Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2019 | |
Document And Entity Information | |
Entity Registrant Name | Processa Pharmaceuticals, Inc. |
Entity Central Index Key | 0001533743 |
Document Type | S-1 |
Document Period End Date | Sep. 30, 2019 |
Amendment Flag | false |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business Flag | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets | |||
Cash and cash equivalents | $ 504,302 | $ 1,740,961 | $ 2,847,429 |
Due from related party | 663 | 21,583 | 62,709 |
Prepaid expenses and other | 220,280 | 257,832 | 41,446 |
Total Current Assets | 725,245 | 2,020,376 | 2,951,584 |
Property And Equipment | |||
Software | 19,740 | 19,740 | |
Office equipment | 9,327 | 9,327 | |
Total Cost | 29,067 | 29,067 | |
Less: accumulated depreciation | 18,026 | 11,692 | |
Property and equipment, net | 11,041 | 17,375 | 25,821 |
Other Assets | |||
Operating lease right of use assets, net of accumulated amortization | 238,186 | ||
Intangible assets, net of accumulated amortization | 9,841,286 | 10,437,782 | |
Security deposit | 5,535 | 5,535 | 5,535 |
Total Other Assets | 10,085,007 | 10,443,317 | |
Total Assets | 10,821,293 | 12,481,068 | 2,982,940 |
Current Liabilities | |||
Senior convertible notes | 230,000 | 2,448,570 | |
Current maturities of operating lease liability | 77,423 | ||
Accrued interest | 20,343 | 35,693 | |
Accounts payable | 64,861 | 292,102 | 50,686 |
Due to related parties | 25,727 | 436 | |
Accrued expenses | 123,670 | 103,259 | 64,428 |
Total Current Liabilities | 291,681 | 645,704 | 2,599,813 |
Non-current Liabilities | |||
Accrued rent liability | 9,963 | ||
Noncurrent operating lease liability | 166,739 | ||
Net deferred tax liability | 1,692,194 | 2,134,346 | |
Total Liabilities | 2,150,614 | 2,780,050 | 2,609,776 |
COMMITMENTS AND CONTINGENCIES | |||
Stockholders' Equity | |||
Preferred stock, value | |||
Common stock, value | 3,840 | 3,867 | 3,527 |
Additional paid-in capital | 18,874,406 | 19,121,285 | 4,228,723 |
Subscription receivable | (1,800,000) | ||
Accumulated deficit | (10,207,567) | (7,624,134) | (3,859,086) |
Total Stockholders' Equity | 8,670,679 | 9,701,018 | 373,164 |
Total Liabilities and Stockholders' Equity | $ 10,821,293 | $ 12,481,068 | $ 2,982,940 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Aug. 31, 2019 | Dec. 31, 2018 | Mar. 19, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | |||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Preferred stock, shares authorized | 1,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | |
Preferred stock, shares issued | |||||
Preferred stock, shares outstanding | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Common stock, shares authorized | 100,000,000 | 350,000,000 | 350,000,000 | 43,261,049 | |
Common stock, shares issued | 38,404,530 | 38,674,265 | 35,272,626 | 35,272,626 | |
Common stock, shares outstanding | 38,404,530 | 38,674,265 | 35,272,626 | 35,272,626 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Expenses | ||||||
Research and development expenses | $ 584,979 | $ 611,612 | $ 1,804,169 | $ 2,477,481 | $ 3,085,317 | $ 964,164 |
General and administrative expenses | 419,028 | 451,359 | 1,219,329 | 1,305,511 | 1,439,623 | 838,269 |
Total operating expenses | 1,004,007 | 1,062,971 | 3,023,498 | 3,782,992 | ||
Operating Loss | (1,004,007) | (1,062,971) | (3,023,498) | (3,782,992) | (4,524,940) | (1,802,433) |
Other Income (Expense) | ||||||
Interest expense | (2,271) | (8,323) | (12,973) | (154,377) | (161,205) | (59,063) |
Interest income | 1,503 | 6,457 | 10,886 | 10,163 | 18,297 | 5,181 |
Total other income (expense) | (768) | (1,866) | (2,087) | (144,214) | ||
Net Operating Loss Before Income Tax Benefit | (1,004,775) | (1,064,837) | (3,025,585) | (3,927,206) | (4,667,848) | (1,856,315) |
Income tax benefit | 141,251 | 212,015 | 442,152 | 771,332 | 902,801 | |
Net Loss | $ (863,524) | $ (852,822) | $ (2,583,433) | $ (3,155,874) | $ (3,765,047) | $ (1,856,315) |
Net Loss per Common Share - Basic and Diluted | $ (0.02) | $ (0.02) | $ (0.07) | $ (0.09) | $ (0.10) | $ (0.06) |
Weighted Average Common Shares Used to Compute Net Loss Applicable to Common Shares - Basic and Diluted | 38,798,251 | 38,674,265 | 38,716,048 | 36,869,323 | 37,324,267 | 32,595,680 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-In Capital [Member] | Subscription Receivable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 3,175 | $ 4,266,825 | $ (2,002,772) | $ 2,267,229 | ||
Balance, shares at Dec. 31, 2016 | 31,745,242 | |||||
Fair value of Heatwurx net liabilities obtained in a reverse merger | $ 352 | (38,102) | (37,750) | |||
Fair value of Heatwurx net liabilities obtained in a reverse merger, shares | 3,527,284 | |||||
Net loss | (1,856,315) | (1,856,315) | ||||
Balance at Dec. 31, 2017 | $ 3,527 | 4,228,723 | (3,859,087) | 373,164 | ||
Balance, shares at Dec. 31, 2017 | 35,272,626 | |||||
Recognize the fair value of exclusive license intangible asset acquired from CoNCERT in exchange for 2,090,301 common shares of Processa held by Promet | 8,000,000 | 8,000,000 | ||||
Net loss | (1,096,798) | (1,096,798) | ||||
Balance at Mar. 31, 2018 | $ 3,527 | 12,228,723 | (4,955,884) | 7,276,366 | ||
Balance, shares at Mar. 31, 2018 | 35,272,626 | |||||
Balance at Dec. 31, 2017 | $ 3,527 | 4,228,723 | (3,859,087) | 373,164 | ||
Balance, shares at Dec. 31, 2017 | 35,272,626 | |||||
Net loss | (3,155,874) | |||||
Balance at Sep. 30, 2018 | $ 3,867 | 19,317,036 | (1,800,000) | (7,014,961) | 10,505,942 | |
Balance, shares at Sep. 30, 2018 | 38,674,265 | |||||
Balance at Dec. 31, 2017 | $ 3,527 | 4,228,723 | (3,859,087) | 373,164 | ||
Balance, shares at Dec. 31, 2017 | 35,272,626 | |||||
Recognize the fair value of exclusive license intangible asset acquired from CoNCERT in exchange for 2,090,301 common shares of Processa held by Promet | 8,000,000 | 8,000,000 | ||||
Conversion of Senior convertible notes for common stock and stock purchase warrants | $ 121 | 2,312,488 | 2,312,609 | |||
Conversion of Senior convertible notes for common stock and stock purchase warrants, shares | 1,206,245 | |||||
Issuance of common stock units for cash | $ 140 | 2,874,547 | 2,874,687 | |||
Issuance of common stock units for cash, shares | 1,402,442 | |||||
Issuance of common stock units for a future research funding commitment | $ 79 | 1,631,464 | (1,800,000) | (168,457) | ||
Issuance of common stock units for a future research funding commitment, shares | 792,952 | |||||
Stock-based compensation | 74,063 | 74,063 | ||||
Net loss | (3,765,047) | (3,765,047) | ||||
Balance at Dec. 31, 2018 | $ 3,867 | 19,121,285 | (1,800,000) | (7,624,134) | 9,701,018 | |
Balance, shares at Dec. 31, 2018 | 38,674,265 | |||||
Balance at Mar. 31, 2018 | $ 3,527 | 12,228,723 | (4,955,884) | 7,276,366 | ||
Balance, shares at Mar. 31, 2018 | 35,272,626 | |||||
Conversion of Senior convertible notes for common stock and stock purchase warrants | $ 121 | 2,390,248 | 2,390,369 | |||
Conversion of Senior convertible notes for common stock and stock purchase warrants, shares | 1,206,245 | |||||
Issuance of common stock units for cash | $ 140 | 2,964,955 | 2,965,095 | |||
Issuance of common stock units for cash, shares | 1,402,442 | |||||
Issuance of common stock units for a future research funding commitment | $ 79 | 1,682,582 | (1,800,000) | (117,339) | ||
Issuance of common stock units for a future research funding commitment, shares | 792,952 | |||||
Net loss | (1,206,255) | (1,206,255) | ||||
Balance at Jun. 30, 2018 | $ 3,867 | 19,266,508 | (1,800,000) | (6,162,139) | 11,308,236 | |
Balance, shares at Jun. 30, 2018 | 38,674,265 | |||||
Stock-based compensation | 50,528 | 50,528 | ||||
Net loss | (852,822) | (852,822) | ||||
Balance at Sep. 30, 2018 | $ 3,867 | 19,317,036 | (1,800,000) | (7,014,961) | 10,505,942 | |
Balance, shares at Sep. 30, 2018 | 38,674,265 | |||||
Balance at Dec. 31, 2018 | $ 3,867 | 19,121,285 | (1,800,000) | (7,624,134) | 9,701,018 | |
Balance, shares at Dec. 31, 2018 | 38,674,265 | |||||
Stock-based compensation | 58,559 | 58,559 | ||||
Payments made by investor for clinical trial costs | 115,000 | 115,000 | ||||
Net loss | (750,832) | (750,832) | ||||
Balance at Mar. 31, 2019 | $ 3,867 | 19,179,844 | (1,685,000) | (8,374,966) | 9,123,745 | |
Balance, shares at Mar. 31, 2019 | 38,674,265 | |||||
Balance at Dec. 31, 2018 | $ 3,867 | 19,121,285 | (1,800,000) | (7,624,134) | 9,701,018 | |
Balance, shares at Dec. 31, 2018 | 38,674,265 | |||||
Net loss | (2,583,433) | |||||
Balance at Sep. 30, 2019 | $ 3,840 | 18,874,406 | (10,207,567) | 8,670,679 | ||
Balance, shares at Sep. 30, 2019 | 38,404,530 | |||||
Balance at Mar. 31, 2019 | $ 3,867 | 19,179,844 | (1,685,000) | (8,374,966) | 9,123,745 | |
Balance, shares at Mar. 31, 2019 | 38,674,265 | |||||
Stock-based compensation | 66,476 | 66,476 | ||||
Payments made by investor for clinical trial costs | 280,927 | 280,927 | ||||
Net loss | (969,077) | (969,077) | ||||
Balance at Jun. 30, 2019 | $ 3,867 | 19,246,320 | (1,404,073) | (9,344,043) | 8,502,071 | |
Balance, shares at Jun. 30, 2019 | 38,674,265 | |||||
Conversion of Senior convertible notes for common stock and stock purchase warrants | $ 13 | 258,917 | 258,930 | |||
Conversion of Senior convertible notes for common stock and stock purchase warrants, shares | 126,741 | |||||
Stock-based compensation | 269,129 | 269,129 | ||||
Payments made by investor for clinical trial costs | 504,073 | 504,073 | ||||
Pledged shares of common stock forfeited upon revised research funding commitment | $ (40) | (899,960) | 900,000 | |||
Pledged shares of common stock forfeited upon revised research funding commitment, shares | (396,476) | |||||
Net loss | (863,524) | (863,524) | ||||
Balance at Sep. 30, 2019 | $ 3,840 | $ 18,874,406 | $ (10,207,567) | $ 8,670,679 | ||
Balance, shares at Sep. 30, 2019 | 38,404,530 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |||
Common stock, shares exchanged | 2,090,301 | 2,090,301 | |
Conversion of stock, costs | $ 4,742 | $ 82,502 | |
Issuance of common stock units for cash, cost | 218,422 | 308,830 | |
Issuance of common stock units for a future research funding commitment, cost | $ 117,339 | $ 168,457 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows From Operating Activities | ||||
Net Loss | $ (2,583,433) | $ (3,155,874) | $ (3,765,047) | $ (1,856,315) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation | 6,334 | 6,334 | 8,445 | 1,865 |
Amortization of right-of-use assets | 55,012 | |||
Amortization of debt issuance costs | 64,841 | 67,069 | 23,370 | |
Amortization of intangible asset | 596,496 | 422,814 | 621,647 | |
Impairment of software costs | 15,330 | |||
Deferred income tax benefit | (442,152) | (771,332) | (902,801) | |
Stock-based compensation | 394,164 | 50,528 | 74,063 | |
Payments/Reimbursements made directly by an investor in partial satisfaction of their stock subscription receivable | 900,000 | |||
Net changes in operating assets and liabilities: | ||||
Prepaid expenses | 37,552 | (240,872) | (216,386) | (23,299) |
Vendor deposit | 227,657 | |||
Operating lease liability | (58,999) | |||
Accrued interest | 8,587 | 89,522 | 94,122 | 35,693 |
Accounts payable | (227,241) | 29,334 | 241,416 | 9,995 |
Due (from)/to related parties | 46,647 | (32,393) | 40,690 | (62,368) |
Accrued rent liability | 13,284 | |||
Accrued expenses | 30,374 | 293,160 | 28,868 | (39,829) |
Net cash used in operating activities | (1,236,659) | (3,243,938) | (3,707,914) | (1,654,617) |
Cash Flows From Investing Activities | ||||
Proceeds from the redemption of certificates of deposit | 1,019,294 | |||
Purchase of property and equipment | (20,622) | |||
Purchase of intangible asset | (1,782) | (20,500) | ||
Acquisition costs related to the CoNCERT intangible asset | (1,782) | |||
Cash received in a reverse acquisition transaction | 6,280 | |||
Purchase of software license | (20,500) | |||
Net cash used in investing activities | (22,282) | (22,282) | 1,004,952 | |
Cash Flows From Financing Activities | ||||
Net proceeds from issuance of common stock | 2,965,095 | 2,874,687 | ||
Proceeds from issuance of senior convertible notes | 2,580,000 | |||
Transaction costs incurred on Senior Convertible Notes | (4,742) | (82,502) | (154,800) | |
Payment of placement agent and legal fees associated with clinical funding commitment | (117,339) | (168,457) | ||
Net cash provided by financing activities | 2,843,014 | 2,623,728 | 2,425,200 | |
Net (Decrease)/Increase in Cash and Cash Equivalents | (1,236,659) | (423,206) | (1,106,468) | 1,775,535 |
Cash and Cash Equivalents - Beginning | 1,740,961 | 2,847,429 | 2,847,429 | 1,071,894 |
Cash and Cash Equivalents - End | 504,302 | 2,424,223 | 1,740,961 | 2,847,429 |
Supplemental Cash Flow Information: | ||||
Cash paid for interest | ||||
Cash Paid for income taxes | ||||
Non-Cash Investing and Financing Activities: | ||||
Right-of-use asset obtained in exchange for operating lease liability | (293,198) | |||
Reduction in deferred lease liability | (9,963) | |||
Operating lease liability | 303,161 | |||
Recognize the exclusive license intangible asset acquired from CoNCERT | (11,037,147) | (11,037,147) | ||
Recognize deferred tax liability for basis difference of Intangible asset | 3,037,147 | 3,037,147 | ||
Recognize additional paid-in capital for consideration paid from the transfer of 2,090,301 common shares of Processa released by Promet to CoNCERT for Processa | 8,000,000 | 8,000,000 | ||
Cash paid for intangible license asset acquired from CoNCERT | ||||
Net | ||||
Conversion of Senior Convertible Debt and related accrued interest into shares of common stock and warrants | 258,930 | 2,395,111 | 2,395,111 | |
Common stock and stock purchase warrants issued in connection with a clinical trial funding commitment | (900,000) | 1,800,000 | 1,800,000 | |
Assumption of liabilities related to the reverse merger transaction | 44,030 | |||
Less: issuance of common stock related to the reverse merger transaction | (37,750) | |||
Cash received related to the net liabilities assumed in the reverse merger transaction | $ 6,280 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Parenthetical) | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Statement of Cash Flows [Abstract] | |
Issuance costs | $ 308,830 |
Common stock, shares transferred | shares | 2,090,301 |
Conversion of senior convertible debt, value | $ 2,350,000 |
Accrued interest | $ 109,472 |
Converted Senior Convertible Debt and accrued interest, shares and warrants | shares | 1,206,245 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1 – Organization and Summary of Significant Accounting Policies Business Activities and Organization Processa Pharmaceuticals, Inc. is an emerging clinical stage biopharmaceutical company focused on the development of drug products that are intended to provide treatment for and improve the survival and/or quality of life of patients who have a high unmet medical need condition or who have no alternative treatment. Within this group of pharmaceutical products, we currently are developing one product for multiple indications (i.e., the use of a drug to treat a particular disease), will begin developing a newly acquired drug once adequate funding has been obtained, and are searching for additional products for our portfolio. Our lead product, PCS-499, is an oral tablet that is a deuterated analog of one of the major metabolites of pentoxifylline (Trental ® On June 22, 2018, the FDA granted orphan-drug designation to PCS-499 for the treatment of NL. On September 28, 2018, the FDA cleared our IND for PCS-499 in NL such that we could move forward with the Phase 2a safety-dose tolerability trial. We dosed our first NL patient in this Phase 2a clinical trial on January 29, 2019. On August 23, 2019, our study was fully enrolled as the twelfth patient was dosed. The main objective of the trial is to evaluate the safety and tolerability of PCS-499 in patients with NL. We expect the safety and efficacy data collected to provide information for the design of future clinical trials. Based on toxicology studies and healthy human volunteer studies, Processa and the FDA agreed that a PCS-499 dose of 1.8 grams/day would be the highest dose administered to NL patients in this Phase 2 trial. As anticipated, the PCS-499 dose of 1.8 grams/day, 50% greater than the maximum tolerated dose of pentoxifylline, appears to be well tolerated with no serious adverse events reported. Twelve patients have been dosed with nine patients on treatment for at least four months, seven patients on treatment for at least six months, and two patients on treatment for at least nine months. Currently, nine patients remain in the study. To date, six patients dosed at 1.8 g/day have reported only mild adverse events related to the treatment, which occurred mostly in the first month of treatment and were quickly resolved. As expected, gastrointestinal or central nervous system (CNS) adverse events were reported most often. The degeneration of tissue occurring at the NL lesion site is caused by a number of pathophysiological changes, which has made it extremely difficult to develop effective treatments for this condition. PCS-499 may provide a solution since PCS-499 and its metabolites affect a number of biological pathways, several of which contribute to the pathophysiology associated with NL. As expected, we have not yet seen any significant change in the NL lesion of the trial participants. We are continually evaluating the data we receive. We plan to request a meeting with the FDA before the end of 2019 to further discuss the development of PCS-499, including the next clinical trial. On August 29, 2019, we entered into an exclusive license agreement with Akashi Therapeutics, Inc. (“Akashi”) to develop and commercialize an anti-fibrotic, anti-inflammatory drug (HT-100) that also promotes healthy muscle fiber regeneration. In previous clinical trials in Duchenne Muscular Dystrophy (DMD), HT-100 showed promising improvement in the muscle strength of non-ambulant pediatric patients. Although the FDA placed a clinical hold on the DMD trial after a serious adverse event in a pediatric patient, FDA has removed the drug off clinical hold and defined how HT-100 can resume clinical trials in DMD. Once we have obtained adequate funding, we plan to develop HT-100 in rare adult fibrotic related diseases such as focal segmental glomerulosclerosis, idiopathic pulmonary fibrosis or Scleroderma. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC (as amended). The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. Going Concern and Management’s Plans Our condensed consolidated financial statements have been prepared using U.S. GAAP and are based on the assumption that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We face certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities. We currently have no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. We have relied exclusively on private placements with a small group of accredited investors to finance our business and operations. As described in more detail below, we recently entered into two line of credit agreements providing a revolving commitment of an aggregate up to $1.4 million but have not drawn any amounts as of the date of this report. We have not had any revenue since our inception. We are looking at ways to add a revenue stream to offset some of our expenses but do not currently have any revenue under contract or any immediate sales prospects. During the nine months ended September 30, 2019, we had an accumulated deficit of $10.2 million, incurred a net loss of $2.6 million and used $1.2 million in net cash from operating activities from continuing operations. At September 30, 2019, we had cash and cash equivalents totaling $504,302. During the nine months ended September 30, 2019, PoC Capital (our clinical trial funding commitment investor) made payments directly to our CRO totaling $689,168 for amounts invoiced. PoC Capital also repaid us $210,832 for clinical trial expenses we previously paid to our CRO, $180,119 of which is included in Prepaid and Other on our condensed consolidated balance sheet at September 30, 2019. On September 20, 2019, we entered into two separate Line of Credit Agreements (“LOC Agreements”) with DKBK Enterprises, LLC (“DKBK”) and current shareholder CorLyst, LLC (“CorLyst”), both related parties (“Lenders”), which provide a revolving commitment of up to $700,000 each ($1.4 million total). Under the LOC Agreements, all funds borrowed will bear an 8% annual interest rate. The lenders have the right to convert all or any portion of the debt and interest into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction or (iii) at an adjusted price; all as defined in the 8% Senior Note agreement. The lenders will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. Our Chief Executive Officer (CEO) is also the Chief Executive Officer and Managing Member of both Lenders. CorLyst beneficially owns 6,859,527 shares of Processa common stock, representing approximately 17.7% of the Company’s outstanding shares of voting capital stock. We have not drawn any amounts under these LOC agreements. In connection with the LOC Agreements, we amended the existing pledge agreement with PoC Capital on September 30, 2019 to reduce the committed funds from $1.8 million to $900,000, which has now been paid in full. As part of the original pledge agreement, we issued 792,952 shares of common stock and 792,952 warrants to purchase shares of common stock to PoC Capital but held 396,476 shares and 396,476 warrants as collateral until certain payment milestones were met. PoC Capital forfeited the pledged collateral in the amended agreement and the shares have been reissued to Processa and will be retired. We are currently in the process of raising additional funds through the private sale of 8% Senior Convertible Notes (“8% Senior Notes”) to accredited investors. As of November 5, 2019, $745,000 from the sale of 8% Senior Notes to both new and existing investors has been received in escrow. We have not recorded these amounts in the accompanying condensed consolidated financial statements at September 30, 2019 since these investors, in connection with the revision of our agreement with PoC Capital and our entering into the LOC agreements, had the opportunity through October 18, 2019 to rescind their investment. No investors indicated any intention to rescind any investment and we plan to close the escrow account in the fourth quarter of 2019, at which time we will record the proceeds. We have also delayed some of our cash outflows, primarily through the deferred payment of salaries ($48,840 has been accrued and included in accrued expenses during the three and nine months ended September 30, 2019) until such time as we have raised sufficient funding. Based on our current plan, we likely need to raise additional capital to fund our future operations. While we believe our current resources are adequate to complete our current Phase 2a trial for NL, we do not currently have resources to conduct other future trials or develop HT-100 without raising additional capital. As noted above, the timing and extent of our spending will depend on the costs associated with, and the results of our Phase 2a trial for NL. Our anticipated spending and our cash flow needs could change significantly as the trial progresses. There may be costs we incur during our trial that we do not currently anticipate in order to complete the trial, requiring us to need additional capital sooner than currently expected. The additional funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend our current or future clinical trials, or research and development programs. