Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 09, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity Registrant Name | LIPOCINE INC. | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | LPCN | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 88,290,650 | ||
Entity Central Index Key | 0001535955 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Security Exchange Name | NASDAQ | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 72 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 19,217,382 | $ 9,728,523 |
Restricted cash | 5,000,000 | 5,000,000 |
Marketable investment securities | 449,992 | 4,340,041 |
Accrued interest income | 391 | 16,522 |
Prepaid and other current assets | 661,258 | 545,887 |
Total current assets | 25,329,023 | 19,630,973 |
Property and equipment, net of accumulated depreciation of $1,143,697 and $1,140,143, respectively | 3,554 | |
Other assets | 23,753 | 23,753 |
Total assets | 25,352,776 | 19,658,280 |
Current liabilities: | ||
Accounts payable | 1,597,220 | 1,182,241 |
Accrued expenses | 1,653,178 | 449,303 |
Debt - current portion | 3,333,333 | 3,333,333 |
Total current liabilities | 6,583,731 | 4,964,877 |
Debt - non-current portion | 2,257,075 | 3,814,407 |
Warrant liability | 1,170,051 | 4,591,200 |
Total liabilities | 10,010,857 | 13,370,484 |
Commitments and contingencies (notes 5, 8 and 11) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; zero issued and outstanding | 0 | 0 |
Common stock, par value $0.0001 per share, 100,000,000 shares authorized; 70,041,967 and 37,655,175 issued and 70,036,257 and 37,649,465 outstanding | 7,005 | 3,766 |
Additional paid-in capital | 187,407,634 | 157,391,969 |
Treasury stock at cost, 5,710 shares | (40,712) | (40,712) |
Accumulated other comprehensive loss | (38) | |
Accumulated deficit | (172,032,008) | (151,067,189) |
Total stockholders' equity | 15,341,919 | 6,287,796 |
Total liabilities and stockholders' equity | $ 25,352,776 | $ 19,658,280 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment (in dollars) | $ 1,143,697 | $ 1,140,143 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 70,041,967 | 37,655,175 |
Common stock, shares outstanding | 70,036,257 | 37,649,465 |
Treasury Stock, Shares | 5,710 | 5,710 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | ||
License revenue | $ 0 | $ 164,990 |
Total revenues | 0 | 164,990 |
Operating expenses: | ||
Research and development | 9,748,469 | 7,468,210 |
General and administrative | 8,247,795 | 5,597,070 |
Total operating expenses | 17,996,264 | 13,065,280 |
Operating loss | (17,996,264) | (12,900,290) |
Other income (expense) | ||
Interest and investment income | 75,650 | 423,491 |
Interest expense | (386,618) | (766,745) |
Gain on extinguishment of debt | 234,802 | 0 |
Unrealized gain (loss) on warrant liability | (2,892,189) | 236,400 |
Total other expense, net | (2,968,355) | (106,854) |
Loss before income tax expense | (20,964,619) | (13,007,144) |
Income tax expense | (200) | (200) |
Net loss | $ (20,964,819) | $ (13,007,344) |
Basic loss per share attributable to common stock | $ (0.38) | $ (0.50) |
Weighted average common shares outstanding, basic | 55,688,085 | 25,882,273 |
Diluted loss per share attributable to common stock | $ (0.38) | $ (0.50) |
Weighted average common shares outstanding, diluted | 55,688,085 | 25,882,273 |
Comprehensive loss: | ||
Net loss | $ (20,964,819) | $ (13,007,344) |
Unrealized net gain on available-for-sale securities | 38 | 925 |
Comprehensive loss | $ (20,964,781) | $ (13,006,419) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock [Member]ATM | Common Stock [Member]Equity offering | Common Stock [Member] | Treasury Stock [Member]ATM | Treasury Stock [Member]Equity offering | Treasury Stock [Member] | Additional Paid-in Capital [Member]ATM | Additional Paid-in Capital [Member]Equity offering | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Gain(Loss) [Member]ATM | Accumulated Other Comprehensive Gain(Loss) [Member]Equity offering | Accumulated Other Comprehensive Gain(Loss) [Member] | Accumulated Deficit [Member]ATM | Accumulated Deficit [Member]Equity offering | Accumulated Deficit [Member] | ATM | Equity offering | Total |
Balances at Dec. 31, 2018 | $ 2,174 | $ (40,712) | $ 147,533,019 | $ (963) | $ (138,059,845) | $ 9,433,673 | ||||||||||||
Balances (in shares) at Dec. 31, 2018 | 21,731,486 | 5,710 | ||||||||||||||||
Net loss | $ 0 | $ 0 | 0 | 0 | (13,007,344) | (13,007,344) | ||||||||||||
Unrealized net gain on available-for-sale securities | 0 | 0 | 0 | 925 | 0 | 925 | ||||||||||||
Pre-funded warrant exercises | $ 155 | $ 0 | 0 | 0 | 0 | 155 | ||||||||||||
Pre-funded warrant exercises (in shares) | 1,550,000 | 0 | ||||||||||||||||
Stock-based compensation | $ 0 | $ 0 | 1,035,834 | 0 | 0 | 1,035,834 | ||||||||||||
Option exercises | $ 2 | $ 0 | 56,198 | 0 | 0 | $ 56,200 | ||||||||||||
Option exercises (in shares) | 20,000 | 0 | 20,000 | |||||||||||||||
Vesting of restricted stock units | $ 25 | $ 0 | (25) | 0 | 0 | $ 0 | ||||||||||||
Vesting of restricted stock units (in shares) | 247,500 | |||||||||||||||||
Settlement of warrant liability on warrant exercises | 0 | |||||||||||||||||
Common stock sold through offering | $ 365 | $ 1,045 | $ 0 | $ 0 | $ 8,000,046 | $ 766,897 | $ 0 | $ 0 | $ 0 | $ 0 | $ 8,000,411 | $ 767,942 | ||||||
Common stock sold through offering (in shares) | 3,650,479 | 10,450,000 | 0 | 0 | ||||||||||||||
Balances at Dec. 31, 2019 | $ 3,766 | $ (40,712) | 157,391,969 | (38) | (151,067,189) | 6,287,796 | ||||||||||||
Balances (in shares) at Dec. 31, 2019 | 37,649,465 | 5,710 | ||||||||||||||||
Net loss | $ 0 | $ 0 | 0 | 0 | (20,964,819) | (20,964,819) | ||||||||||||
Unrealized net gain on available-for-sale securities | 0 | 0 | 0 | 38 | 0 | 38 | ||||||||||||
Stock-based compensation | 0 | 0 | 1,373,182 | 0 | 0 | $ 1,373,182 | ||||||||||||
Option exercises (in shares) | 0 | |||||||||||||||||
Vesting of restricted stock units | $ 63 | $ 0 | (63) | 0 | 0 | $ 0 | ||||||||||||
Vesting of restricted stock units (in shares) | 628,807 | 0 | ||||||||||||||||
Common stock issued for warrants exercises | $ 1,510 | $ 0 | 7,673,366 | 0 | 0 | 7,674,876 | ||||||||||||
Common stock issued for warrants exercises (in shares) | 15,097,651 | 0 | ||||||||||||||||
Settlement of warrant liability on warrant exercises | $ 0 | $ 0 | 6,313,338 | 0 | 0 | 6,313,338 | ||||||||||||
Common stock sold through offering | $ 658 | $ 1,008 | $ 0 | $ 0 | $ 9,003,710 | $ 5,652,132 | $ 0 | $ 0 | $ 0 | $ 0 | $ 9,004,368 | $ 5,653,140 | ||||||
Common stock sold through offering (in shares) | 6,576,300 | 10,084,034 | 0 | 0 | ||||||||||||||
Balances at Dec. 31, 2020 | $ 7,005 | $ (40,712) | $ 187,407,634 | $ 0 | $ (172,032,008) | $ 15,341,919 | ||||||||||||
Balances (in shares) at Dec. 31, 2020 | 70,036,257 | 5,710 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (20,964,819) | $ (13,007,344) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation expense | 3,554 | 15,443 |
Stock-based compensation expense | 1,373,182 | 1,035,834 |
Non-cash interest expense | 109,335 | 221,209 |
Non-cash gain on extinguishment of debt | (234,802) | 0 |
Non-cash loss (gain) on change in fair value of warrant liability | 2,892,189 | (236,400) |
Amortization of premium/discount on marketable investment securities | (2,616) | (164,306) |
Changes in operating assets and liabilities: | ||
Accrued interest income | 16,131 | 21,992 |
Prepaid and other current assets | (115,371) | (25,774) |
Accounts payable | 414,979 | 510,961 |
Accrued expenses | 1,205,140 | (37,832) |
Cash used in operating activities | (15,303,098) | (11,666,217) |
Cash flows from investing activities: | ||
Purchases of marketable investment securities | (6,315,297) | (16,851,568) |
Maturities of marketable investment securities | 10,208,000 | 19,849,795 |
Cash provided by investing activities | 3,892,703 | 2,998,227 |
Cash flows from financing activities: | ||
Proceeds from debt | 233,537 | 0 |
Debt repayments | (1,666,667) | (3,333,334) |
Proceeds from stock option exercises | 0 | 56,200 |
Proceeds from sale of common stock sold in equity offering | 5,653,140 | 5,595,542 |
Proceeds from exercise of warrants | 7,674,876 | 155 |
Net proceeds from sale of common stock through ATM | 9,004,368 | 8,000,411 |
Cash provided by financing activities | 20,899,254 | 10,318,974 |
Net increase in cash and cash equivalents | 9,488,859 | 1,650,984 |
Cash, cash equivalents, and restricted cash at beginning of period | 14,728,523 | |
Cash, cash equivalents, and restricted cash at end of period | 24,217,382 | 14,728,523 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 276,019 | 545,536 |
Income taxes paid | 200 | 200 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Settlement of warrant liability on warrant exercises | 6,313,338 | 0 |
Unrealized net gain on marketable investment securities | 38 | 925 |
Accrued final payment charge on debt | 109,335 | 221,209 |
Allocation of equity offering proceeds to warrant liability | $ 0 | $ 4,827,600 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2020 | |
Description of Business | |
