | |
Net cash provided by financing activities | 9,246,310 | 9,246,623 | 6,349,182 | |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,825,421) | 7,525,201 | 2,908,009 | 3,850,795 |
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD | 6,777,052 | 3,869,043 | 3,869,043 | 18,248 |
CASH AND CASH EQUIVALENTS-END OF PERIOD | 4,951,631 | 11,394,244 | 6,777,052 | 3,869,043 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||
Interest paid | 38,160 | |||
Income taxes paid | ||||
Reclassification of stock-based comp from accrued expenses | 117,001 | |||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Issuance of warrants for financing costs classified as debt discount | 222,950 | |||
Beneficial conversion discount on convertible notes payable | 52,050 | |||
Exchange of Subordinated notes in the amount of $115,639 for Senior secured notes | 100,000 | |||
Stock and warrants issued per terms of June 2018 notes and FirstFire note | 3,747,207 | |||
Stock and warrants issued for MVA agreement | 385,191 | |||
Stock and warrants issued for conversion of convertible notes | 545,307 | |||
Stock issued on conversion of June 2018 note | $ 325,000 |
Description of Business
Description of Business | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
DESCRIPTION OF BUSINESS | 1 — DESCRIPTION OF BUSINESS Adial Pharmaceuticals, Inc. (the "Company" or "Adial") was converted from a limited liability company formed under the name ADial Pharmaceuticals, LLC on November 23, 2010 in the Commonwealth of Virginia to a corporation and reincorporated in Delaware on October 1, 2017. Adial is presently engaged in the development of medications for the treatment of addictions and related disorders. The Company has commenced its first Phase 3 clinical trial of its lead compound AD04 ("AD04") for the treatment of alcohol use disorder. Both the U.S. Food and Drug Administration ("FDA") and the European Medicines Authority ("EMA") have indicated they will accept heavy-drinking-based endpoints as a basis for approval for the treatment of alcohol use disorder rather than the previously required abstinence-based endpoints. Key patents have been issued in the United States, the European Union, and other jurisdictions for which the Company has exclusive license rights. The active ingredient in AD04 is ondansetron, a serotonin-3 antagonist. Due to its mechanism of action, AD04 has the potential to be used for the treatment of other addictive disorders, such as opioid use disorder, obesity, smoking, and other drug addictions. | 1 — DESCRIPTION OF BUSINESS Adial Pharmaceuticals, Inc. (the "Company" or "Adial") was converted from a limited liability company formed under the name ADial Pharmaceuticals, LLC on November 23, 2010 in the Commonwealth of Virginia to a corporation and reincorporated in Delaware on October 1, 2017. Adial is presently engaged in the development of medications for the treatment of addictions and related disorders. The Company has commenced its first Phase 3 clinical trial of its lead compound AD04 ("AD04") for the treatment of alcohol use disorder. Both the U.S. Food and Drug Administration ("FDA") and the European Medicines Authority ("EMA") have indicated they will accept heavy-drinking-based endpoints as a basis for approval for the treatment of alcohol use disorder rather than the previously required abstinence-based endpoints. Key patents have been issued in the United States, the European Union, and other jurisdictions for which the Company has exclusive license rights. The active ingredient in AD04 is ondansetron, a serotonin-3 antagonist. Due to its mechanism of action, AD04 has the potential to be used for the treatment of other addictive disorders, such as opioid use disorder, obesity, smoking, and other drug addictions. In July 2018, the Company raised proceeds of approximately $6.3 million in an initial public offering (the "IPO") of common stock and warrants, net of offering expenses. On July 27, 2018, the shares of common stock and offering warrants began trading on the Nasdaq Capital Market under the symbols "ADIL" and "ADILW", respectively. In February 2019, the Company raised proceeds of approximately $8.2 million in a follow-on underwritten public offering (the "Follow-on Offering") of shares of common stock and warrants, net of offering expenses. |
Liquidity, Going Concern and Ot
Liquidity, Going Concern and Other Uncertainties | 3 Months Ended |
Mar. 31, 2020 | |
Liquidity Going Concern and Other Uncertainties [Abstract] | |
LIQUIDITY, GOING CONCERN AND OTHER UNCERTAINTIES | 2 — LIQUIDITY, GOING CONCERN AND OTHER UNCERTAINTIES The unaudited condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP"), which contemplate continuation of the Company as a going concern. The Company is in a development stage and has not generated any revenues The Company has incurred losses each year since inception and has experienced negative cash flows from operations in each year since inception and has an accumulated deficit of approximately $22.9 million as of March 31, 2020. Based on the current development plans for AD04 in both the U.S. and international markets and other operating requirements, the Company believes that the existing cash and equivalents will not be sufficient to fund operations for at least the next twelve months following the filing of these unaudited condensed financial statements. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The cash and cash equivalents as of the financial statement filing date are expected to fund operations into the fourth quarter of 2020. Due to significantly slowed trial enrollment resulting from the current COVID-19 pandemic (see Other Uncertainties The Company's continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, grant funding, strategic relationships, or out-licensing in order to complete its current and subsequent clinical trial requirements for its lead compound, AD04. Management is actively pursuing financing and other strategic plans but can provide no assurances that such financing or other strategic plans will be available on acceptable terms, or at all. Further, the extreme volatility in the financial markets due to COVID-19, may make it more difficult to raise sufficient capital when needed or execute other strategic plans or transactions. Without additional funding, the Company would be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on the Company and its financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. Other Uncertainties Generally, this industry subjects the Company to a number of other risks and uncertainties that can affect its operating results and financial condition. Such factors include, but are not limited to: the timing, costs and results of clinical trials and other development activities versus expectations; the ability to obtain regulatory approval to market product candidates; the ability to manufacture products successfully; competition from products sold or being developed by other companies; the price of, and demand for, Company products once approved; the ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products. The Company also faces the ongoing risk that the coronavirus pandemic may further slow, for an unforeseeable period, the conduct of the Company's trial. The ongoing coronavirus pandemic may also impact the Company in other ways, through the increase of non-trial costs such as insurance premiums, by increasing the demand for and cost of capital, creation of a wider economic slow down, by the loss of work time from key personnel, and through impacts on our key clinical trial vendors and API suppliers. The full extent to which the COVID-19 pandemic impacts the clinical development of AD04, the Company's suppliers and other commercial partners, and the value of and market for the Company's common stock will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results. The interim operating results are not necessarily indicative of results that may be expected for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019, included in the Annual Report on Form 10-K filed on March 20, 2020. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Use of Estimates The preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation of stock-based compensation, accruals associated with third party providers supporting clinical trials, and income tax asset realization. In particular, the recognition of clinical trial costs are dependent on the our own judgement, as well as the judgment of our contractors and subcontractors in their reporting of information to us. Basic and Diluted Earnings (Loss) per Share Basic and diluted earnings (loss) per share are computed based on the weighted-average outstanding shares of common stock, which are all voting shares. Diluted net loss per share is computed giving effect to all proportional shares of common stock, including stock options and warrants to the extent dilutive. Basic net loss per share was the same as diluted net loss per share for the three months ended March 31, 2020 and 2019 as the inclusion of all potential common shares outstanding would have an anti-dilutive effect. The total number of potentially dilutive common shares that were excluded at March 31, 2020 and 2019 was as follows: Potentially Dilutive Common 2020 2019 Warrants to purchase Common Shares 6,595,631 6,728,113 Common Shares issuable on exercise of options 2,620,877 1,400,967 Total potentially dilutive Common Shares excluded 9,216,508 8,129,080 Research and Development Research and development costs are charged to expense as incurred and include direct trial expenses such as fees due to contract research organizations, consultants which support the Company's research and development endeavors, the acquisition of technology rights without an alternative use, and compensation and benefits of clinical research and development personnel. Certain research and development costs, in particular fees to contract research organizations ("CROs"), are structured with milestone payments due on the occurrence of certain key events. Where such milestone payments are greater than those earned through the provision of such services, the Company recognizes a prepaid asset which is recorded as expense as services are incurred. Stock-Based Compensation The Company measures the cost of option awards based on the grant date fair value of the awards. That cost is recognized on a straight-line basis over the period during which the awardee was required to provide service in exchange for the entire award. The fair value of options is calculated using the Black-Scholes option pricing model, based on key assumptions such as the expected volatility of the Company's common stock, the risk-free rate of return, and expected term of the options. The Company's estimates of these assumptions are primarily based on historical data, peer company data, government data, and the judgment of management regarding future trends. Common shares issued are valued based on the fair value of the Company's common shares as determined by the market closing price of a share of our common stock on the date of the Commitment to make the issuance. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense. The Company has generally recorded a full valuation allowance for its tax carryforwards, reflecting the judgment of Company management that they are more likely than not to expire unused. Adoption of Recent Accounting Pronouncements Fair Value | 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Liquidity, Going Concern and Other Uncertainties The financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP"), which contemplate continuation of the Company as a going concern. The Company is in a development stage and has not generated any revenues. The Company had an accumulated deficit of approximately $20.6 million and $12.0 million as of December 31, 2019 and 2018, respectively, and had incurred net losses of approximately $8.6 million and $11.6 million, for the years then ended. Based on the current development plans for AD04 in both the U.S. and international markets and other operating requirements, the Company believes that the existing cash and equivalents will not be sufficient to fund operations for at least the next twelve months following the filing of these financial statements. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The cash and equivalents as of the financial statement filing date are expected to fund operations into the fourth quarter of 2020, and the Company estimates that such funds will not support the current Phase 3 clinical trial to database lock, which is the endpoint of clinical activities for our current trial. The Company has applied for grants that could be used for the current Phase 3 clinical trial which, if received, is expected to fund the Company to database lock and into the first quarter of 2021. Also, if our trial activities are significantly delayed due to the coronavirus pandemic (See Note 12 - Subsequent Events), we would not be able to reach database lock with cash on hand even with receipt of the grants to which we have applied. In such case, we would need to obtain additional funding. The Company's ultimate liquidity requirements will depend upon a number of factors, including, but not limited to, clinical trial costs, the time required to complete planned trials, and the use of cash in pursuit of non-dilutive funding sources and the success or failure of such pursuit. The Company's continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, grant funding, strategic relationships, or out-licensing in order to complete its current and subsequent clinical trial requirements for its lead compound, AD04. Management can provide no assurance that such financing or strategic relationships will be available on acceptable terms, or at all. Without additional funding, the Company would be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on the Company and its financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. Generally, this industry subjects the Company to a number of other risks and uncertainties that can affect its operating results and financial condition. Such factors include, but are not limited to: the timing, costs and results of clinical trials and other development activities versus expectations; the ability to obtain regulatory approval to market product candidates; the ability to manufacture products successfully; competition from products sold or being developed by other companies; the price of, and demand for, Company products once approved; the ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products. The Company also faces the current risk that the continuing coronavirus outbreak may delay, for an unforeseeable period, the conduct of our trial. Any such delay would affect our liquidity needs and ability to continue as a going concern. (See Note 12 - Subsequent Events.) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation of stock-based compensation, derivative liabilities, accruals associated with third party providers supporting clinical trials, contingent liabilities and income tax asset realization. In particular, accrual of expenses associated with our clinical trial are dependent on the our own judgement, as well as the judgment of our contractors and subcontractors in their reporting of information to us. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. Basic and Diluted Earnings (Loss) per Share Basic and diluted earnings (loss) per share are computed based on the weighted-average outstanding shares of common stock, which are all voting shares. Diluted net loss per share is computed giving effect to all proportional shares of common stock, including stock options and warrants to the extent dilutive. Basic net loss per share was the same as diluted net loss per share for the years ended December 31, 2019 and 2018 as the inclusion of all potential common shares outstanding would have an anti-dilutive effect. "Penny warrants" were not excluded from calculation of outstanding shares for purposes of basic earnings per share. The total number of potentially dilutive common shares that were excluded at December 31, 2019 and 2018 was as follows: Potentially Dilutive 2019 2018 Warrants to purchase Common Shares 6,595,631 5,054,759 Common Shares issuable on exercise of options 1,661,466 243,182 Total potentially dilutive Common Shares excluded 8,257,097 5,297,941 Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At times, the Company's cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation. At December 31, 2019, the Company held a balance in a checking account that exceeded federally insured limits by approximately $0.4 million and held approximately $6.1 million in non-FDIC insured cash equivalent investments. At December 31, 2018 the Company held a balance in a checking account that exceeded federally insured limits by approximately $3.4 million. Intangible Assets Intangible assets consist primarily of the trademarks and copyrights. The trademarks and copyrights will be amortized using the straight-line method based on an estimated useful life of 20 years. Impairment of Long-Lived Assets The Company's long-lived assets (consisting of the trademarks) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Research and Development Research and development costs are charged to expense as incurred and include direct trial expenses such as fees due to contract research organizations, consultants which support our research and development endeavors, the acquisition of technology rights without an alternative use, and compensation and benefits of clinical research and development personnel. Certain of research and development costs, in particular fees to contract research organizations ("CROs"), are structured as milestone payments, payments due on the occurrence of certain key events. Where such milestone payments is greater than the payments earned through the provision of such services, the Company recognizes such payments as prepaid assets, which are recorded as expense as such services are incurred. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Stock-Based Compensation The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC 718, Compensation - Stock Based Compensation ("ASC 718"). The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of options granted using the Black Scholes Merton model. The Company estimates when and if performance-based awards will be earned. If an award is not considered probable of being earned, no amount of equity-based compensation expense is recognized. If the award is deemed probable of being earned, related equity-based compensation expense is recorded. The fair value of an award ultimately expected to vest is recognized as an expense, net of forfeitures, over the requisite service, which is generally the vesting period of the award. The Black Scholes Merton model requires the input of certain subjective assumptions and the application of judgment in determining the fair value of the awards. The most significant assumptions and judgments include the expected volatility, risk-free interest rate, the expected dividend yield, and the expected term of the awards. The assumptions used in our option pricing model represent management's best estimates. If factors change and different assumptions are used, our equity-based compensation expense could be materially different in the future. The key assumptions included in the model are as follows: ● Expected volatility — Management determined the expected price volatility based on the historical volatilities of peer group companies as the Company does not have a sufficient trading history. Industry peers consist of several public companies in the bio-tech industry similar in size, stage of life cycle, and capital structure. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company's own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. ● Risk-free interest rate — The risk free rate was determined based on yields of U.S. Treasury Bonds of comparable terms. ● Expected dividend yield — The Company has not previously issued dividends and do not anticipate paying dividends in the foreseeable future. Therefore, we used a dividend rate of zero based on our expectation of additional dividends. ● Expected term —The expected term of the options was estimated using the simplified method. Common shares issued to third parties for services provided are valued based on the fair value of the Company's common shares as determined by the market closing price of a share of our common stock on the date of the Commitment to make the issuance. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense. Fair Value of Financial Instruments and Fair Value Measurements Significant items subject to such estimates and assumptions include the valuation of stock-based compensation, derivative liabilities, accruals associated with third party providers supporting clinical trials, contingent liabilities and income tax liability. Authoritative literature establishes a three-level valuation hierarchy for disclosures of fair value measurements and disclosure. The carrying amounts reported in the balance sheets for current liabilities, convertible notes, Senior Notes, Senior Secured Bridge Notes, and Subordinated Notes are a reasonable estimate of their fair values 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 carrying value of all other financial liabilities at cost approximates fair value. The three levels of valuation hierarchy are defined as follows: ● Level 1: Observable inputs such as quoted prices in active markets; ● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Adoption of Recent Accounting Pronouncements Leases — Stock Compensation Recent Accounting Pronouncements Fair Value |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | 3 — INTANGIBLE ASSETS, NET Intangible assets, net consist of the following: Useful December 31, 2019 December 31, Trademarks and Copyrights 20 years $ 11,300 $ 11,300 Less: Accumulated amortization (5,130 ) (4,565 ) Intangible Assets, net $ 6,170 $ 6,735 Amortization of trademarks and copyrights amounted to $565 and $563 the years ended December 31, 2019 and 2018, respectively. At December 31, 2019, the future remaining amortization periods for trademarks and copyrights are approximately 12 years. |
Accrued Expenses
Accrued Expenses | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Payables and Accruals [Abstract] | ||
ACCRUED EXPENSES | 4 — ACCRUED EXPENSES Accrued liabilities consist of the following: March 31, December 31, Accrued employee compensation $ 111,769 $ 263,914 Legal and consulting services 25,350 68,056 Clinical research organization services and expenses 46,328 16,877 Minimum license royalties 10,000 – Total accrued liabilities $ 193,447 $ 348,847 | 4 — ACCRUED EXPENSES Accrued liabilities consist of the following: December 31, December 31, Accrued employee compensation $ 263,914 $ 132,341 Consulting services 68,056 25,962 Clinical Research Organization services and expenses 16,877 - Total accrued liabilities $ 348,847 $ 158,303 |
Senior Secured Notes
Senior Secured Notes | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
SENIOR SECURED NOTES | 5 — SENIOR SECURED NOTES Senior Secured Bridge Note Effective May 1, 2017, the Company entered into a senior secured bridge note financing with a third party investment fund (the "Senior Holder") for the principal sum of $287,500 (the "Senior Secured Bridge Note") of which $250,000 was received as proceeds and $37,500 was recorded as original issue discount. The interest on the principal amount was at the rate of two percent per annum. The maturity date at issue was November 1, 2017, at which time the principal and accrued and unpaid interest and other fees therein, was due and payable. The Senior Secured Bridge Note was secured by all the assets held by the Company. After amending the Senior Secured Bridge Note and extending its terms on October 23, 2017 and November 20, 2017, the Company executed an agreement to settle in full the outstanding Senior Secured Bridge Note on February 22, 2018. Under the terms of this agreement, the Company paid $150,000 at time of execution of the settlement and was to pay an additional cash payment of $100,000 at the Next Financing, as defined. In addition, at such time the Next Financing closed, the Company agreed to issue to the holder (i) warrants to purchase a number of shares of the Company's common stock equal to $325,000 divided by the price per share of the Next Financing; and (ii) a number of shares of the Company's common stock equal to $50,000 divided by the price per unit of the Next Financing. The warrants were to have an exercise price equal to the price per share of the Next Financing and a term of two years. On July 31, 2018, on completion of the IPO and as required under the terms of the settlement agreement, the Company made a cash payment of $100,000 and issued 10,020 shares of common stock and warrants to purchase 65,130 shares of common stock at an exercise price of $4.99 per share. The net loss on extinguishment was $97,593. Interest expense on the Senior Secured Note in the year ended December 31, 2018 was $24,431. Senior Secured Notes (Related Parties $470,000) On February 22, 2018 and March 1, 2018, the Company entered Security Purchase Agreements to issue Secured Notes (the "Secured Notes") to a number of Company directors and a consultant in the aggregate principal amount of $510,000. The Secured Notes ranked pari passu Additionally, upon the consummation by the Company of any debt or equity financing in the amount of $2 million or more (the "Next Financing"), the Company agreed to issue to the holders (i) warrants to purchase the securities offered in the Next Financing, such aggregate number of securities to be equal to 400% of the aggregate principal amount of the Secured Notes divided by the price per security of the Next Financing; and (ii) an aggregate number of the securities offered equal to 400% of the of the aggregate principal amount of the Secured Notes divided by the price per security of the Next Financing Secured Notes. The warrants issued have an exercise price equal to the price per security of the Next Financing and a term of five years. On June 8, 2018, the Secured Notes were amended, extending the maturity date to August 1, 2018. In addition to the extension of term, the extension fees were changed as follows: the extension fee for extension to the fifth month anniversary of the issue date was eliminated, the fee for extension to the sixth month anniversary of the issue date was made 99.4% of the principal amount, and the fee for extension to the seventh month anniversary of the issue date was made an additional 46.3% of the principal amount. On July 31, 2018, upon the consummation of the IPO and as required by the terms of the Secured Notes, the principal and interest outstanding of the Secured Notes was paid in full and 408,000 units (376,000 units to related parties), each unit consisting each of a share of common stock and a warrant to purchase of a share of common stock at an exercise price of $6.25 per share and 408,000 Unit Warrants (376,000 Unit Warrants to related parties) were issued. The loss on extinguishment of the Secured Notes was $3,399,902. For the year ended December 31, 2018, interest and financing charges on the Secured Notes was $548,229. Senior Note On June 3, 2018, the Company entered into a Security Purchase Agreement in the principal amount of $325,000 to one accredited institutional investor (the "June 2018 Senior Note"). The June 2018 Senior Note ranked pari passu with respect to seniority as to payment with the $510,000 in outstanding other Secured Notes, senior as to payment as to all other outstanding debt and was secured by a lien on substantially all of the Company's assets. The June 2018 Senior Note was issued at an original issue discount of 15.4%, or $50,000, did not bear interest and was payable on March 5, 2019 or upon an earlier event of default, including, without limitation, a change of control of the Company. The June 2018 Senior Note was convertible into shares of the Company's common stock at a conversion price of $2.00 per share, subject to adjustment for certain dilutive issuances. Additionally, in the event of the consummation by the Company of a Dilutive Financing (defined as any debt or equity financing in the amount of $2,000,000 or more, at a price of less than $4.00 per share of common stock), the Company agreed to reduce the conversion price then in effect to a price equal to 50% of the per share price of the common stock issued in the Dilutive Financing. The Company also issued to the investor a warrant to purchase 300,000 shares of its common stock exercisable at $3.75 per share which will be exercisable for a term of five years. At the time of the issuance of the June 2018 Senior Note, the Company discounted the principal by $222,950 for the relative value of the warrants issued and $52,050 for the relative value of the beneficial conversion feature, for total additional paid in capital of $275,000, which was the entire cash value of the June 2018 Senior Note at issuance. On December 19, 2018, the holder of the June 2018 Senior Note elected to convert the entire outstanding principal of $325,000 into shares of common stock at the conversion price of $2.00 per share, as a result of which the Company issued to the holder 162,500 shares of common stock. At the time of conversion, the amortization of the remaining discounts to the June 2018 Senior Note was accelerated and recognized an interest expense of $186,397. For the year ended December 31, 2018, interest expense on the June 2018 Senior Note was $325,000, including the expense recognized on conversion referred to above. |
Subordinated Notes - Related Pa
Subordinated Notes - Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Subordinated Debt Related Parties [Abstract] | |
SUBORDINATED NOTES - RELATED PARTIES | 6 — SUBORDINATED NOTES — RELATED PARTIES On November 20, 2017, the Company issued subordinated notes (the "Subordinated Notes"), subordinate to the Senior Secured Bridge Note, to certain insiders, including Directors and a Consultant, (the "Subordinated Holders") in the aggregate principal amount of $115,000, of which $100,000 was received as proceeds and $15,000 was recorded as original issue discount. In addition, upon repayment, the Subordinated Holders were to receive warrants to purchase shares of the Company's common stock in the amount equal to the principal of the Subordinated Notes and at an exercise price per share equal to 100% of the IPO price. On February 22, 2018, the Subordinated Notes were settled in full, including unpaid interest and warrant issuance obligations, for newly issued Senior Secured Notes in the principal amount of $100,000. As a result, the Company realized a gain of $12,241 and no stock or warrants were issued. For the years ended December 31, 2018, interest expense on the notes was $4,637. |
Convertible Notes - Related Par
Convertible Notes - Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES - RELATED PARTIES | 7 — CONVERTIBLE NOTES — RELATED PARTIES In September and December, 2016, the Company issued convertible notes (the "2016 Convertible Notes") with an outstanding unsecured principal amount of $235,000 to its members, including Directors and Officers. The principal and interest was originally due in 2029, and the 2016 Convertible Notes bore interest at a rate of 15% per annum. The 2016 Convertible Notes were to automatically convert to common stock in the event the Company issued and sold either common or preferred stock of $2,000,000 or more. The conversion price would be either one third the price offered during the financing round that triggers the conversion, or the price obtained by dividing $2,000,000 by the Company's fully-diluted capitalization at the time of the financing round that triggers the conversion (the "Conversion Cap Price"), whichever were lower. Upon maturity of the 2016 Convertible Notes, the holder might elect to convert the 2016 Convertible Notes into common stock as if a sale of the Company had occurred on the maturity date. On July 31, 2018, as a result of the IPO and as required under the terms of the 2016 Convertible Notes, the outstanding principal and accrued interest on the 2016 Convertible Notes was converted at the Conversion Cap Price to 700,854 shares of common stock and 700,845 warrants to purchase shares of common stock at an exercise price of $6.25 per share (395,118 shares of common stock and 395,118 warrants to purchase shares of common stock). At the time of the conversion, the Company recognized a de minimus net gain on extinguishment of $752. The total interest expense on these notes in the year ended December 31, 2018 was $264,749. |
Related Party Transactions
Related Party Transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | 5 — RELATED PARTY TRANSACTIONS In January 2011, the Company entered into an exclusive, worldwide license agreement with The University of Virginia Patent Foundation d/b/a the University of Virginia Licensing and Ventures Group (the "UVA LVG") for rights to make, use or sell licensed products in the United States based upon patents and patent applications made and held by UVA LVG (the "UVA LVG License"). The Company is required to pay compensation to the UVA LVG, as described Note 7. A certain percentage of these payments by the Company to the UVA LVG may then be distributed to the Company's former Chairman of the Board who currently serves as the Company's Chief Medical Officer in his capacity as inventor of the patents by the UVA LVG in accordance with their policies at the time. See Note 7 for related party vendor, consulting, and lease agreements. | 8 — RELATED PARTY TRANSACTIONS In January 2011, the Company entered into an exclusive, worldwide license agreement with The University of Virginia Patent Foundation d/b/a the University of Virginia Licensing and Ventures Group (the "UVA LVG") for rights to make, use or sell licensed products in the United States based upon patents and patent applications made and held by UVA LVG (the "UVA LVG License"). The Company is required to pay compensation to the UVA LVG, as described Note 11. A certain percentage of these payments by the Company to the UVA LVG may then be distributed to the Chairman of the Board in his capacity as inventor of the patents by the UVA LVG in accordance with their policies at the time. On January 29, 2018, the Company entered a Medical Translations services agreement with Medico-Trans Company, LLC ("MTC"), a company under the control of the Chairman of the Board, whereby MTC agreed to perform $67,304 in medical translation services, to be paid on occurrence of a qualified financing of $2,000,000 or more; or, in the event that a qualified financing had not taken place by February 10, 2018, for installment payments of $22,000 on February 10, 2018, $22,000 on March 10, 2018, and the remaining balance on April 10, 2018, and to issue to MTC on consummation of a qualified financing a number of shares of common stock equal to $201,911 divided by the price per share of the qualified financing. The Company made $68,540 in payments to MTC, paying the entire balance and accrued interest thereon. Of these payments, $51,540 were in cash, and the remaining $17,000 payment was converted to the principal balance of a Secured Note (see Note 5). On consummation of the IPO, MTC was issued 40,463 shares of common stock, as required under the terms it the agreement. On January 29, 2018, the CEO made a payment of $21,000 to Kilburn & Strode, a patent firm, on behalf of the Company for expenses relating to validation of Adial patents, and for which he submitted an expense report. On March 1, 2018 the expense report payable was converted to the principal balance of a Senior Note (see Note 5). On February 22, 2018, the Company executed a Backstop Commitment Agreement ("BCA") with MVA 151 Investors, LLC ("MVA"), a company controlled by Company Director Kevin Schuyler, pursuant to which MVA agreed to guarantee the purchase of up to $242,000 ("the Backstop Amount") in the principal amount of Secured Notes then offered for subscription and unsubscribed on March 1, 2018 (the "Backstop Commitment"). In consideration of this backstop commitment, at such time as the Company completed the Next Financing, as defined, the Company agreed to issue MVA (i) warrants to purchase a number of shares of the Company's common stock equal to 150% of the Backstop Amount divided by the price per share of the Next Financing and (ii) a number of units of Company common stock equal to 50% of the Backstop Amount divided by the price per share of the Next Financing. The warrants are to have an exercise price equal to the price per share of the Next Financing and a term of five years. On March 1, MVA invested $92,000 in Secured Notes as a result of the BCA, this amount being the $242,000 backstop amount less $150,000 in additional subscriptions received between February 22, 2018 and March 1, 2018. This investment fully satisfied the Backstop Commitment and left MVA with no further associated obligation to invest. At the time of the IPO, the Company issued MVA 151 Investors 24,200 shares of common stock, 24,200 warrants to purchase a share of common stock at an exercise price of $6.25, and 72,600 warrants to purchase a unit (each unit consisting of a share of common stock and a warrant to purchase a share of common stock at an exercise price of $6.25) at an exercise price of $5.00 per unit. The total cost of the issuances made as a result of the backstop agreement was $385,181, included in the net loss recognized on the Senior Secured Notes (see Note 5). On April 25, 2016, the Company entered into a Consulting Agreement with a consultant, who now serves as the Company's Chief Operating Officer and Chief Financial Officer, at a compensation rate of $2,000 per month, adjusted to $3,200 per month in December 31, 2017. This consultant was to be awarded 0.5% of a transaction, as defined by and under the terms of the Company's PBP, but was issued 44,636 shares of common stock on retirement of the plan in 2018 (see Note 11). For the years ended December 31, 2018, total fees charged by this consultant were $25,600. Effective July 25, 2018, this consultant was employed as COO/CFO under the terms of an employment agreement (see Note 11) that superseded the consulting agreement. Related parties that participated in the July 31, 2018 initial public offering included: (i) William Stilley, the CEO, who purchased 80,000 units consisting of 80,000 shares of common stock and warrants to purchase 80,000 shares of common stock at an exercise price of $6.25 per share; (ii) Kevin Schuyler, Vice Chairman of the Board of Directors and Lead Independent Director, who purchased 90,000 units consisting of 90,000 shares of common stock and warrants to purchase 90,000 shares of common stock at an exercise price of $6.25 per; (iii) James Newman, a Director, who purchased 10,000 units, consisting of 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock at an exercise price of $6.25 per share, personally and 10,000 units, consisting of 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock at an exercise price of $6.25 per share though a Roth IRA for his benefit; (iv) Bankole Johnson, Chairman, who purchased 1,400 units consisting of 1,400 shares of common stock and warrants to purchase 1,400 shares of common stock at an exercise price of $6.25 per share; (v) Keller Enterprises LLC, an affiliate of Robertson Gilliland, a Director, which purchased 14,000 units consisting of 14,000 shares of common stock and warrants to purchase 14,000 shares of common stock at an exercise price of $6.25 per share; (vi) Bankole Johnson, Chairman, who purchased 1,400 units consisting of 1,400 shares of common stock and warrants to purchase 1,400 shares of common stock at an exercise price of $6.25 per share; (vii) Tony Goodman, a Director, who purchased 7,000 units consisting of 7,000 shares of common stock and warrants to purchase 1,400 shares of common stock at an exercise price of $6.25 per share. See Notes 5,6,7, and 11 for related party debt transactions and Note 11 for related party vendor and consulting agreements. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