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the future and thereafter, and no assurances can be given that such funding will be available at all, in a sufficient amount, or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions providing funds, we will rapidly exhaust our resources and be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these condensed consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about our ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are available to be issued. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should we be unable to continue as a going concern based on the outcome of these uncertainties described above. Use of Estimates In preparing our condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP and pursuant to the rules and regulations of the SEC, we make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to: stock-based compensation, determining the fair value of acquired assets and assumed liabilities, intangible assets, and income taxes. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While we believe the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangibles with a finite useful life are amortized using the straight-line method unless the pattern in which the economic benefits of the intangible assets are consumed or used up are reliably determinable. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to our future cash flows. The useful life is based on the duration of the expected use of the asset by us and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. We evaluate the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. If an income approach is used to measure the fair value of an intangible asset, we consider the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to us, the useful life is considered indefinite. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. Impairment of Long-Lived Assets and Intangibles Other Than Goodwill We account for the impairment of long-lived assets in accordance with ASC 360 , Property, Plant and Equipment Intangibles – Goodwill and Other, Stock-based Compensation Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, Compensation-Stock Compensation Net Loss Per Share Basic loss per share is computed by dividing our net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing our net loss available to common shareholders by the diluted weighted average number of shares of common stock during the period. Since we experienced a net loss for all periods presented, basic and diluted net loss per share are the same. As such, diluted loss per share for the three and nine months ended September 30, 2019 and 2018 excludes the impact of potentially dilutive common shares related to outstanding stock options, warrants and the conversion of our Senior Convertible Notes since those shares would have an anti-dilutive effect on loss per share. Research and Development Research and development costs are expensed as incurred and consisted of direct and overhead-related expenses. Recently Adopted Accounting Pronouncements On January 1, 2019, we adopted Accounting Standards Codification (ASC) 842, Leases The adoption of the new guidance did not have a material impact on the condensed consolidated statement of operations. For further details regarding the adoption of this standard, see Note 9, “Operating Leases.” |
Organization and Description of
Organization and Description of the Business | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Organization and Description of the Business | Note 1 – Organization and Description of the Business Processa Pharmaceuticals, Inc. (“Processa” or “the Company”) is an emerging clinical stage biopharmaceutical company focused on the development of drug products that are intended to provide treatment for and improve the survival and/or quality of life of patients who have a high unmet medical need condition or who have no alternative treatment. Within this group of pharmaceutical products, we currently are developing one product for multiple indications (i.e., the use of a drug to treat a particular disease) and searching for additional products for our portfolio. Our lead product, PCS-499 is an oral tablet that is an analog of an active metabolite of an already approved FDA drug. The advantage of PCS-499 is that it potentially may work in many conditions because it has multiple pharmacological targets it affects that are important in the treatment of these conditions. Based on its pharmacological activity, we have identified multiple unmet medical need conditions where the use of PCS-499 may result in clinical efficacy. The lead indication currently under development for PCS-499 is Necrobiosis Lipoidica (NL). We started our Phase 2a clinical trial in NL patients in the fourth quarter of 2018, and on January 29, 2019 our first patient received the first dose of PCS-499. As of March 15, 2019, four additional patients have been enrolled in the study and have received at least one dose of PCS-499. All these patients have tolerated PCS-499 to date and are continuing in the study. Our trial is taking place at two sites: The University of Pennsylvania and University of Pittsburgh Medical Center (UPMC). We anticipate all 12 patients planned for this study will be enrolled by June 2019. We continue to evaluate other unmet need conditions for PCS-499, as well as other potential assets and develop strategies including the regulatory pathway and commercialization plans for product(s) for these unmet medical conditions. On October 4, 2017, we (formerly known as Heatwurx, Inc. or “Heatwurx”) and our wholly-owned subsidiary, Processa Therapeutics LLC, (“Processa LLC”) a Delaware limited liability company, acquired all the net assets of Promet Therapeutics, LLC (“Promet”) a private Delaware limited liability company, including the rights to the CoNCERT Agreement (see Note 5) in exchange for 31,745,242 shares of our common stock, which at closing, constituted approximately 90% of our issued and outstanding common stock on a fully diluted basis (approximately 84% of which was beneficially owned by Promet and approximately 6% of which was held for the benefit of CoNCERT until released to CoNCERT on behalf of Processa at the conclusion of the CoNCERT transaction). We accounted for the net asset acquisition transaction as a “reverse acquisition” merger using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805-40-45, Business Combinations – Reverse Acquisitions On March 19, 2018, along with Promet and CoNCERT Pharmaceuticals Inc. (“CoNCERT”), the Option and License Agreement (the “Agreement”) executed with CoNCERT in October 2017 was amended. The Agreement was assigned to us and we exercised the exclusive option for the PCS-499 compound. The option was exercised in exchange for CoNCERT receiving (i) $8 million of our common stock that was held by Promet for the benefit of CoNCERT (2,090,301 shares which represented a 5.93% interest in our common stock outstanding on that date), and (ii) 15% of any sublicense revenue earned by us for a period equivalent to the royalty term (as defined in the Agreement) until the earliest of (a) our raising $8 million of gross proceeds; and (b) CoNCERT being able to sell its shares of our common stock without restrictions pursuant to the terms of the amended Agreement. All other terms of the Agreement remain unchanged. As a result, we recognized an intangible asset and additional paid-in capital in the amount of $8 million resulting from Promet releasing the shares to CoNCERT on our behalf in satisfaction of our obligation under the Agreement to CoNCERT (see Note 5 - Intangible Asset for income tax effect of this transaction). There was no change in the total shares issued and outstanding, and after Promet LLC released CoNCERT’s shares it held for CoNCERT, Promet’s percentage beneficial interest held in us remained at 84%. |
Going Concern and Management's
Going Concern and Management's Plans | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Management's Plans | Note 2 – Going Concern and Management’s Plans Our consolidated financial statements have been prepared using U.S. GAAP and are based on the assumption that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We face certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities, and no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. We have relied exclusively on private placements with a small group of accredited investors to finance our business and operations. We do not have any prospective arrangements or credit facilities as a source of future funds. We have not had any revenue since our inception as Promet on August 31, 2015. We are looking at ways to add a revenue stream to offset some of our expenses but do not currently have any revenue under contract or any immediate sales prospects. As of December 31, 2018, we had an accumulated deficit of approximately $7.6 million, incurred a net loss of approximately $3.8 million and used approximately $3.7 million in net cash from operating activities from continuing operations for the year ended December 31, 2018. At December 31, 2018, we had total cash and cash equivalents of approximately $1.7 million and a Clinical Trial Funding commitment from an investor (PoC Capital) of $1.8 million. Based on our current plan and our available resources (including the Clinical Trial Funding commitment of $1.8 million from PoC Capital), we will need to raise additional capital before the end of the second quarter of 2019 in order to fund our future operations. While we believe our current resources are adequate to complete our upcoming Phase 2a trial for NL, we do not currently have resources to conduct other future trials without raising additional capital. As noted above, the timing and extent of our spending will depend on the cost associated with, and the results of our upcoming Phase 2a trial for NL. Our anticipated spending and our cash flow needs could change significantly as the trial progresses. There may be costs we incur during our trial that we do not currently anticipate requiring us to need additional capital sooner than currently expected. When additional funding is required, it may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical trials, or research and development programs. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in future and thereafter, and no assurances can be given that such funding will be available at all, in a sufficient amount, or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions providing funds, we will rapidly exhaust our resources and be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about our ability to continue as a going concern within one year after the date that these consolidated financial statements are available to be issued. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should we be unable to continue as a going concern based on the outcome of these uncertainties described above. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 3 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), and reflect all of our activities, including those of our wholly-owned subsidiary. All material intercompany accounts and transactions have been eliminated in consolidation. We have reclassified certain immaterial prior year amounts to conform to our current year presentation. The reclassification of prior period amounts had no effect on previously reported net income, stockholders’ equity or cash flows. Use of Estimates In preparing our consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, we make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to: stock-based compensation, determining the fair value of acquired assets and assumed liabilities, intangible assets, and income taxes. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While we believe the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and money market funds. We consider all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Money market funds totaled $1,328,049 and $1,300,815 at December 31, 2018 and 2017, respectively. Property and Equipment Property is stated at cost, less accumulated depreciation. Costs of renewals and improvements that extend the useful lives of the assets are capitalized. Expenditures for maintenance and routine repairs are charged to expense as incurred. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, which generally range from 3 to 5 years. We amortize leasehold improvements over the shorter of the estimated useful life of the asset or the term of the related lease. Upon retirement or disposition of assets, the costs and related accumulated depreciation are removed from the accounts with the resulting net gain or loss, if any, reflected in the statement of operations. Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangibles with a finite useful life are amortized using the straight-line method unless the pattern in which the economic benefits of the intangible assets are consumed or used up are reliably determinable. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to our future cash flows. The useful life is based on the duration of the expected use of the asset by us and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. We evaluate the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. If an income approach is used to measure the fair value of an intangible asset, we consider the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to us, the useful life is considered indefinite. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. Impairment of Long-Lived Assets and Intangibles Other Than Goodwill We account for the impairment of long-lived assets in accordance with ASC 360 , Property, Plant and Equipment Intangibles – Goodwill and Other Fair Value Measurements and Disclosure We apply ASC 820, Fair Value Measurements and Disclosures Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value determined through the use of models or other valuation methodologies. Level 3 – Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available and includes situations where there is little market activity for the asset or liability. The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. Our policy is to recognize transfers between levels of the fair value hierarchy in the period the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, 2, or 3 during the periods presented. Stock-based Compensation Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, Compensation-Stock Compensation Net Loss Per Share Basic loss per share is computed by dividing our net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the year. Diluted loss per share is computed by dividing our net loss available to common shareholders by the diluted weighted average number of shares of common stock during the period. Since we experienced a net loss for each of the years presented, basic and diluted net loss per share are the same. Our diluted net loss per share for the years ended December 31, 2018 and 2017 excluded 3,898,219 and 1,262,849 of potentially dilutive common shares, respectively, related to the conversion of our Senior Notes and outstanding stock options and warrants since those shares would have had an anti-dilutive effect on loss per share during the years then ended. Segments We operate in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. During 2018 and 2017 all our long-lived assets were located within the United States. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and the senior convertible notes approximate fair value because of the short-term maturity of these instruments, including the mandatory conversion of the Senior Notes into our common stock upon meeting certain conditions. Debt Issuance Costs We recognized the debt issuance costs incurred related to our Senior Convertible Notes as a reduction of the carrying amount of the Senior Convertible Notes on the face of the consolidated balance sheet. The debt issuance costs are amortized to interest expense using the interest method over the term of the Senior Convertible Notes. Research and development Research and development costs are expensed as incurred and consisted of direct and overhead-related expenses. Research and development costs totaled $3,085,317 and $964,164 for the years ended December 31, 2018 and 2017, respectively. Expenditures to acquire technologies, including licenses, which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology we develop for use in our products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated. No costs have been capitalized during the years ended December 31, 2018 and 2017. Income Taxes As a result of the reverse acquisition merger (see Notes 1 and 4), we experienced a change in control on October 4, 2017. Prior to the closing of the merger, Promet was treated as a partnership for federal income tax purposes and thus was not subject to income tax at the entity level. Therefore, no provision or liability for income taxes has been included in these financial statements through the date of the asset purchase on October 4, 2017. In addition, Promet determined that it was not required to record a liability related to uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes The net deferred tax assets of Heatwurx were principally federal and state net operating loss carry forwards. The Heatwurx net deferred tax assets were significantly limited following an ownership change as defined by Internal Revenue Code Section 382 and were fully reserved with a valuation allowance. Promet determined that it was not required to record a liability related to uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes Subsequent to the closing of the combination of Heatwurx and the assets of Promet, we file a consolidated federal income tax return in the United States, which includes eligible subsidiaries. In addition, we file income tax returns in state and local jurisdictions as applicable. We account for income taxes under 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 bases. The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. A full valuation allowance was recorded against our deferred tax assets at December 31, 2018 and 2017. With respect to uncertain tax positions, we would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of interest expense and general and administrative expense, respectively. We had no unrecognized tax benefits or uncertain tax positions at December 31, 2018 or 2017. Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). We have implemented all new accounting pronouncements that are in effect and that may impact its financial statements. We have evaluated recently issued accounting pronouncements and determined that there is no material impact on our financial position or results of operations. Recently issued accounting pronouncements not yet adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (Topic 842) - Leases In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) - Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently adopted accounting pronouncements From May 2014 through December 31, 2018, the FASB issued several ASUs related to ASU 2014-09, Revenue from Contracts with Customers In July 2017, the FASB issued Accounting Standards Update 2017-11 (ASU 2017-11), which allows companies to exclude a down round feature when determining whether a financial instrument is considered indexed to the entity’s own stock. As a result, financial instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion options that have down round features, an entity will recognize the intrinsic value of the feature only when the feature becomes beneficial. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We early adopted ASU 2017-11 effective January 1, 2018 without a material impact on our consolidated financial statements. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the U.S. tax reform announced on December 22, 2017 by the U.S. Government commonly referred to as the Tax Cuts and Jobs Act. SAB 118 provides a measurement period that should not extend beyond one year from the U.S. tax reform enactment date for companies to complete the accounting under Accounting Standards Codification (“ASC”) 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the U.S. tax reform for which the accounting under ASC 740 is complete. Specifically, we were required to revalue our U.S. deferred tax assets and liabilities due to the federal income tax rate reduction from 35 percent to 21 percent. Since we have provided a full valuation allowance against our deferred tax assets, the revaluation of the deferred tax assets did not have a material impact on any period presented. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition | Note 4 – Acquisition On October 4, 2017, in exchange for 90 percent or 31,745,242 shares of our common stock, we acquired the net assets of Promet, totaling $1,017,342, in a transaction that was accounted for as a reverse acquisition in accordance with ASC 805-40-45, Business Combinations - Reverse Acquisitions The transaction was considered a capital transaction in substance. Accordingly, for accounting purposes, it was assumed that Promet issued shares to Heatwurx at fair value, net of the assets and liabilities assumed from Heatwurx as shown below, which were recognized as a reduction of additional paid-in-capital at closing of the reverse merger. The net recognized value of Heatwurx identifiable assets and liabilities included the following: Cash $ 6,280 Accounts payable (26,098 ) Accrued expenses (17,932 ) Net liabilities assumed $ (37,750 ) Our financial statements present the financial position (with a retrospective adjustment to Promet’s legal capital to reflect our pre-merger capital structure) and operations of Promet prior to October 4, 2017, and of the combined company from October 4, 2017 forward. The assets and liabilities of Promet are recognized and measured at their historical carrying amounts. The accumulated deficit and other equity balances of Promet have been carried forward and adjusted to reflect our legal shares and par value with the difference allocated to additional paid-in capital. Promet incurred acquisition-related transaction costs of $58,763, which are included in general and administrative expense, a component of operating expenses in the consolidated statements of operations. Earnings per share (“EPS”) is calculated using our equity structure, including the equity interests issued to Promet in the asset acquisition transaction. Prior to the reverse acquisition, EPS was based on Promet’s net income and weighted average common shares outstanding that were received in the asset purchase transaction. Subsequent to the reverse acquisition, EPS is based on the weighted actual number of common shares outstanding during that period. |
Intangible Assets
Intangible Assets | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible Assets | Note 2 – Intangible Assets Intangible assets at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Gross intangible assets $ 11,059,429 $ 11,059,429 Less: Accumulated amortization (1,218,143 ) (621,647 ) Total intangible assets, net $ 9,841,286 $ 10,437,782 Amortization expense was $198,832 and $200,256 for the three months ended September 30, 2019 and 2018, respectively, and $596,496 and $422,814 for the nine months ended September 30, 2019 and 2018, respectively. This expense is included within research and development expense in the accompanying condensed consolidated statements of operations. Our estimated amortization expense for the next year will be approximately $795,000 and approximately $788,000 per year for annual periods thereafter. The capitalized costs for the license rights to PCS-499 included the $8 million purchase price, $1,782 in transaction costs and $3,037,147 associated with the initial recognition of an offsetting deferred tax liability related to the acquired temporary difference for an asset purchased that is not a business combination and has a tax basis of $1,782 in accordance with ASC 740-10-25-51 Income Taxes Research and Development | Note 5 – Intangible Assets Intangible assets at December 31, 2018 consisted of the capitalized costs of $20,500 for a purchased software license and $11,038,929 associated with our exercise of the option to acquire the exclusive license from CoNCERT related to patent rights and know-how to develop and commercialize compounds and products for PCS-499 and each metabolite thereof and the related income tax effects (See Note 1). The capitalized costs for the license rights to PCS-499 include $8 million purchase price, $1,782 in transaction costs and $3,037,147 associated with the initial recognition of an offsetting deferred tax liability related to the acquired temporary difference for an asset purchased that is not a business combination and has a tax basis of $1,782 in accordance with ASC 740-10-25-51 Income Taxes Research and Development Acquisition of the CoNCERT License On March 19, 2018, Promet, Processa and CoNCERT amended the Agreement executed in October 2017. The Agreement was assigned to Processa and Processa exercised the exclusive option for the PCS-499 compound in exchange for CoNCERT receiving, in part, $8 million of our common stock that was held by Promet (2,090,301 shares at $3.83 per share) and to be released to CoNCERT for the benefit of Processa in satisfaction of the obligation due for the exclusive license for PCS-499 acquired by us. There was no change in the total shares issued and outstanding of 35,272,626, however, Promet released to CoNCERT the approximately 6% of the shares acquired in the Promet/Heatwurx combination, which were reserved for CoNCERT in respect of the license as part of the overall transaction leaving Promet with approximately 84% controlling interest and CoNCERT with approximately 6%. Promet contributed the payment of the obligation due for the exclusive license to us without consideration paid to them. As a result of the transaction, we recognized an exclusive license intangible asset with a fair value of $8 million and an offsetting increase in additional paid-in capital resulting from Promet releasing the shares reserved for CoNCERT in respect of CoNCERT’s contributed license on behalf of Processa, and thereby satisfying Processa’s liability to CoNCERT. The negotiation of the modification to the Agreement was in process as of October 4, 2017 and was finalized in mid-February 2018 and the legal documents were thereafter executed and the option was exercised on March 19, 2018 in exchange for CoNCERT receiving: (i) $8 million of our common stock that was held by Promet LLC for the benefit of CoNCERT; (ii) royalties, on a product-by-product basis, on worldwide net sales of products during each year as follows: (a) four percent (4%) of sales less than or equal to $100 million; (b) five percent (5%) of sales greater than $100 million and less than or equal to $500 million; (c) six percent (6%) of sales greater than $500 million and less than or equal to $1 billion; and, (d) for that portion greater than $1 billion, (i) with respect to net sales made by Promet or any of its affiliates, ten percent (10%) of net sales, and (ii) with respect to net sales made by any sub-licensee, the greater of (1) 6% of such net sales or (2) 50% of all payments received by Promet or any of its affiliates with respect to such net sales; and (iii) 15% of any sublicense revenue earned by us for a period equivalent to the royalty term (as defined in the Agreement) until the earliest of (a) our raising $8 million of gross proceeds and (b) CoNCERT being able to sell its shares of our common stock without restrictions pursuant to the terms of the amended Agreement. All other terms of the Agreement remained unchanged. The license agreement was assigned to and exercised by us. As a result of the transaction, we recognized an intangible asset for the fair value of the common stock consideration paid of $8 million with an offsetting amount in additional paid-in capital resulting from Promet releasing the shares to CoNCERT in satisfaction of our obligation to CoNCERT under the Agreement. We estimated the fair value of the common stock issued based on the market approach and CoNCERT’s requirement to receive shares valued at $8 million. The market approach was based on the final negotiated number of shares of stock determined on a volume weighted average price of our common stock quoted on the OTC Pink Marketplace over a 45 day period preceding the mid-February 2018 finalized negotiation of the modification to the option and license agreement with CoNCERT, an unrelated third party, for the exclusive license rights to PCS-499. However, we have less than 300 shareholders, the volume of shares trading for our common stock is not significant and the OTC Pink Marketplace is not a national exchange; therefore, the volume weighted average price quotes for our common stock are from markets that are not active and consequently are Level 2 inputs. The total cost recognized for the exclusive license acquired represents the allocated fair value related to the stock transferred to CoNCERT plus the recognition of the deferred tax liability related to the acquired temporary difference and the transaction costs incurred to complete the transaction as discussed above. Our intangible assets consist of the following at December 31, 2018: License Software December 31, Gross intangible asset $ 11,038,929 $ 20,500 $ 11,059,429 Less: accumulated amortization (616,807 ) (4,840 ) (621,647 ) Total intangible asset, net $ 10,422,122 $ 15,660 $ 10,437,782 Amortization expense was $621,647 for the year ended December 31, 2018 and is included within research and development expense in the accompanying consolidated statements of operations. We had no intangible assets at December 31, 2017. As of December 31, 2018, estimated amortization expense for the next two years amounts will be approximately $795,000 per year and for annual periods thereafter approximately $788,000 per year. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 6 – Notes Payable Notes Payable On September 29, 2017, prior to the Asset Purchase closing, principal of all existing Heatwurx notes payable in the amount of $1,939,341 and related accrued interest in the amount of $613,114 were converted to 1,850,625 shares of common stock. As of December 31, 2017, there were no Heatwurx notes payable outstanding. Senior Convertible Notes The balance of our Senior Convertible Notes (“Senior Notes”) at December 31, 2018 and 2017 was as follows: 2018 2017 Senior Notes $ 230,000 $ 2,580,000 Less: Debt issuance costs - (131,430 ) Balance 230,000 2,448,570 Current portion (230,000 ) (2,448,570 ) Long term portion $ - $ - Interest expense totaled $161,205 and $59,063 for the years ended December 31, 2018 and 2017. Included in interest expense is the amortization of the related debt issuance costs of $67,069 and $23,370 for the years ended December 31, 2018 and 2017, respectively. The Senior Notes and related accrued interest are classified as current liabilities in our consolidated balance sheets. Issuance of the Senior Notes As of October 4, 2017, certain entities affiliated with current shareholders purchased $1.25 million of our Senior Notes in a bridge financing undertaken by us to support our operations. On November 21, 2017, additional third-party accredited investors contributed $1.33 million in financing proceeds. On May 25, 2018, $2,350,000 of Senior Notes were converted, as described below, leaving $230,000 of Senior Notes outstanding at December 31, 2018. The Senior Notes bear interest at 8% per year and are payable in kind (in common stock). Holders of Senior Notes (a) may elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversation of the Senior Notes, (b) are entitled to full ratchet anti-dilution protection in event of any sale of securities at a net consideration per share that is less than the applicable conversion price per share to the holder, (c) are entitled to certain registration rights for the securities underlying the Senior Notes and (d) have been granted certain preemptive rights pro rata to their respective interests through December 31, 2018. The Senior Notes can be prepaid by us at any time following the date of issuance with seven days prior written notice to the note holder. The Senior Notes are secured by a security interest in our assets and contain negative covenants that do not permit us to incur additional indebtedness or liens on property or assets owned, repurchase common stock, pay dividends, or enter into any transaction with affiliates of ours that would require disclosure in a public filing with the Securities and Exchange Commission. Upon an event of default, the outstanding principal amount of the Senior Notes, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become immediately due and payable in cash at the holder’s election, if not cured within the cure period. We retained a placement agent and agreed to pay the placement agent (i) six percent (6%) of gross proceeds received by us and (ii) warrants to purchase securities in the amount of three percent (3%) of the equity issued or issuable in connection with the Senior Notes bridge financing upon their conversion. As a result of the Senior Notes conversion, warrants to purchase a total of 72,375 shares of common stock were issued, with a three-year term, at an exercise price equal to $2.452. We incurred $154,800 in debt issuance costs on the Senior Notes in connection with a payment to the placement agent, which was reported as a reduction of the carrying amount of the Senior Convertible Notes on the face of the consolidated balance sheets. The debt issuance costs are amortized to interest expense using the effective interest rate method over the term of the Senior Convertible Notes. The effective interest rate on the Senior Notes was 7.72% before debt issuance costs, since no payments of interest are due until maturity and 13.96% including the debt issuance costs based on the repayment terms of the Senior Notes. Conversion of Our Senior Notes On May 25, 2018, pursuant to the mandatory and automatic conversion provisions of the Senior Notes, we converted $2,350,000 of the $2,580,000 outstanding Senior Notes, along with any accrued interest into 1,206,245 shares of common stock (at a conversion price of $2.043 per share) and a warrant to purchase one share of common stock for three years, at an exercise price of $2.452. We also incurred costs totaling $82,502 related to our contractual obligations to file a resale registration statement related to this transaction with the SEC Senior Notes totaling $230,000 held by Canadian individuals cannot be converted until we complete certain regulatory matters and filings in Canada. Once these regulatory matters and filings have been met, the Senior Notes held by these individuals will automatically convert on the same terms as the other noteholders, which includes additional accrued interest until conversion. We evaluated the warrants issued in this transaction and determined they should be classified as equity. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Stockholders' Equity | Note 7 – Stockholders’ Equity During the nine months ended September 30, 2019 and 2018, there were no sales of our preferred stock. At September 30, 2019 and December 31, 2018, there were no issued or outstanding shares of preferred stock. During the nine months ended September 30, 2019, PoC Capital (our clinical trial funding commitment investor), made payments directly to our CRO totaling $689,168 for amounts invoiced. PoC Capital also repaid us $210,832 for clinical trial expenses we previously paid to our CRO, $180,119 of which is included in Prepaid and Other on our condensed consolidated balance sheet at September 30, 2019. As explained in Note 1 – Going Concern, we amended the existing pledge agreement with PoC Capital on September 30, 2019 to reduce the committed funds from $1.8 million to $900,000, which has now been paid in full. As part of the original pledge agreement, we issued 792,952 shares of common stock and 792,952 warrants to purchase shares of common stock to PoC Capital but held 396,476 shares and 396,476 warrants as collateral until certain payment milestones were met. PoC Capital forfeited the pledged collateral in the amended agreement and the shares have been reissued to Processa and will be retired. In August 2019, we amended our articles of incorporation, reducing the authorized number of shares of our preferred stock from 10,000,000 to 1,000,000 and our common stock from 350,000,000 to 100,000,000. | Note 7 – Stockholders’ Equity Preferred Stock As of December 31, 2018, we have authorized 10,000,000 shares of Preferred Stock with a $0.0001 par value. No shares were issued and outstanding. On September 29, 2017, prior to the asset purchase closing, Heatwurx shareholders converted 178,924 shares of Series D Preferred Stock and all accrued dividends in the amount of $118,658 into 102,789 shares of common stock. Common Stock As of December 31, 2018, we have authorized 350,000,000 of common stock with a $0.0001 par value. 2018 Private Placement Transactions Between May 15, 2018 and June 29, 2018, we sold an aggregate of 1,402,442 units in a private placement transaction at a purchase price equal to $2.27 per unit for gross proceeds of approximately $3.2 million. Each unit consisted of one share of our common stock and a warrant to purchase one share of our common stock for $2.724, subject to adjustment thereunder for a period of three years. We paid $167,526 to our placement agent and issued placement agent warrants to purchase up to 84,146 shares of common stock, with a three-year term, at an exercise price equal to $2.724. We also incurred costs totaling $141,304 related to this transaction and our contractual obligation to file a resale registration statement related to the PIPE transaction with the SEC. The issuance costs were charged against additional paid in capital. On May 25, 2018, we entered into an Agreement with PoC Capital, LLC (“PoC”), where PoC has agreed to finance $1,800,000 in study costs associated with certain clinical studies, including our Phase 2a study to evaluate the safety, tolerability, efficacy and pharmacodynamics of PCS 499 in patients with Necrosis Lipoidica in exchange for 792,952 shares of our common stock and a warrant for the purchase of 792,952 shares of common stock with an exercise price of $2.724, expiring on July 29, 2021. Any study costs in excess of that amount will be our responsibility. PoC will typically not make payments to us, but directly to the contract research organization based on their invoices. We paid $108,000 to our placement agent and issued our placement agent warrants to purchase 47,578 shares of common stock, with a three-year term, at an exercise price equal to $2.724. We also incurred costs totaling $60,457, related to this transaction and our contractual obligation to file a resale registration statement related to this transaction with the SEC. The issuance costs were charged against additional paid in capital. We also entered into a pledge agreement with PoC, under which we received a security interest for 396,476 shares, or half the shares we issued them, to hold as collateral. These shares will be released in two tranches of 198,238 shares each, with each tranche released upon PoC making payments totaling $720,000. During the year ended December 31, 2018, we have made payments to our CRO of $239,129, including the prepayment of certain amounts, all of which will be repaid to us by PoC in the next year. We have accounted for payments we made to our CRO in 2018 as either a prepaid expense or a research and development expense depending on whether the related service has been provided. Since the amount of the Clinical Trial Funding commitment has not changed, we continue to show the full amount of that commitment, $1.8 million, as a subscription receivable. We will reduce the subscription receivable in the period the investor makes payment to our CRO or us. The common stock, but not the warrants, issued for the 2018 Private Placement Transactions and the conversion of the Senior Convertible Notes have, subject to certain customary exceptions, full ratchet anti-dilution protection. Until we have issued equity securities or securities convertible into equity securities for a total of an additional $20 million in cash or assets, including the proceeds from the exercise of the warrants issued above, in the event we issue additional equity securities or securities convertible into equity securities at a purchase price less than $2.27 per share of common stock, the above purchase prices shall be adjusted and new shares of common stock issued as if the purchase price was such lower amount (or, if such additional securities are issued without consideration, to a price equal to $0.01 per share). We evaluated the warrants issued in the 2018 Private Placement Transactions and determined they should be classified as equity. |