Description of Business | (1) Description of Business Lipocine Inc. (“Lipocine” or the “Company"), a clinical-stage biopharmaceutical company focused on metabolic and endocrine disorders, is engaged in research and development for the delivery of drugs using its proprietary delivery technology. The Company’s principal operation is to provide oral delivery solutions for existing drugs. Lipocine develops its own drug candidates or it develops drug candidates on behalf of or in collaboration with corporate partners. The Company has funded operating costs primarily through collaborative license, milestone and research arrangements, through federal grants, through the sale of equity securities and through debt. The Company is incorporated under the laws of the State of Delaware. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include those related to stock-based compensation; income tax uncertainties; the fair value of the warrant liability and the useful lives of property and equipment. (b) Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. Although the Company may deposit its cash and cash equivalents with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Cash and cash equivalents were $19.2 million and $9.7 million at December 31, 2020 and 2019. (c) Receivables Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses. In establishing the allowance, management considers historical losses adjusted to take into account current market conditions and their customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company had no write-offs in 2020 and 2019 and the Company did not record an allowance for doubtful accounts as of December 31, 2020 and 2019 as there were no accounts receivable outstanding. The Company does not have any off-balance-sheet credit exposure related to its customers. (d) Revenue Recognition The Company generates revenue from license and royalty arrangements. At inception of each contract, the Company identifies the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determines the transaction price including any variable consideration, allocates the transaction price to the distinct performance obligations and determines whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company reassess its reserves for variable consideration at each reporting date and makes adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known. (e) Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Maintenance and repairs that do not extend the life or improve the asset are expensed in the year incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are five years for laboratory and office equipment, three years for computer equipment and software, and seven years for furniture and fixtures. (f) Accounting for Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets held for sale are reported at the lower of the carrying amount, or fair value, less costs to sell. (g) Income Taxes Income taxes are accounted for 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 and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of its income tax expense. (h) Share Based Payments The Company recognizes stock-based compensation expense for grants of stock option awards, restricted stock units and restricted stock under the Company’s Incentive Plan to employees, nonemployees and nonemployee members of the Company’s board of directors based on the grant-date fair value of those awards. The grant-date fair value of an award is generally recognized as compensation expense over the award’s requisite service period. In addition, the Company has granted performance-based stock option awards and restricted stock units, which vest based upon the Company satisfying certain performance conditions. Potential compensation cost, measured on the grant date, related to these performance options will be recognized only if, and when, the Company estimates that these options or units will vest, which is based on whether the Company considers the performance conditions to be probable of attainment. The Company’s estimates of the number of performance-based options or units that will vest will be revised, if necessary, in subsequent periods. The Company uses the Black-Scholes model to compute the estimated fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of the Company’s Common Stock price, (ii) the periods of time over which employees, nonemployees and members of the board of directors are expected to hold their options prior to exercise (expected term), (iii) expected dividend yield on the Common Stock, and (iv) risk-free interest rates. Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited. This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation cost that has been expensed in the statements of operations amounted to $1.4 million and $1.0 million for the years ended December 31, 2020 and 2019, allocated as follows: Year Ended 2020 2019 Research and development $ 583,212 $ 419,801 General and administrative 789,970 616,033 $ 1,373,182 $ 1,035,834 The Company issued 1,360,000 stock options and 79,000 stock options, respectively, during the years ended December 31, 2020 and 2019, respectively. Additionally, the Company issued zero and 280,120 restricted stock units, respectively, during the years ended December 31, 2020 and 2019, respectively. Key assumptions used in the determination of the fair value of stock options granted are as follows: Expected Term : The expected term represents the period that the stock-based awards are expected to be outstanding. Due to limited historical experience of similar awards, the expected term was estimated using the simplified method in accordance with the provisions of Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, for awards with stated or implied service periods. The simplified method defines the expected term as the average of the contractual term and the vesting period of the stock option. For awards with performance conditions, and that have the contractual term to satisfy the performance condition, the contractual term was used. Risk-Free Interest Rate : The risk-free interest rate used was based on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term. Expected Dividend : The expected dividend assumption is based on management’s current expectation about the Company’s anticipated dividend policy. The Company does not anticipate declaring dividends in the foreseeable future. Expected Volatility : Since the Company did not have sufficient trading history, the volatility factor was based on the average of similar public companies through August 2014. When selecting similar companies, the Company considered the industry, stage of life cycle, size, and financial leverage. Beginning in August 2014, the volatility factor is based on a combination of the Company’s trading history since March 2014 and the average of similar public companies. Beginning in July 2017, the volatility factor is based solely on the Company’s trading history since March 2014. For options granted in 2020 and 2019, the Company calculated the fair value of each option grant on the respective dates of grant using the following weighted average assumptions: 2020 2019 Expected term 5.83 years 5.67 years Risk-free interest rate 0.93 % 1.82 % Expected dividend yield — — Expected volatility 100.32 % 80.38 % FASB Accounting Standards Codification (“ASC”) 718, Stock Compensation, requires the Company to recognize compensation expense for the portion of options that are expected to vest. Therefore, the Company applied estimated forfeiture rates that were derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods. As of December 31, 2020, there was $972,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock option plan. That cost is expected to be recognized over a weighted average period of 2.5 years and will be adjusted for subsequent changes in estimated forfeitures. The weighted average fair value of share-based compensation awards granted during the years ended December 31, 2020 and 2019 was approximately $0.72 per share and $1.25 per share, respectively. (i) Fair Value The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: · Level 1 Inputs: Quoted prices for identical instruments in active markets. · Level 2 Inputs: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuation in which all significant inputs and significant value drivers are observable in active markets. · Level 3 Inputs: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For accrued interest income, prepaid and other current assets, accounts payable, and accrued expenses, the carrying amounts approximate fair value because of the short maturity of these instruments. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at December 31, 2020 and 2019: December 31, Fair value measurements at reporting date using 2020 Level 1 inputs Level 2 inputs Level 3 inputs Assets: Cash equivalents - money market funds $ 18,399,585 $ 18,399,585 $ — $ — Commercial paper 449,992 — 449,992 — $ 18,849,577 $ 18,399,585 $ 449,992 $ — Liabilities: Warrant liability $ 1,170,051 — — 1,170,051 $ 20,019,628 $ 18,399,585 $ 449,992 $ 1,170,051 December 31, Fair value measurements at reporting date using 2019 Level 1 inputs Level 2 inputs Level 3 inputs Assets: Cash equivalents - money market funds and commercial paper $ 8,921,249 $ 6,575,862 $ 2,345,387 $ — Corporate bonds, notes and commercial paper 4,340,041 — 4,340,041 — $ 13,261,290 $ 6,575,862 $ 6,685,428 $ — Liabilities: Warrant liability $ 4,591,200 — — 4,591,200 $ 17,852,490 $ 6,575,862 $ 6,685,428 $ 4,591,200 The following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value in the balance sheets: Cash equivalents: Cash equivalents primarily consist of highly-rated money market funds, commercial paper and treasury bills with original maturities to the Company of three months or less and are purchased daily at par value with specified yield rates. Cash equivalents related to money market funds and treasury bills are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets. Cash equivalents related to commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs. Corporate bonds, notes, and commercial paper: The Company uses a third-party pricing service to value these investments. Corporate bonds, notes and commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs. Warrant liability: The warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded to other income (expense) in the accompanying statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The fair value of the warrant liability is estimated using a Black-Scholes option-pricing model. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of December 31, 2020, include (i) volatility of 88.46%, (ii) risk free interest rate of 0.27%, (iii) strike price of $0.50, (iv) fair value of common stock of $1.36, and (v) expected life of 3.9 years. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of December 31, 2019, include (i) volatility of 225.93%, (ii) risk free interest rate of 1.69%, (iii) strike price of $0.50, (iv) fair value of common stock of $0.385, and (v) expected life of 4.9 years. The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, Level 2 or Level 3 for the years ended December 31, 2020 and 2019. (j) Earnings (Loss) per Share Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding plus, where applicable, the additional potential common shares that would have been outstanding related to dilutive options, warrants, and unvested restricted stock units to the extent such shares are dilutive. The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock for the years ended December 31, 2020 and 2019. Year Ended December 31, 2020 2019 Basic loss per share attributable to common stock: Numerator Net loss $ (20,964,819) $ (13,007,344) Denominator Weighted avg. common shares outstanding 55,688,085 25,882,273 Basic loss per share attributable to common stock $ (0.38) $ (0.50) Diluted loss per share attributable to common stock: Numerator Net loss $ (20,964,819) $ (13,007,344) Denominator Weighted avg. common shares outstanding 55,688,085 25,882,273 Diluted loss per share attributable to common stock $ (0.38) $ (0.50) The computation of diluted earnings per share for the years ended December 31, 2020 and 2019 does not include stock options, warrants or unvested restricted stock units to purchase shares in the computation of diluted earnings per share because these instruments were antidilutive: December 31, 2020 2019 Stock options 3,564,458 2,310,485 Unvested restricted stock units — 661,307 Warrants 1,944,366 12,000,000 (k) Segment Information The Company is a single reportable segment engaged in research and development for the delivery of drugs using its proprietary delivery technology. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. The chief operating decision maker made such decisions and assessed performance at the company level, as one segment. (l) Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries. The Company eliminates all intercompany accounts and transactions in consolidation. |