SHAREHOLDERS' EQUITY | 6 — SHAREHOLDERS' EQUITY Common Stock Issuances On January 22, 2019, the Company issued 250,000 unregistered shares of common stock upon the exercise of the warrant to purchase 300,000 shares of common stock at an exercise price of $3.75 per share for a cash payment of $468,750 and the cashless exercise of the remaining warrant. On January 31, 2019, the Company issued 22,311 unregistered shares of common stock upon the full cashless exercise of a warrant to purchase 65,130 shares of common stock at an exercise price of $4.99 per share. On February 22, 2019, the Company concluded a follow-on offering of 2,475,000 shares of common stock and warrants to purchase 1,856,250 shares of common stock at an exercise price of $4.0625 per share. The shares of common stock and accompanying warrants were sold to the public at a price of $3.25 per share and warrant. The underwriters were granted an over-allotment option to purchase up to 371,250 shares of common stock and warrants to purchase 278,437 shares of common stock at a price of $3.25 per share of common stock and warrant. The underwriters partially exercised their over-allotment option by purchasing 370,000 shares of common stock and warrants to purchase 277,500 shares common stock. Gross proceeds of the offering, totaled $9,246,249, which after offering expenses, resulted in net proceeds of $8,195,673. On March 3, 2020, the Compensation Committee of Board of Directors of the Company awarded the Company's executive officers, William B. Stilley, Chief Executive Officer, and Joseph Truluck, Chief Financial Officer, performance bonuses for 2019, partially paid in common stock of the Company to preserve cash, of $42,000 and $21,000 in cash, respectively, and 54,167 and 27,084 shares of the Company's common stock, respectively, which shares are subject to a six-month contractual restriction on sale. Of the $180,002 total cost of these bonuses, $150,000 were recognized in the year ended December 31, 2019 as expected under these executives' contracts, and the remaining $30,002 in bonus was recognized as time of issue as Board discretionary. The cost of the equity component of these issuances was recorded as contributed equity of $117,001. During the three months ended March 31, 2020, the Company issued 180,000 shares of common stock to consultants for services rendered at a total cost of $210,300. 2017 Equity Incentive Plan On October 9, 2017, the Company adopted the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the "2017 equity incentive plan"); which became effective on July 31, 2018. Initially, the aggregate number of shares of our common stock that may be issued pursuant to stock awards under the 2017 equity incentive plan was 1,750,000 shares. On August 16, by a vote of the shareholders, the number of shares issuable under the plan was increased to 3,500,000. At March 31, 2020, we had issued 614,438 shares and had outstanding 2,481,191 options to purchase shares of our common stock under the 2017 equity incentive plan. Stock Options The following table provides the stock option activity for the three months ended March 31, 2020: Total Options Outstanding Weighted Average Remaining Term (Years) Weighted Average Exercise Price Weighted Average Fair Value at Issue Outstanding December 31, 2019 1,661,466 9.14 3.38 2.38 Issued 1,100,000 1.44 1.13 Cancelled (140,589 ) 3.30 2.54 Outstanding March 31, 2020 2,620,877 8.49 2.57 1.84 Outstanding March 31, 2020, vested and exercisable 697,960 7.12 $ 3.50 $ 2.57 At March 31, 2020, the intrinsic value totals of the outstanding options were $0. The Company used the Black Scholes valuation model to determine the fair value of the options issued, using the following key assumptions for the three months ended March 31, 2020 and 2019: March 31, Fair Value per Share $ 1.44 Expected Term 5.75 years Expected Dividend $ 0 Expected Volatility 102.4 % Risk free rate 0.72 % Compensation expense associated with issuance of options was recognized using the straight-line method over the requisite service period. During the three months ended March 31, 2020, 1,100,000 options to purchase shares of common stock were issued at a cost of $1.13 per option, for a total cost of $1,243,000 to be amortized over a service a weighted average period of three years. As of March 31, 2020, $3,305,359 in further compensation expense resulting from issued options remained to be recognized over a weighted average remaining service period of 2.57 years. The components of stock-based compensation expense included in the Company's Statements of Operations for the three months ended March 31, 2020 and 2019 are as follows: Three months ended March 31 2020 2019 Research and development options expense 86,439 43,174 Total research and development expenses 86,439 43,174 General and administrative options expense 255,568 85,976 Stock issued to consultants and employees 228,626 154,854 Total general and administrative expenses 484,194 240,830 Total stock-based compensation expense $ 570,633 $ 284,004 Stock Warrants The following table provides the activity in warrants for the respective periods. Total Warrants Weighted Average Remaining Term (Years) Weighted Average Exercise Price Average Intrinsic Value Outstanding December 31, 2019 6,669,274 4.23 $ 5.38 0.03 Issued – NA NA NA Exercised – NA NA NA Outstanding March 31, 2020 6,669,274 3.98 $ 5.38 0.01 During the three months ended March 31, 2020, no warrants to purchase shares of common stock were either issued or exercised. | 9 — SHAREHOLDERS' EQUITY Equity Issuances/Repurchases On April 1, 2018, the Company issued 292,309 shares of common stock to Company officers and a director in compensation for termination, by mutual agreement of the Performance Bonus Plan. At the time of this issuance, the company recognized an stock-based compensation expense of $1,461,545. On July 31, 2018, the Company concluded its initial public offering of 1,464,000 units, each unit consisting of one share of common stock and a warrant for the purchase of one share of common stock with an exercise price of $6.25 (the "Offering Warrants"). The units were sold to the public at a price of $5.00 per unit. The underwriters were granted an overallotment option to purchase up to 219,600 shares of common stock at $4.99 per share and up to 219,600 Offering Warrants for $0.01 per Offering Warrant. The underwriters exercised their overallotment option to purchase 170,652 Offering Warrants for $1,707. The Company also issued 58,560 warrants to the underwriter as compensation. Gross proceeds of the offering, totaled $7,321,706, which after offering expenses, resulted in net proceeds of $6,267,932. On July 31, 2018 the Company issued 700,855 shares of common stock as part of units to holders of the 2016 Convertible Notes upon conversion of the 2016 Convertible Notes at consummation of the IPO, resulting in $545,307 recorded in equity upon conversion. On July 31, 2018, the Company issued 388,860 shares of common stock and 444,608 warrants to consultants, employees, and contractors on consummation of the IPO, which resulted in stock-based compensation expenses of $3,436,406. On July 31, 2018, the Company issued 442,220 shares of common stock, 480,600 warrants in units and 497,330 warrants in common stock resulting in $4,132,398 recorded in equity due to stock and warrants issuances in connection with debt settlements. On November 26, 2018, the Company issued 100,000 shares of common stock to a consultant at the market price of $1.66 per share for a total cost of $166,000. On December 15, 2018, the Company issued 18,750 shares of common stock to a consultant at the market price of $2.80 per share for a total cost of $52,500. On December 26, 2018, the Company issued 25,000 shares of common stock on exercise of 25,000 previously issued tradeable warrants for the warrant exercise price of $6.25 per share, for a total cash receipt of $156,250. On January 22, 2019, the Company issued 250,000 unregistered shares of common stock upon the exercise of the warrant to purchase 300,000 shares of common stock at an exercise price of $3.75 per share for a cash payment of $468,750 and the cashless exercise of the remaining warrant. On January 31, 2019, the Company issued 22,311 unregistered shares of common stock upon the full cashless exercise of a warrant to purchase 65,130 shares of common stock at an exercise price of $4.99 per share. On February 22, 2019, the Company concluded the Follow-on Offering of 2,475,000 shares of common stock and warrants to purchase 1,856,250 shares of common stock at an exercise price of $4.0625 per share. The shares of common stock and accompanying warrants were sold to the public at a price of $3.25 per share and warrant. The underwriters were granted an over-allotment option to purchase up to 371,250 shares of common stock and warrants to purchase 278,437 shares of common stock at a price of $3.25 per share of common stock and warrant. The underwriters partially exercised their over-allotment option by purchasing 370,000 shares of common stock and warrants to purchase 277,500 shares common stock. Gross proceeds of the offering, totaled $9,246,249, which after offering expenses, resulted in net proceeds of $8,195,673. During the year ended December 31, 2019, 93,100 previously-registered shares of common stock were issued as a result of the exercise of tradeable warrants to purchase 93,100 shares of common stock at an exercise price of $6.25 per share for cash payments of $581,875 and 61,005 unregistered shares of common stock were issued as a result of the exercise of at an exercise price of $0.005 per share for cash payments of $325. During the year ended December 31, 2019, the Company issued 184,437 shares of common stock to consultants for services rendered at a total cost of $440,745. Stock Options The following table provides the activity in options for the respective periods: Total Options Outstanding Weighted Average Remaining Term (Years) Weighted Average Exercise Price Weighted Average Fair Value at Issue Outstanding December 31, 2017 174,282 9.50 5.70 4.84 Issued 68,900 10.00 $ 2.80 $ 2.21 Outstanding December 31, 2018 243,182 8.93 $ 4.88 $ 4.09 Issued 1,452,880 10.00 3.19 2.21 Cancelled (34,596 ) 8.35 5.70 4.23 Outstanding December 31, 2019 1,661,466 9.14 3.38 2.38 Outstanding December 31, 2019, vested and exercisable 488,573 8.30 $ 3.66 $ 2.73 At December 31, 2019, the intrinsic value totals of the outstanding options were $83,845. The Company used the Black Scholes valuation model to determine the fair value of the options issued, using the following key assumptions for the years ended December 31, 2019 and 2018: 2019 2018 Fair Value per Share $ 1.45-3.39 $ 2.80 Expected Term 1.46-5.75 years 6.5 years Expected Dividend $0 $0 Expected Volatility 97.37-101.09 % 95.77 % Risk free rate 2.32-2.51 % 2.79 % Compensation expense associated with issuance of options was recognized using the straight-line method over the requisite service period. During the years ended December 31, 2019 and 2018, total stock-based compensation expense from the options issued was $1,078,573 and $251,903, respectively, which were classified as research and development and general and administrative expense as presented in the table below. As of December 31, 2019, $2,544,283 in further compensation expense resulting from issued options remained to be recognized over a weighted average remaining service period of 1.64 years. The components of stock-based compensation expense included in the Company's Statements of Operations for the years ended December 31, 2019 and 2018 are as follows: Year ended December 31 2019 2018 Research and development options expense 355,229 52,452 Total research and development expenses 355,229 52,452 General and administrative options expense 723,344 199,451 Stock granted for Performance Bonus Plan Cancellation – 1,461,545 Stock and warrants granted in IPO – 3,436,406 Stock issued to consultants 523,745 218,500 Total general and administrative expenses 1,247,089 5,315,902 Total stock-based compensation expense $ 1,602,318 $ 5,368,354 Stock Warrants The following table provides the activity in warrants for the respective periods. Total Warrants Weighted Average Remaining Term (Years) Weighted Average Exercise Price Average Intrinsic Value Outstanding December 31, 2017 482,555 11.20 5.51 1.38 Issued 4,547,204 5.00 5.82 0.00 Exercised (25,000 ) 4.59 6.25 0.06 Outstanding December 31, 2018 5,054,759 5.07 $ 5.72 $ 0.61 Issued 2,133,750 5.00 4.06 0.00 Exercised (519,235 ) 4.17 4.07 1.32 Outstanding December 31, 2019 6,669,274 4.23 $ 5.38 0.03 During the year ended December 31, 2019, warrants to purchase 93,100 shares of common stock with an exercise price of $6.25 per share of common stock were exercised for $581,875, warrants to purchase 125,000 shares of common stock with an exercise price of $3.75 per share of common stock were exercised for $468,750, 61,005 warrants to purchase 61,005 shares of common stock with an exercise price of $0.005 per share of common stock were exercised for $325, and 240,130 warrants were exercised on a cashless basis for the issue of 147,311 shares of common stock. The total received in exercise fees for exercise of warrants was $1,050,950, resulting in the issue of a total of 426,416 shares of common stock, of which 405,830 shares of common stock were unregistered at the time of issuance. 2017 Equity Incentive Plan On October 9, 2017, we adopted the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the "2017 equity incentive plan"); which became effective on July 31, 2018. Initially, the aggregate number of shares of our common stock that may be issued pursuant to stock awards under the 2017 equity incentive plan is 1,750,000 shares. On August 16, by a vote of the shareholders, the number of shares issuable under the plan was increased to 3,500,000. At December 31, 2019, we had issued 353,187 shares and options to purchase an aggregate of 1,521,780 shares of our common stock under the 2017 equity incentive plan. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 10 — INCOME TAXES Background The Company was reorganized as a C corporation on October 1, 2017. Prior to reorganization, for federal and state income tax purposes, the Company was a limited liability company treated as a partnership, in which income tax liabilities and/or benefits were passed through to the Company's unitholders. As such, the Company did not directly pay federal and state income taxes and recognition was not given to federal and state income taxes for the operations of the Company prior to reorganization. After reorganization, the Company became a taxable entity. On reincorporation, the Company recapitalized $10,673,709 in retained deficits and 2017 losses prior to reincorporation to additional paid in capital, leaving a retained deficit $403,992 as the basis for a potential loss carryforward. The Company's tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The annual effective tax rate is estimated to be a combined 27% for the U.S. federal and state statutory tax rates for the years ended December 31, 2019 and 2018. We review tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of December 31, 2019 and 2018, there were no tax contingencies or unrecognized tax positions recorded. Rate Reconciliation A reconciliation of the statutory Federal income tax rate and effective rate of the provision for income taxes is as follows: Year ended December 31, 2019 2018 Computed "expected" tax benefit $ (1,804,200 ) (2,442,589 ) Increase (reduction) in income taxes resulting from: State Tax, net of federal (225,900 ) (697,883 ) Stock Compensation and Warrant Modification 372,190 — Miscellaneous 17,572 — Non-deductible finance charges and loss on debt extinguishment — 1,255,918 Change in the valuation allowance 1,640,338 1,884,554 Total income tax expense/(benefit) $ — — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets as of December 31, 2019 and 2018, respectively, are as follows: Deferred Tax Assets (rounded) Total Total Deferred Tax Asset 2019 2018 2019 2018 Net operating loss carry-forward 14,120,000 7,132,000 3,635,000 1,926,000 Stock based compensation — 252,000 — 68,000 Intangible Assets (1,000 ) — (0 ) — Less: valuation allowance (14,119,000 ) (7,384,000 ) (3,635,000 ) (1,994,000 ) Total $ — $ — $ — $ — The Company has a net operating loss carry-forward for federal and state tax purposes of approximately $14.1 million at December 31, 2019, that is potentially available to offset future taxable income. The 20-year limitation was eliminated for losses generated after January 1, 2018, giving the taxpayer the ability to carry forward losses indefinitely. However, NOL carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income. In assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, net operating loss carryback potential and tax planning strategies in making these assessments. Based on the above criteria, the Company believes that it is more likely than not that the remaining deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance of $3.6 million against the net deferred tax asset that is not realizable. Section 382 of the Internal Revenue Code ("Section 382") imposes limitations on a corporation's ability to utilize net operating losses if it experiences an "ownership change." In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. Any unused annual limitation may be carried over to later years, and the amount of the limitation may under certain circumstances be increased by the built-in gains in assets held by us at the time of the change that are recognized in the five-year period after the change. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which they operate. In the normal course of business, the Company is subject to examination by Federal and state jurisdictions where applicable based on the statute of limitations that apply in each jurisdiction. As of December 31, 2019, open years related to the Federal and state jurisdictions are 2018 & 2017. Since the Company was not a taxable entity prior to reincorporation, examination of returns for years prior to 2017 will not result in changes to tax liability or benefit. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | 7 — COMMITMENTS AND CONTINGENCIES License with University of Virginia Patent Foundation In January 2011, the Company entered into an exclusive, worldwide license agreement with (the "UVA LVG") for rights to make, use or sell licensed products in the United States based upon the ten separate patents and patent applications made and held by UVA LVG. As consideration for the rights granted in the UVA LVG License, the Company is obligated to pay UVA LVG yearly license fees and milestone payments, as well as a royalty based on net sales of products covered by the patent-related rights. More specifically, the Company paid UVA LVG a license issue fee and is obligated to pay UVA LVG (i) annual minimum royalties of $40,000 commencing in 2017; (ii) a $20,000 milestone payments upon dosing the first patient under a Phase 3 human clinical trial of a licensed product, $155,000 upon the earlier of the completion of a Phase 3 trial of a licensed product, partnering of a licensed product, or sale of the Company, $275,000 upon acceptance of an NDA by the FDA, and $1,000,000 upon approval for sale of AD04 in the U.S., Europe or Japan; as well as (iii) royalties equal to a 2% and 1% of net sales of licensed products in countries in which a valid patent exists or does not exist, respectively, with royalties paid quarterly. In the event of a sublicense to a third party, the Company is obligated to pay royalties to UVA LVG equal to a percentage of what the Company would have been required to pay to UVA LVG had it sold the products under sublicense ourselves. In addition, the Company is required to pay to UVA LVG 15% of any sublicensing income. The license agreement may be terminated by UVA LVG upon sixty (60) days written notice if the Company breaches its obligations thereunder, including failing to make any milestone, failure to make required payments, or the failure to exercise diligence to bring licensed products to market. In the event of a termination, the Company will be obligated to pay all amounts that accrued prior to such termination. The term of the license continues until the expiration, abandonment or invalidation of all licensed patents and patent applications, and following any such expiration, abandonment or invalidation will continue in perpetuity on a royalty-free, fully paid basis. The Company executed an amendment, dated December 14, 2017, which changed the dates by which the Company, using commercially reasonable efforts, was to achieve the goals of submitting a New Drug Application to the FDA for a licensed product to December 31, 2024 (from December 31, 2023) and commencing commercialization of an FDA approved product by December 31, 2025 (from December 31, 2024). If the Company were to fail to use commercially reasonable effort and fail to meet either goal, the licensor would have the right to terminate the license. The Company executed a further amendment to the license agreement, dated December 18, 2018, changing the date at which the Company must have initiated a Phase 3 trial to December 31, 2019. On December 31, 2019, the Company executed a further amendment to the license agreement which, among other things, removed in its entirety the diligence milestone to initiate a Phase 3 clinical trial by December 31, 2019. Furthermore, the Company agreed to pay upon execution of the Amendment the diligence milestone payment of $20,000 that had been due upon initiation of a Phase 3 clinical trial. In addition, the Company agreed to use and will continue to use best efforts to dose a first patient with a Licensed Product (as defined in the License Agreement) in a Phase 3 clinical trial on or before March 31, 2020. In March of 2020, the first patient was dosed with AD04 after having joined the Company's trial, satisfying this term of the license agreement. During the three months ended March 31, 2020, the Company recognized a $10,000 minimum license royalty expense under this agreement. Clinical Research Organization (CRO) On October 31, 2018, the Company entered into a master services agreement ("MSA") with Crown CRO Oy ("Crown") for contract clinical research and consulting services. The MSA has a term of five years, automatically renewed for two-year periods, unless either party gives written notice of a decision not to renew the agreement three months prior to automatic renewal. The agreement can be terminated by the Company if, in the Company's reasonable opinion, clinical or non-clinical data support termination of the clinical research for safety reasons. On November 16, 2018, the Company and Crown entered into Service Agreement 1 under the MSA for a 24 week, multi-centered, randomized, double-blind, placebo-controlled, parallel-group, Phase 3 clinical study of the Company's lead compound, AD04. The MSA or a service agreement under it may be terminated by the Company, without penalty, on fourteen days written notice. On June 28, 2019, the Company and Crown Executed a change order to Service Agreement 1 increasing Crown's fee from $3,262,411 (€2,958,835 converted to dollars at the Euro/US Dollar exchange rate of 1.1026 as of March 31, 2020) to $3,494,024 (€3,168,895) and rescheduling future milestone payments as shown below. On November 21, 2018, the Company made the initial prepayment under the agreement of $505,960, after exchange to US dollars at the rate then prevailing. The fees are to be paid as milestones are reached on the following schedule. On September 30, 2019, the Company received an invoice for the 10% milestone payment associated with the first submission of a trial application to a national regulatory authority and recorded a prepaid expense of $294,124. On February 1, 2020, the first site initiation visit ("SIV") of a study site had been completed and the second milestone of €269,938, was recognized as a prepaid expense of $299,496. On February 27, 2020, the first potential patient for the study had been screened and the third milestone payment of €269,938 was recognized as a prepaid expense of $297,013. At March 31, 2020, the remaining future milestone payments are shown in the table below, converted to dollars from euros at the exchange rate then prevailing. Milestone Event Percent Amount 30% patients randomized 10 % $ 297,634 50% sites initiated 10 % $ 297,634 60% patients randomized 10 % $ 297,634 100% sites initiated 10 % $ 297,634 100% of patients randomized 10 % $ 297,634 90% of case report form pages monitored 5 % $ 148,817 PE analysis 5 % $ 148,817 Database is locked 10 % $ 297,634 Service Agreement 1 also estimated approximately $2.4 million (€ 2,172,000) in pass-through costs, mostly fees to clinical investigators and sites, which will be billed as incurred and the total contingent upon individual site rate and enrollment rates. In the event that the MSA or Service Order are terminated, Crown's actual costs up the date of termination will be payable by the Company, but any unrealized milestones shall not be. During the three months ended March 31, 2020, the Company recognized $34,120 in costs associated with fees to investigators and sites. During the three months ended March 31, 2020, the Company recognized $337,503 in direct expenses associated with the Service Agreement 1, classified as R&D expense, leaving a $473,639 prepaid expense asset. Lease Commitments – Related Party On March 1, 2020, the Company entered into a sublease with Purnovate, LLC, a private company in which the Company's CEO has a 35% financial interest for the lease of three offices at 1180 Seminole Trail, Suite 495, Charlottesville, VA 22901. The lease has a term of two years, and the monthly rent is $1,400. In the three months ended March 31, 2020, the rent expense associated with this lease was $1,400. Consulting Agreements – Related Party On March 24, 2019, the Company entered into a consulting agreement (the "Consulting Agreement") with Dr. Bankole A. Johnson, who at the time of the agreement was serving as the Chairman of the Board of Directors, for his service as Chief Medical Officer of the Company. The Consulting Agreement has a term of three years, unless terminated by mutual consent or by the Company for cause. Dr. Johnson resigned as Chairman of the Board of Directors at the time of execution of the consulting agreement. Under the terms of the Consulting Agreement, Dr. Johnson's annual fee of $375,000 per year is paid twice per month. On execution, Dr. Johnson received a signing bonus of $250,000 and option to purchase 250,000 shares of common stock. Dr. Johnson's participation in the Grant Incentive Plan (see below) continues unaffected. The total expense to the Company under this agreement was $93,750 in the three months ended March 31, 2020. On July 5, 2019, the Company entered into a Master Services Agreement (the "MSA") and attached statement of work with Psychological Education Publishing Company ("PEPCO") to administer a behavioral therapy program during the Company's upcoming Phase 3 clinical trial. PEPCO is owned by a related party, Dr. Bankole Johnson, the Company's Chief Medical Officer, and currently the largest stockholder in the Company. It is anticipated that the compensation to be paid to PEPCO for services under the MSA will total approximately $300,000, of which shares of the Company's common stock having a value equal to twenty percent (20%) of this total can be issued to Dr. Johnson in lieu of cash payment. On December 12, 2019, the Company entered into an Amendment (the "Amendment") to the statement of work ("SOW"). The Company had paid PEPCO $39,064 under the SOW for services rendered to date, leaving as estimated balance of $274,779 to be paid under the SOW. The Amendment provided the Company with a 20% discount on the remaining services and to fix the price of any remaining services at a total of $219,823 for all services required for the use of Brief Behavioral Compliance Enhancement Treatment (BBCET) in support of the Trial. In addition, Dr. Johnson executed a guaranty, dated December 12, 2019, of PEPCO's performance under the MSA and SOW (the "Guaranty"), together with a pledge and security agreement, dated December 12, 2019 (the "Pledge and Security Agreement"), to secure the Guaranty with 600,000 shares of the Company's common stock beneficially owned by him and a lock-up agreement, dated December 12, 2019 (the "Lock-Up"), pursuant to which he agreed not to transfer or dispose of, directly or indirectly, any shares of the Company's common stock, as currently owned by him, until after January 1, 2021. As of March 31, 2020, the Company had recognized $91,972 in expenses, of which $52,908 were charged against cash advanced under the terms of the Amendment, leaving a net prepaid expense asset of $167,095 associated with this vendor agreement. Litigation The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company's liquidity, financial condition and cash flows. At March 31, 2020, the Company did not have any pending legal actions. | 11 — COMMITMENTS AND CONTINGENCIES License with University of Virginia Patent Foundation In January 2011, the Company entered into an exclusive, worldwide license agreement with (the "UVA LVG") for rights to make, use or sell licensed products in the United States based upon the ten separate patents and patent applications made and held by UVA LVG. As consideration for the rights granted in the UVA LVG License, the Company is obligated to pay UVA LVG yearly license fees and milestone payments, as well as a royalty based on net sales of products covered by the patent-related rights. More specifically, the Company paid UVA LVG a license issue fee and is obligated to pay UVA LVG (i) annual minimum royalties of $40,000 commencing in 2017; (ii) a $20,000 milestone payments upon dosing the first patient under a Phase 3 human clinical trial of a licensed product, $155,000 upon the earlier of the completion of a Phase 3 trial of a licensed product, partnering of a licensed product, or sale of the Company, $275,000 upon acceptance of an NDA by the FDA, and $1,000,000 upon approval for sale of AD04 in the U.S., Europe or Japan; as well as (iii) royalties equal to a 2% and 1% of net sales of licensed products in countries in which a valid patent exists or does not exist, respectively, with royalties paid quarterly. In the event of a sublicense to a third party, the Company is obligated to pay royalties to UVA LVG equal to a percentage of what the Company would have been required to pay to UVA LVG had it sold the products under sublicense ourselves. In addition, the Company is required to pay to UVA LVG 15% of any sublicensing income. The license agreement may be terminated by UVA LVG upon sixty (60) days written notice if the Company breaches its obligations thereunder, including failing to make any milestone, failure to make required payments, or the failure to exercise diligence to bring licensed products to market. In the event of a termination, the Company will be obligated to pay all amounts that accrued prior to such termination. The term of the license continues until the expiration, abandonment or invalidation of all licensed patents and patent applications, and following any such expiration, abandonment or invalidation will continue in perpetuity on a royalty-free, fully paid basis. The Company executed an amendment, dated December 14, 2017, which changed the dates by which the Company, using commercially reasonable efforts, was to achieve the goals of submitting a New Drug Application to the FDA for a licensed product to December 31, 2024 (from December 31, 2023) and commencing commercialization of an FDA approved product by December 31, 2025 (from December 31, 2024). If the Company were to fail to use commercially reasonable effort and fail to meet either goal, the licensor would have the right to terminate the license. The Company executed a further amendment to the license agreement, dated December 18, 2018, changing the date at which the Company must have initiated a Phase 3 trial to December 31, 2019. On December 31, 2019, the Company executed a further amendment to the license agreement which, among other things, removed in its entirety the diligence milestone to initiate a Phase 3 clinical trial by December 31, 2019. Furthermore, the Company agreed to pay upon execution of the Amendment the diligence milestone payment of $20,000 that had been due upon initiation of a Phase 3 clinical trial. In addition, the Company agreed to use and will continue to use best efforts to dose a first patient with a Licensed Product (as defined in the License Agreement) in a Phase 3 clinical trial on or before March 31, 2020. In the year ended December 31, 2019, the Company recognized a $40,000 minimum license royalty expense and $20,000 in milestone payment expense under this agreement. Clinical Research Organization (CRO) On October 31, 2018, the Company entered into a master services agreement ("MSA") with Crown CRO Oy ("Crown") for contract clinical research and consulting services. The MSA has a term of five years, automatically renewed for two-year periods, unless either party gives written notice of a decision not to renew the agreement three months prior to automatic renewal. The agreement can be terminated by the Company if, in the Company's reasonable opinion, clinical or non-clinical data support termination of the clinical research for safety reasons. On November 16, 2018, the Company and Crown entered into Service Agreement 1 under the MSA for a 24 week, multi-centered, randomized, double-blind, placebo-controlled, parallel-group, Phase 3 clinical study of the Company's lead compound, AD04. The MSA or a service agreement under it may be terminated by the Company, without penalty, on fourteen days written notice. On June 28, 2019, the Company and Crown Executed a change order to Service Agreement 1 increasing Crown's fee from $3,321,292 (€2,958,835 converted to dollars at the Euro/US Dollar exchange rate of 1.1225 as of December 31, 2019, as are all other Euro-denominated amounts below) to $3,557,085 (€3,168,895) and rescheduling future milestone payments as shown below. On November 21, 2018, the Company made the prepayment under the agreement, at a cost of $505,960, after exchange to US dollars at the rate then prevailing. The fees are to be paid as milestones are reached on the following schedule. On September 30, 2019, the Company received an invoice for the 10% milestone payment associated with the first submission of a trial application to a national regulatory authority, which event the Company acknowledged as having occurred. At the exchange rates then prevailing this invoice was recorded as a prepaid expense of $294,124. At December 31, 2019, the remaining future milestone payments are shown in the table below. Milestone Event Percent Amount First site initiation visit 10 % $ 303,005 First patient in 10 % $ 303,005 30% patients randomized 10 % $ 303,005 50% sites initiated 10 % $ 303,005 60% patients randomized 10 % $ 303,005 100% sites initiated 10 % $ 303,005 100% of patients randomized 