Income Taxes
Income Taxes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | Note 3 – Income Taxes We account for income taxes in accordance with ASC Topic 740, Income Taxes. A deferred tax liability was recorded on March 19, 2018 when Processa received CoNCERT’s license and “Know-How” in exchange for Processa stock that had been issued in an Internal Revenue Code Section 351 Transaction. The Section 351 Transaction treats the acquisition of the license and Know-How for stock as a tax-free exchange. As a result, under ASC 740-10-25-51 Income Taxes Under ACS 740-270 Income Taxes – Interim Reporting | Note 8 – Income Taxes The historical information presented in our consolidated financial statements prior to October 4, 2017 was that of Promet. As described in Note 4, prior to the closing of the asset purchase transaction on October 4, 2017, Promet was treated as a partnership for federal income tax purposes and thus was not subject to income tax at the entity level. Therefore, no provision or liability for income taxes has been included in these consolidated financial statements through the date of the asset purchase on October 4, 2017. We account for income taxes in accordance with ASC Topic 740, Income Taxes. As described more fully in Note 1, Promet and Processa entered into an Asset Purchase Agreement pursuant to which Processa acquired, in an IRC Section 351 tax-free contribution of assets solely for over 80% of the voting stock of Processa (the “Section 351 Transaction”) by Promet, for properties, rights and assets, including liabilities and commitments, owned by Promet (the “Contributed Assets”). Contemplated in the Contributed Assets were rights, title and interest under a certain option and license agreement with CoNCERT with respect to certain know-how, patent rights and compounds developed or obtained by CoNCERT (the “CoNCERT Assets”) for which voting securities of Processa were expressly contemplated to be issued as part and parcel with, and integrated into, the Section 351 Transaction to CoNCERT because all Contributed Assets including the CoNCERT Assets were contemplated to be integral to each other and were considered to be an integrated undertaking as the primary target, purpose and reason for the overall transaction itself. As a result of the asset purchase transaction, Promet was issued 90 percent of the total issued and outstanding common stock of Heatwurx (including the approximate 6% of shares issued in the Section 351 transaction for CoNCERT and held by Promet for the benefit of CoNCERT until the CoNCERT transaction could be concluded). The overall transaction resulted in an ownership change as defined by Internal Revenue Code Section 382. Promet also determined that it was not required to record a liability related to any uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes A deferred tax liability was recorded when Processa exercised its option and received CoNCERT’s license and “Know-How” in exchange for Processa stock that had been issued in the Internal Revenue Code Section 351 Transaction on March 19, 2018. The Section 351 Transaction treats the acquisition of the license and Know-How for stock as a tax-free exchange. As a result, under ASC 740-10-25-51 Income Taxes For the year ended December 31, 2018, we recorded a federal income tax benefit of $902,801 as a result of offsetting our deferred tax liability by the deferred tax assets resulting from 2017 and 2018 net operating losses and the income tax effect of the intangible asset amortization for financial statement purposes. We did not record any current federal or state tax provision in our 2017 consolidated financial statements. Our provision (benefit) for income taxes for the years ended December 31, 2018 and 2017 was as follows: Year Ended December 31, 2018 2017 Current: Federal $ - $ - State - - Total deferred tax benefit - - Deferred: Federal (940,510 ) (116,783 ) State (292,047 ) (50,004 ) Total deferred tax benefit (1,232,557 ) (166,787 ) Valuation allowance 329,756 166,787 Net deferred tax benefit (902,801 ) - Total tax provision (benefit) $ (902,801 ) $ - A reconciliation of our effective income tax rate and statutory income tax rate for the years ended December 31, 2018 and 2017 is as follows: Year Ended December 31, 2018 2017 Federal statutory income tax rate 21.00 % 34.00 % State tax rate, net 4.58 % 5.45 % Permanent differences (0.90 )% (0.02 )% Impact of change in federal income tax rates - (11.92 )% Deferred tax asset valuation allowance (5.33 )% (27.51 )% Effective income tax rate (19.35 )% - On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law. Among its provisions, the TCJA reduces the statutory U.S. Corporate income tax rate from 34% to 21% effective January 1, 2018. The TCJA includes provisions that, in certain instances, impose U.S. income tax liabilities on future earnings of foreign subsidiaries and limit the deductibility of future interest expenses. The TCJA also provides for accelerated deductions of certain capital expenditures made after September 27, 2017 through bonus depreciation and an indefinite tax loss carryforward period for losses incurred after December 31, 2017. However, these tax-loss carry forwards can only offset 80 percent of future taxable income in any one year, with respect to any excess continuing to be carried forward indefinitely. Losses incurred prior to January 1, 2018 continue to carry forward for twenty years. The application of the TCJA may change due to regulations subsequently issued by the U.S. Treasury Department. We applied the guidance in SAB 118 when accounting for the enactment-date effects of the TCJA in 2017 and throughout 2018. As of December 31, 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which is generally 21%), by recording a provisional amount of $72,300, which was fully offset by the valuation allowance. Upon further analysis of certain aspects of the Act and refinement of our calculations during the year ended December 31, 2018, we determined that no adjustment was necessary to the provisional amount. At December 31, 2018 and 2017, we had available federal net operating loss carryforwards of approximately $2.7 million and $259,000, respectively. The net operating loss generated in 2018 of $2.4 million will carry forward indefinitely and be available to offset up to 80% of future taxable income each year. Net operating losses generated prior to 2018 will expire from 2019 through 2037. We are evaluating our qualified research expenditures for the federal orphan drug credit and the federal and state credit for increasing research activities to offset potential future tax liabilities. The federal research and development tax credits have a 20-year carryforward period. The Maryland research and development tax credits have a 7-year carryforward period. We have not recognized any deferred tax assets related to research and development tax credits as of December 31, 2018 or 2017. We also have available state net operating loss carryforwards of approximately $2.7 million and $259,000 as of December 31, 2018 and 2017, respectively, which expire from 2028 to 2037. All federal and state net operating loss and credit carryforwards listed above are reflected after the reduction for amounts effectively eliminated under Section 382. We do not recognize other deferred income tax assets at this time because the realization of the assets is not more-likely-than-not that they will go unrealized. As of December 31, 2018 and 2017, we had deferred start-up expenditures and net operating losses for both federal and state income tax purposes of $4,369,700 and $606,113, respectively. The benefit associated with the amortization of the deferred start-up expenditures will more-likely-than-not go unrealized unless future operations are successful. Since the success of future operations is indeterminable, the potential benefits resulting from these deferred tax assets have not been recorded in our consolidated financial statements. The significant components of our deferred tax assets and liabilities for Federal and state income taxes consisted of the following: December 31, 2018 2017 Deferred tax assets: Non-current: Net operating loss carry forward – Federal $ 559,817 $ 49,822 Net operating loss carry forward – State 173,743 21,333 Deferred rent 2,742 Stock option expense 20,380 Depreciation 4,549 Intangible asset - Start-up expenditures 468,872 95,632 Total non-current deferred tax assets 1,230,103 166,787 Valuation allowance for deferred tax assets (496,542 ) (166,787 ) Total deferred tax assets $ 733,561 $ - Deferred Tax Liabilities: Non-current: Intangible asset, net of tax effect of intangible asset amortization (2,867,907 ) - Total non-current deferred tax liabilities (2,867,907 ) - Total deferred tax asset (liability) $ (2,134,346 ) $ - The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, a reserve has been established against the deferred tax assets related to deferred start-up expenditures and net operating loss. The change in the valuation allowance in 2018 and 2017 was $329,755 and $166,787, respectively. Our total deferred tax asset as of December 31, 2018 and 2017 include $1,703,904 ($468,872 tax effected) and $347,530 ($95,504 tax effected) of general and administrative expenses treated as deferred start-up expenditures for tax purposes, respectively, and $2,665,796 ($733,560 tax effected) and $258,583 ($71,283 tax effected) of tax losses resulting in tax loss carryforwards as of the same periods. We have had no revenues and recognized cumulative loses since inception. Due to the uncertainty regarding future profitability and recognition of taxable income to utilize the amortization of deferred start-up expenditures and the tax loss carryforwards, except for its offset against the deferred tax liability created by our acquisition of the Contributed Assets, a valuation allowance against any potential deferred tax assets has been recognized for the years ended December 31, 2018 and 2017. We recognize potential liabilities for uncertain tax positions using a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. We have not recorded any uncertain tax positions. We are subject to taxation in the United States and state jurisdictions where applicable. Our tax years for 2014 through 2017 are subject to examination by the Internal Revenue Service and state tax authorities. There are currently no income tax examinations underway in any jurisdiction in which we file. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-based Compensation | Note 4 - Stock-based Compensation On June 20, 2019, our Board of Directors granted stock options for the purchase of 909,230 shares of our common stock to employees. The stock options awarded contained either service or performance vesting conditions, as described below, have a contractual term of five years and an exercise price equal to the closing price of our common stock on the OTCQB on the date of grant of $2.40. We granted 334,400 stock options to employees and non-employees during the nine months ended September 30, 2018. Stock options representing the purchase of 456,000 shares of common stock (of the 909,230 stock options granted on June 20, 2019) contained service vesting conditions. The service condition related solely to employees rendering service over a three-year period. These awards vest one-third on the first anniversary of the grant date, and then vest ratably over the remaining twenty-four months, 1/36 th Stock options representing the purchase of 453,230 shares of common stock (of the 909,230 stock options granted on June 20, 2019) vest upon meeting the following performance criteria: (i) 90,646 shares vest when we in-license one new or additional drug; (ii) 90,646 shares vest when our current Phase 2a clinical trial for PCS-499 is complete; and (iii) 271,938 shares vest when we up-list from the OTCQB to either the Nasdaq or NYSE markets. As of September 30, 2019, we are recognizing compensation cost for the awards related to completion of our current clinical trial and for in-licensing a new drug. The clinical trial is progressing as planned with no significant adverse events, is fully enrolled, and fully funded. Management does not foresee any reasons why this study will not be completed as planned and believes it is probable that this performance condition will be met in mid-2020. On August 29, 2019, we reached a license agreement with Akashi Therapeutics for HT-100 and as such, the performance condition related to the award for in-licensing one new or additional drug has been met. As for the last award with performance conditions related to up-listing on Nasdaq or NYSE markets, management has determined that until we complete the performance related condition, it is not probable to conclude the performance condition will be achieved. As such, no stock-based compensation expense is being recorded for those awards. We had outstanding options to purchase 334,400 and 1,293,630 shares of our common stock at September 30, 2018 and 2019, respectively, of which options for the purchase of 187,746 shares of our common stock have been vested. We recorded $50,528 and $269,129 for the three months ended September 30, 2018 and 2019, respectively, and $50,528 and $394,164 of stock-based compensation expense for the nine months ended September 30, 2018 and 2019, respectively. The allocation of stock-based compensation expense between research and development and general and administrative expense was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Research and Development $ 88,707 $ - $ 92,111 $ - General and Administrative 180,422 50,528 302,053 50,528 $ 269,129 $ 50,528 $ 394,164 $ 50,528 | Note 9 - Stock-based Compensation The amended and restated Heatwurx, Inc. 2011 Equity Incentive Plan (the “Plan”) was adopted on April 15, 2011 by the Board of Directors and approved by the shareholders on October 15, 2012. Under this Plan, our employees, non-employee directors, advisors, and consultants are eligible to receive grants under the Plan. The Plan authorizes the issuance of up to 257,143 shares of common stock. If unexercised options expire or are terminated, the underlying shares will again become available for future grants under the Plan. The Plan provides for the grant of options to purchase shares of our common stock. Options may be incentive stock options, designed to satisfy the requirements of Section 422 of the U.S. Internal Revenue Code, or non-statutory stock options, which do not meet those requirements. We can grant incentive stock options only to our employees, however, we can grant non-statutory stock options to our employees, nonemployee directors, advisors, and consultants. The exercise price for non-statutory and incentive stock options granted under the equity compensation plan may not be less than 100% of the fair market value of the common stock on the option grant date or 110% in the case of incentive stock options granted to employees who own stock representing more than 10% of the voting power of all classes of our common stock. The Board of Directors, until a Compensation Committee has been appointed, has the authority to establish the vesting, including the terms under which vesting may be accelerated, and other terms and conditions of the options granted. Options can have a term of no more than ten years from the grant date, except for incentive stock options granted to 10% stockholders which can have a term of no more than five years from the grant date. The Board of Directors may amend or terminate the Plan and outstanding options at any time without the consent of option holders provided that such action does not adversely affect outstanding options. Amendments are subject to stockholder approval to the extent required by applicable laws and regulations. Unless terminated sooner, the Plan will automatically terminate on April 15, 2021, the tenth anniversary of April 15, 2011. During the year ended December 31, 2018, there was one grant for the purchase of 50,000 shares of our common stock outstanding under this Plan. We also granted non-qualified stock options outside of the Plan for a total of 334,400 shares of common stock. An option for the purchase of 316,400 shares of common stock vests over a four-year term and an option for the purchase of 18,000 shares of common stock vests over one-year term. Stock option granted in 2018 all have a maximum contractual term of ten years. Vesting is subject to the holder’s continuous service with us. The fair value of each stock option grants was estimated using the Black-Scholes option-pricing model at the date of grant. We recently completed a reverse merger, as described in Note 1, and as such, lack company-specific historical and implied volatility information. Therefore, we determined our expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expect to continue to do so until such time as it has adequate historical data regarding the volatility of our own traded stock price. Due to the lack of historical exercise history, the expected term of our stock options was determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future. The fair value of our option awards granted during the year ended December 31, 2018 was estimated using the following assumptions: Risk-free rate of interest 3.09 % Expected term (years) 5.0 to 6.25 Expected stock price volatility 85.31 % Dividend yield 0 % The following table summarizes our stock option activity for the year ended December 31, 2018: Total options Weighted average Weighted average remaining contractual life Outstanding as of January 1, 2018 - $ - - Options granted 384,400 2.92 9.9 Exercised - - - Forfeited - - - Outstanding as of December 31, 2018 384,400 $ 2.92 9.9 No options were vested or exercisable as of December 31, 2018. The weighted average grant date fair value per share of options granted during the year ended December 31, 2018 was between $2.00 and $2.57. No forfeiture rate was applied to these stock options. We recorded $74,063 of stock-based compensation expense for the year ended December 31, 2018 for awards issued as general and administrative expense. No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for all net deferred tax assets. As of December 31, 2018, there was $754,877 of total unrecognized compensation expense, related to the unvested stock options which are expected to be recognized over a weighted average period of 3.6 years. |
Net Loss Per Share of Common St