Marketable Investment Securitie
Marketable Investment Securities | 12 Months Ended |
Dec. 31, 2020 | |
Marketable Investment Securities | |
Marketable Investment Securities | (3) Marketable Investment Securities The Company has classified its marketable investment securities as available-for-sale securities, all of which are debt securities. Debt securities are carried at fair value with unrealized holding gains and losses, net of the related tax effect, included in accumulated other comprehensive income (loss) in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities by major security type and class of security at December 31, 2020 and 2019 were as follows: Gross Gross unrealized unrealized Amortized holding holding Aggregate December 31, 2020 Cost gains losses fair value Commercial paper $ 449,992 $ — $ — $ 449,992 $ 449,992 $ — $ — $ 449,992 Gross Gross unrealized unrealized Amortized holding holding Aggregate December 31, 2019 Cost gains losses fair value Corporate bonds, notes and commercial paper $ 4,340,079 $ — $ (38) $ 4,340,041 $ 4,340,079 $ — $ (38) $ 4,340,041 Maturities of debt securities classified as available-for-sale securities at December 31, 2020 are as follows: Amortized Aggregate December 31, 2020 Cost fair value Due within one year $ 449,992 $ 449,992 $ 449,992 $ 449,992 There were no sales of marketable investment securities during the years ended December 31, 2020 and 2019 and therefore no realized gains or losses. Additionally, $10.2 million and $19.8 million of marketable investment securities matured during the years ended December 31, 2020 and 2019, respectively. The Company determined there were no other-than-temporary impairments for the years ended December 31, 2020 and 2019. |
Contractual Agreements
Contractual Agreements | 12 Months Ended |
Dec. 31, 2020 | |
Contractual Agreements | |
Contractual Agreements | (4) Contractual Agreements (a) Abbott Products, Inc. On March 29, 2012, the Company terminated its collaborative agreement with Solvay Pharmaceuticals, Inc. (later acquired by Abbott Products, Inc.) for TLANDO. As part of the termination, the Company reacquired the rights to the intellectual property from Abbott. All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales. Such royalties are limited to $1.0 million in the first two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount. If generic versions of any such product are introduced, then royalties are reduced by 50%. The Company did not incur any royalties during the years ended December 31, 2020 and 2019. (b) Contract Research and Development The Company has entered into agreements with various contract organizations that conduct preclinical, clinical, analytical and manufacturing development work on behalf of the Company as well as a number of independent contractors, primarily clinical researchers, who serve as advisors to the Company. The Company incurred expenses of $6.8 million and $5.4 million under these agreements in 2020 and 2019 and has recorded these expenses in research and development expenses. |
Loan and Security Agreements
Loan and Security Agreements | 12 Months Ended |
Dec. 31, 2020 | |
Loan and Security Agreements | |
Loan and Security Agreements | (5) Loan and Security Agreement Silicon Valley Bank Loan On January 5, 2018, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”) pursuant to which SVB agreed to lend the Company $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate, as reported in the money rates section of The Wall Street Journal or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum (4.25% as of December 31, 2020), which interest is payable monthly. Additionally on April 1, 2020, the Company and SVB entered into a Deferral Agreement. Under the Deferral Agreement, principal repayments are deferred by six months and the Company is only required to make monthly interest payments. The loan matures on June 1, 2022. Previously, the Company only made monthly interest payments until December 31, 2018, following which the Company also made equal monthly payments of principal and interest until the signing of the Deferral Agreement. The Company will also be required to pay an additional final payment at maturity equal to $650,000 (the “Final Payment Charge”). The Final Payment Charge will be due on the scheduled maturity date and to date approximately $590,000 has been recognized as an increase to the principal balance with a corresponding charge to interest expense with the remaining final payment charge to be recognized over the term of the facility using the effective interest method. At its option, the Company may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest and the Final Payment Charge). In connection with the Loan and Security Agreement, the Company granted to SVB a security interest in substantially all of the Company’s assets now owned or hereafter acquired, excluding intellectual property and certain other assets. In addition, as TLANDO was not approved by the United States Food and Drug Administration (“FDA”) prior to May 31, 2018, the Company maintains $5.0 million of cash collateral at SVB as required under the Loan and Security Agreement until such time as TLANDO is approved by the FDA. However on February 16, 2021, the Company and SVB amended the Loan and Security Agreement to amend, among other things, the removal the financial trigger and financial trigger release event provisions requiring the Company to maintain a minimum cash collateral value and collateral pledge thereof. While any amounts are outstanding under the Loan and Security Agreement, the Company is subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against the Company and the collateral securing the credit facility, including foreclosure against the property securing the credit facilities, including its cash. These events of default include, among other things, any failure by the Company to pay principal or interest due under the credit facility, a breach of certain covenants under the credit facility, the Company’s insolvency, a material adverse change, and one or more judgments against the Company in an amount greater than $100,000 individually or in the aggregate. Future maturities principal payments on debt at December 31, 2020, are as follows: Amount Years Ending December 31, (in thousands) 2021 3,333 2022 1,667 Thereafter — $ 5,000 The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the statement of cash flows. December 31, 2020 Cash and cash equivalents $ 19,217,382 Restricted cash 5,000,000 Cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 24,217,382 Amounts included in restricted cash represent those required to be set aside by the Loan and Security Agreement. However on February 16, 2021, the Company and SVB amended the Loan and Security Agreement to amend, among other things, the removal the financial trigger and financial trigger release event provisions requiring the Company to maintain a minimum cash collateral value and collateral pledge thereof. Payroll Protection Program Loan On April 21, 2020, the Company was granted a loan from SVB in the aggregate amount of $233,537, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP loan, which was in the form of a note dated April 21, 2020 issued by SVB, originally matured on April 21, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 21, 2020 (“Note”). Under the terms of the PPP loan, certain amounts of the PPP loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On November 2, 2020, we were notified by the Small Business Administration that our PPP Loan had been forgiven. Other Effective June 15, 2020 and through December 31, 2020, the Company deferred Federal Insurance Contributions Act (“FICA”) taxes under the CARES Act Section 2302. Payment of these tax deferrals are delayed to December 31, 2021 and December 31, 2022. As of December 31, 2020 the tax deferrals totaled $36,000 and are included in accrued liabilities. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment | |
Property and Equipment | (6) Property and Equipment Property and equipment consisted of the following: December 31, December 31, 2020 2019 Computer equipment and software $ 43,361 $ Lab and office equipment 1,048,932 1,048,932 Furniture and fixtures 51,404 51,404 1,143,697 1,143,697 Less accumulated depreciation (1,143,697) (1,140,143) $ — $ 3,554 Depreciation expense for the years ended December 31, 2020 and 2019 was approximately $4,000 and $15,000, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | (7) Income Taxes (a) Income Tax Expense Income tax expense consists of: December 31, 2020 2019 U.S. federal $ — $ — State and local 200 200 Deferred — — Total $ 200 $ 200 (b) Tax Rate Reconciliation Income tax expense was $200 and $200, respectively, for the years ended December 31, 2020 and 2019 and differed from the amounts computed by applying the U.S. federal income tax rate of 21% for 2020 and 2019, respectively, to pretax income from continuing operations as a result of the following: December 31, 2020 2019 Computed "expected" tax benefit $ (4,402,570) $ (2,731,500) Increase (reduction) in income taxes resulting from: Change in valuation allowance 4,248,002 3,037,041 State and local income taxes, net of federal income tax benefit 158 158 Stock expense 86,209 114,458 Research and development tax credits (485,254) (357,561) Orphan drug tax credit (4,797) (14,357) Warrant liability 607,360 (49,644) Other, net (48,908) 1,605 $ 200 $ 200 (c) Significant Components of Deferred Taxes The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019 are presented below. December 31, 2020 2019 Deferred tax assets: Stock-based compensation $ 1,651,482 $ 1,637,731 Net operating loss carryforwards 35,102,326 30,574,751 Employee benefits 54,108 48,423 Research and development tax credits 4,472,003 3,833,189 Orphan drug tax credits 1,168,828 1,162,757 Plant and equipment 959 1,782 Other deductible tempory differences 5,386 5,806 Total gross deferred tax assets 42,455,092 37,264,439 Less valuation allowance (42,455,092) (37,264,439) Net deferred tax assets $ — $ — The valuation allowance for deferred tax assets as of December 31, 2020 and 2019 was $42.5 million and $37.3 million, respectively. The net change in the valuation allowance was an increase of $5.2 million in 2020 and an increase of $3.8 million in 2019. A valuation allowance has been provided for the full amount of the Company’s net deferred tax assets as the Company believes it is more likely than not that these benefits will not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. 