10 % $ 303,005 90% of case report form pages monitored 5 % $ 151,503 PE analysis 5 % $ 151,503 Database is locked 10 % $ 303,005 Service Agreement 1 also estimates approximately $2.4 million (€ 2,172,000) in pass-through costs, mostly fees to clinical investigators and sites, which will be billed as incurred. In the event that the MSA or Service Order are terminated, the Crown's actual costs up the date of termination will be payable by the Company, but any unrealized milestones shall not be. During the year ended December 31, 2019, the Company recognized $585,451 in direct expenses associated with the Service Agreement 1, classified as R&D expense, leaving a $214,633 prepaid expense asset. Lease Commitments On October 9, 2018, the Company entered into a license and membership agreement with Jelly Works X Zero-Ten, LLC for membership in a coworking space and use of an office located at 307A Kamani Street, Honolulu, HI 96813. The Company agreed to pay a monthly fee of $1,152 for membership and use of these facilities, committing to do so for a term of one year. At the end of this period, the agreement reverted to a month-to-month rental of a dedicated desk space, without office, for a monthly fee of $393 per month. In the year ended December 31, 2019, the Company rent expense associated with this agreement was approximately $12,304. On December 19, 2018, the Company entered into an office service agreement with the University of Virginia Foundation for the use of an office and a workstation located at 1001 Research Park Boulevard, Suite 100, Charlottesville, VA 22911. The Company agreed to pay a fee of $1,150 per month for use of these facilities. The agreement is on a month-to-month basis. For the year ended December 31, 2019, the Company rent expense associated with this agreement, including continuing month-to-month payments after the expiration of the agreement, was approximately $12,650. For an additional sublease, see Note 12. Performance Bonus Plan In 2015, the Company adopted a performance bonus plan ("PBP") to provide incentive for Company personnel, which was modified on January 25, 2016 and April 15, 2017. Under the PBP, 5.25% of the first $14.7 million of a strategic transaction (one or more transactions that provide funds to the Company and/or its members that enable the commencement of the clinical development of AD04) will be set aside for Company's personnel with 1.25% of funds to be awarded to the Chairman of the Board and the remainder to be awarded at the CEO's discretion, with no more than 3.15% payout to the CEO of the Company. The maximum bonus amount to be paid out of the PBP was $771,750. On April 1, 2018, the Company retired the PBP by mutual agreement with the participating directors and officers, Bankole Johnson, William Stilley, and Joseph Truluck, the PBP. In consideration of their agreement to retire the PBP, the respective directors and officers were issued 292,309 shares of common stock, which resulted in an expense of approximately $1.5 million in the year ended December 31, 2018. Consulting Agreements – Related Party On March 24, 2019, the Company entered into a consulting agreement (the "Consulting Agreement") with Dr. Bankole A. Johnson, who at the time of the agreement was serving as the Chairman of the Board of Directors, for his service as Chief Medical Officer of the Company. The Consulting Agreement has a term of three years, unless terminated by mutual consent or by the Company for cause. Dr. Johnson resigned as Chairman of the Board of Directors at the time of execution of the consulting agreement. Under the terms of the Consulting Agreement, Dr. Johnson's annual fee of $375,000 per year is paid twice per month. On execution, Dr. Johnson received a signing bonus of $250,000 and option to purchase 250,000 shares of common stock. Dr. Johnson's participation in the Grant Incentive Plan (see below) continues unaffected. The total expense to the company under this agreement was $676,664 in the year ended December 31, 2019. On July 5, 2019, the Company entered into a Master Services Agreement (the "MSA") and attached statement of work with Psychological Education Publishing Company ("PEPCO") to administer a behavioral therapy program during the Company's upcoming Phase 3 clinical trial. PEPCO is owned by a related party, Dr. Bankole Johnson, the Company's Chief Medical Officer, and currently the largest stockholder in the Company. It is anticipated that the compensation to be paid to PEPCO for services under the MSA will total approximately $300,000, of which shares of the Company's common stock having a value equal to twenty percent (20%) of this total can be issued to Dr. Johnson in lieu of cash payment. In the year ended December 31, 2019, the Company had recognized expenses of $39,064 under the terms of this agreement. On December 12, 2019, the Company entered into an Amendment (the "Amendment") to the statement of work ("SOW"). The Company had paid PEPCO $39,064 under the SOW for services rendered to date, leaving as estimated balance of $274,779 to be paid under the SOW. The Amendment provided the Company with a 20% discount on the remaining services and to fix the price of any remaining services at a total of $219,823 for all services required for the use of Brief Behavioral Compliance Enhancement Treatment (BBCET) in support of the Trial. In addition, Dr. Johnson executed a guaranty, dated December 12, 2019, of PEPCO's performance under the MSA and SOW (the "Guaranty"), together with a pledge and security agreement, dated December 12, 2019 (the "Pledge and Security Agreement"), to secure the Guaranty with 600,000 shares of the Company's common stock beneficially owned by him and a lock-up agreement, dated December 12, 2019 (the "Lock-Up"), pursuant to which he agreed not to transfer or dispose of, directly or indirectly, any shares of the Company's common stock, as currently owned by him, until after January 1, 2021. As of December 31, 2019, the Company had recognized $39,064 in expenses associated with this vendor agreement. Other Consulting and Vendor Agreements The Company has entered into a number of agreements and work orders for future consulting, clinical trial support, and testing services, with terms ranging between 12 and 30 months. These agreements, in aggregate, commit the Company to approximately $1.4 million in future cash. Litigation The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company's liquidity, financial condition and cash flows. At December 31, 2019 and 2018, the Company did not have any pending legal actions. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 12 — SUBSEQUENT EVENTS On February 1, 2020, Crown CRO informed the Company that the first site initiation visit ("SIV") of a study site had been completed and, under the terms of the MSA and Work Order, invoiced the second milestone payment of €269,938, recognized as a prepaid expense asset of $299,496 at the exchange rates prevailing on the date of invoice. On February 3, 2020 the Company entered into an agreement with Lyon Capital, LLC for participation in an investor conference and other investor relations services. In compensation for these services, the Company issued Lyons Capital, LLC 30,000 shares of common stock with a market value of $1.76 per share for a total cost of $52,800, recognized as equity compensation expense. On March 1, 2020, the Company entered into a sublease with Purnovate, LLC, a private company in which our CEO has a 35% financial interest for the lease of three offices at 1180 Seminole Trail, Suite 495, Charlottesville, VA 22901. The lease has a term of two years, and the monthly rent is $1,400. On March 3, 2020, the Compensation Committee of Board of Directors of the Company awarded the Company's executive officers, William B. Stilley, Chief Executive Officer, and Joseph Truluck, Chief Financial Officer, performance bonuses for 2019, partially paid in common stock of the Company to preserve cash, of $42,000 and $21,000 in cash, respectively, and 54,167 and 27,084 shares of the Company's common stock, respectively, which shares are subject to a six-month contractual restriction on sale. In addition, the Committee granted to each of Mr. Stilley and Mr. Truluck an option to purchase 460,000 and 200,000 shares the Company's common stock, respectively. Additional options awards to purchase 440,000 shares of the Company's common stock were issued to our Directors and employees. The shares of common stock underlying the option awards each vest pro rata on a monthly basis over a thirty-six month period. The options are exercisable for a period of ten years from the date of grant and have an exercise price of $1.44 per share. In addition, the Committee approved an amendment, to the Company's employment agreement with Mr. Truluck to increase his annual base salary to $170,000. As the situation with Covid-19 continues to evolve, the Company's Phase 3 clinical trial could be materially and adversely affected by the risks, or the public perception of the risks, related to this pandemic. This pandemic or outbreak could result in the complete or partial closure of one or more of the Company's clinical trial site locations, the CRO, and/or impact the trial monitors and other critical vendors and consultants supporting the trial. In addition, outbreaks or the perception of an outbreak near clinical trial site locations would likely impact the Company's ability to recruit patients. These situations, or others associated with Covid-19, could cause delays in the Company's current Phase 3 clinical trial and completion within the disclosed time periods and expected costs, all of which could have a material adverse effect on our business and its financial condition. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results. The interim operating results are not necessarily indicative of results that may be expected for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019, included in the Annual Report on Form 10-K filed on March 20, 2020. | |
Reclassification | Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. | Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation of stock-based compensation, accruals associated with third party providers supporting clinical trials, and income tax asset realization. In particular, the recognition of clinical trial costs are dependent on the our own judgement, as well as the judgment of our contractors and subcontractors in their reporting of information to us. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation of stock-based compensation, derivative liabilities, accruals associated with third party providers supporting clinical trials, contingent liabilities and income tax asset realization. In particular, accrual of expenses associated with our clinical trial are dependent on the our own judgement, as well as the judgment of our contractors and subcontractors in their reporting of information to us. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. |
Basic and Diluted Earnings (Loss) per Share | Basic and Diluted Earnings (Loss) per Share Basic and diluted earnings (loss) per share are computed based on the weighted-average outstanding shares of common stock, which are all voting shares. Diluted net loss per share is computed giving effect to all proportional shares of common stock, including stock options and warrants to the extent dilutive. Basic net loss per share was the same as diluted net loss per share for the three months ended March 31, 2020 and 2019 as the inclusion of all potential common shares outstanding would have an anti-dilutive effect. The total number of potentially dilutive common shares that were excluded at March 31, 2020 and 2019 was as follows: Potentially Dilutive Common 2020 2019 Warrants to purchase Common Shares 6,595,631 6,728,113 Common Shares issuable on exercise of options 2,620,877 1,400,967 Total potentially dilutive Common Shares excluded 9,216,508 8,129,080 | Basic and Diluted Earnings (Loss) per Share Basic and diluted earnings (loss) per share are computed based on the weighted-average outstanding shares of common stock, which are all voting shares. Diluted net loss per share is computed giving effect to all proportional shares of common stock, including stock options and warrants to the extent dilutive. Basic net loss per share was the same as diluted net loss per share for the years ended December 31, 2019 and 2018 as the inclusion of all potential common shares outstanding would have an anti-dilutive effect. "Penny warrants" were not excluded from calculation of outstanding shares for purposes of basic earnings per share. The total number of potentially dilutive common shares that were excluded at December 31, 2019 and 2018 was as follows: Potentially Dilutive 2019 2018 Warrants to purchase Common Shares 6,595,631 5,054,759 Common Shares issuable on exercise of options 1,661,466 243,182 Total potentially dilutive Common Shares excluded 8,257,097 5,297,941 |
Research and Development | Research and Development Research and development costs are charged to expense as incurred and include direct trial expenses such as fees due to contract research organizations, consultants which support the Company's research and development endeavors, the acquisition of technology rights without an alternative use, and compensation and benefits of clinical research and development personnel. Certain research and development costs, in particular fees to contract research organizations ("CROs"), are structured with milestone payments due on the occurrence of certain key events. Where such milestone payments are greater than those earned through the provision of such services, the Company recognizes a prepaid asset which is recorded as expense as services are incurred. | Research and Development Research and development costs are charged to expense as incurred and include direct trial expenses such as fees due to contract research organizations, consultants which support our research and development endeavors, the acquisition of technology rights without an alternative use, and compensation and benefits of clinical research and development personnel. Certain of research and development costs, in particular fees to contract research organizations ("CROs"), are structured as milestone payments, payments due on the occurrence of certain key events. Where such milestone payments is greater than the payments earned through the provision of such services, the Company recognizes such payments as prepaid assets, which are recorded as expense as such services are incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of option awards based on the grant date fair value of the awards. That cost is recognized on a straight-line basis over the period during which the awardee was required to provide service in exchange for the entire award. The fair value of options is calculated using the Black-Scholes option pricing model, based on key assumptions such as the expected volatility of the Company's common stock, the risk-free rate of return, and expected term of the options. The Company's estimates of these assumptions are primarily based on historical data, peer company data, government data, and the judgment of management regarding future trends. Common shares issued are valued based on the fair value of the Company's common shares as determined by the market closing price of a share of our common stock on the date of the Commitment to make the issuance. | Stock-Based Compensation The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC 718, Compensation - Stock Based Compensation ("ASC 718"). The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of options granted using the Black Scholes Merton model. The Company estimates when and if performance-based awards will be earned. If an award is not considered probable of being earned, no amount of equity-based compensation expense is recognized. If the award is deemed probable of being earned, related equity-based compensation expense is recorded. The fair value of an award ultimately expected to vest is recognized as an expense, net of forfeitures, over the requisite service, which is generally the vesting period of the award. The Black Scholes Merton model requires the input of certain subjective assumptions and the application of judgment in determining the fair value of the awards. The most significant assumptions and judgments include the expected volatility, risk-free interest rate, the expected dividend yield, and the expected term of the awards. The assumptions used in our option pricing model represent management's best estimates. If factors change and different assumptions are used, our equity-based compensation expense could be materially different in the future. The key assumptions included in the model are as follows: ● Expected volatility — Management determined the expected price volatility based on the historical volatilities of peer group companies as the Company does not have a sufficient trading history. Industry peers consist of several public companies in the bio-tech industry similar in size, stage of life cycle, and capital structure. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company's own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. ● Risk-free interest rate — The risk free rate was determined based on yields of U.S. Treasury Bonds of comparable terms. ● Expected dividend yield — The Company has not previously issued dividends and do not anticipate paying dividends in the foreseeable future. Therefore, we used a dividend rate of zero based on our expectation of additional dividends. ● Expected term —The expected term of the options was estimated using the simplified method. Common shares issued to third parties for services provided are valued based on the fair value of the Company's common shares as determined by the market closing price of a share of our common stock on the date of the Commitment to make the issuance. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense. The Company has generally recorded a full valuation allowance for its tax carryforwards, reflecting the judgment of Company management that they are more likely than not to expire unused. | Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense. |
Adoption of Recent Accounting Pronouncements | Adoption of Recent Accounting Pronouncements Fair Value | Adoption of Recent Accounting Pronouncements Leases — Stock Compensation |