Net Loss Per Share of Common Stock | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Net Loss Per Share of Common Stock | Note 8 – Net Loss per Share of Common Stock Basic net loss per share is computed by dividing net loss by the weighted average common shares outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average common shares outstanding, which includes potentially dilutive effect of stock options, warrants and senior convertible notes. Since we experienced a loss for all periods presented, including any dilutive common shares outstanding would have an anti-dilutive impact on diluted net loss per share, and as shown below, were excluded from the computation. The treasury-stock method is used to determine the dilutive effect of our stock options and warrants grants, and the if-converted method is used to determine the dilutive effect of the Senior Notes. The computation of net loss per share for the three and nine months ended September 30, 2019 and 2018 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Basic and diluted net loss per share: Net loss from continuing operations $ (863,524 ) (852,822 ) $ (2,583,433 ) $ (3,155,874 ) Weighted average number of common 38,798,251 38,674,265 38,716,048 36,869,323 Basic and diluted net loss per share $ (0.02 ) $ (0.02 ) $ (0.07 ) $ (0.09 ) The following potentially dilutive securities were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods presented. September 30, 2019 December 31, 2018 Stock options and purchase warrants 4,636,682 3,997,187 Senior convertible notes and related accrued interest - 122,717 | Note 10 – Net Loss per Share of Common Stock Basic net loss per share is computed by dividing net loss by the weighted average common shares outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average common shares outstanding without the impact of potential dilutive common shares outstanding because they would have an anti-dilutive impact on diluted net loss per share. The treasury-stock method is used to determine the dilutive effect of our stock options and warrants grants, and the if-converted method is used to determine the dilutive effect of the Senior Notes. The computation of net loss per share for the year ended December 31, 2018 and 2017 was as follows: 2018 2017 Basic and diluted net loss per share: Net loss $ (3,765,047 ) $ (1,856,315 ) Weighted-average number of common shares-basic and diluted 37,324,267 32,595,680 Basic and diluted net loss per share $ (0.10 ) $ (0.06 ) The outstanding options and warrants to purchase common stock and the shares issuable under the Senior Notes were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods are presented below: 2018 2017 Stock options and purchase warrants 3,917,763 - Senior convertible notes 112,580 1,262,849 |
Related Party Transactions
Related Party Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Note 10 – Related Party Transactions A shareholder, CorLyst, LLC, reimburses us for shared costs related to payroll, health care insurance and rent based on actual costs incurred, which are recognized as a reduction of our general and administrative operating expenses being reimbursed in our condensed consolidated statements of operations. Reimbursable expenses from CorLyst totaled $79,058 and $80,447 for rent and other costs during the nine months ended September 30, 2019 and 2018, respectively. In August 2019, CorLyst prepaid us for Q3 and Q4 shared expenses. At September 30, 2019, we recognize $25,727 in prepaid reimbursements as due to related parties in the accompanying condensed consolidated balance sheet. Amounts due from CorLyst at September 30, 2019 and December 31, 2018 were $0 and $21,583, respectively. As described further in Note 1 – Going Concern and Note 5, we also entered into two separate Line of Credit Agreements with CorLyst, LLC and DKBK Enterprises, LLC, both related parties, on September 20, 2019. | Note 11 – Related Party Transactions A shareholder, CorLyst, LLC, reimburses us for shared costs related to payroll, health care insurance and rent based on actual costs incurred and recognized as a reduction of the general and administrative operating expenses being reimbursed in our condensed consolidated statement of operations. The reimbursed amounts totaled $134,881 and $49,089 for the years ended December 31, 2018 and 2017, respectively. Amounts due from CorLyst at December 31, 2018 and 2017 were $21,583 and $62,709, respectively. CorLyst also purchased 132,159 shares of our common stock for $300,001 in our private placement transaction on April 15, 2018. One of our Directors is also the manager of the JMW Fund, LLC, San Gabriel Fund, LLC, and Richland Fund, LLC, collectively known as the “Funds.” The Funds received 515,583 shares of our common stock and warrants to purchase 515,583 shares of our common stock upon the conversion of $1 million of Senior Convertible Notes held by the Funds purchased on October 4, 2017. At December 31, 2018, the Funds owned a total of 2,566,639 shares of common stock and warrants to purchase 515,583 shares of common stock. Entities affiliated with our Chairman of the Board of Directors and Chief Executive Officer (CEO) received 103,117 shares of our common stock and warrants to purchase 103,117 shares of our common stock upon the conversion of $200,000 in Senior Notes purchased on October 4, 2017. Our CEO and entities affiliated with our CEO also purchased a total of 132,160 shares of common stock and warrants to purchase 132,160 shares of common stock in private placement transactions in April and May 2018. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Note 11 – Commitments and Contingencies Purchase Obligations We enter into contracts in the normal course of business with contract research organizations and subcontractors to further develop our products. The contracts are cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, we would only be obligated for products or services that we received as of the effective date of the termination and any applicable cancellation fees. We had a purchase obligation of approximately $16,000 and $35,000 at September 30, 2019 and December 31, 2018, respectively. | Note 12 – Commitments and Contingencies Operating Lease Obligations We currently lease office space and equipment from third parties under non-cancelable operating leases. Our office lease commenced on October 1, 2016 and expires September 30, 2019 with monthly rent at inception of $5,535 that escalates $1,107 annually on each October. Rent expense under our current office lease for the years ended December 31, 2018 and 2017 was $79,704 and $83,025, respectively. We also incurred common area maintenance and real estate tax reimbursements of $23,648 and $22,929 for the years ended December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017, we included the current portion of our deferred rent liability of $9,963 and $3,321 in accrued expenses. Our equipment lease commenced in June 2017 and expires in August 2020. Monthly rent of $586 over the 39-month lease term includes a monthly operating usage cost allowance of $125. Additional charges for excess usage, as defined in the agreement, are charged quarterly. The lessor charges monthly sales tax of 6 percent. Rent expense under the equipment lease for the years ended December 31, 2018 and 2017 was $8,533 and $6,626, respectively. Future minimum rental payments under the leases as of December 31, 2018, are as follows: Office Equipment Total 2019 $ 91,328 $ 7,036 $ 98,364 2020 87,176 4,691 91,867 2021 90,497 90,497 2022 69,741 69,741 Total future minimum lease payments $ 338,742 $ 11,727 $ 350,469 Purchase Obligations We enter into contracts in the normal course of business with contract research organizations and subcontractors to further develop our products. The contracts are cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, we would only be obligated for products or services that it received as of the effective date of the termination and any applicable cancellation fees. We had purchase obligations of approximately $35,000 and $896,000 at December 31, 2018 and 2017, respectively. |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | Note 13 – Concentration of Credit Risk We maintain cash accounts in two commercial banks. Balances on deposit are insured by the Federal Deposit Insurance Corporation (FDIC) up to specified limits. Total cash held by one bank was $1,328,049 at December 31, 2018 which exceed FDIC limits. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Note 5 – Debt Line of Credit Agreements On September 20, 2019, we entered into two separate Line of Credit Agreements (“LOC Agreements”) with DKBK Enterprises, LLC (“DKBK”) and current shareholder CorLyst, LLC (“CorLyst”), both related parties (“Lenders”), which provide a revolving commitment of up to $700,000 each ($1.4 million total). Under the LOC Agreements, all funds borrowed will bear an 8% annual interest rate. The lenders have the right to convert all or any portion of the debt and interest into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share, (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction, or (iii) at an adjusted price; all as defined in the 8% Senior Note agreement. The lenders will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. Our Chief Executive Officer (CEO) is also the Chief Executive Officer and Managing Member of both Lenders. CorLyst beneficially owns 6,859,527 shares of Processa common stock, representing approximately 17.7% of the Company’s outstanding shares of voting capital stock. We have not drawn any amounts under these LOC agreements. Senior Convertible Notes At September 30, 2019 and December 31, 2018, we had $0 and $230,000 of Senior Convertible Notes outstanding. The $230,000 outstanding at December 31, 2018 were held by Canadian investors that, although qualifying for automatic and mandatory conversion, could not be converted until the Alberta Securities Commission released us from a cease trade order, which predated our merger with HeatWurx, and permitted us to issue common stock units (consisting of shares of our common stock and stock purchase warrants) to these Canadian investors. In June 2019, the Alberta Securities Commission released the cease trade order and assessed us a $10,000 fine, which was expensed. On July 2, 2019, we converted the principal and related accrued interest of $258,930 into 126,741 shares of common stock and 126,741 stock purchase warrants. We are currently in the process of raising additional funds through the private sale of 8% Senior Convertible Notes (“8% Senior Notes”) to accredited investors. As of November 5, 2019, we have received into escrow $745,000 from the sale of 8% Senior Notes. We have not recorded these amounts in the accompanying condensed consolidated financial statements at September 30, 2019 since these investors, in connection with the revision of our agreement with PoC Capital and our entering into the LOC agreements, had the opportunity through October 18, 2019 to rescind their investment. No investors indicated their plan to rescind any investment and we plan to close the escrow account in the fourth quarter of 2019, at which time we will record the proceeds. |
License Agreement for HT-100
License Agreement for HT-100 | 9 Months Ended |
Sep. 30, 2019 | |
License Agreement For Ht-100 | |
License Agreement for HT-100 | Note 6 – License Agreement for HT-100 As described in Note 1 – Business Activities and Organization, on August 29, 2019, we entered into an exclusive license agreement with Akashi to develop and commercialize an anti-fibrotic, anti-inflammatory drug, HT-100. As partial consideration for the licenses, we paid $10,000 to Akashi upon full execution of the license agreement. This upfront payment was expensed as a research and development cost. As additional consideration, we will pay Akashi up to $12 million over the period of achieving certain future development and regulatory milestones related to the drug. The expense related to these milestone payments will be recorded as research and development expense over the period from when achieving the milestone is probable to when the milestone is actually achieved. The agreement also contains provisions for sales milestone payments and royalty payments. |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Operating Leases | Note 9 - Operating Leases We lease our office space under an operating lease agreement. This lease does not have significant rent escalation, concessions, leasehold improvement incentives, or other build-out clauses. Further, the lease does not contain contingent rent provisions. We also lease office equipment under an operating lease. Our office space lease includes both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs), which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. Our leases do not provide an implicit rate and, as such, we have used our incremental borrowing rate of 8% in determining the present value of the lease payments based on the information available at the lease commencement date. Lease costs included in our condensed consolidated statement of operations totaled $73,621 and $66,712 for the nine months ended September 30, 2019 and 2018, respectively. The weighted average remaining lease terms and discount rate for our operating leases were as follows at September 30, 2019: Weighted average remaining lease term (years) for our facility and equipment leases 2.6 Weighted average discount rate for our facility and equipment leases 8 % Maturities of our lease liabilities for all operating leases were as follows as of September 30, 2019: 2019 $ 23,396 2020 92,603 2021 90,495 2022 69,741 Total lease payments 276,235 Less: Interest (32,073 ) Present value of lease liabilities 244,162 Less: current maturities (77,423 ) Non-current lease liability $ 166,739 |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 12 – Subsequent Events Senior Convertible Notes As of November 5, 2019, we have received into escrow $745,000 from the sale of 8% Senior Convertible Notes (8% Senior Notes). We have not recorded these amounts in the accompanying condensed consolidated financial statements at September 30, 2019 since these investors, in connection with the revision of our agreement with PoC Capital and our entering into the LOC agreements, had the opportunity through October 18, 2019 to rescind their investment. No investors indicated their plan to rescind any investment and we plan to close the escrow account in the fourth quarter of 2019, at which time we will record the proceeds. Upon completion of listing our common stock on either the Nasdaq Capital Market or the New York Stock Exchange, our 8% Senior Notes are mandatorily convertible into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share or (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction, both as defined in the 8% Senior Note agreement, occurring after the closing of the 8% Senior Note financing. Upon maturity (December 15, 2020), the 8% Senior Note holders have the option to convert the 8% Senior Note into shares of our common stock at the lower of $2.04 per share or an adjusted price as set forth in the 8% Senior Note agreement. Upon either mandatory conversion or conversion at the holder’s option, the holder will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. Reverse Stock Split On October 31, 2019, our Board of Directors authorized management to effect a reverse stock split of our common stock in a ratio between four for one share to ten to one share, subject to regulatory approval and at the discretion of the Board of Directors. The accompanying condensed consolidated financial statements have not been adjusted to reflect the effect of any future reverse stock split. | Note 14 – Subsequent Event In January 2019, we executed a new lease for our current space for an additional three years, extending the lease period to September 30, 2022 at a rental amount consistent with the current lease. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Business Activities and Organization | Business Activities and Organization Processa Pharmaceuticals, Inc. is an emerging clinical stage biopharmaceutical company focused on the development of drug products that are intended to provide treatment for and improve the survival and/or quality of life of patients who have a high unmet medical need condition or who have no alternative treatment. Within this group of pharmaceutical products, we currently are developing one product for multiple indications (i.e., the use of a drug to treat a particular disease), will begin developing a newly acquired drug once adequate funding has been obtained, and are searching for additional products for our portfolio. Our lead product, PCS-499, is an oral tablet that is a deuterated analog of one of the major metabolites of pentoxifylline (Trental ® On June 22, 2018, the FDA granted orphan-drug designation to PCS-499 for the treatment of NL. On September 28, 2018, the FDA cleared our IND for PCS-499 in NL such that we could move forward with the Phase 2a safety-dose tolerability trial. We dosed our first NL patient in this Phase 2a clinical trial on January 29, 2019. On August 23, 2019, our study was fully enrolled as the twelfth patient was dosed. The main objective of the trial is to evaluate the safety and tolerability of PCS-499 in patients with NL. We expect the safety and efficacy data collected to provide information for the design of future clinical trials. Based on toxicology studies and healthy human volunteer studies, Processa and the FDA agreed that a PCS-499 dose of 1.8 grams/day would be the highest dose administered to NL patients in this Phase 2 trial. As anticipated, the PCS-499 dose of 1.8 grams/day, 50% greater than the maximum tolerated dose of pentoxifylline, appears to be well tolerated with no serious adverse events reported. Twelve patients have been dosed with nine patients on treatment for at least four months, seven patients on treatment for at least six months, and two patients on treatment for at least nine months. Currently, nine patients remain in the study. To date, six patients dosed at 1.8 g/day have reported only mild adverse events related to the treatment, which occurred mostly in the first month of treatment and were quickly resolved. As expected, gastrointestinal or central nervous system (CNS) adverse events were reported most often. The degeneration of tissue occurring at the NL lesion site is caused by a number of pathophysiological changes, which has made it extremely difficult to develop effective treatments for this condition. PCS-499 may provide a solution since PCS-499 and its metabolites affect a number of biological pathways, several of which contribute to the pathophysiology associated with NL. As expected, we have not yet seen any significant change in the NL lesion of the trial participants. We are continually evaluating the data we receive. We plan to request a meeting with the FDA before the end of 2019 to further discuss the development of PCS-499, including the next clinical trial. On August 29, 2019, we entered into an exclusive license agreement with Akashi Therapeutics, Inc. (“Akashi”) to develop and commercialize an anti-fibrotic, anti-inflammatory drug (HT-100) that also promotes healthy muscle fiber regeneration. In previous clinical trials in Duchenne Muscular Dystrophy (DMD), HT-100 showed promising improvement in the muscle strength of non-ambulant pediatric patients. Although the FDA placed a clinical hold on the DMD trial after a serious adverse event in a pediatric patient, FDA has removed the drug off clinical hold and defined how HT-100 can resume clinical trials in DMD. Once we have obtained adequate funding, we plan to develop HT-100 in rare adult fibrotic related diseases such as focal segmental glomerulosclerosis, idiopathic pulmonary fibrosis or Scleroderma. | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by U.S. GAAP for complete financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC (as amended). The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), and reflect all of our activities, including those of our wholly-owned subsidiary. All material intercompany accounts and transactions have been eliminated in consolidation. We have reclassified certain immaterial prior year amounts to conform to our current year presentation. The reclassification of prior period amounts had no effect on previously reported net income, stockholders’ equity or cash flows. |