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 (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. During the year ended December 31, 2013, the Company experienced a change in ownership, as defined by the Internal Revenue Code, as amended (the “Code”) under Section 382. A change of ownership occurs when ownership of a company increases by more than 50 percentage points over a three-year testing period of certain stockholders. As a result of this ownership change, we determined that our annual limitation on the utilization of our federal net operating loss (“NOL”) and credit carryforwards is approximately $1.1 million per year. We will only be able to utilize $20.2 million of our pre-ownership change NOL carryforwards and will forgo utilizing $5.5 million of our pre-ownership change NOL carryforwards and $1.2 million of our pre-change credit carryforwards as a result of this ownership change. We do not account for forgone NOL and credit carryovers in our deferred tax assets and only account for the NOL and credit carryforwards that will not expire unutilized as a result of the restrictions of Code Section 382. As of December 31, 2020, we had NOL and research and development credit carryforwards for U.S. federal income tax reporting purposes of approximately $136.7 million and $3.2 million, respectively. Approximately $25.7 million of the NOL will expire between 2023 and 2033 and $70.8 million of the NOL will expire 2034 through 2037. Pursuant to the Tax Cuts and Jobs Act of 2017, NOL’s generated in 2018 and subsequent years have an unlimited carryforward therefore the 2020, 2019 and 2018 NOL of $40.2 million can be carried forward indefinitely. The research and development credits will begin to expire in 2033 through 2038. We have orphan drug credit carry forwards of approximately $1.2 million which will expire if unused through 2040. We also have state NOL and research and development credit carry-forwards of approximately $129.2 million and $1.3 million, respectively. Approximately $2.1 million of the Company's state NOL expires in 2021, $34.8 million expires between 2022 and 2029, and $92.3 million will expire in 2030 through 2035. The state research and development credits expire in 2023 through 2032. The Company's federal and state income tax returns for December 31, 2017 through 2020 are open tax years. A reconciliation of the beginning and ending amount of total unrecognized tax contingencies, excluding interest and penalties, for the years ended December 31, 2020 and 2019 are as follows: December 31, 2020 2019 Balance, beginning of year $ — $ — Balance, end of year $ — $ — |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases | (8) Leases On August 6, 2004, the Company assumed a non-cancelable operating lease for office space and laboratory facilities in Salt Lake City, Utah. On May 6, 2014, the Company modified and extended the lease through February 28, 2018, on February 8, 2018, the Company extended the lease through February 28, 2019 on January 2, 2019, the Company extended the lease through February 29, 2020, on February 24, 2020, the Company extended the lease through February 28, 2021 and on March 3, 2021, the Company extended the lease through February 28, 2022. Future minimum lease payments under non-cancelable operating leases as of December 31, 2020 are: Operating leases Year ending December 31: 2021 $ 55,064 Total minimum lease payments $ 55,064 The Company’s rent expense was $330,000 and $329,000 for the years ended December 31, 2020 and 2019, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | (9) Stockholders’ Equity (a) Issuance of Common Stock On January 28, 2021, the Company completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“January 2021 Offering”). The gross proceeds from the January 2021 Offering were approximately $28.7 million, before deducting underwriter fees and other offering expenses of $1.9 million. In the January 2021 Offering, the Company sold 16,428,571 shares of its common stock. On February 27, 2020, the Company completed a registered direct offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“February 2020 Offering”). The gross proceeds from the February 2020 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $347,000. In the February 2020 Offering, the Company sold 10,084,034 Class A Units at an offering price of $0.595 per unit, with each Class A Unit consisting of one share of its common stock and one-half of a common warrant to purchase one share of common stock at an exercise price of $0.53 per share of common stock. Additionally, the common stock warrants were immediately exercisable and expire on February 27, 2025. By their terms, however, the common stock warrants cannot be exercised at any time that the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise. On November 18, 2019, the Company completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“November 2019 Offering”). The gross proceeds from the November 2019 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $404,000. In the November 2019 Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisted of one share of its common stock and a common warrant to purchase one share of its common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase one share of its common stock and a common warrant to purchase one share of its common stock, at a price of $0.50 per Class A Unit and $0.4999 per Class B Unit. The pre-funded warrants, which were exercised for common stock in December 2019, were issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations. The pre-funded warrants were immediately exercisable at an exercise price of $.0001 per share, subject to adjustment. Additionally, the common stock warrants were immediately exercisable at an exercise price of $0.50 per share, subject to adjustment, and expire on November 17, 2024. By their terms, however, neither the pre-funded warrants nor the common stock warrants can be exercised at any time that the pre-funded warrant holder or the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise. On the date of the November 2019 Offering, the Company allocated approximately $768,000 and $4.8 million to common stock/additional paid-in capital and warrant liability, respectively. On March 6, 2017, the Company entered into the Sales Agreement with Cantor pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to the amount the Company registered on an effective registration statement pursuant to which the offering is being made. The Company currently has registered up to $50.0 million for sale under the Sales Agreement, pursuant to the Registration Statement on Form S-3 (File No. 333-250072) through Cantor as the Company’s sales agent. Cantor may sell the Company’s common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act, including sales made directly on or through the Nasdaq Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. Cantor uses its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell these shares. The Company pays Cantor 3.0% of the aggregate gross proceeds from each sale of shares under the Sales Agreement. In addition, the Company has also provided Cantor with customary indemnification rights. The shares of the Company’s common stock sold under the Sales Agreement are sold and issued pursuant to the Registration Statement on Form S-3 (File No. 333-250072) (the “Form S-3”), which was previously declared effective by the Securities and Exchange Commission, and the related prospectus and one or more prospectus supplements. The Company is not obligated to make any sales of its common stock under the Sales Agreement. The offering of common stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. The Company and Cantor may each terminate the Sales Agreement at any time upon ten days’ prior notice. During the year ended December 31, 2020, the Company sold 3,746,300 shares of our common stock pursuant to the current Registration Statement on Form S-3 (File No. 333-250072) at a weighted-average sales price of $1.41 per share, resulting in net proceeds of approximately $5.1 million under the Sales Agreement which is net of $148,000 in expenses. Also during the year ended December 31, 2020, the Company sold 2,830,000 shares of common stock pursuant to the prior Registration Statement on Form S-3 (File No. 333-220942) at a weighted-average sales price of $1.43 per share, resulting in net proceeds of approximately $3.9 million under the Sales Agreement which is net of $165,000 in expenses. During the year ended December 31, 2019, the Company sold 3,650,479 shares of our common stock pursuant to the prior Registration Statement on Form S-3 (File No. 333-220942) at a weighted-average sales price of $2.26 per share, resulting in net proceeds of $8.0 million under the Sales Agreement which is net of $249,000 in expenses. As of December 31, 2020, the Company had $44.7 million available for sale under the Sales Agreement. (b) Rights Agreement On November 13, 2015, the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, entered into a Rights Agreement. Also on November 12, 2015, the board of directors of the Company authorized and the Company declared a dividend of one preferred stock purchase right (each a “Right” and collectively, the “Rights”) for each outstanding share of common stock of the Company. The dividend was payable to stockholders of record as of the close of business on November 30, 2015 and entitles the registered holder to purchase from the Company one one-thousandth of a fully paid non-assessable share of Series A Junior Participating Preferred Stock of the Company at a price of $63.96 per one-thousandth share (the “Purchase Price”). The Rights will generally become exercisable upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (as defined below) or (ii) 10 business days (or such later date as may be determined by action of the board of directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding common stock of the Company. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 15% or more of the outstanding shares of common stock of the Company. The rights plan was originally set to expire on November 12, 2018; however, on November 5, 2018 our Board of Directors approved an extension of the expiration date to November 5, 2021, unless the rights are earlier redeemed or exchanged by the Company. In general, in the event a person becomes an Acquiring Person, then each Right not owned by such Acquiring Person will entitle its holder to purchase from the Company, at the Right’s then current exercise price, in lieu of shares of Series A Junior Participating Preferred Stock, common stock of the Company with a market value of twice the Purchase Price. In addition, if after any person has become an Acquiring Person, (a) the Company is acquired in a merger or other business combination, or (b) 50% or more of the Company’s assets, or assets accounting for 50% or more of its earning power, are sold, leased, exchanged or otherwise transferred (in one or more transactions), proper provision shall be made so that each holder of a Right (other than the Acquiring Person, its affiliates and associates and certain transferees thereof, whose Rights became void) shall thereafter have the right to purchase from the acquiring corporation, for the Purchase Price, that number of shares of common stock of the acquiring corporation which at the time of such transaction would have a market value of twice the Purchase Price. The Company will be entitled to redeem the Rights at $0.001 per Right at any time prior to the time an Acquiring Person becomes such. The terms of the Rights are set forth in the Rights Agreement, which is summarized in the Company’s Current Report on Form 8‑K dated November 13, 2015. The rights plan was originally set to expire on November 12, 2018; however, on November 5, 2018 our Board of Directors approved an Amended and Restated Rights Agreement pursuant to which the expiration date was extended to November 5, 2021, unless the rights are earlier redeemed or exchanged by the Company. (c) Stock Option Plan In April 2014, the board of directors adopted the 2014 Stock and Incentive Plan (“2014 Plan”) subject to shareholder approval which was received in June 2014. The 2014 Plan provides for the granting of nonqualified and incentive stock options, stock appreciation rights, restricted stock units, restricted stock and dividend equivalents. An aggregate of 1,000,000 shares are authorized for issuance under the 2014 Plan. Additionally, 271,906 remaining authorized shares under the 2011 Equity Incentive Plan (“2011 Plan”) were issuable under the 2014 Plan at the time of the 2014 Plan adoption. Upon receiving shareholder approval in June 2016, the 2014 Plan was amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 1,271,906 to 2,471,906. Additionally, upon receiving shareholder approval in June 2018, the 2014 Plan was further amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 2,471,906 to 3,221,906. Finally, upon receiving shareholder approval in June 2020, the 2014 Plan was further amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 3,221,906 to 5,721,906. The board of directors, on an option-by-option basis, determines the number of shares, exercise price, term, and vesting period. Options granted generally have a ten-year contractual life. The Company issues shares of common stock upon the exercise of options with the source of those shares of common stock being either newly issued shares or shares held in treasury. An aggregate of 5,721,906 shares are authorized for issuance under the 2014 Plan, with 1,940,790 shares remaining available for grant as of December 31, 2020. A summary of stock option activity is as follows: Outstanding stock options Number of Weighted average shares exercise price Balance at December 31, 2019 2,310,485 $ 4.81 Options granted 1,360,000 0.92 Options exercised — — Options forfeited (51,776) 0.88 Options cancelled (54,251) 6.32 Balance at December 31, 2020 3,564,458 3.36 Options exercisable at December 31, 2020 2,122,086 4.98 The following table summarizes information about stock options outstanding and exercisable at December 31, 2020: Options outstanding Options exercisable Weighted Weighted average average remaining Weighted remaining Weighted contractual average contractual average Aggregate Number life exercise Aggregate intrinsic Number life exercise intrinsic outstanding (Years) price value exerciseable (Years) price value 3,564,458 6.64 $ 3.36 $ 576,889 2,122,086 4.77 $ 4.98 $ 564,443 The intrinsic value for stock options is defined as the difference between the current market value and the exercise price. The total intrinsic value of stock options exercised during the years ended December 31, 2020 and 2019 was $0 and $1,000. There were 0 and 20,000 stock options exercised during the years ended December 31, 2020 and 2019. (d) Restricted Stock Units A summary of restricted stock unit activity is as follows: Number of unvested restricted stock units Balance at December 31, 2019 661,307 Granted — Vested (628,807) Forfeited (32,500) Balance at December 31, 2020 — (e) Common Stock Warrants The Company accounts for its common stock warrants under ASC 480, Distinguishing Liabilities from Equity , which requires any financial instrument, other than an outstanding share, that, at inception, embodies an obligation to repurchase the issuer’s equity shares, or is indexed to such an obligation, and requires or may require the issuer to settle the obligation by transferring assets, to be classified as a liability. In accordance with ASC 480, the Company’s outstanding warrants from the November 2019 Offering are classified as a liability. The liability is adjusted to fair value at each reporting period, with the changes in fair value recognized as gain (loss) on change in fair value of warranty liability in the Company’s consolidated statements of operations. The warrants issued in the November 2019 Offering allow the warrant holder, if certain change in control events occur, the option to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a fundamental transaction. As of December 31, 2020, the Company had 1,104,030 warrants outstanding from the November 2019 Offering to purchase an equal number of shares of common stock. The fair value of these warrants on November 18, 2019 (closing date of November 19 Offering) and December 31, 2020 and 2019 was determined using the Black-Scholes option pricing model with the following Level 3 inputs (as defined in the November 2019 Offering): December 31, December 31, November 18, 2020 2019 2019 Expected life in years 3.88 4.88 5.00 Risk-free interest rate 0.27 % 1.69 % 1.63 % Dividend yield — — — Volatility 88.46 % 225.93 % 224.47 % Stock price $ 1.36 $ 0.39 $ 0.41 During the year ended December 31, 2020, the Company recorded a non-cash loss of $2.9 million from the change in fair value of the November 2019 Offering warrants and during the year ended December 31, 2019, the Company recorded a non-cash gain of $236,000 from the change in fair value of the November 2019 Offering warrants. The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs: Warrant Liability Balance at December 31, 2018 $ — Initial fair value of common stock warrants issued in November 2019 Offering 4,827,600 Change in fair value of common stock warrants (236,400) Balance at December 31, 2019 4,591,200 Settlement of liabilty on warrant exercise (6,313,338) Change in fair value of common stock warrants 2,892,189 Balance at December 31, 2020 $ 1,170,051 Additionally, in the February 2020 Offering, the Company issued 5,042,017 common stock warrants. However, the February 2020 Offering warrants do not provide the warrant holder the option to receive an amount of cash equal to the Black-Scholes value of the warrants upon a fundamental transaction. Therefore, the Company has not recorded a warrant liability with respect to the warrants issued in the February 2020 Offering. The following table summarizes the number of common stock warrants outstanding and the weighted average exercise price: Weighted Average Common Stock Exercise Warrants Price Outstanding at December 31, 2019 12,000,000 $ 0.50 Issued 5,042,017 0.53 Exercised (15,097,651) 0.51 Expired — — Cancelled — — Forfeited — — Balance at December 31, 2020 1,944,366 $ 0.51 During the years ended December 31, 2020 and 2019, 15.1 million and zero common stock warrants to purchase one share of our common stock were exercised, respectively, resulting in proceeds of approximately $7.7 million and zero, respectively. The following table summarizes information about common stock warrants outstanding at December 31, 2020: Warrants outstanding Weighted average remaining Number exercisable contractual life (Years) Weighted average exercise price Aggregate intrinsic value 1,944,366 4.00 $ 0.51 $ 1,646,945 |
401(k) Plan
401(k) Plan | 12 Months Ended |
Dec. 31, 2020 | |
401(k) Plan | |