Liquidity and Other Uncertainties | Liquidity, Going Concern and Other Uncertainties The financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP"), which contemplate continuation of the Company as a going concern. The Company is in a development stage and has not generated any revenues. The Company had an accumulated deficit of approximately $20.6 million and $12.0 million as of December 31, 2019 and 2018, respectively, and had incurred net losses of approximately $8.6 million and $11.6 million, for the years then ended. Based on the current development plans for AD04 in both the U.S. and international markets and other operating requirements, the Company believes that the existing cash and equivalents will not be sufficient to fund operations for at least the next twelve months following the filing of these financial statements. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The cash and equivalents as of the financial statement filing date are expected to fund operations into the fourth quarter of 2020, and the Company estimates that such funds will not support the current Phase 3 clinical trial to database lock, which is the endpoint of clinical activities for our current trial. The Company has applied for grants that could be used for the current Phase 3 clinical trial which, if received, is expected to fund the Company to database lock and into the first quarter of 2021. Also, if our trial activities are significantly delayed due to the coronavirus pandemic (See Note 12 - Subsequent Events), we would not be able to reach database lock with cash on hand even with receipt of the grants to which we have applied. In such case, we would need to obtain additional funding. The Company's ultimate liquidity requirements will depend upon a number of factors, including, but not limited to, clinical trial costs, the time required to complete planned trials, and the use of cash in pursuit of non-dilutive funding sources and the success or failure of such pursuit. The Company's continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, grant funding, strategic relationships, or out-licensing in order to complete its current and subsequent clinical trial requirements for its lead compound, AD04. Management can provide no assurance that such financing or strategic relationships will be available on acceptable terms, or at all. Without additional funding, the Company would be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on the Company and its financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. Generally, this industry subjects the Company to a number of other risks and uncertainties that can affect its operating results and financial condition. Such factors include, but are not limited to: the timing, costs and results of clinical trials and other development activities versus expectations; the ability to obtain regulatory approval to market product candidates; the ability to manufacture products successfully; competition from products sold or being developed by other companies; the price of, and demand for, Company products once approved; the ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products. The Company also faces the current risk that the continuing coronavirus outbreak may delay, for an unforeseeable period, the conduct of our trial. Any such delay would affect our liquidity needs and ability to continue as a going concern. (See Note 12 - Subsequent Events.) | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At times, the Company's cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation. At December 31, 2019, the Company held a balance in a checking account that exceeded federally insured limits by approximately $0.4 million and held approximately $6.1 million in non-FDIC insured cash equivalent investments. At December 31, 2018 the Company held a balance in a checking account that exceeded federally insured limits by approximately $3.4 million. | |
Intangible Assets | Intangible Assets Intangible assets consist primarily of the trademarks and copyrights. The trademarks and copyrights will be amortized using the straight-line method based on an estimated useful life of 20 years. | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company's long-lived assets (consisting of the trademarks) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. | |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements Significant items subject to such estimates and assumptions include the valuation of stock-based compensation, derivative liabilities, accruals associated with third party providers supporting clinical trials, contingent liabilities and income tax liability. Authoritative literature establishes a three-level valuation hierarchy for disclosures of fair value measurements and disclosure. The carrying amounts reported in the balance sheets for current liabilities, convertible notes, Senior Notes, Senior Secured Bridge Notes, and Subordinated Notes are a reasonable estimate of their fair values 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 carrying value of all other financial liabilities at cost approximates fair value. The three levels of valuation hierarchy are defined as follows: ● Level 1: Observable inputs such as quoted prices in active markets; ● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Fair Value |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Schedule of potentially dilutive Common Shares | Potentially Dilutive Common 2020 2019 Warrants to purchase Common Shares 6,595,631 6,728,113 Common Shares issuable on exercise of options 2,620,877 1,400,967 Total potentially dilutive Common Shares excluded 9,216,508 8,129,080 | Potentially Dilutive 2019 2018 Warrants to purchase Common Shares 6,595,631 5,054,759 Common Shares issuable on exercise of options 1,661,466 243,182 Total potentially dilutive Common Shares excluded 8,257,097 5,297,941 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible assets, net | Useful December 31, 2019 December 31, Trademarks and Copyrights 20 years $ 11,300 $ 11,300 Less: Accumulated amortization (5,130 ) (4,565 ) Intangible Assets, net $ 6,170 $ 6,735 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Payables and Accruals [Abstract] | ||
Schedule of accrued liabilities | March 31, December 31, Accrued employee compensation $ 111,769 $ 263,914 Legal and consulting services 25,350 68,056 Clinical research organization services and expenses 46,328 16,877 Minimum license royalties 10,000 – Total accrued liabilities $ 193,447 $ 348,847 | December 31, December 31, Accrued employee compensation $ 263,914 $ 132,341 Consulting services 68,056 25,962 Clinical Research Organization services and expenses 16,877 - Total accrued liabilities $ 348,847 $ 158,303 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Schedule of stock options activity | Total Options Outstanding Weighted Average Remaining Term (Years) Weighted Average Exercise Price Weighted Average Fair Value at Issue Outstanding December 31, 2019 1,661,466 9.14 3.38 2.38 Issued 1,100,000 1.44 1.13 Cancelled (140,589 ) 3.30 2.54 Outstanding March 31, 2020 2,620,877 8.49 2.57 1.84 Outstanding March 31, 2020, vested and exercisable 697,960 7.12 $ 3.50 $ 2.57 | Total Options Outstanding Weighted Average Remaining Term (Years) Weighted Average Exercise Price Weighted Average Fair Value at Issue Outstanding December 31, 2017 174,282 9.50 5.70 4.84 Issued 68,900 10.00 $ 2.80 $ 2.21 Outstanding December 31, 2018 243,182 8.93 $ 4.88 $ 4.09 Issued 1,452,880 10.00 3.19 2.21 Cancelled (34,596 ) 8.35 5.70 4.23 Outstanding December 31, 2019 1,661,466 9.14 3.38 2.38 Outstanding December 31, 2019, vested and exercisable 488,573 8.30 $ 3.66 $ 2.73 |
Schedule of black scholes valuation model to determine the fair value of the options issued | March 31, Fair Value per Share $ 1.44 Expected Term 5.75 years Expected Dividend $ 0 Expected Volatility 102.4 % Risk free rate 0.72 % | 2019 2018 Fair Value per Share $ 1.45-3.39 $ 2.80 Expected Term 1.46-5.75 years 6.5 years Expected Dividend $0 $0 Expected Volatility 97.37-101.09 % 95.77 % Risk free rate 2.32-2.51 % 2.79 % |
Schedule of stock-based compensation expense | Three months ended March 31 2020 2019 Research and development options expense 86,439 43,174 Total research and development expenses 86,439 43,174 General and administrative options expense 255,568 85,976 Stock issued to consultants and employees 228,626 154,854 Total general and administrative expenses 484,194 240,830 Total stock-based compensation expense $ 570,633 $ 284,004 | Year ended December 31 2019 2018 Research and development options expense 355,229 52,452 Total research and development expenses 355,229 52,452 General and administrative options expense 723,344 199,451 Stock granted for Performance Bonus Plan Cancellation – 1,461,545 Stock and warrants granted in IPO – 3,436,406 Stock issued to consultants 523,745 218,500 Total general and administrative expenses 1,247,089 5,315,902 Total stock-based compensation expense $ 1,602,318 $ 5,368,354 |
Schedule of activity in warrants | Total Warrants Weighted Average Remaining Term (Years) Weighted Average Exercise Price Average Intrinsic Value Outstanding December 31, 2019 6,669,274 4.23 $ 5.38 0.03 Issued – NA NA NA Exercised – NA NA NA Outstanding March 31, 2020 6,669,274 3.98 $ 5.38 0.01 | Total Warrants Weighted Average Remaining Term (Years) Weighted Average Exercise Price Average Intrinsic Value Outstanding December 31, 2017 482,555 11.20 5.51 1.38 Issued 4,547,204 5.00 5.82 0.00 Exercised (25,000 ) 4.59 6.25 0.06 Outstanding December 31, 2018 5,054,759 5.07 $ 5.72 $ 0.61 Issued 2,133,750 5.00 4.06 0.00 Exercised (519,235 ) 4.17 4.07 1.32 Outstanding December 31, 2019 6,669,274 4.23 $ 5.38 0.03 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of pretax loss from continuing operations | Year ended December 31, 2019 2018 Computed "expected" tax benefit $ (1,804,200 ) (2,442,589 ) Increase (reduction) in income taxes resulting from: State Tax, net of federal (225,900 ) (697,883 ) Stock Compensation and Warrant Modification 372,190 — Miscellaneous 17,572 — Non-deductible finance charges and loss on debt extinguishment — 1,255,918 Change in the valuation allowance 1,640,338 1,884,554 Total income tax expense/(benefit) $ — — |
Schedule of deferred tax assets | Total Total Deferred Tax Asset 2019 2018 2019 2018 Net operating loss carry-forward 14,120,000 7,132,000 3,635,000 1,926,000 Stock based compensation — 252,000 — 68,000 Intangible Assets (1,000 ) — (0 ) — Less: valuation allowance (14,119,000 ) (7,384,000 ) (3,635,000 ) (1,994,000 ) Total $ — $ — $ — $ — |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of milestone payment | Milestone Event Percent Amount 30% patients randomized 10 % $ 297,634 50% sites initiated 10 % $ 297,634 60% patients randomized 10 % $ 297,634 100% sites initiated 10 % $ 297,634 100% of patients randomized 10 % $ 297,634 90% of case report form pages monitored 5 % $ 148,817 PE analysis 5 % $ 148,817 Database is locked 10 % $ 297,634 | Milestone Event Percent Amount First site initiation visit 10 % $ 303,005 First patient in 10 % $ 303,005 30% patients randomized 10 % $ 303,005 50% sites initiated 10 % $ 303,005 60% patients randomized 10 % $ 303,005 100% sites initiated 10 % $ 303,005 100% of patients randomized 10 % $ 303,005 90% of case report form pages monitored 5 % $ 151,503 PE analysis 5 % $ 151,503 Database is locked 10 % $ 303,005 |
Description of Business (Detail
Description of Business (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Feb. 28, 2019 | Jul. 31, 2018 | Mar. 31, 2020 | Dec. 31, 2019 | |
Description of Business (Textual) | ||||
Incorporation of business, date | Oct. 1, 2017 | Oct. 1, 2017 | ||
Incorporation country name | Delaware | Delaware | ||
IPO [Member] | ||||
Description of Business (Textual) | ||||
Proceeds from initial public offering | $ 8,200,000 | $ 6,300,000 |
Liquidity, Going Concern and _2
Liquidity, Going Concern and Other Uncertainties (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Liquidity, Going Concern and Other Uncertainties (Textual) | |||
Accumulated deficit | $ (22,903,612) | $ (20,626,799) | $ (12,035,370) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||||
Warrants to purchase Common Shares | 6,595,631 | 6,728,113 | 6,595,631 | 5,054,759 |
Common Shares issuable on exercise of options | 2,620,877 | 1,400,967 | 1,661,466 | 243,182 |
Total potentially dilutive Common Shares excluded | 9,216,508 | 8,129,080 | 8,257,097 | 5,297,941 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies (Textual) | ||||
Accumulated deficit | $ (22,903,612) | $ (20,626,799) | $ (12,035,370) | |
Net losses | $ (2,276,813) | $ (2,682,651) | (8,591,429) | (11,631,378) |
Cash in hand | 400,000 | $ 3,400,000 | ||
Non-FDIC cash in hand | $ 6,100,000 | |||
Intangible assets estimated useful life | 20 years | |||
Recognized income tax, description | Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense. | Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense. | ||
Leases term | 12 months | |||
Leases, description | For an asset to be considered as a lease in the contract the asset must meet the following criteria: (1) the asset must be explicitly or implicitly specified in the contract; (2) the asset must be physically distinct; and (3) the supplier does not have a substantive substitution right. Once an asset is determined to be an embedded lease it is then tested to determine if it is an operating or financing lease. Embedded leases are determined to be operating leases if the contractual term is less than 75% of the estimated economic life, the allocated cash flows are less than 90% of the fair market value to purchase these assets, there is no purchase option (bargain or otherwise), there is no transfer of ownership at the end, and the assets are not so customized to the Company's needs that they could not be reworked to use for another customer. The Company did not recognize any embedded leases in its examination of its current service contracts. |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Trademarks and Copyrights | $ 11,300 | $ 11,300 | |
Less: Accumulated amortization | (5,130) | (4,565) | |
Intangible Assets, net | $ 6,170 | $ 6,029 | $ 6,735 |
Useful life of intangible assets, net | 20 years |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets, Net (Textual) | ||||
Amortization of trademarks and copyrights | $ 141 | $ 142 | $ 565 | $ 563 |
Useful life of intangible assets, net | 20 years | |||
Trademarks [Member] | ||||
Intangible Assets, Net (Textual) | ||||
Useful life of intangible assets, net | 12 years |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | |||
Accrued employee compensation | $ 111,769 | $ 263,914 | $ 132,341 |
Legal and consulting services | 25,350 | 68,056 | |
Clinical research organization services and expenses | 46,328 | 16,877 | |
Minimum license royalties | 10,000 | ||
Consulting services | 68,056 | 25,962 | |
Total accrued liabilities | $ 193,447 | $ 348,847 | $ 158,303 |
Senior Secured Notes (Details)
Senior Secured Notes (Details) - USD ($) | Jul. 01, 2018 | Jun. 08, 2018 | Jun. 03, 2018 | Feb. 22, 2018 | May 01, 2017 | Dec. 19, 2018 | Jul. 31, 2018 | Mar. 01, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 31, 2019 | Jan. 22, 2019 |
Senior Secured Notes (Textual) | ||||||||||||||
Principal amount | $ 100,000 | $ 325,000 | ||||||||||||
Amortized to interest expense | $ 352,673 | |||||||||||||
Warrants exercise price | $ 6.25 | $ 4.99 | $ 3.75 | |||||||||||
Interest and financing charges | 1,167,046 | |||||||||||||
Additional paid in capital | 28,444,390 | 27,757,017 | 16,469,818 | |||||||||||
Payment of senior note | 150,000 | |||||||||||||
Senior Secured Bridge Note [Member] | ||||||||||||||
Senior Secured Notes (Textual) | ||||||||||||||
Principal amount | $ 287,500 | |||||||||||||
Terms of agreement, description | The Company paid $150,000 at time of execution of the settlement and was to pay an additional cash payment of $100,000 at the Next Financing, as defined. | |||||||||||||
Debt proceeds | 250,000 | |||||||||||||
Original issue discount | $ 37,500 | |||||||||||||
Maturity date at issue | Nov. 1, 2017 | |||||||||||||
Debt, description | The Company agreed to issue to the holder (i) warrants to purchase a number of shares of the Company’s common stock equal to $325,000 divided by the price per share of the Next Financing; and (ii) a number of shares of the Company’s common stock equal to $50,000 divided by the price per unit of the Next Financing. The warrants were to have an exercise price equal to the price per share of the Next Financing and a term of two years. | |||||||||||||
Senior Secured Bridge Note [Member] | IPO [Member] | ||||||||||||||
Senior Secured Notes (Textual) | ||||||||||||||
Settlement cash payment | $ 100,000 | |||||||||||||
Issuance of common stock | 10,020 | |||||||||||||
Warrants to purchase of common stock | 65,130 | |||||||||||||
Warrants exercise price | $ 4.99 | |||||||||||||
Extinguishment of net loss | $ 97,593 | |||||||||||||
Interest expense | 24,431 | |||||||||||||
Senior Secured Notes (Related Parties $470,000) [Member] | ||||||||||||||
Senior Secured Notes (Textual) | ||||||||||||||
Debt proceeds | $ 2,000,000 | |||||||||||||
Maturity date at issue | Aug. 1, 2018 | |||||||||||||
Debt, description | The principal and interest outstanding of the Secured Notes was paid in full and 408,000 units (376,000 units to related parties), each unit consisting each of a share of common stock and a warrant to purchase of a share of common stock at an exercise price of $6.25 per share and 408,000 Unit Warrants (376,000 Unit Warrants to related parties) were issued. The loss on extinguishment of the Secured Notes was $3,399,902. | The Company agreed to issue to the holders (i) warrants to purchase the securities offered in the Next Financing, such aggregate number of securities to be equal to 400% of the aggregate principal amount of the Secured Notes divided by the price per security of the Next Financing; and (ii) an aggregate number of the securities offered equal to 400% of the of the aggregate principal amount of the Secured Notes divided by the price per security of the Next Financing Secured Notes. The warrants issued have an exercise price equal to the price per security of the Next Financing and a term of five years. | ||||||||||||
Discounted principal amount | 103,000 | |||||||||||||
Cash received | $ 410,000 | |||||||||||||
Debt interest rate, description | The extension fees were changed as follows: the extension fee for extension to the fifth month anniversary of the issue date was eliminated, the fee for extension to the sixth month anniversary of the issue date was made 99.4% of the principal amount, and the fee for extension to the seventh month anniversary of the issue date was made an additional 46.3% of the principal amount. | |||||||||||||
Interest and financing charges | $ 548,229 | |||||||||||||
Senior Secured Notes (Related Parties $470,000) [Member] | Security Purchase Agreements [Member] | ||||||||||||||
Senior Secured Notes (Textual) | ||||||||||||||
Principal amount | $ 510,000 | |||||||||||||
Maturity date at issue | Jul. 1, 2018 | |||||||||||||
Interest rate | 18.00% | |||||||||||||
Senior Note [Member] | Security Purchase Agreements [Member] | ||||||||||||||
Senior Secured Notes (Textual) | ||||||||||||||