Going Concern and Management's Plans | Going Concern and Management’s Plans Our condensed consolidated financial statements have been prepared using U.S. GAAP and are based on the assumption that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We face certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities. We currently have no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. We have relied exclusively on private placements with a small group of accredited investors to finance our business and operations. As described in more detail below, we recently entered into two line of credit agreements providing a revolving commitment of an aggregate up to $1.4 million but have not drawn any amounts as of the date of this report. We have not had any revenue since our inception. We are looking at ways to add a revenue stream to offset some of our expenses but do not currently have any revenue under contract or any immediate sales prospects. During the nine months ended September 30, 2019, we had an accumulated deficit of $10.2 million, incurred a net loss of $2.6 million and used $1.2 million in net cash from operating activities from continuing operations. At September 30, 2019, we had cash and cash equivalents totaling $504,302. During the nine months ended September 30, 2019, PoC Capital (our clinical trial funding commitment investor) made payments directly to our CRO totaling $689,168 for amounts invoiced. PoC Capital also repaid us $210,832 for clinical trial expenses we previously paid to our CRO, $180,119 of which is included in Prepaid and Other on our condensed consolidated balance sheet at September 30, 2019. On September 20, 2019, we entered into two separate Line of Credit Agreements (“LOC Agreements”) with DKBK Enterprises, LLC (“DKBK”) and current shareholder CorLyst, LLC (“CorLyst”), both related parties (“Lenders”), which provide a revolving commitment of up to $700,000 each ($1.4 million total). Under the LOC Agreements, all funds borrowed will bear an 8% annual interest rate. The lenders have the right to convert all or any portion of the debt and interest into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction or (iii) at an adjusted price; all as defined in the 8% Senior Note agreement. The lenders will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. Our Chief Executive Officer (CEO) is also the Chief Executive Officer and Managing Member of both Lenders. CorLyst beneficially owns 6,859,527 shares of Processa common stock, representing approximately 17.7% of the Company’s outstanding shares of voting capital stock. We have not drawn any amounts under these LOC agreements. In connection with the LOC Agreements, we amended the existing pledge agreement with PoC Capital on September 30, 2019 to reduce the committed funds from $1.8 million to $900,000, which has now been paid in full. As part of the original pledge agreement, we issued 792,952 shares of common stock and 792,952 warrants to purchase shares of common stock to PoC Capital but held 396,476 shares and 396,476 warrants as collateral until certain payment milestones were met. PoC Capital forfeited the pledged collateral in the amended agreement and the shares have been reissued to Processa and will be retired. We are currently in the process of raising additional funds through the private sale of 8% Senior Convertible Notes (“8% Senior Notes”) to accredited investors. As of November 5, 2019, $745,000 from the sale of 8% Senior Notes to both new and existing investors has been received in escrow. We have not recorded these amounts in the accompanying condensed consolidated financial statements at September 30, 2019 since these investors, in connection with the revision of our agreement with PoC Capital and our entering into the LOC agreements, had the opportunity through October 18, 2019 to rescind their investment. No investors indicated any intention to rescind any investment and we plan to close the escrow account in the fourth quarter of 2019, at which time we will record the proceeds. We have also delayed some of our cash outflows, primarily through the deferred payment of salaries ($48,840 has been accrued and included in accrued expenses during the three and nine months ended September 30, 2019) until such time as we have raised sufficient funding. Based on our current plan, we likely need to raise additional capital to fund our future operations. While we believe our current resources are adequate to complete our current Phase 2a trial for NL, we do not currently have resources to conduct other future trials or develop HT-100 without raising additional capital. As noted above, the timing and extent of our spending will depend on the costs associated with, and the results of our Phase 2a trial for NL. Our anticipated spending and our cash flow needs could change significantly as the trial progresses. There may be costs we incur during our trial that we do not currently anticipate in order to complete the trial, requiring us to need additional capital sooner than currently expected. The additional funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend our current or future clinical trials, or research and development programs. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the future and thereafter, and no assurances can be given that such funding will be available at all, in a sufficient amount, or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions providing funds, we will rapidly exhaust our resources and be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these condensed consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about our ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are available to be issued. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should we be unable to continue as a going concern based on the outcome of these uncertainties described above. | |
Use of Estimates | Use of Estimates In preparing our condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP and pursuant to the rules and regulations of the SEC, we make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to: stock-based compensation, determining the fair value of acquired assets and assumed liabilities, intangible assets, and income taxes. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While we believe the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. | Use of Estimates In preparing our consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, we make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to: stock-based compensation, determining the fair value of acquired assets and assumed liabilities, intangible assets, and income taxes. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While we believe the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and money market funds. We consider all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Money market funds totaled $1,328,049 and $1,300,815 at December 31, 2018 and 2017, respectively. | |
Property and Equipment | Property and Equipment Property is stated at cost, less accumulated depreciation. Costs of renewals and improvements that extend the useful lives of the assets are capitalized. Expenditures for maintenance and routine repairs are charged to expense as incurred. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, which generally range from 3 to 5 years. We amortize leasehold improvements over the shorter of the estimated useful life of the asset or the term of the related lease. Upon retirement or disposition of assets, the costs and related accumulated depreciation are removed from the accounts with the resulting net gain or loss, if any, reflected in the statement of operations. | |
Intangible Assets | Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangibles with a finite useful life are amortized using the straight-line method unless the pattern in which the economic benefits of the intangible assets are consumed or used up are reliably determinable. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to our future cash flows. The useful life is based on the duration of the expected use of the asset by us and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. We evaluate the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. If an income approach is used to measure the fair value of an intangible asset, we consider the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to us, the useful life is considered indefinite. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. | Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangibles with a finite useful life are amortized using the straight-line method unless the pattern in which the economic benefits of the intangible assets are consumed or used up are reliably determinable. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to our future cash flows. The useful life is based on the duration of the expected use of the asset by us and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. We evaluate the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. If an income approach is used to measure the fair value of an intangible asset, we consider the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to us, the useful life is considered indefinite. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. |
Impairment of Long-Lived Assets and Intangibles Other Than Goodwill | Impairment of Long-Lived Assets and Intangibles Other Than Goodwill We account for the impairment of long-lived assets in accordance with ASC 360 , Property, Plant and Equipment Intangibles – Goodwill and Other, | Impairment of Long-Lived Assets and Intangibles Other Than Goodwill We account for the impairment of long-lived assets in accordance with ASC 360 , Property, Plant and Equipment Intangibles – Goodwill and Other |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, Compensation-Stock Compensation | Stock-based Compensation Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, Compensation-Stock Compensation |
Net Loss Per Share | Net Loss Per Share Basic loss per share is computed by dividing our net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing our net loss available to common shareholders by the diluted weighted average number of shares of common stock during the period. Since we experienced a net loss for all periods presented, basic and diluted net loss per share are the same. As such, diluted loss per share for the three and nine months ended September 30, 2019 and 2018 excludes the impact of potentially dilutive common shares related to outstanding stock options, warrants and the conversion of our Senior Convertible Notes since those shares would have an anti-dilutive effect on loss per share. | Net Loss Per Share Basic loss per share is computed by dividing our net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the year. Diluted loss per share is computed by dividing our net loss available to common shareholders by the diluted weighted average number of shares of common stock during the period. Since we experienced a net loss for each of the years presented, basic and diluted net loss per share are the same. Our diluted net loss per share for the years ended December 31, 2018 and 2017 excluded 3,898,219 and 1,262,849 of potentially dilutive common shares, respectively, related to the conversion of our Senior Notes and outstanding stock options and warrants since those shares would have had an anti-dilutive effect on loss per share during the years then ended. |
Research and Development | Research and Development Research and development costs are expensed as incurred and consisted of direct and overhead-related expenses. | Research and development Research and development costs are expensed as incurred and consisted of direct and overhead-related expenses. Research and development costs totaled $3,085,317 and $964,164 for the years ended December 31, 2018 and 2017, respectively. Expenditures to acquire technologies, including licenses, which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology we develop for use in our products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated. No costs have been capitalized during the years ended December 31, 2018 and 2017. |
Fair Value Measurements and Disclosure | Fair Value Measurements and Disclosure We apply ASC 820, Fair Value Measurements and Disclosures Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value determined through the use of models or other valuation methodologies. Level 3 – Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available and includes situations where there is little market activity for the asset or liability. The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. Our policy is to recognize transfers between levels of the fair value hierarchy in the period the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, 2, or 3 during the periods presented. | |
Segments | Segments We operate in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. During 2018 and 2017 all our long-lived assets were located within the United States. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and the senior convertible notes approximate fair value because of the short-term maturity of these instruments, including the mandatory conversion of the Senior Notes into our common stock upon meeting certain conditions. | |
Debt Issuance Costs | Debt Issuance Costs We recognized the debt issuance costs incurred related to our Senior Convertible Notes as a reduction of the carrying amount of the Senior Convertible Notes on the face of the consolidated balance sheet. The debt issuance costs are amortized to interest expense using the interest method over the term of the Senior Convertible Notes. | |
Income Taxes | Income Taxes As a result of the reverse acquisition merger (see Notes 1 and 4), we experienced a change in control on October 4, 2017. Prior to the closing of the merger, Promet was treated as a partnership for federal income tax purposes and thus was not subject to income tax at the entity level. Therefore, no provision or liability for income taxes has been included in these financial statements through the date of the asset purchase on October 4, 2017. In addition, Promet determined that it was not required to record a liability related to uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes The net deferred tax assets of Heatwurx were principally federal and state net operating loss carry forwards. The Heatwurx net deferred tax assets were significantly limited following an ownership change as defined by Internal Revenue Code Section 382 and were fully reserved with a valuation allowance. Promet determined that it was not required to record a liability related to uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes Subsequent to the closing of the combination of Heatwurx and the assets of Promet, we file a consolidated federal income tax return in the United States, which includes eligible subsidiaries. In addition, we file income tax returns in state and local jurisdictions as applicable. We account for income taxes under 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 bases. The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. A full valuation allowance was recorded against our deferred tax assets at December 31, 2018 and 2017. With respect to uncertain tax positions, we would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of interest expense and general and administrative expense, respectively. We had no unrecognized tax benefits or uncertain tax positions at December 31, 2018 or 2017. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). We have implemented all new accounting pronouncements that are in effect and that may impact its financial statements. We have evaluated recently issued accounting pronouncements and determined that there is no material impact on our financial position or results of operations. | |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently issued accounting pronouncements not yet adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (Topic 842) - Leases In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) - Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements On January 1, 2019, we adopted Accounting Standards Codification (ASC) 842, Leases The adoption of the new guidance did not have a material impact on the condensed consolidated statement of operations. For further details regarding the adoption of this standard, see Note 9, “Operating Leases.” | Recently adopted accounting pronouncements From May 2014 through December 31, 2018, the FASB issued several ASUs related to ASU 2014-09, Revenue from Contracts with Customers In July 2017, the FASB issued Accounting Standards Update 2017-11 (ASU 2017-11), which allows companies to exclude a down round feature when determining whether a financial instrument is considered indexed to the entity’s own stock. As a result, financial instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion options that have down round features, an entity will recognize the intrinsic value of the feature only when the feature becomes beneficial. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We early adopted ASU 2017-11 effective January 1, 2018 without a material impact on our consolidated financial statements. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the U.S. tax reform announced on December 22, 2017 by the U.S. Government commonly referred to as the Tax Cuts and Jobs Act. SAB 118 provides a measurement period that should not extend beyond one year from the U.S. tax reform enactment date for companies to complete the accounting under Accounting Standards Codification (“ASC”) 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the U.S. tax reform for which the accounting under ASC 740 is complete. Specifically, we were required to revalue our U.S. deferred tax assets and liabilities due to the federal income tax rate reduction from 35 percent to 21 percent. Since we have provided a full valuation allowance against our deferred tax assets, the revaluation of the deferred tax assets did not have a material impact on any period presented. |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Identifiable Assets and Liabilities | The net recognized value of Heatwurx identifiable assets and liabilities included the following: Cash $ 6,280 Accounts payable (26,098 ) Accrued expenses (17,932 ) Net liabilities assumed $ (37,750 ) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Summary of Intangible Assets | Intangible assets at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Gross intangible assets $ 11,059,429 $ 11,059,429 Less: Accumulated amortization (1,218,143 ) (621,647 ) Total intangible assets, net $ 9,841,286 $ 10,437,782 | Our intangible assets consist of the following at December 31, 2018: License Software December 31, Gross intangible asset $ 11,038,929 $ 20,500 $ 11,059,429 Less: accumulated amortization (616,807 ) (4,840 ) (621,647 ) Total intangible asset, net $ 10,422,122 $ 15,660 $ 10,437,782 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Convertible Notes | The balance of our Senior Convertible Notes (“Senior Notes”) at December 31, 2018 and 2017 was as follows: 2018 2017 Senior Notes $ 230,000 $ 2,580,000 Less: Debt issuance costs - (131,430 ) Balance 230,000 2,448,570 Current portion (230,000 ) (2,448,570 ) Long term portion $ - $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | Our provision (benefit) for income taxes for the years ended December 31, 2018 and 2017 was as follows: Year Ended December 31, 2018 2017 Current: Federal $ - $ - State - - Total deferred tax benefit - - Deferred: Federal (940,510 ) (116,783 ) State (292,047 ) (50,004 ) Total deferred tax benefit (1,232,557 ) (166,787 ) Valuation allowance 329,756 166,787 Net deferred tax benefit (902,801 ) - Total tax provision (benefit) $ (902,801 ) $ - |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of our effective income tax rate and statutory income tax rate for the years ended December 31, 2018 and 2017 is as follows: Year Ended December 31, 2018 2017 Federal statutory income tax rate 21.00 % 34.00 % State tax rate, net 4.58 % 5.45 % Permanent differences (0.90 )% (0.02 )% Impact of change in federal income tax rates - (11.92 )% Deferred tax asset valuation allowance (5.33 )% (27.51 )% Effective income tax rate (19.35 )% - |
Schedule of Deferred Tax Assets | The significant components of our deferred tax assets and liabilities for Federal and state income taxes consisted of the following: December 31, 2018 2017 Deferred tax assets: Non-current: Net operating loss carry forward – Federal $ 559,817 $ 49,822 Net operating loss carry forward – State 173,743 21,333 Deferred rent 2,742 Stock option expense 20,380 Depreciation 4,549 Intangible asset - Start-up expenditures 468,872 95,632 Total non-current deferred tax assets 1,230,103 166,787 Valuation allowance for deferred tax assets (496,542 ) (166,787 ) Total deferred tax assets $ 733,561 $ - Deferred Tax Liabilities: Non-current: Intangible asset, net of tax effect of intangible asset amortization (2,867,907 ) - Total non-current deferred tax liabilities (2,867,907 ) - Total deferred tax asset (liability) $ (2,134,346 ) $ - |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Schedule of Stock Option Valuation Assumption | The fair value of our option awards granted during the year ended December 31, 2018 was estimated using the following assumptions: Risk-free rate of interest 3.09 % Expected term (years) 5.0 to 6.25 Expected stock price volatility 85.31 % Dividend yield 0 % | |
Schedule of Stock Option | The following table summarizes our stock option activity for the year ended December 31, 2018: Total options Weighted average Weighted average remaining contractual life Outstanding as of January 1, 2018 - $ - - Options granted 384,400 2.92 9.9 Exercised - - - Forfeited - - - Outstanding as of December 31, 2018 384,400 $ 2.92 9.9 | |
Schedule of Allocation of Stock-based Compensation Expense | The allocation of stock-based compensation expense between research and development and general and administrative expense was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Research and Development $ 88,707 $ - $ 92,111 $ - General and Administrative 180,422 50,528 302,053 50,528 $ 269,129 $ 50,528 $ 394,164 $ 50,528 |
Net Loss Per Share of Common _2
Net Loss Per Share of Common Stock (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Schedule of Earnings Per Share Basic and Diluted | The computation of net loss per share for the three and nine months ended September 30, 2019 and 2018 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Basic and diluted net loss per share: Net loss from continuing operations $ (863,524 ) (852,822 ) $ (2,583,433 ) $ (3,155,874 ) Weighted average number of common 38,798,251 38,674,265 38,716,048 36,869,323 Basic and diluted net loss per share $ (0.02 ) $ (0.02 ) $ (0.07 ) $ (0.09 ) | The computation of net loss per share for the year ended December 31, 2018 and 2017 was as follows: 2018 2017 Basic and diluted net loss per share: Net loss $ (3,765,047 ) $ (1,856,315 ) Weighted-average number of common shares-basic and diluted 37,324,267 32,595,680 Basic and diluted net loss per share $ (0.10 ) $ (0.06 ) |