401(k) Plan | (10) 401(k) Plan On January 1, 2002, the Company adopted a tax qualified employee savings and retirement plan (the “401(k) Plan”) covering eligible employees. Pursuant to the 401(k) Plan, employees may elect to reduce current compensation by a percentage of eligible compensation, not to exceed legal limits, and contribute the amount of such reduction to the 401(k) Plan. Beginning April 1, 2014, the 401(k) Plan was amended to require matching contributions to the 401(k) Plan by the Company on behalf of the participants of 100 percent Company match on up to four percent of an employee's compensation computed on a per pay period basis. The Company contributed $67,000 and $63,000, respectively, to the 401(k) Plan during the years ended December 31, 2020 and 2019. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | (11) Commitments and Contingencies Litigation The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business. The Company records a liability when a particular contingency is probable and estimable. On February 15, 2019, a purported shareholder filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware, John Wajda, derivatively on behalf of Lipocine Inc. v. Mahesh Patel, et al., against certain of the Company’s current and former officers and directors as well as the Company as a nominal defendant. The complaint asserts claims for alleged breaches of fiduciary duty and unjust enrichment arising out of the Company’s dissemination of purportedly false and misleading statements relating to the filing of the New Drug Application (“NDA”) for TLANDO. The relief sought in the complaint includes unspecified damages, changes to the Company’s corporate governance procedures, equitable and/or injunctive relief, restitution, and attorneys’ fees. On August 16, 2019, defendants filed a motion to dismiss the complaint. Plaintiff’s response to the motion to dismiss was due on October 18, 2019; however rather than file an opposition brief, plaintiffs filed an amended stockholder derivative complaint. Defendants’ motion to dismiss the amended complaint was filed on December 12, 2019; plaintiff’s response was filed on January 27, 2020 and defendants’ reply was filed on February 26, 2020. Oral arguments on the motion to dismiss were held on July 28, 2020. On July 30, 2020, the court entered an order dismissing the complaint in its entirety. On April 2, 2019, the Company filed a lawsuit against Clarus in the United States District Court for the District of Delaware alleging that Clarus’s JATENZO® product infringes six of Lipocine’s issued U.S. patents: 9,034,858; 9,205,057; 9,480,690; 9,757,390; 6,569,463; and 6,923,988. However on February 11, 2020, the Company voluntarily dismissed allegations of patent infringement for expired U.S. Patent Nos. 6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute. Clarus has answered the complaint and asserted counterclaims of non-infringement and invalidity. The Company answered Clarus’s counterclaims on April 29, 2019. The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February 11, 2020 and a Summary Judgement Hearing on January 15, 2021. Originally the United States District Court for the District of Delaware had scheduled a five-day jury trial to begin on February 8, 2021, however, on December 28, 2020, the District Court postponed the jury trial due to the ongoing effects of the COVID-19 pandemic. The jury trial will be rescheduled once it becomes clear when jury trials will resume in the District of Delaware. On November 14, 2019, the Company and certain of its officers were named as defendants in a purported shareholder class action lawsuit, Solomon Abady v. Lipocine Inc. et al ., 2:19-cv-00906-PMW, filed in the United District Court for the District of Utah. The complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading and/or lacked a reasonable basis in violation of federal securities laws. The lawsuit seeks certification as a class action (for a purported class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an unspecified amount, and unspecified equitable or injunctive relief. The Company insurance that covers claims of this nature. The retention amount payable by the Company under our policy is $1.25 million. The Company filed a motion to dismiss the class action lawsuit on July 24, 2020. In response, the plaintiffs filed their response to the motion to dismiss the class action lawsuit on September 22, 2020 and the Company filed its reply to its motion to dismiss on October 22, 2020. The Company intends to vigorously defend itself against these allegations and has not recorded a liability related to this shareholder class action lawsuit as the outcome is not probable nor can an estimate be made of loss, if any. Beyond John Wajda, derivatively on behalf of Lipocine Inc. v. Mahesh Patel, et al. and Solomon Abady v. Lipocine Inc. et al ., 2:19-cv-00906-PM, management does not currently believe that any other matter, individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations. Guarantees and Indemnifications In the ordinary course of business, the Company enters into agreements, such as lease agreements, licensing agreements, clinical trial agreements, and certain services agreements, containing standard guarantee and / or indemnifications provisions. Additionally, the Company has indemnified its directors and officers to the maximum extent permitted under the laws of the State of Delaware. |
Agreement with Spriaso, LLC
Agreement with Spriaso, LLC | 12 Months Ended |
Dec. 31, 2020 | |
Agreement with Spriaso, LLC | |
Agreement with Spriaso, LLC | (12) Agreement with Spriaso, LLC On July 23, 2013, the Company entered into an assignment/license and a services agreement with Spriaso, a related-party that is majority-owned by certain current and former directors of Lipocine Inc. and their affiliates. Under the license agreement, the Company assigned and transferred to Spriaso all of the Company’s rights, title and interest in its intellectual property to develop products for the cough and cold field. In addition, Spriaso received all rights and obligations under the Company’s product development agreement with a third-party. In exchange, the Company will receive a royalty of 20 percent of the net proceeds received by Spriaso, up to a maximum of $10.0 million. Spriaso also granted back to the Company an exclusive license to such intellectual property to develop products outside of the cough and cold field. Under the service agreement, the Company provided facilities and up to 10 percent of the services of certain employees to Spriaso for a period of 18 months which expired January 23, 2015. Effective January 23, 2015, the Company entered into an amended services agreement with Spriaso in which the Company agreed to continue providing up to 10 percent of the services of certain employees to Spriaso at a rate of $230/hour for a period of six months. The agreement was further amended on July 23, 2015, on January 23, 2016, on July 23, 2016, on January 23, 2017, on July 23, 2017, on January 23, 2018, on July 23, 2018 and again on January 23, 2019 to extend the term of the agreement for an additional six months. The agreement was further amended on July 23, 2019 and again on July 23, 2020 to extend the term of the agreement for an additional twelve months. The agreement may be extended upon written agreement of Spriaso and the Company. The Company did not receive any reimbursements from Spriaso for the years ended December 31, 2020 and 2019, respectively. Additionally, during the years ended December 31, 2020 and 2019, the Company received zero and $165,000, respectively, in royalty payments from Spriaso. Spriaso filed its first NDA and as an affiliated entity of the Company, it used up the one-time waiver for user fees for a small business submitting its first human drug application to the FDA. Spriaso is considered a variable interest entity under the FASB ASC Topic 810-10, Consolidations , however the Company is not the primary beneficiary and has therefore not consolidated Spriaso. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2020 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | (13) Accounting Pronouncements Accounting Pronouncements Issued Not Yet Adopted In 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019. However, in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases: Effective Dates , which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting companies . A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023. The Company has historically not had credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Use of Estimates | (a) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include those related to stock-based compensation; income tax uncertainties; the fair value of the warrant liability and the useful lives of property and equipment. |
Cash and Cash Equivalents | (b) Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. Although the Company may deposit its cash and cash equivalents with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Cash and cash equivalents were $19.2 million and $9.7 million at December 31, 2020 and 2019. |
Receivables | (c) Receivables Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses. In establishing the allowance, management considers historical losses adjusted to take into account current market conditions and their customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company had no write-offs in 2020 and 2019 and the Company did not record an allowance for doubtful accounts as of December 31, 2020 and 2019 as there were no accounts receivable outstanding. The Company does not have any off-balance-sheet credit exposure related to its customers. |
Revenue Recognition | (d) Revenue Recognition The Company generates revenue from license and royalty arrangements. At inception of each contract, the Company identifies the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determines the transaction price including any variable consideration, allocates the transaction price to the distinct performance obligations and determines whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company reassess its reserves for variable consideration at each reporting date and makes adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known. |
Property and Equipment | (e) Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Maintenance and repairs that do not extend the life or improve the asset are expensed in the year incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are five years for laboratory and office equipment, three years for computer equipment and software, and seven years for furniture and fixtures. |
Accounting for Impairment of Long-Lived Assets | (f) Accounting for Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets held for sale are reported at the lower of the carrying amount, or fair value, less costs to sell. |
Income Taxes | (g) Income Taxes Income taxes are accounted for 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 and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of its income tax expense. |