Principal amount | $ 325,000 | $ 325,000 | ||||||||||||
Debt, description | The June 2018 Senior Note was issued at an original issue discount of 15.4%, or $50,000, did not bear interest and was payable on March 5, 2019 or upon an earlier event of default, including, without limitation, a change of control of the Company. | |||||||||||||
Warrants to purchase of common stock | 300,000 | |||||||||||||
Warrants exercise price | $ 3.75 | |||||||||||||
Conversion price | $ 2 | $ 2 | ||||||||||||
Note discounted amount | $ 222,950 | |||||||||||||
Additional paid in capital | $ 275,000 | |||||||||||||
Dilutive financing, description | Additionally, in the event of the consummation by the Company of a Dilutive Financing (defined as any debt or equity financing in the amount of $2,000,000 or more, at a price of less than $4.00 per share of common stock), the Company agreed to reduce the conversion price then in effect to a price equal to 50% of the per share price of the common stock issued in the Dilutive Financing. | |||||||||||||
Payment of senior note | $ 510,000 | |||||||||||||
Exercisable term | 5 years | |||||||||||||
Note beneficial conversion feature | $ 52,050 | |||||||||||||
Interest expense on the secured notes | $ 186,397 | |||||||||||||
Shares of common stock issued | 162,500 |
Subordinated Notes - Related _2
Subordinated Notes - Related Parties (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Feb. 22, 2018 | Nov. 20, 2017 | Dec. 31, 2018 | Dec. 19, 2018 | Jul. 01, 2018 | |
Subordinated Notes - Related Parties (Textual) | |||||
Aggregate principal amount | $ 325,000 | $ 100,000 | |||
Secured notes | $ 100,000 | ||||
Realized gain | $ 12,241 | ||||
Interest expense | $ 4,637 | ||||
Subordinated Notes [Member] | |||||
Subordinated Notes - Related Parties (Textual) | |||||
Aggregate principal amount | $ 115,000 | ||||
Proceeds from related parties | 100,000 | ||||
Original issue discount | $ 15,000 | ||||
Subordinated notes, exercisable per share | 100.00% |
Convertible Notes - Related P_2
Convertible Notes - Related Parties (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jul. 31, 2018 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2018 | Mar. 31, 2020 | Dec. 31, 2019 | |
Convertible Notes (Textual) | ||||||
Conversion of stock description | Under the terms of the 2016 Convertible Notes, the outstanding principal and accrued interest on the 2016 Convertible Notes was converted at the Conversion Cap Price to 700,854 shares of common stock and 700,845 warrants to purchase shares of common stock at an exercise price of $6.25 per share (395,118 shares of common stock and 395,118 warrants to purchase shares of common stock). At the time of the conversion, the Company recognized a de minimus net gain on extinguishment of $752. | |||||
Preferred stock issued | ||||||
2016 Convertible Notes [Member] | ||||||
Convertible Notes (Textual) | ||||||
Outstanding unsecured principal amount | $ 235,000 | $ 235,000 | ||||
Due date | The principal and interest was originally due in 2029. | The principal and interest was originally due in 2029. | ||||
Interest rate | 15.00% | 15.00% | ||||
Debt conversion description | The 2016 Convertible Notes were to automatically convert to common stock in the event the Company issued and sold either common or preferred stock of $2,000,000 or more. | The 2016 Convertible Notes were to automatically convert to common stock in the event the Company issued and sold either common or preferred stock of $2,000,000 or more. | ||||
Interest expense | $ 264,749 | |||||
Preferred stock issued | 2,000,000 | 2,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | |||
Jul. 31, 2018 | Feb. 22, 2018 | Jan. 29, 2018 | Apr. 25, 2016 | |
Management [Member] | ||||
Related Party Transactions (Textual) | ||||
Description of consulting agreement with consultant | At a compensation rate of $2,000 per month, adjusted to $3,200 per month in December 31, 2017. This consultant was to be awarded 0.5% of a transaction, as defined by and under the terms of the Company's PBP, but was issued 44,636 shares of common stock on retirement of the plan in 2018 (see Note 11). For the years ended December 31, 2018, total fees charged by this consultant were $25,600. Effective | |||
IPO [Member] | ||||
Related Party Transactions (Textual) | ||||
Description of related parties that participated | (i) William Stilley, the CEO, who purchased 80,000 units consisting of 80,000 shares of common stock and warrants to purchase 80,000 shares of common stock at an exercise price of $6.25 per share; (ii) Kevin Schuyler, Vice Chairman of the Board of Directors and Lead Independent Director, who purchased 90,000 units consisting of 90,000 shares of common stock and warrants to purchase 90,000 shares of common stock at an exercise price of $6.25 per; (iii) James Newman, a Director, who purchased 10,000 units, consisting of 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock at an exercise price of $6.25 per share, personally and 10,000 units, consisting of 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock at an exercise price of $6.25 per share though a Roth IRA for his benefit; (iv) Bankole Johnson, Chairman, who purchased 1,400 units consisting of 1,400 shares of common stock and warrants to purchase 1,400 shares of common stock at an exercise price of $6.25 per share; (v) Keller Enterprises LLC, an affiliate of Robertson Gilliland, a Director, which purchased 14,000 units consisting of 14,000 shares of common stock and warrants to purchase 14,000 shares of common stock at an exercise price of $6.25 per share; (vi) Bankole Johnson, Chairman, who purchased 1,400 units consisting of 1,400 shares of common stock and warrants to purchase 1,400 shares of common stock at an exercise price of $6.25 per share; (vii) Tony Goodman, a Director, who purchased 7,000 units consisting of 7,000 shares of common stock and warrants to purchase 1,400 shares of common stock at an exercise price of $6.25 per share. | |||
Medico-Trans Company, LLC [Member] | ||||
Related Party Transactions (Textual) | ||||
Medical translations services agreement, description | The Company entered a Medical Translations services agreement with Medico-Trans Company, LLC ("MTC"), a company under the control of the Chairman of the Board, whereby MTC agreed to perform $67,304 in medical translation services, to be paid on occurrence of a qualified financing of $2,000,000 or more; or, in the event that a qualified financing had not taken place by February 10, 2018, for installment payments of $22,000 on February 10, 2018, $22,000 on March 10, 2018, and the remaining balance on April 10, 2018, and to issue to MTC on consummation of a qualified financing a number of shares of common stock equal to $201,911 divided by the price per share of the qualified financing. | |||
Payments to MTC | $ 68,540 | |||
Cash payments | 51,540 | |||
Principal balance | 17,000 | |||
Expenses relating to validation of Adial patents | $ 21,000 | |||
Shares of common stock issued | 40,463 | |||
MVA 151 Investors, LLC [Member] | ||||
Related Party Transactions (Textual) | ||||
Backstop commitment, description | The Company executed a Backstop Commitment Agreement ("BCA") with MVA 151 Investors, LLC ("MVA"), a company controlled by Company Director Kevin Schuyler, pursuant to which MVA agreed to guarantee the purchase of up to $242,000 ("the Backstop Amount") in the principal amount of Secured Notes then offered for subscription and unsubscribed on March 1, 2018 (the "Backstop Commitment"). | |||
Secured notes investment, description | (i) warrants to purchase a number of shares of the Company's common stock equal to 150% of the Backstop Amount divided by the price per share of the Next Financing and (ii) a number of units of Company common stock equal to 50% of the Backstop Amount divided by the price per share of the Next Financing. The warrants are to have an exercise price equal to the price per share of the Next Financing and a term of five years. On March 1, MVA invested $92,000 in Secured Notes as a result of the BCA, this amount being the $242,000 backstop amount less $150,000 in additional subscriptions received between February 22, 2018 and March 1, 2018. This investment fully satisfied the Backstop Commitment and left MVA with no further associated obligation to invest. At the time of the IPO, the Company issued MVA 151 Investors 24,200 shares of common stock, 24,200 warrants to purchase a share of common stock at an exercise price of $6.25, and 72,600 warrants to purchase a unit (each unit consisting of a share of common stock and a warrant to purchase a share of common stock at an exercise price of $6.25) at an exercise price of $5.00 per unit. The total cost of the issuances made as a result of the backstop agreement was $385,181, included in the net loss recognized on the Senior Secured Notes (see Note 5). |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - Option [Member] - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Total Options Outstanding | |||
Beginning balance | 1,661,466 | 243,182 | 174,282 |
Issued | 1,100,000 | 1,452,880 | 68,900 |
Cancelled | (140,589) | (34,596) | |
Ending balance | 2,620,877 | 1,661,466 | 243,182 |
Outstanding vested | 697,960 | 488,573 | |
Outstanding Exercisable | 697,960 | 488,573 | |
Weighted Average Remaining Term (Years) | |||
Outstanding Beginning | 9 years 1 month 20 days | 8 years 11 months 4 days | 9 years 6 months |
Issued | 10 years | 10 years | |
Cancelled | 8 years 4 months 6 days | ||
Outstanding Ending | 8 years 5 months 27 days | 9 years 1 month 20 days | 8 years 11 months 4 days |
Outstanding Ending, vested | 7 years 1 month 13 days | 8 years 3 months 19 days | |
Outstanding Ending, Exercisable | 7 years 1 month 13 days | 8 years 3 months 19 days | |
Weighted Average Exercise Price | |||
Beginning balance | $ 3.38 | $ 4.88 | $ 5.70 |
Issued | 1.44 | 3.19 | 2.80 |
Cancelled | 3.30 | 5.70 | |
Ending balance | $ 2.57 | $ 3.38 | 4.88 |
Outstanding vested | 3.50 | 3.66 | |
Outstanding exercisable | 3.50 | 3.66 | |
Weighted Average Fair Value at Issue | |||
Beginning balance | $ 2.38 | $ 4.09 | 4.84 |
Issued | 1.13 | 2.21 | 2.21 |
Cancelled | 2.54 | 4.23 | |
Ending balance | 1.84 | 2.38 | $ 4.09 |
Outstanding, vested | 2.57 | 2.73 | |
Outstanding, exercisable | $ 2.57 | $ 2.73 |
Shareholders' Equity (Details 1
Shareholders' Equity (Details 1) - Black Scholes [Member] - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair value of the options | |||
Fair Value per Share | $ 1.44 | $ 2.80 | |
Expected Term | 5 years 9 months | 6 years 6 months | |
Expected Dividend | 0.00% | 0.00% | 0.00% |
Expected Volatility | 102.40% | 95.77% | |
Risk free rate | 0.72% | 2.79% | |
Minimum [Member] | |||
Fair value of the options | |||
Fair Value per Share | $ 1.45 | ||
Expected Term | 1 year 5 months 16 days | ||
Expected Dividend | |||
Expected Volatility | 97.37% | ||
Risk free rate | 2.32% | ||
Maximum [Member] | |||
Fair value of the options | |||
Fair Value per Share | $ 3.39 | ||
Expected Term | 5 years 9 months | ||
Expected Dividend | |||
Expected Volatility | 101.09% | ||
Risk free rate | 2.51% |
Shareholders' Equity (Details 2
Shareholders' Equity (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||||
Research and development options expense | $ 86,439 | $ 43,174 | $ 355,229 | $ 52,452 |
Total research and development expenses | 1,059,578 | 686,914 | 3,965,543 | 368,459 |
General and administrative options expense | 255,568 | 85,976 | 723,344 | 199,451 |
Stock granted for Performance Bonus Plan cancellation | 1,461,545 | |||
Stock and warrants granted in IPO | 3,436,406 | |||
Stock issued to consultants and employees | 228,626 | 154,854 | 523,745 | 218,500 |
Total general and administrative expenses | 1,240,667 | 1,562,352 | 4,279,357 | 6,618,763 |
Total stock-based compensation expense | $ 570,633 | $ 284,004 | $ 1,602,318 | $ 5,368,354 |
Shareholders' Equity (Details 3
Shareholders' Equity (Details 3) - Warrants [Member] - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Total Warrants | |||
Beginning balance | 6,669,274 | 5,054,759 | 482,555 |
Issued | 2,133,750 | 4,547,204 | |
Exercised | (519,235) | (25,000) | |
Ending Balance | 6,669,274 | 6,669,274 | 5,054,759 |
Weighted Average Remaining Term (Years) | |||
Outstanding beginning | 4 years 2 months 23 days | 5 years 26 days | 11 years 2 months 12 days |
Issued | 5 years | 5 years | |
Exercised | 4 years 2 months 1 day | 4 years 7 months 2 days | |
Outstanding ending | 3 years 11 months 23 days | 4 years 2 months 23 days | 5 years 26 days |
Weighted Average Exercise Price | |||
Beginning balance | $ 5.38 | $ 5.72 | $ 5.51 |
Issued | 4.06 | 5.82 | |
Exercised | 4.07 | 6.25 | |
Ending balance | 5.38 | 5.38 | 5.72 |
Average Intrinsic Value | |||
Beginning balance | 0.03 | 0.61 | 1.38 |
Issued | 0 | 0 | |
Exercised | 1.32 | 0.06 | |
Ending balance | $ 0.01 | $ 0.03 | $ 0.61 |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) | Mar. 03, 2020 | Dec. 15, 2018 | Apr. 01, 2018 | Oct. 09, 2017 | Aug. 16, 2019 | Feb. 22, 2019 | Jan. 31, 2019 | Jan. 22, 2019 | Dec. 26, 2018 | Nov. 26, 2018 | Jul. 31, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Stockholders' Deficit (Textual) | |||||||||||||||
Shares issued | 22,311 | 250,000 | 93,100 | ||||||||||||
Warrants for purchase | $ 65,130 | $ 300,000 | $ 1,100,000 | $ 93,100 | |||||||||||
Equity-based compensation expense | $ 117,001 | 1,243,000 | |||||||||||||
Outstanding options intrinsic value | 0 | 83,845 | |||||||||||||
Compensation expense | $ 2,544,283 | ||||||||||||||
Common stock exercise price | $ 4.99 | $ 3.75 | $ 6.25 | ||||||||||||
Interest and financing charges | $ 1,167,046 | ||||||||||||||
Weighted average remaining vesting period | 2 years 6 months 25 days | 1 year 7 months 21 days | |||||||||||||
Common stock issued, shares | 250,000 | 2,481,191 | 426,416 | ||||||||||||
Further compensation expense resulting from issued options remained to be recognized | $ 3,505,359 | ||||||||||||||
Warrant purchase, description | 93,100 previously-registered shares of common stock were issued as a result of the exercise of tradeable warrants to purchase 93,100 shares of common stock at an exercise price of $6.25 per share for cash payments of $581,875 and 61,005 unregistered shares of common stock were issued as a result of the exercise of at an exercise price of $0.005 per share for cash payments of $325. | Warrants to purchase 93,100 shares of common stock with an exercise price of $6.25 per share of common stock were exercised for $581,875, warrants to purchase 125,000 shares of common stock with an exercise price of $3.75 per share of common stock were exercised for $468,750, 61,005 warrants to purchase 61,005 shares of common stock with an exercise price of $0.005 per share of common stock were exercised for $325, and 240,130 warrants were exercised on a cashless basis for the issue of 147,311 shares of common stock. | |||||||||||||
Unregistered shares of common stock | 405,830 | ||||||||||||||
Common stock, description | The Compensation Committee of Board of Directors of the Company awarded the Company's executive officers, William B. Stilley, Chief Executive Officer, and Joseph Truluck, Chief Financial Officer, performance bonuses for 2019, partially paid in common stock of the Company to preserve cash, of $42,000 and $21,000 in cash, respectively, and 54,167 and 27,084 shares of the Company's common stock, respectively, which shares are subject to a six-month contractual restriction on sale. Of the $180,002 total cost of these bonuses, $150,000 were recognized in the year ended December 31, 2019 as expected under these executives' contracts, and the remaining $30,002 in bonus was recognized as time of issue as Board discretionary. | ||||||||||||||
Options [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Common stock exercise price | $ 1.13 | ||||||||||||||
Common stock issued, shares | 1,521,780 | ||||||||||||||
Consultants at a total cost | $ 440,745 | ||||||||||||||
2017 Equity Incentive Plan [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Common stock issued, shares | 1,750,000 | 3,500,000 | 353,187 | ||||||||||||
2017 Equity Incentive Plan [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Common stock issued, shares | 614,438 | ||||||||||||||
Consultants at a total cost | $ 210,300 | ||||||||||||||
IPO [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Initial public offering, description | The Company concluded a follow-on offering of 2,475,000 shares of common stock and warrants to purchase 1,856,250 shares of common stock at an exercise price of $4.0625 per share. The shares of common stock and accompanying warrants were sold to the public at a price of $3.25 per share and warrant. The underwriters were granted an over-allotment option to purchase up to 371,250 shares of common stock and warrants to purchase 278,437 shares of common stock at a price of $3.25 per share of common stock and warrant. The underwriters partially exercised their over-allotment option by purchasing 370,000 shares of common stock and warrants to purchase 277,500 shares common stock. Gross proceeds of the offering, totaled $9,246,249, which after offering expenses, resulted in net proceeds of $8,195,673. | The Company concluded its initial public offering of 1,464,000 units, each unit consisting of one share of common stock and a warrant for the purchase of one share of common stock with an exercise price of $6.25 (the "Offering Warrants"). The units were sold to the public at a price of $5.00 per unit. The underwriters were granted an overallotment option to purchase up to 219,600 shares of common stock at $4.99 per share and up to 219,600 Offering Warrants for $0.01 per Offering Warrant. The underwriters exercised their overallotment option to purchase 170,652 Offering Warrants for $1,707. The Company also issued 58,560 warrants to the underwriter as compensation. Gross proceeds of the offering, totaled $7,321,706, which after offering expenses, resulted in net proceeds of $6,267,932. | |||||||||||||
IPO [Member] | 2016 Convertible Notes [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Shares issued | 700,855 | ||||||||||||||
Conversion amount | $ 545,307 | ||||||||||||||
R&D Expense [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Equity-based compensation expense | $ 1,078,573 | $ 251,903 | |||||||||||||
G&A Expense [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Equity-based compensation expense | $ 544,283 | ||||||||||||||
Warrants [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Shares issued | 442,220 | ||||||||||||||
Exercise price | $ 25,000 | ||||||||||||||
Underlying stock price per share | $ 6.25 | ||||||||||||||
Warrants issued | 480,600 | ||||||||||||||
Common stock issued, shares | 25,000 | ||||||||||||||