Schedule of Potentially Dilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive securities were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods presented. September 30, 2019 December 31, 2018 Stock options and purchase warrants 4,636,682 3,997,187 Senior convertible notes and related accrued interest - 122,717 | The outstanding options and warrants to purchase common stock and the shares issuable under the Senior Notes were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods are presented below: 2018 2017 Stock options and purchase warrants 3,917,763 - Senior convertible notes 112,580 1,262,849 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments | Future minimum rental payments under the leases as of December 31, 2018, are as follows: Office Equipment Total 2019 $ 91,328 $ 7,036 $ 98,364 2020 87,176 4,691 91,867 2021 90,497 90,497 2022 69,741 69,741 Total future minimum lease payments $ 338,742 $ 11,727 $ 350,469 |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Weighted Average Remaining Lease Terms and Discount Rate for Our Operating Leases | The weighted average remaining lease terms and discount rate for our operating leases were as follows at September 30, 2019: Weighted average remaining lease term (years) for our facility and equipment leases 2.6 Weighted average discount rate for our facility and equipment leases 8 % |
Schedule of Maturities of Lease Liabilities for All Operating Leases | Maturities of our lease liabilities for all operating leases were as follows as of September 30, 2019: 2019 $ 23,396 2020 92,603 2021 90,495 2022 69,741 Total lease payments 276,235 Less: Interest (32,073 ) Present value of lease liabilities 244,162 Less: current maturities (77,423 ) Non-current lease liability $ 166,739 |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Nov. 05, 2019 | Sep. 30, 2019 | Sep. 20, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 29, 2019 | Jan. 02, 2019 | May 25, 2018 |
Accumulated deficit | $ (10,207,567) | $ (10,207,567) | $ (10,207,567) | $ (7,624,134) | $ (3,859,086) | |||||||||||
Net Loss | (863,524) | $ (969,077) | $ (750,832) | $ (852,822) | $ (1,206,255) | $ (1,096,798) | (2,583,433) | $ (3,155,874) | (3,765,047) | (1,856,315) | ||||||
Net cash used in operating activities | (1,236,659) | (3,243,938) | (3,707,914) | (1,654,617) | ||||||||||||
Cash and cash equivalents | 504,302 | 504,302 | 504,302 | $ 1,740,961 | 2,847,429 | |||||||||||
Payments made directly by investor for clinical trial costs | 689,168 | |||||||||||||||
Repayment made directly by investor for clinical trial expenses | 210,832 | |||||||||||||||
Debt instrument, conversion price per share | $ 2.043 | |||||||||||||||
Common stock, forfeited | ||||||||||||||||
Proceeds from sale of convertible notes | 2,580,000 | |||||||||||||||
Impairment of long-lived assets | ||||||||||||||||
Right-of-use asset | 238,186 | 238,186 | 238,186 | |||||||||||||
Lease obligations | $ 244,162 | $ 244,162 | $ 244,162 | |||||||||||||
Accounting Standards Update 2016-02 [Member] | ||||||||||||||||
Right-of-use asset | $ 293,198 | |||||||||||||||
Lease obligations | $ 303,161 | |||||||||||||||
8% Senior Convertible Notes [Member] | New and Existing Investors [Member] | ||||||||||||||||
Debt instrument, interest percentage | 8.00% | 8.00% | 8.00% | |||||||||||||
8% Senior Convertible Notes [Member] | New and Existing Investors [Member] | Subsequent Event [Member] | ||||||||||||||||
Debt instrument, interest percentage | 8.00% | |||||||||||||||
Proceeds from sale of convertible notes | $ 745,000 | |||||||||||||||
Two LOC Agreements [Member] | Lenders [Member] | ||||||||||||||||
Maximum revolving line of credit | $ 1,400,000 | |||||||||||||||
Line of credit, interest percentage | 8.00% | |||||||||||||||
Debt instrument, conversion price per share | $ 2.04 | |||||||||||||||
Debt instrument, conversion terms | Under the LOC Agreements, all funds borrowed will bear an 8% annual interest rate. The lenders have the right to convert all or any portion of the debt and interest into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction or (iii) at an adjusted price; all as defined in the 8% Senior Note agreement. The lenders will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. | |||||||||||||||
LOC Agreement One [Member] | Lenders [Member] | ||||||||||||||||
Maximum revolving line of credit | $ 700,000 | |||||||||||||||
LOC Agreement Two [Member] | Lenders [Member] | ||||||||||||||||
Maximum revolving line of credit | $ 700,000 | |||||||||||||||
Line of Credit Agreements [Member] | CorLyst, LLC [Member] | ||||||||||||||||
Common stock beneficially owned, shares | 6,859,527 | |||||||||||||||
Equity method investment, ownership percentage | 17.70% | |||||||||||||||
Pledge Agreement [Member] | PoC Capital [Member] | ||||||||||||||||
Maximum revolving line of credit | $ 900,000 | $ 900,000 | $ 900,000 | $ 1,800,000 | ||||||||||||
Pledge Agreement [Member] | PoC Capital [Member] | Until Certain Milestones Payment [Member] | ||||||||||||||||
Common stock, forfeited | 396,476 | |||||||||||||||
Warrants, forfeited | 396,476 | |||||||||||||||
Prepaid and Other [Member] | ||||||||||||||||
Repayment made directly by investor for clinical trial expenses | $ 180,119 |
Organization and Description _2
Organization and Description of the Business (Details Narrative) (10K) - USD ($) | Mar. 19, 2018 | Oct. 04, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2018 |
Number of shares provided in exchange for net assets | 31,745,242 | 2,090,301 | 2,090,301 | 2,090,301 | ||
Percentage of issued and outstanding common stock diluted basis | 90.00% | |||||
Promet [Member] | ||||||
Percentage of issued and outstanding common stock diluted basis | 84.00% | |||||
CoNCERT Pharmaceuticals, Inc [Member] | ||||||
Number of shares provided in exchange for net assets | 2,090,301 | |||||
Percentage of issued and outstanding common stock diluted basis | 6.00% | |||||
Percentage of common stock holdings | 5.93% | 6.00% | ||||
Percentage of royalty | 15.00% | |||||
Controlling interest, description | Promet's percentage beneficial interest held in us remained at 84%. | |||||
CoNCERT Pharmaceuticals, Inc [Member] | Option and License Agreement [Member] | ||||||
Option exercised in exchange for common stock | $ 8,000,000 | |||||
CoNCERT Pharmaceuticals, Inc [Member] | Option and License Agreement [Member] | Additional Paid-In Capital [Member] | ||||||
Value of shares exchanged | $ 8,000,000 |
Going Concern and Management'_2
Going Concern and Management's Plans (Details Narrative) (10K) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||
Accumulated deficit | $ (10,207,567) | $ (10,207,567) | $ (7,624,134) | $ (3,859,086) | ||||||
Net Loss | (863,524) | $ (969,077) | $ (750,832) | $ (852,822) | $ (1,206,255) | $ (1,096,798) | (2,583,433) | $ (3,155,874) | (3,765,047) | (1,856,315) |
Net cash used in operating activities | (1,236,659) | $ (3,243,938) | (3,707,914) | (1,654,617) | ||||||
Cash and cash equivalents | $ 504,302 | $ 504,302 | 1,740,961 | $ 2,847,429 | ||||||
Clinical Trial Funding commitment from investor capital | $ 1,800,000 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) (10K) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)Numbershares | Dec. 31, 2017USD ($)shares | |
Money market funds | $ 1,328,049 | $ 1,300,815 | ||||
Impairment of long-lived assets and intangibles | ||||||
Potentially dilutive common shares | shares | 3,898,219 | 1,262,849 | ||||
Number of operating segment | Number | 1 | |||||
Research and development costs | $ 584,979 | $ 611,612 | $ 1,804,169 | $ 2,477,481 | $ 3,085,317 | $ 964,164 |
Unrecognized tax benefits | ||||||
Portfolio lease of assets and liabilities | $ 318,000 | |||||
Income tax description | Revalue our U.S. deferred tax assets and liabilities due to the federal income tax rate reduction from 35 percent to 21 percent. | |||||
Federal income tax rate | 21.00% | 34.00% | ||||
Minimum [Member] | ||||||
Estimated useful lives of property plant and equipment | 3 years | |||||
Maximum [Member] | ||||||
Estimated useful lives of property plant and equipment | 5 years |
Acquisition (Details Narrative)
Acquisition (Details Narrative) (10-K) - USD ($) | Mar. 19, 2018 | Oct. 04, 2017 | Oct. 04, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2019 | Dec. 31, 2017 |
Number of shares provided in exchange for net assets | 31,745,242 | 2,090,301 | 2,090,301 | 2,090,301 | |||||
Common stock shares issued | 35,272,626 | 38,674,265 | 38,404,530 | 35,272,626 | |||||
Common stock shares outstanding | 35,272,626 | 38,674,265 | 38,404,530 | 35,272,626 | |||||
CoNCERT Pharmaceuticals, Inc [Member] | |||||||||
Number of shares provided in exchange for net assets | 2,090,301 | ||||||||
Percentage of common stock holdings | 5.93% | 6.00% | |||||||
Voting interest | 6.00% | ||||||||
Promet Therapeutics LLC [Member] | |||||||||
Equity ownership percentage | 84.00% | ||||||||
Promet Therapeutics LLC [Member] | General and Administrative [Member] | |||||||||
Acquisition-related transaction costs | $ 58,763 | ||||||||
Parent Company [Member] | |||||||||
Business acquisition exchange percentage | 90.00% | ||||||||
Number of shares provided in exchange for net assets | 31,745,242 | ||||||||
Business acquisition acquired value | $ 1,017,342 | $ 1,017,342 | |||||||
Common stock shares issued | 35,272,626 | ||||||||
Common stock shares outstanding | 35,272,626 | ||||||||
Voting interest | 90.00% |
Acquisition - Schedule of Ident
Acquisition - Schedule of Identifiable Assets and Liabilities (Details) (10-K) | Dec. 31, 2018USD ($) |
Business Combinations [Abstract] | |
Cash | $ 6,280 |
Accounts payable | (26,098) |
Accrued expenses | (17,932) |
Net liabilities assumed | $ (37,750) |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||
Amortization expense | $ 198,832 | $ 200,256 | $ 596,496 | $ 422,814 | $ 621,647 | |
Future amortization expense, next year | 795,000 | 795,000 | 795,000 | |||
Future amortization expense, thereafter | 788,000 | 788,000 | 788,000 | |||
Purchase price | 8,000,000 | 8,000,000 | ||||
Transaction costs | 1,782 | 1,782 | 1,782 | |||
Capitalized cost | 3,037,147 | 3,037,147 | 11,038,929 | |||
Tax basis of intangible asset | $ 1,782 | $ 1,782 | $ 1,782 |
Intangible Assets (Details Na_2
Intangible Assets (Details Narrative) (10-K) - USD ($) | Mar. 19, 2018 | Oct. 04, 2017 | Oct. 04, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Purchase of software license | $ (1,782) | $ (20,500) | |||||||||
Capitalized cost, intangible asset | $ 3,037,147 | 3,037,147 | 11,038,929 | ||||||||
Purchase price, intangible asset | 8,000,000 | ||||||||||
Transaction costs, intangible asset | 1,782 | 1,782 | 1,782 | ||||||||
Tax basis of intangible asset | $ 1,782 | $ 1,782 | $ 1,782 | ||||||||
Number of shares provided in exchange for net assets | 31,745,242 | 2,090,301 | 2,090,301 | 2,090,301 | |||||||
Common stock shares issued | 35,272,626 | 38,404,530 | 38,404,530 | 38,674,265 | 35,272,626 | ||||||
Common stock shares outstanding | 35,272,626 | 38,404,530 | 38,404,530 | 38,674,265 | 35,272,626 | ||||||
License agreement description | The negotiation of the modification to the Agreement was in process as of October 4, 2017 and was finalized in mid-February 2018 and the legal documents were thereafter executed and the option was exercised on March 19, 2018 in exchange for CoNCERT receiving: (i) $8 million of our common stock that was held by Promet LLC for the benefit of CoNCERT; (ii) royalties, on a product-by-product basis, on worldwide net sales of products during each year as follows: (a) four percent (4%) of sales less than or equal to $100 million; (b) five percent (5%) of sales greater than $100 million and less than or equal to $500 million; (c) six percent (6%) of sales greater than $500 million and less than or equal to $1 billion; and, (d) for that portion greater than $1 billion, (i) with respect to net sales made by Promet or any of its affiliates, ten percent (10%) of net sales, and (ii) with respect to net sales made by any sub-licensee, the greater of (1) 6% of such net sales or (2) 50% of all payments received by Promet or any of its affiliates with respect to such net sales; and (iii) 15% of any sublicense revenue earned by us for a period equivalent to the royalty term (as defined in the Agreement) until the earliest of (a) our raising $8 million of gross proceeds | ||||||||||
Proceeds from common stock | $ 2,965,095 | $ 2,874,687 | |||||||||
Amortization expense | $ 198,832 | $ 200,256 | 596,496 | $ 422,814 | $ 621,647 | ||||||
Weighted average amortization period for intangible asset | 2 years | ||||||||||
Future amortization expense, year two | 795,000 | 795,000 | $ 795,000 | ||||||||
Future amortization expense, thereafter | $ 788,000 | $ 788,000 | $ 788,000 | ||||||||
Agreement [Member] | |||||||||||
Sub-licence agreement percentage | 15.00% | 15.00% | |||||||||
Category 1 [Member] | Sub-licensee [Member] | |||||||||||
Percentage of sales percentage | 6.00% | 6.00% | |||||||||
CoNCERT Pharmaceuticals, Inc [Member] | |||||||||||
Number of shares provided in exchange for net assets | 2,090,301 | ||||||||||
Shares acquired price per share | $ 3.83 | ||||||||||
Acquisition percentage | 6.00% | ||||||||||
Percentage of controlling interest | 6.00% | ||||||||||
Fair value of intangible assets | $ 8,000,000 | ||||||||||
Proceeds from royalty receivable | $ 8,000,000 | ||||||||||
Proceeds from common stock | $ 8,000,000 | ||||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 1 [Member] | |||||||||||
Percentage of sales percentage | 4.00% | 4.00% | |||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 1 [Member] | Maximum [Member] | |||||||||||
Amount of sales limit | $ 100,000,000 | ||||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 2 [Member] | |||||||||||
Percentage of sales percentage | 5.00% | 5.00% | |||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 2 [Member] | Maximum [Member] | |||||||||||
Amount of sales limit | $ 500,000,000 | ||||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 2 [Member] | Minimum [Member] | |||||||||||
Amount of sales limit | $ 100,000,000 | ||||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 3 [Member] | |||||||||||
Percentage of sales percentage | 6.00% | 6.00% | |||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 3 [Member] | Maximum [Member] | |||||||||||
Amount of sales limit | $ 1,000,000,000 | ||||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 3 [Member] | Minimum [Member] | |||||||||||
Amount of sales limit | 500,000,000 | ||||||||||
CoNCERT Pharmaceuticals, Inc [Member] | Category 4 [Member] | Minimum [Member] | |||||||||||
Amount of sales limit | $ 1,000,000,000 | ||||||||||
Promet [Member] | Category 1 [Member] | |||||||||||
Percentage of sales percentage | 10.00% | 10.00% | |||||||||
Promet [Member] | Category 2 [Member] | |||||||||||
Percentage of sales percentage | 50.00% | 50.00% |
Intangible Assets - Summary of
Intangible Assets - Summary of Intangible Assets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Gross intangible assets | $ 11,059,429 | $ 11,059,429 |
Less: Accumulated amortization | (1,218,143) | (621,647) |
Total intangible assets, net | $ 9,841,286 | 10,437,782 |
License Rights to PCS-499 [Member] | ||
Gross intangible assets | 11,038,929 | |
Less: Accumulated amortization | (616,807) | |
Total intangible assets, net | 10,422,122 | |
Software License [Member] | ||
Gross intangible assets | 20,500 | |
Less: Accumulated amortization | (4,840) | |
Total intangible assets, net | $ 15,660 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) (10-K) - USD ($) | Jul. 02, 2019 | May 25, 2018 | Nov. 21, 2017 | Sep. 29, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | May 25, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 04, 2017 |
Notes payable | $ 1,939,341 | |||||||||||
Accrued interest | $ 613,114 | $ 109,472 | ||||||||||
Conversion debt into shares | 126,741 | 1,850,625 | ||||||||||
Interest expenses | $ 2,271 | $ 8,323 | $ 12,973 | $ 154,377 | 161,205 | $ 59,063 | ||||||
Amortization of debt issuance costs | 67,069 | $ 23,370 | ||||||||||
Senior secured convertible notes | $ 2,580,000 | |||||||||||
Conversion of senior notes | $ 258,930 | $ 2,350,000 | ||||||||||
Senior notes outstanding | $ 230,000 | |||||||||||
Warrants exercise price | $ 2.452 | |||||||||||
Accrued interest into shares converted | 1,206,245 | |||||||||||
Conversion of senior notes, conversion price | $ 2.043 | |||||||||||
Contractual obligation amount | $ 82,502 | |||||||||||
Boustead Securities Ltd [Member] | ||||||||||||
Gross proceeds from debt percentage | 6.00% | |||||||||||
Warrant to purchase securities percentage | 3.00% | |||||||||||
Warrants to purchase shares of common stock | 72,375 | |||||||||||
Warrants exercise term | 3 years | |||||||||||
Warrants exercise price | $ 2.452 | |||||||||||
Debt issuance costs | $ 154,800 | |||||||||||
Common Stock [Member] | ||||||||||||
Conversion debt into shares | 102,789 | |||||||||||
Accredited Investors [Member] | ||||||||||||
Proceeds from financing cost | $ 1,330,000 | |||||||||||
Senior Convertible Notes [Member] | ||||||||||||
Senior secured convertible notes | $ 1,250,000 | |||||||||||
Conversion of senior notes | $ 2,350,000 | |||||||||||
Senior notes outstanding | $ 230,000 | |||||||||||
Debt interest rate | 13.96% | |||||||||||
Debt instrument interest rate term | may elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversation of the Senior Notes | |||||||||||
Debt effective interest rate | 7.72% | |||||||||||
Senior Convertible Notes [Member] | Common Stock [Member] | ||||||||||||
Debt interest rate | 8.00% |
Notes Payable - Schedule of Sen
Notes Payable - Schedule of Senior Convertible Notes (Details) (10-K) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | May 25, 2018 | Dec. 31, 2017 |
Senior Notes | $ 2,580,000 | |||
Balance | $ 230,000 | $ 2,448,570 | ||
Current portion | (230,000) | (2,448,570) | ||
Long-term portion | ||||
Senior Convertible Notes [Member] | ||||
Senior Notes | 230,000 | 2,580,000 | ||
Less: Debt issuance costs | $ (131,430) |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 29, 2019 | Aug. 31, 2019 | Dec. 31, 2017 |
Sale of preferred stock, number of preferred shares sold | |||||||
Preferred stock, shares issued | |||||||
Preferred stock, shares outstanding | |||||||
Repayment made directly by investor for clinical trial expenses | $ 210,832 | ||||||
Amount paid included in prepaid expense and other current assets | $ 180,119 | $ 180,119 | |||||
Common stock, forfeited | |||||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 350,000,000 | 350,000,000 | 43,261,049 | ||
PoC Capital [Member] | Pledge Agreement [Member] | |||||||
Maximum revolving line of credit | $ 900,000 | $ 900,000 | $ 1,800,000 | ||||
PoC Capital [Member] | Pledge Agreement [Member] | Until Certain Milestones Payment [Member] | |||||||
Common stock, forfeited | 396,476 | ||||||
Warrants, forfeited | 396,476 | ||||||
PoC Capital [Member] | CRO [Member] | |||||||
Payment for subscription receivable | $ 689,168 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details Narrative) (10-K) - USD ($) | Jul. 02, 2019 | May 25, 2018 | Sep. 29, 2017 | Jun. 29, 2018 | Dec. 31, 2018 | Sep. 30, 2019 | Aug. 31, 2019 | Dec. 31, 2017 |
Preferred stock, shares authorized | 10,000,000 | 1,000,000 | 10,000,000 | 10,000,000 | ||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Conversion debt into shares | 126,741 | 1,850,625 | ||||||
Common stock, shares authorized | 350,000,000 | 100,000,000 | 350,000,000 | 43,261,049 | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Contractual obligation amount | $ 82,502 | |||||||
Clinical Trial Funding commitment | $ 1,800,000 | |||||||
Private Placement [Member] | ||||||||
Common stock and a warrant purchase price per share | $ 0.01 | |||||||
Private Placement [Member] | Maximum [Member] | ||||||||
Common stock and a warrant purchase price per share | $ 2.27 | |||||||
2018 Private Placement Transactions [Member] | ||||||||
Number of units sold | 1,402,442 | |||||||
Purchase price per unit | $ 2.27 | |||||||
Gross proceeds from unit sold | $ 3,200,000 | |||||||
Common stock and a warrant purchase price per share | $ 2.724 | |||||||
Amount paid to placement agent | $ 167,526 | |||||||
Issued placement agent warrants to purchase shares | 84,146 | |||||||
Warrant term | 3 years | |||||||
Contractual obligation amount | $ 141,304 | |||||||
PoC Capital, LLC [Member] | ||||||||
Number of units sold | 792,952 | |||||||
Purchase price per unit | $ 2.724 | |||||||
Common stock and a warrant purchase price per share | $ 2.724 | |||||||
Amount paid to placement agent | $ 108,000 | |||||||
Issued placement agent warrants to purchase shares | 47,578 | |||||||
Contractual obligation amount | $ 60,457 | |||||||
Amount financed under agreement | $ 1,800,000 | |||||||
Warrant to purchase common stock | 792,952 | |||||||
Warrant expiration date | Jul. 29, 2021 | |||||||
Pledge Agreement with PoC [Member] | ||||||||
Number of units sold | 396,476 | |||||||
Pledge Agreement with PoC [Member] | Tranche One [Member] | ||||||||