Share-Based Payments | (h) Share Based Payments The Company recognizes stock-based compensation expense for grants of stock option awards, restricted stock units and restricted stock under the Company’s Incentive Plan to employees, nonemployees and nonemployee members of the Company’s board of directors based on the grant-date fair value of those awards. The grant-date fair value of an award is generally recognized as compensation expense over the award’s requisite service period. In addition, the Company has granted performance-based stock option awards and restricted stock units, which vest based upon the Company satisfying certain performance conditions. Potential compensation cost, measured on the grant date, related to these performance options will be recognized only if, and when, the Company estimates that these options or units will vest, which is based on whether the Company considers the performance conditions to be probable of attainment. The Company’s estimates of the number of performance-based options or units that will vest will be revised, if necessary, in subsequent periods. The Company uses the Black-Scholes model to compute the estimated fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of the Company’s Common Stock price, (ii) the periods of time over which employees, nonemployees and members of the board of directors are expected to hold their options prior to exercise (expected term), (iii) expected dividend yield on the Common Stock, and (iv) risk-free interest rates. Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited. This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation cost that has been expensed in the statements of operations amounted to $1.4 million and $1.0 million for the years ended December 31, 2020 and 2019, allocated as follows: Year Ended 2020 2019 Research and development $ 583,212 $ 419,801 General and administrative 789,970 616,033 $ 1,373,182 $ 1,035,834 The Company issued 1,360,000 stock options and 79,000 stock options, respectively, during the years ended December 31, 2020 and 2019, respectively. Additionally, the Company issued zero and 280,120 restricted stock units, respectively, during the years ended December 31, 2020 and 2019, respectively. Key assumptions used in the determination of the fair value of stock options granted are as follows: Expected Term : The expected term represents the period that the stock-based awards are expected to be outstanding. Due to limited historical experience of similar awards, the expected term was estimated using the simplified method in accordance with the provisions of Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, for awards with stated or implied service periods. The simplified method defines the expected term as the average of the contractual term and the vesting period of the stock option. For awards with performance conditions, and that have the contractual term to satisfy the performance condition, the contractual term was used. Risk-Free Interest Rate : The risk-free interest rate used was based on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term. Expected Dividend : The expected dividend assumption is based on management’s current expectation about the Company’s anticipated dividend policy. The Company does not anticipate declaring dividends in the foreseeable future. Expected Volatility : Since the Company did not have sufficient trading history, the volatility factor was based on the average of similar public companies through August 2014. When selecting similar companies, the Company considered the industry, stage of life cycle, size, and financial leverage. Beginning in August 2014, the volatility factor is based on a combination of the Company’s trading history since March 2014 and the average of similar public companies. Beginning in July 2017, the volatility factor is based solely on the Company’s trading history since March 2014. For options granted in 2020 and 2019, the Company calculated the fair value of each option grant on the respective dates of grant using the following weighted average assumptions: 2020 2019 Expected term 5.83 years 5.67 years Risk-free interest rate 0.93 % 1.82 % Expected dividend yield — — Expected volatility 100.32 % 80.38 % FASB Accounting Standards Codification (“ASC”) 718, Stock Compensation, requires the Company to recognize compensation expense for the portion of options that are expected to vest. Therefore, the Company applied estimated forfeiture rates that were derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods. As of December 31, 2020, there was $972,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock option plan. That cost is expected to be recognized over a weighted average period of 2.5 years and will be adjusted for subsequent changes in estimated forfeitures. The weighted average fair value of share-based compensation awards granted during the years ended December 31, 2020 and 2019 was approximately $0.72 per share and $1.25 per share, respectively. |
Fair Value | (i) Fair Value The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: · Level 1 Inputs: Quoted prices for identical instruments in active markets. · Level 2 Inputs: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuation in which all significant inputs and significant value drivers are observable in active markets. · Level 3 Inputs: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For accrued interest income, prepaid and other current assets, accounts payable, and accrued expenses, the carrying amounts approximate fair value because of the short maturity of these instruments. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at December 31, 2020 and 2019: December 31, Fair value measurements at reporting date using 2020 Level 1 inputs Level 2 inputs Level 3 inputs Assets: Cash equivalents - money market funds $ 18,399,585 $ 18,399,585 $ — $ — Commercial paper 449,992 — 449,992 — $ 18,849,577 $ 18,399,585 $ 449,992 $ — Liabilities: Warrant liability $ 1,170,051 — — 1,170,051 $ 20,019,628 $ 18,399,585 $ 449,992 $ 1,170,051 December 31, Fair value measurements at reporting date using 2019 Level 1 inputs Level 2 inputs Level 3 inputs Assets: Cash equivalents - money market funds and commercial paper $ 8,921,249 $ 6,575,862 $ 2,345,387 $ — Corporate bonds, notes and commercial paper 4,340,041 — 4,340,041 — $ 13,261,290 $ 6,575,862 $ 6,685,428 $ — Liabilities: Warrant liability $ 4,591,200 — — 4,591,200 $ 17,852,490 $ 6,575,862 $ 6,685,428 $ 4,591,200 The following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value in the balance sheets: Cash equivalents: Cash equivalents primarily consist of highly-rated money market funds, commercial paper and treasury bills with original maturities to the Company of three months or less and are purchased daily at par value with specified yield rates. Cash equivalents related to money market funds and treasury bills are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets. Cash equivalents related to commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs. Corporate bonds, notes, and commercial paper: The Company uses a third-party pricing service to value these investments. Corporate bonds, notes and commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs. Warrant liability: The warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded to other income (expense) in the accompanying statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The fair value of the warrant liability is estimated using a Black-Scholes option-pricing model. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of December 31, 2020, include (i) volatility of 88.46%, (ii) risk free interest rate of 0.27%, (iii) strike price of $0.50, (iv) fair value of common stock of $1.36, and (v) expected life of 3.9 years. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of December 31, 2019, include (i) volatility of 225.93%, (ii) risk free interest rate of 1.69%, (iii) strike price of $0.50, (iv) fair value of common stock of $0.385, and (v) expected life of 4.9 years. The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, Level 2 or Level 3 for the years ended December 31, 2020 and 2019. |
Earnings (Loss) per Share | (j) Earnings (Loss) per Share Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding plus, where applicable, the additional potential common shares that would have been outstanding related to dilutive options, warrants, and unvested restricted stock units to the extent such shares are dilutive. The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock for the years ended December 31, 2020 and 2019. Year Ended December 31, 2020 2019 Basic loss per share attributable to common stock: Numerator Net loss $ (20,964,819) $ (13,007,344) Denominator Weighted avg. common shares outstanding 55,688,085 25,882,273 Basic loss per share attributable to common stock $ (0.38) $ (0.50) Diluted loss per share attributable to common stock: Numerator Net loss $ (20,964,819) $ (13,007,344) Denominator Weighted avg. common shares outstanding 55,688,085 25,882,273 Diluted loss per share attributable to common stock $ (0.38) $ (0.50) The computation of diluted earnings per share for the years ended December 31, 2020 and 2019 does not include stock options, warrants or unvested restricted stock units to purchase shares in the computation of diluted earnings per share because these instruments were antidilutive: December 31, 2020 2019 Stock options 3,564,458 2,310,485 Unvested restricted stock units — 661,307 Warrants 1,944,366 12,000,000 |
Segment Information | (k) Segment Information The Company is a single reportable segment engaged in research and development for the delivery of drugs using its proprietary delivery technology. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. The chief operating decision maker made such decisions and assessed performance at the company level, as one segment. |
Principles of Consolidation | (l) Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries. The Company eliminates all intercompany accounts and transactions in consolidation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of employee service share-based compensation, allocation of recognized period costs | Year Ended 2020 2019 Research and development $ 583,212 $ 419,801 General and administrative 789,970 616,033 $ 1,373,182 $ 1,035,834 |
Schedule of key assumption of fair value of stock options granted | 2020 2019 Expected term 5.83 years 5.67 years Risk-free interest rate 0.93 % 1.82 % Expected dividend yield — — Expected volatility 100.32 % 80.38 % |
Schedule of fair value, assets measured on recurring basis | December 31, Fair value measurements at reporting date using 2020 Level 1 inputs Level 2 inputs Level 3 inputs Assets: Cash equivalents - money market funds $ 18,399,585 $ 18,399,585 $ — $ — Commercial paper 449,992 — 449,992 — $ 18,849,577 $ 18,399,585 $ 449,992 $ — Liabilities: Warrant liability $ 1,170,051 — — 1,170,051 $ 20,019,628 $ 18,399,585 $ 449,992 $ 1,170,051 December 31, Fair value measurements at reporting date using 2019 Level 1 inputs Level 2 inputs Level 3 inputs Assets: Cash equivalents - money market funds and commercial paper $ 8,921,249 $ 6,575,862 $ 2,345,387 $ — Corporate bonds, notes and commercial paper 4,340,041 — 4,340,041 — $ 13,261,290 $ 6,575,862 $ 6,685,428 $ — Liabilities: Warrant liability $ 4,591,200 — — 4,591,200 $ 17,852,490 $ 6,575,862 $ 6,685,428 $ 4,591,200 |