Warrant purchase, description | 93,100 previously-registered shares of common stock were issued as a result of the exercise of tradeable warrants to purchase 93,100 shares of common stock at an exercise price of $6.25 per share for cash payments of $581,875 and 61,005 unregistered shares of common stock were issued as a result of the exercise of at an exercise price of $0.005 per share for cash payments of $325. | ||||||||||||||
Warrants units | 497,330 | ||||||||||||||
Debt settlements | $ 4,132,398 | ||||||||||||||
Common stock total cash receipt | $ 156,250 | ||||||||||||||
Exercise fee recieved | $ 1,050,950 | ||||||||||||||
Consultant [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Underlying stock price per share | $ 2.80 | $ 1.66 | |||||||||||||
Common stock issued price | $ 52,500 | $ 166,000 | |||||||||||||
Common stock issued, shares | 18,750 | 100,000 | 180,000 | 184,437 | |||||||||||
Officers and Director [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Shares issued | 292,309 | ||||||||||||||
Equity-based compensation expense | $ 1,461,545 | ||||||||||||||
Common stock issued price | $ 468,750 | ||||||||||||||
Consultants, Employees, and Contractors [Member] | IPO [Member] | |||||||||||||||
Stockholders' Deficit (Textual) | |||||||||||||||
Shares issued | 388,860 | ||||||||||||||
Equity-based compensation expense | $ 3,436,406 | ||||||||||||||
Warrants issued | 444,608 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Computed "expected" tax benefit | $ (1,804,200) | $ (2,442,589) | ||
Increase (reduction) in income taxes resulting from: | ||||
State Tax, net of federal | (225,900) | (697,883) | ||
Stock Compensation and Warrant Modification | 372,190 | |||
Miscellaneous | 17,572 | |||
Non-deductible finance charges and loss on debt extinguishment | 1,255,918 | |||
Change in the valuation allowance | 1,640,338 | 1,884,554 | ||
Total income tax expense/(benefit) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets | ||
Net operating loss carry-forward | $ 14,120,000 | $ 7,132,000 |
Stock based compensation | 252,000 | |
Intangible Assets | (1,000) | |
Less: valuation allowance | (7,384,000) | |
Total | ||
Deferred Tax Asset [Member] | ||
Deferred Tax Assets | ||
Net operating loss carry-forward | 3,635,000 | 1,926,000 |
Stock based compensation | 68,000 | |
Intangible Assets | 0 | |
Less: valuation allowance | (3,635,000) | (1,994,000) |
Total |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 02, 2017 | |
Income Taxes (Textual) | ||||
Retained deficits | $ 403,992 | |||
U.S. federal and state income tax rate, description | The 20-year limitation was eliminated for losses generated after January 1, 2018, giving the taxpayer the ability to carry forward losses indefinitely. However, NOL carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income. | |||
Net operating loss carry-forward for federal and state | $ 14,100,000 | |||
Net deferred tax asset | $ 7,384,000 | |||
Description of net operating losses | An ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. | |||
Annual effective tax rate, percentage | 27.00% | 27.00% | ||
Deferred Tax Asset [Member] | ||||
Income Taxes (Textual) | ||||
Net deferred tax asset | $ 3,635,000 | $ 1,994,000 | ||
C Corporation [Member] | ||||
Income Taxes (Textual) | ||||
Retained deficits | $ 10,673,709 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
First site initiation visit [Member] | ||
Milestone Event | First site initiation visit | |
Percent Milestone Fees | 10.00% | |
Amount | $ 303,005 | |
First patient in [Member] | ||
Milestone Event | First patient in | |
Percent Milestone Fees | 10.00% | |
Amount | $ 303,005 | |
30% patients randomized [Member] | ||
Milestone Event | 30% patients randomized | 30% patients randomized |
Percent Milestone Fees | 10.00% | 10.00% |
Amount | $ 297,634 | $ 303,005 |
50% sites initiated [Member] | ||
Milestone Event | 50% sites initiated | 50% sites initiated |
Percent Milestone Fees | 10.00% | 10.00% |
Amount | $ 297,634 | $ 303,005 |
60% patients randomized [Member] | ||
Milestone Event | 60% patients randomized | 60% patients randomized |
Percent Milestone Fees | 10.00% | 10.00% |
Amount | $ 297,634 | $ 303,005 |
100% sites initiated [Member] | ||
Milestone Event | 100% sites initiated | 100% sites initiated |
Percent Milestone Fees | 10.00% | 10.00% |
Amount | $ 297,634 | $ 303,005 |
100% of patients randomized [Member] | ||
Milestone Event | 100% of patients randomized | 100% of patients randomized |
Percent Milestone Fees | 10.00% | 10.00% |
Amount | $ 297,634 | $ 303,005 |
90% of case report form pages monitored [Member] | ||
Milestone Event | 90% of case report form pages monitored | 90% of case report form pages monitored |
Percent Milestone Fees | 5.00% | 5.00% |
Amount | $ 148,817 | $ 15,503 |
PE analysis [Member] | ||
Milestone Event | PE analysis | PE analysis |
Percent Milestone Fees | 5.00% | 5.00% |
Amount | $ 148,817 | $ 15,503 |
Database is locked [Member] | ||
Milestone Event | Database is locked | Database is locked |
Percent Milestone Fees | 10.00% | 10.00% |
Amount | $ 297,634 | $ 303,005 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) | Oct. 09, 2018 | Apr. 02, 2018USD ($) | Mar. 01, 2020 | Dec. 12, 2019 | Jul. 05, 2019 | Mar. 24, 2019USD ($)shares | Dec. 19, 2018 | Nov. 21, 2018USD ($) | Nov. 16, 2018 | Dec. 31, 2015 | Jan. 31, 2011 | Mar. 31, 2020USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2018USD ($) | Feb. 29, 2020USD ($) | Feb. 29, 2020EUR (€) | Feb. 01, 2020USD ($) | Feb. 01, 2020EUR (€) | Sep. 30, 2019USD ($) |
Commitments and Contingencies (Textual) | |||||||||||||||||||||
License agreement description | The Company adopted a performance bonus plan (“PBP”) to provide incentive for Company personnel, which was modified on January 25, 2016 and April 15, 2017. Under the PBP, 5.25% of the first $14.7 million of a strategic transaction (one or more transactions that provide funds to the Company and/or its members that enable the commencement of the clinical development of AD04) will be set aside for Company’s personnel with 1.25% of funds to be awarded to the Chairman of the Board and the remainder to be awarded at the CEO’s discretion, with no more than 3.15% payout to the CEO of the Company. The maximum bonus amount to be paid out of the PBP was $771,750. | ||||||||||||||||||||
Minimum royalties accrued | $ 10,000 | $ 40,000 | |||||||||||||||||||
Minimum royalties paid | 20,000 | ||||||||||||||||||||
Euro/US dollar exchange rate | 0.10 | ||||||||||||||||||||
Shares of common stock | $ 3,436,406 | ||||||||||||||||||||
Amendment diligence milestone payment | 20,000 | ||||||||||||||||||||
Prepaid expense | $ 294,124 | ||||||||||||||||||||
Expense | $ 1,500,000 | ||||||||||||||||||||
Second Milestone [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Prepaid expense | $ 299,496 | ||||||||||||||||||||
Third Milestone [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Prepaid expense | $ 297,013 | ||||||||||||||||||||
Licensing & Venture Group [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
License agreement description | The Company paid UVA LVG a license issue fee and is obligated to pay UVA LVG (i) annual minimum royalties of $40,000 commencing in 2017; (ii) a $20,000 milestone payments upon dosing the first patient under a Phase 3 human clinical trial of a licensed product, $155,000 upon the earlier of the completion of a Phase 3 trial of a licensed product, partnering of a licensed product, or sale of the Company, $275,000 upon acceptance of an NDA by the FDA, and $1,000,000 upon approval for sale of AD04 in the U.S., Europe or Japan; as well as (iii) royalties equal to a 2% and 1% of net sales of licensed products in countries in which a valid patent exists or does not exist, respectively, with royalties paid quarterly. In the event of a sublicense to a third party, the Company is obligated to pay royalties to UVA LVG equal to a percentage of what the Company would have been required to pay to UVA LVG had it sold the products under sublicense ourselves. In addition, the Company is required to pay to UVA LVG 15% of any sublicensing income. | ||||||||||||||||||||
License agreement notice period, description | The license agreement may be terminated by UVA LVG upon sixty (60) days written notice if the Company breaches its obligations thereunder, including failing to make any milestone, failure to make required payments, or the failure to exercise diligence to bring licensed products to market. | ||||||||||||||||||||
License agreement amendment changed dates, description | The Company executed an amendment, dated December 14, 2017, which changed the dates by which the Company, using commercially reasonable efforts, was to achieve the goals of submitting a New Drug Application to the FDA for a licensed product to December 31, 2024 (from December 31, 2023) and commencing commercialization of an FDA approved product by December 31, 2025 (from December 31, 2024). | ||||||||||||||||||||
Euro [Member] | Second Milestone [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Prepaid expense | € | € 269,938 | ||||||||||||||||||||
Euro [Member] | Third Milestone [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Prepaid expense | € | € 269,938 | ||||||||||||||||||||
Service Agreemen 1 [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Description of master services agreement | The Company and Crown entered into Service Agreement 1 under the MSA for a 24 week, multi-centered, randomized, double-blind, placebo-controlled, parallel-group, Phase 3 clinical study of the Company's lead compound, AD04. The MSA or a service agreement under it may be terminated by the Company, without penalty, on fourteen days written notice. | ||||||||||||||||||||
Estimated cost | 34,120 | ||||||||||||||||||||
Prepaid expense | 473,639 | 214,633 | |||||||||||||||||||
Service agreement direct expenses | 337,503 | 585,451 | |||||||||||||||||||
Service Agreemen 1 [Member] | Euro [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Fee for completion of trial under service | € | € 3,168,895 | € 3,168,895 | |||||||||||||||||||
Estimated cost | € | 2,172,000 | ||||||||||||||||||||
Service Order [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Fee for completion of trial under service | $ 3,494,024 | $ 3,557,085 | |||||||||||||||||||
Euro/US dollar exchange rate | 1.1026 | 1.1225 | |||||||||||||||||||
Prepayment under the agreement cost | $ 505,960 | ||||||||||||||||||||
Estimated cost | $ 2,400,000 | $ 3,262,411 | $ 3,321,292 | ||||||||||||||||||
Service Order [Member] | Euro [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Estimated cost | € | € 2,958,835 | € 2,958,835 | |||||||||||||||||||
Consulting Agreement [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Contract research organizations, description | The Company entered into an Amendment (the "Amendment") to the statement of work ("SOW"). The Company had paid PEPCO $39,064 under the SOW for services rendered to date, leaving as estimated balance of $274,779 to be paid under the SOW. The Amendment provided the Company with a 20% discount on the remaining services and to fix the price of any remaining services at a total of $219,823 for all services required for the use of Brief Behavioral Compliance Enhancement Treatment (BBCET) in support of the Trial. In addition, Dr. Johnson executed a guaranty, dated December 12, 2019, of PEPCO's performance under the MSA and SOW (the "Guaranty"), together with a pledge and security agreement, dated December 12, 2019 (the "Pledge and Security Agreement"), to secure the Guaranty with 600,000 shares of the Company's common stock beneficially owned by him and a lock-up agreement, dated December 12, 2019 (the "Lock-Up"), pursuant to which he agreed not to transfer or dispose of, directly or indirectly, any shares of the Company's common stock, as currently owned by him, until after January 1, 2021. As of March 31, 2020, the Company had recognized $91,972 in expenses, of which $52,908 were charged against cash advanced under the terms of the Amendment, leaving a net prepaid expense asset of $167,095 associated with this vendor agreement. | The Company entered into a Master Services Agreement (the "MSA") and attached statement of work with Psychological Education Publishing Company ("PEPCO") to administer a behavioral therapy program during the Company's upcoming Phase 3 clinical trial. PEPCO is owned by a related party, Dr. Bankole Johnson, the Company's Chief Medical Officer, and currently the largest stockholder in the Company. It is anticipated that the compensation to be paid to PEPCO for services under the MSA will total approximately $300,000, of which shares of the Company's common stock having a value equal to twenty percent (20%) of this total can be issued to Dr. Johnson in lieu of cash payment. | The Company had recognized $91,972 in expenses, of which $52,908 were charged against cash advanced under the terms of the Amendment, leaving a net prepaid expense asset of $167,095 associated with this vendor agreement. | The Company had recognized $91,972 in expenses, of which $52,908 were charged against cash advanced under the terms of the Amendment, leaving a net prepaid expense asset of $167,095 associated with this vendor agreement. | |||||||||||||||||
Vendor Agreement [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Vendor Agreements, description | The Company has entered into a number of agreements and work orders for future consulting, clinical trial support, and testing services, with terms ranging between 12 and 30 months. These agreements, in aggregate, commit the Company to approximately $1.4 million in future cash. | The Company has entered into a number of agreements and work orders for future consulting, clinical trial support, and testing services, with terms ranging between 12 and 30 months. These agreements, in aggregate, commit the Company to approximately $1.4 million in future cash. | |||||||||||||||||||
Office Service Agreement [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
License agreement description | The Company entered into an office service agreement with the University of Virginia Foundation for the use of an office and a workstation located at 1001 Research Park Boulevard, Suite 100, Charlottesville, VA 22911. The Company agreed to pay a fee of $1,150 per month for use of these facilities. The agreement is on a month-to-month basis. For the year ended December 31, 2019, the Company rent expense associated with this agreement, including continuing month-to-month payments after the expiration of the agreement, was approximately $12,650. | ||||||||||||||||||||
License and Membership Agreement [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
License agreement description | The Company agreed to pay a monthly fee of $1,152 for membership and use of these facilities, committing to do so for a term of one year. At the end of this period, the agreement reverted to a month-to-month rental of a dedicated desk space, without office, for a monthly fee of $393 per month. In the year ended December 31, 2019, the Company rent expense associated with this agreement was approximately $12,304. | The Company entered into a sublease with Purnovate, LLC, a private company in which the Company's CEO has a 35% financial interest for the lease of three offices at 1180 Seminole Trail, Suite 495, Charlottesville, VA 22901. The lease has a term of two years, and the monthly rent is $1,400. In the three months ended March 31, 2020, the rent expense associated with this lease was $1,400. | |||||||||||||||||||
Consulting Agreement [Member] | Bankole A. Johnson [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Consultant fees | $ 93,750 | $ 676,664 | |||||||||||||||||||
Annual salary | $ 375,000 | ||||||||||||||||||||
Option to purchase | shares | 250,000 | ||||||||||||||||||||
BonusReceived | $ 250,000 | ||||||||||||||||||||
Directors and Officers [Member] | |||||||||||||||||||||
Commitments and Contingencies (Textual) | |||||||||||||||||||||
Shares of common stock | $ 292,309 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Mar. 03, 2020 | Mar. 03, 2020 | Mar. 03, 2020 | Mar. 01, 2020 | Feb. 03, 2020 | Jan. 22, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 01, 2020 |
Subsequent Events (Textual) | |||||||||||
Common stock, description | The Compensation Committee of Board of Directors of the Company awarded the Company's executive officers, William B. Stilley, Chief Executive Officer, and Joseph Truluck, Chief Financial Officer, performance bonuses for 2019, partially paid in common stock of the Company to preserve cash, of $42,000 and $21,000 in cash, respectively, and 54,167 and 27,084 shares of the Company's common stock, respectively, which shares are subject to a six-month contractual restriction on sale. Of the $180,002 total cost of these bonuses, $150,000 were recognized in the year ended December 31, 2019 as expected under these executives' contracts, and the remaining $30,002 in bonus was recognized as time of issue as Board discretionary. | ||||||||||
Compensation expense | $ 570,633 | $ 284,004 | $ 1,602,318 | $ 5,368,354 | |||||||
Cash | $ 400,000 | $ 3,400,000 | |||||||||
Common stock issued, shares | 250,000 | 2,481,191 | 426,416 | ||||||||
Options [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock issued, shares | 1,521,780 | ||||||||||
Subsequent Event [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock, description | The Company to preserve cash, of $42,000 and $21,000 in cash, respectively, and 54,167 and 27,084 shares of the Company's common stock, respectively, which shares are subject to a six-month contractual restriction on sale. | ||||||||||
Related party payments | $ 269,938 | ||||||||||
Prepaid expense | $ 299,496 | ||||||||||
Subsequent Event [Member] | Options [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Exercise price | $ 1.44 | $ 1.44 | $ 1.44 | ||||||||
Options exercisable period | 10 years | ||||||||||
Subsequent Event [Member] | Mr. Stilley [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock issued, shares | 460,000 | ||||||||||
Subsequent Event [Member] | Mr. Truluck [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock issued, shares | 200,000 | ||||||||||
Annual salary | $ 170,000 | ||||||||||
Subsequent Event [Member] | Directors and employees [Member] | Options [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock, description | The shares of common stock underlying the option awards each vest pro rata on a monthly basis over a thirty-six month period. | ||||||||||
Common stock issued, shares | 440,000 | ||||||||||
Subsequent Event [Member] | Purnovate, LLC [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Lease term | 2 years | ||||||||||
Rent | $ 1,400 | ||||||||||
Financial interest, percentage | 35.00% | ||||||||||
Subsequent Event [Member] | Lyons Capital, LLC [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock issued | 30,000 | ||||||||||
Market value per share | $ 1.76 | ||||||||||
Compensation expense | $ 52,800 |