Number of units sold | 198,238 | |||||||
Pledge Agreement with PoC [Member] | Tranche Two [Member] | ||||||||
Number of units sold | 198,238 | |||||||
Common Stock [Member] | ||||||||
Conversion debt into shares | 102,789 | |||||||
Subscription Receivable [Member] | ||||||||
Clinical Trial Funding commitment | $ 1,800,000 | |||||||
Heatwurx Shareholders [Member] | Series D Preferred Stock [Member] | ||||||||
Conversion debt into shares | 178,924 | |||||||
Accrued dividends | $ 118,658 | |||||||
CRO [Member] | ||||||||
Payments made to CRO | $ 239,129 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Deferred tax liability | $ 3,037,147 | $ 3,037,147 |
Deferred tax liability, financial reporting basis | 11,038,929 | 11,038,929 |
Deferred tax liability, tax basis | $ 1,782 | $ 1,782 |
Income Taxes (Details Narrati_2
Income Taxes (Details Narrative) (10-K) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred tax liability | $ 3,037,147 | $ 3,037,147 | $ 3,037,147 | |||
Deferred tax liability, financial reporting basis | 11,038,929 | 11,038,929 | 11,038,929 | |||
Deferred tax liability, tax basis | 1,782 | 1,782 | 1,782 | |||
Income tax benefit | $ 141,251 | $ 212,015 | $ 442,152 | $ 771,332 | $ 902,801 | |
Income tax description | Revalue our U.S. deferred tax assets and liabilities due to the federal income tax rate reduction from 35 percent to 21 percent. | |||||
Federal income tax rate | 21.00% | 34.00% | ||||
Operating loss description | However, these tax-loss carry forwards can only offset 80 percent of future taxable income in any one year, with respect to any excess continuing to be carried forward indefinitely. | |||||
Provisional amount fully offset by valuation of allowance | $ 72,300 | |||||
Research and development tax credits | ||||||
Deferred tax loss carryforward | 733,560 | 71,283 | ||||
Change in valuation of allowance | 329,755 | 166,787 | ||||
Deferred tax start-up expenditures for tax purposes | 1,703,904 | 347,530 | ||||
Start-up expenditures and amortization | 468,872 | 95,504 | ||||
Deferred tax loss carryforward | $ 2,665,796 | 258,583 | ||||
Maryland [Member] | ||||||
Research and development tax credits carryforward period | 7 years | |||||
Tax Cuts and Jobs Act [Member] | ||||||
Income tax description | On December 22, 2017, the Tax Cuts and Jobs Act of 2017 ("TCJA") was signed into law. Among its provisions, the TCJA reduces the statutory U.S. Corporate income tax rate from 34% to 21% effective January 1, 2018. | |||||
Federal [Member] | ||||||
Net operating loss carryforward | $ 2,700,000 | $ 259,000 | ||||
Net operating loss carryforward description | expire from 2019 through 2037 | expire from 2019 through 2037 | ||||
Research and development tax credits carryforward period | 20 years | |||||
Deferred tax loss carryforward | $ 4,369,700 | |||||
State [Member] | ||||||
Net operating loss carryforward | $ 2,700,000 | $ 259,000 | ||||
Net operating loss carryforward description | expire from 2028 to 2037 | expire from 2028 to 2037 | ||||
Deferred tax loss carryforward | $ 606,113 | |||||
Promet [Member] | ||||||
Common stock issued and outstanding percentage | 90.00% |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision for Income Taxes (Details) (10-K) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||||
Current, Federal | ||||||
Current, State | ||||||
Total current | ||||||
Deferred, Federal | (940,510) | (116,783) | ||||
Deferred, State | (292,047) | (50,004) | ||||
Total deferred tax benefit | (1,232,557) | (1,466,787) | ||||
Valuation allowance | 329,756 | 166,787 | ||||
Net deferred tax benefit | $ (442,152) | $ (771,332) | (902,801) | |||
Total tax provision (benefit) | $ (141,251) | $ (212,015) | $ (442,152) | $ (771,332) | $ (902,801) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) (10-K) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory income tax rate | 21.00% | 34.00% |
State tax rate, net | 4.58% | 5.45% |
Permanent differences | (0.90%) | (0.02%) |
Impact of change in federal income tax rates | 0.00% | (11.92%) |
Deferred tax asset valuation allowance | (5.33%) | (27.51%) |
Effective income tax rate | (19.35%) | 0.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) (10-K) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | |||
Net operating loss carry forward - Federal | $ 559,817 | $ 49,822 | |
Net operating loss carry forward - State | 173,743 | 21,333 | |
Deferred rent | 2,742 | ||
Stock option expense | 20,380 | ||
Depreciation | 4,549 | ||
Intangible asset | |||
Start-up expenditures | 468,872 | 95,632 | |
Total non-current deferred tax assets | 1,230,103 | 166,787 | |
Valuation allowance for deferred tax assets | (496,542) | (166,787) | |
Total deferred tax assets | 733,561 | ||
Intangible asset, net of tax effect of intangible asset amortization | (2,867,907) | ||
Total non-current deferred tax liabilities | (2,867,907) | ||
Total deferred tax asset (liability) | $ (1,692,194) | $ (2,134,346) |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - USD ($) | Jun. 20, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock option contractual term | 9 years 10 months 25 days | ||||||
Stock option exercise price | $ 2.92 | ||||||
Number of stock option granted | 384,400 | ||||||
Number of options outstanding | 1,293,630 | 334,400 | 1,293,630 | 334,400 | 384,400 | ||
Number of option purchase during period for vested | 187,746 | ||||||
Stock-based compensation expense | $ 269,129 | $ 50,528 | $ 394,164 | $ 50,528 | $ 74,063 | ||
Employees [Member] | |||||||
Stock option contractual term | 5 years | ||||||
Stock option exercise price | $ 2.40 | ||||||
Employees [Member] | Tranche One [Member] | Three Year Service Vesting [Member] | |||||||
Number of stock option granted | 456,000 | ||||||
Employees [Member] | Tranche Two [Member] | Phase 2a trial for PCS-499 Complete [Member] | |||||||
Number of stock option granted | 90,646 | ||||||
Employees [Member] | Tranche Two [Member] | Up-List From The OCTQB [Member] | |||||||
Number of stock option granted | 271,938 | ||||||
Employees [Member] | Tranche Two [Member] | In-license a new or additional drug [Member] | |||||||
Number of stock option granted | 90,646 | ||||||
Employees and Non-Employees [Member] | |||||||
Number of stock option granted | 334,400 |
Stock-based Compensation (Det_2
Stock-based Compensation (Details Narrative) (10-K) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Number of shares authorized to issuance during period | 257,143 | ||||
Equity compensation description, voting | The exercise price for non-statutory and incentive stock options granted under the equity compensation plan may not be less than 100% of the fair market value of the common stock on the option grant date or 110% in the case of incentive stock options granted to employees who own stock representing more than 10% of the voting power of all classes of our common stock. The Board of Directors, until a Compensation Committee has been appointed, has the authority to establish the vesting, including the terms under which vesting may be accelerated, and other terms and conditions of the options granted. Options can have a term of no more than ten years from the grant date, except for incentive stock options granted to 10% stockholders which can have a term of no more than five years from the grant date. | ||||
Number of option purchase during period | 50,000 | ||||
Stock option contractual term | 10 years | ||||
Options vested or exercisable | |||||
Stock-based compensation expense | $ 269,129 | $ 50,528 | $ 394,164 | $ 50,528 | $ 74,063 |
Unrecognized compensation expense | $ 754,877 | ||||
Unvested stock options expected to be recognized over a weighted average period | 3 years 7 months 6 days | ||||
Minimum [Member] | |||||
Fair value of options granted exercise price | $ 2 | ||||
Maximum [Member] | |||||
Fair value of options granted exercise price | $ 2.57 | ||||
Vested Option One [Member] | |||||
Number of option purchase during period | 316,400 | ||||
Vested option period | 4 years | ||||
Vested Option Two [Member] | |||||
Number of option purchase during period | 18,000 | ||||
Vested option period | 1 year | ||||
Non-Qualified Stock Options [Member] | |||||
Number of stock option issued | 334,400 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Stock Option Valuation Assumption (Details) (10-K) | 12 Months Ended |
Dec. 31, 2018 | |
Risk-free rate of interest | 3.09% |
Expected stock price volatility | 85.31% |
Dividend yield | 0.00% |
Minimum [Member] | |
Expected term (years) | 5 years |
Maximum [Member] | |
Expected term (years) | 6 years 2 months 30 days |
Stock-based Compensation - Sc_2
Stock-based Compensation - Schedule of Stock Option (Details) (10-K) - $ / shares | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Share-based Payment Arrangement [Abstract] | |||
Total Options, Beginning Balance | |||
Total Options, Granted | 384,400 | ||
Total Options, Exercised | |||
Total Options, Forfeited | |||
Total Options, Ending Balance | 1,293,630 | 334,400 | 384,400 |
Weighted average price per share, Beginning balance | |||
Weighted average price per share, Granted | 2.92 | ||
Weighted average price per share, Exercised | |||
Weighted average price per share, Forfeited | |||
Weighted average price per share, Ending balance | $ 2.92 | ||
Weighted average remaining contractual life (in years), Option granted | 9 years 10 months 25 days | ||
Weighted average remaining contractual life (in years), Ending | 9 years 10 months 25 days |
Stock-based Compensation - Sc_3
Stock-based Compensation - Schedule of Allocation of Stock-based Compensation Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Allocation of stock-based compensation expense | $ 269,129 | $ 50,528 | $ 394,164 | $ 50,528 | $ 74,063 |
Research and Development [Member] | |||||
Allocation of stock-based compensation expense | 88,707 | 92,111 | |||
General and Administrative [Member] | |||||
Allocation of stock-based compensation expense | $ 180,422 | $ 50,528 | $ 302,053 | $ 50,528 |
Net Loss Per Share of Common _3
Net Loss Per Share of Common Stock - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||||||||||
Net Loss | $ (863,524) | $ (969,077) | $ (750,832) | $ (852,822) | $ (1,206,255) | $ (1,096,798) | $ (2,583,433) | $ (3,155,874) | $ (3,765,047) | $ (1,856,315) |
Weighted average number of common shares-basic and diluted | 38,798,251 | 38,674,265 | 38,716,048 | 36,869,323 | 37,324,267 | 32,595,680 | ||||
Basic and diluted net loss per share | $ (0.02) | $ (0.02) | $ (0.07) | $ (0.09) | $ (0.10) | $ (0.06) |
Net Loss Per Share of Common _4
Net Loss Per Share of Common Stock - Schedule of Potentially Dilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Potentially dilutive securities excluded from computation of earnings per share | 3,898,219 | 1,262,849 | |
Stock Options and Purchase Warrants [Member] | |||
Potentially dilutive securities excluded from computation of earnings per share | 4,636,682 | 3,997,187 | |
Senior Convertible Notes and Related Accrued Interest [Member] | |||
Potentially dilutive securities excluded from computation of earnings per share | 122,717 |
Net Loss Per Share of Common _5
Net Loss Per Share of Common Stock - Schedule of Potentially Dilutive Securities Excluded from Computation of Earnings Per Share (Details) (10-K) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Senior Convertible Note were excluded from the computation of diluted net income per share | 3,898,219 | 1,262,849 |
Stock Option and Purchase Warrants [Member] | ||
Senior Convertible Note were excluded from the computation of diluted net income per share | 3,917,763 | |
Senior Convertible Notes [Member] | ||
Senior Convertible Note were excluded from the computation of diluted net income per share | 112,580 | 1,262,849 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Amount due from related parties | $ 663 | $ 21,583 | $ 62,709 | |
CorLyst, LLC [Member] | ||||
Rent and other costs reimbursements received | 79,058 | $ 80,447 | ||
Prepaid Reimbursement | 25,727 | |||
Amount due from related parties | $ 0 | $ 21,583 |
Related Party Transactions (D_2
Related Party Transactions (Details Narrative) (10-K) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | May 31, 2018 | Apr. 30, 2018 | Apr. 15, 2018 | Oct. 04, 2017 | |
Reimbursement amount | $ 134,881 | $ 49,089 | |||||
Amount due from related parties | $ 21,583 | 62,709 | $ 663 | ||||
Number of common stock and warrants to purchase shares | 515,583 | ||||||
Chief Executive Officer [Member] | |||||||
Number of common stock and warrants to purchase shares | 132,160 | 132,160 | |||||
Senior Convertible Notes [Member] | Chairman of the Board of Directors [Member] | |||||||
Number of common stock and warrants to purchase shares | 103,117 | ||||||
Convertible debt | $ 200,000 | ||||||
Senior Convertible Notes [Member] | Chief Executive Officer [Member] | |||||||
Number of common stock and warrants to purchase shares | 103,117 | ||||||
Convertible debt | $ 200,000 | ||||||
Corlyst [Member] | |||||||
Amount due from related parties | $ 21,583 | $ 62,709 | |||||
Shares purchased in private placement transaction | 132,159 | ||||||
Shares purchased in private placement transaction, value | $ 300,001 | ||||||
Funds [Member] | Senior Convertible Notes [Member] | |||||||
Number of common stock and warrants to purchase shares | 515,583 | 515,583 | |||||
Convertible debt | $ 2,566,639 | $ 1,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Commitments and Contingencies Disclosure [Abstract] | |||
Purchase obligations | $ 16,000 | $ 35,000 | $ 896,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) (10-K) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | |
Rent expense | $ 5,535 | ||
Change in rent | 1,107 | ||
Accrued rent, current | 9,963 | $ 3,321 | |
Accrued rent, non-current | 9,963 | ||
Purchase obligations | $ 35,000 | 896,000 | $ 16,000 |
Office Lease [Member] | |||
Lease description | Our office lease commenced on October 1, 2016 and expires September 30, 2019 with monthly rent at inception of $5,535 that escalates $1,107 annually on each October. | ||
Rent expense | $ 79,704 | 83,025 | |
Common Area Maintenance and Real Estate Tax Reimbursements [Member] | |||
Rent expense | $ 23,648 | 22,929 | |
Equipment Lease [Member] | |||
Lease description | The equipment lease commenced in June 2017 and expires in August 2020. | ||
Rent expense | $ 8,533 | 6,626 | |
Lease term | 39 months | ||
Monthly operating usage cost allowance | $ 125 | ||
Sales tax percentage | 6.00% | ||
Equipment Lease [Member] | Base Rent [Member] | |||
Rent expense | $ 586 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Rental Payments (Details) (10-K) | Dec. 31, 2018USD ($) |
2019 | $ 98,364 |
2020 | 91,867 |
2021 | 90,497 |
2022 | 69,741 |
Total future minimum lease payments | 350,469 |
Office [Member] | |
2019 | 91,328 |
2020 | 87,176 |
2021 | 90,497 |
2022 | 69,741 |
Total future minimum lease payments | 338,742 |
Equipment [Member] | |
2019 | 7,036 |
2020 | 4,691 |
2021 | |
2022 | |
Total future minimum lease payments | $ 11,727 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details Narrative) (10-K) | Dec. 31, 2018USD ($)Number |
Number of commercial banks has companies operating cash | Number | 2 |
Commercial Bank One [Member] | |
Cash held at bank | $ | $ 1,328,049 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Nov. 05, 2019 | Sep. 20, 2019 | Jul. 02, 2019 | Sep. 29, 2017 | Jun. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | May 25, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | May 25, 2018 |
Debt instrument, conversion price per share | $ 2.043 | ||||||||||
Senior notes outstanding | $ 230,000 | $ 2,448,570 | |||||||||
Fine amount to trade order | $ 10,000 | ||||||||||
Value of principal and accrued interest into shares of common stock | $ 258,930 | $ 2,350,000 | |||||||||
Principal and accrued interest converted into number of shares of common stock | 126,741 | 1,850,625 | |||||||||
Proceeds from sale of convertible notes | $ 2,580,000 | ||||||||||
Stock Option and Purchase Warrants [Member] | |||||||||||
Principal and accrued interest converted into number of shares of common stock | 126,741 | ||||||||||
Canadian Investors [Member] | |||||||||||
Senior notes outstanding | $ 230,000 | ||||||||||
New and Existing Investors [Member] | 8% Senior Convertible Notes [Member] | |||||||||||
Debt instrument, interest percentage | 8.00% | ||||||||||
New and Existing Investors [Member] | 8% Senior Convertible Notes [Member] | Subsequent Event [Member] | |||||||||||
Debt instrument, interest percentage | 8.00% | ||||||||||
Proceeds from sale of convertible notes | $ 745,000 | ||||||||||
LOC Agreement One [Member] | Lenders [Member] | |||||||||||
Maximum revolving line of credit | $ 700,000 | ||||||||||
LOC Agreement Two [Member] | Lenders [Member] | |||||||||||
Maximum revolving line of credit | 700,000 | ||||||||||
Two LOC Agreements [Member] | Lenders [Member] | |||||||||||
Maximum revolving line of credit | $ 1,400,000 | ||||||||||
Line of credit, interest percentage | 8.00% | ||||||||||
Debt instrument, conversion price per share | $ 2.04 | ||||||||||
Debt instrument, conversion terms | Under the LOC Agreements, all funds borrowed will bear an 8% annual interest rate. The lenders have the right to convert all or any portion of the debt and interest into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction or (iii) at an adjusted price; all as defined in the 8% Senior Note agreement. The lenders will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. | ||||||||||
Line of Credit Agreements [Member] | CorLyst, LLC [Member] | |||||||||||
Common stock beneficially owned, shares | 6,859,527 | ||||||||||
Equity method investment, ownership percentage | 17.70% |
License Agreement for HT-100 (D
License Agreement for HT-100 (Details Narrative) - License Agreement [Member] | Aug. 29, 2019USD ($) |
Consideration amount to be paid | $ 10,000 |
Achieving Certain Future Development and Regulatory Milestones Related to Drug [Member] | Maximum [Member] | |
Consideration amount to be paid | $ 12,000,000 |
Operating Leases (Details Narra
Operating Leases (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||
Operating leases incremental borrowing rate | 8.00% | |
Lease costs | $ 73,621 | $ 66,712 |
Operating Leases - Schedule of
Operating Leases - Schedule of Weighted Average Remaining Lease Terms and Discount Rate for Our Operating Leases (Details) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted average remaining lease term (years) for our facility and equipment leases | 2 years 7 months 6 days |
Weighted average discount rate for our facility and equipment leases | 8.00% |
Operating Leases - Schedule o_2
Operating Leases - Schedule of Maturities of Lease Liabilities for All Operating Leases (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Leases [Abstract] | |||
2019 | $ 23,396 | ||
2020 | 92,603 | ||
2021 | 90,495 | ||
2022 | 69,741 | ||
Total lease payments | 276,235 | ||
Less: Interest | (32,073) | ||
Present value of lease liabilities | 244,162 | ||
Less: current maturities | (77,423) | ||
Non-current lease liability | $ 166,739 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 05, 2019 | Oct. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | ||||||
Proceeds from sale of convertible notes | $ 2,580,000 | |||||
Upon Completion of Listing Our Common Stock [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt instrument, conversion terms | Upon completion of listing our common stock on either the Nasdaq Capital Market or the New York Stock Exchange, our 8% Senior Notes are mandatorily convertible into shares of our common stock at a conversion price equal to the lower of (i) $2.04 per share or (ii) a price per share equal to a 10% discount to the pre-money valuation of a Qualified Financing or an Equity State Transaction, both as defined in the 8% Senior Note agreement, occurring after the closing of the 8% Senior Note financing. Upon maturity (December 15, 2020), the 8% Senior Note holders have the option to convert the 8% Senior Note into shares of our common stock at the lower of $2.04 per share or an adjusted price as set forth in the 8% Senior Note agreement. Upon either mandatory conversion or conversion at the holder's option, the holder will also receive stock purchase warrants on a 1:1 basis to the number of shares of common stock received that have an exercise price equal to the greater of (i) the closing price of our common stock on the date of conversion or (ii) $2.72 per share. | |||||
Convertible notes maturity date | Dec. 15, 2020 | |||||
8% Senior Convertible Notes [Member] | New and Existing Investors [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt instrument, interest percentage | 8.00% | |||||
Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Reverse stock split | Common stock in a ratio between four for one share to ten to one share | |||||
Subsequent Event [Member] | 8% Senior Convertible Notes [Member] | New and Existing Investors [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Proceeds from sale of convertible notes | $ 745,000 | |||||
Debt instrument, interest percentage | 8.00% |