Schedule of computation of basic and diluted earnings (loss) per share of common stock | Year Ended December 31, 2020 2019 Basic loss per share attributable to common stock: Numerator Net loss $ (20,964,819) $ (13,007,344) Denominator Weighted avg. common shares outstanding 55,688,085 25,882,273 Basic loss per share attributable to common stock $ (0.38) $ (0.50) Diluted loss per share attributable to common stock: Numerator Net loss $ (20,964,819) $ (13,007,344) Denominator Weighted avg. common shares outstanding 55,688,085 25,882,273 Diluted loss per share attributable to common stock $ (0.38) $ (0.50) |
Schedule of antidilutive securities excluded from computation of earnings per share | December 31, 2020 2019 Stock options 3,564,458 2,310,485 Unvested restricted stock units — 661,307 Warrants 1,944,366 12,000,000 |
Marketable Investment Securit_2
Marketable Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Marketable Investment Securities | |
Schedule of available-for-sale securities | Gross Gross unrealized unrealized Amortized holding holding Aggregate December 31, 2020 Cost gains losses fair value Commercial paper $ 449,992 $ — $ — $ 449,992 $ 449,992 $ — $ — $ 449,992 Gross Gross unrealized unrealized Amortized holding holding Aggregate December 31, 2019 Cost gains losses fair value Corporate bonds, notes and commercial paper $ 4,340,079 $ — $ (38) $ 4,340,041 $ 4,340,079 $ — $ (38) $ 4,340,041 |
Schedule of maturities of debt securities classified as available-for-sale securities | Maturities of debt securities classified as available-for-sale securities at December 31, 2020 are as follows: Amortized Aggregate December 31, 2020 Cost fair value Due within one year $ 449,992 $ 449,992 $ 449,992 $ 449,992 |
Loan and Security Agreements (T
Loan and Security Agreements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Loan and Security Agreements | |
Schedule of maturities of debt | Amount Years Ending December 31, (in thousands) 2021 3,333 2022 1,667 Thereafter — $ 5,000 |
Schedule of reconciliation of cash, cash equivalents, and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the statement of cash flows. December 31, 2020 Cash and cash equivalents $ 19,217,382 Restricted cash 5,000,000 Cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 24,217,382 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment | |
Schedule of Property and equipment | Property and equipment consisted of the following: December 31, December 31, 2020 2019 Computer equipment and software $ 43,361 $ Lab and office equipment 1,048,932 1,048,932 Furniture and fixtures 51,404 51,404 1,143,697 1,143,697 Less accumulated depreciation (1,143,697) (1,140,143) $ — $ 3,554 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Schedule of Income tax expense | Income tax expense consists of: December 31, 2020 2019 U.S. federal $ — $ — State and local 200 200 Deferred — — Total $ 200 $ 200 |
Schedule of pretax income from continuing operations | Income tax expense was $200 and $200, respectively, for the years ended December 31, 2020 and 2019 and differed from the amounts computed by applying the U.S. federal income tax rate of 21% for 2020 and 2019, respectively, to pretax income from continuing operations as a result of the following: December 31, 2020 2019 Computed "expected" tax benefit $ (4,402,570) $ (2,731,500) Increase (reduction) in income taxes resulting from: Change in valuation allowance 4,248,002 3,037,041 State and local income taxes, net of federal income tax benefit 158 158 Stock expense 86,209 114,458 Research and development tax credits (485,254) (357,561) Orphan drug tax credit (4,797) (14,357) Warrant liability 607,360 (49,644) Other, net (48,908) 1,605 $ 200 $ 200 |
Schedule of tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019 are presented below. December 31, 2020 2019 Deferred tax assets: Stock-based compensation $ 1,651,482 $ 1,637,731 Net operating loss carryforwards 35,102,326 30,574,751 Employee benefits 54,108 48,423 Research and development tax credits 4,472,003 3,833,189 Orphan drug tax credits 1,168,828 1,162,757 Plant and equipment 959 1,782 Other deductible tempory differences 5,386 5,806 Total gross deferred tax assets 42,455,092 37,264,439 Less valuation allowance (42,455,092) (37,264,439) Net deferred tax assets $ — $ — |
Schedule of reconciliation of the beginning and ending amount of total unrecognized tax contingencies, excluding interest and penalties | A reconciliation of the beginning and ending amount of total unrecognized tax contingencies, excluding interest and penalties, for the years ended December 31, 2020 and 2019 are as follows: December 31, 2020 2019 Balance, beginning of year $ — $ — Balance, end of year $ — $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Schedule of future minimum rental payments for operating leases | Future minimum lease payments under non-cancelable operating leases as of December 31, 2020 are: Operating leases Year ending December 31: 2021 $ 55,064 Total minimum lease payments $ 55,064 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Schedule of employee service share-based compensation, allocation of recognized period costs | Year Ended 2020 2019 Research and development $ 583,212 $ 419,801 General and administrative 789,970 616,033 $ 1,373,182 $ 1,035,834 |
Schedule of key assumption of fair value of stock options granted | 2020 2019 Expected term 5.83 years 5.67 years Risk-free interest rate 0.93 % 1.82 % Expected dividend yield — — Expected volatility 100.32 % 80.38 % |
Schedule of stock option activity | A summary of stock option activity is as follows: Outstanding stock options Number of Weighted average shares exercise price Balance at December 31, 2019 2,310,485 $ 4.81 Options granted 1,360,000 0.92 Options exercised — — Options forfeited (51,776) 0.88 Options cancelled (54,251) 6.32 Balance at December 31, 2020 3,564,458 3.36 Options exercisable at December 31, 2020 2,122,086 4.98 |
Schedule of share-based compensation of stock options outstanding and exercisable | The following table summarizes information about stock options outstanding and exercisable at December 31, 2020: Options outstanding Options exercisable Weighted Weighted average average remaining Weighted remaining Weighted contractual average contractual average Aggregate Number life exercise Aggregate intrinsic Number life exercise intrinsic outstanding (Years) price value exerciseable (Years) price value 3,564,458 6.64 $ 3.36 $ 576,889 2,122,086 4.77 $ 4.98 $ 564,443 |
Schedule of nonvested restricted stock units activity | A summary of restricted stock unit activity is as follows: Number of unvested restricted stock units Balance at December 31, 2019 661,307 Granted — Vested (628,807) Forfeited (32,500) Balance at December 31, 2020 — |
Schedule of fair value of warrants | December 31, December 31, November 18, 2020 2019 2019 Expected life in years 3.88 4.88 5.00 Risk-free interest rate 0.27 % 1.69 % 1.63 % Dividend yield — — — Volatility 88.46 % 225.93 % 224.47 % Stock price $ 1.36 $ 0.39 $ 0.41 |
Schedule of reconciliation of the warrant liability | The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs: Warrant Liability Balance at December 31, 2018 $ — Initial fair value of common stock warrants issued in November 2019 Offering 4,827,600 Change in fair value of common stock warrants (236,400) Balance at December 31, 2019 4,591,200 Settlement of liabilty on warrant exercise (6,313,338) Change in fair value of common stock warrants 2,892,189 Balance at December 31, 2020 $ 1,170,051 |
Schedule of number of warrants outstanding and the weighted average exercise price | The following table summarizes the number of common stock warrants outstanding and the weighted average exercise price: Weighted Average Common Stock Exercise Warrants Price Outstanding at December 31, 2019 12,000,000 $ 0.50 Issued 5,042,017 0.53 Exercised (15,097,651) 0.51 Expired — — Cancelled — — Forfeited — — Balance at December 31, 2020 1,944,366 $ 0.51 Warrants outstanding Weighted average remaining Number exercisable contractual life (Years) Weighted average exercise price Aggregate intrinsic value 1,944,366 4.00 $ 0.51 $ 1,646,945 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Allocated Share-based Compensation Expense | $ 1,373,182 | $ 1,035,834 |
Research and Development Expense [Member] | ||
Allocated Share-based Compensation Expense | 583,212 | 419,801 |
General and Administrative Expense [Member] | ||
Allocated Share-based Compensation Expense | $ 789,970 | $ 616,033 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | ||
Expected term | 5 years 9 months 29 days | 5 years 8 months 1 day |
Risk-free interest rate | 0.93% | 1.82% |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 100.32% | 80.38% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Marketable Investment Securities | $ 449,992 | $ 4,340,041 |
Assets, Fair Value | 18,849,577 | 13,261,290 |
Warrant liability | 1,170,051 | 4,591,200 |
Liabilities, Fair Value Disclosure | 20,019,628 | 17,852,490 |
Money Market Funds [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 18,399,585 | |
Money Market Funds and Commercial Paper [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 8,921,249 | |
Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | 449,992 | |
Corporate Bonds, Notes and Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | 4,340,041 | |
Level 1 inputs [Member] | ||
Assets: | ||
Assets, Fair Value | 18,399,585 | 6,575,862 |
Warrant liability | 0 | 0 |
Liabilities, Fair Value Disclosure | 18,399,585 | 6,575,862 |
Level 1 inputs [Member] | Money Market Funds [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 18,399,585 | |
Level 1 inputs [Member] | Money Market Funds and Commercial Paper [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 6,575,862 | |
Level 1 inputs [Member] | Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | 0 | |
Level 1 inputs [Member] | Corporate Bonds, Notes and Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | 0 | |
Level 2 inputs [Member] | ||
Assets: | ||
Assets, Fair Value | 449,992 | 6,685,428 |
Warrant liability | 0 | 0 |
Liabilities, Fair Value Disclosure | 449,992 | 6,685,428 |
Level 2 inputs [Member] | Money Market Funds [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 0 | |
Level 2 inputs [Member] | Money Market Funds and Commercial Paper [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 2,345,387 | |
Level 2 inputs [Member] | Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | 449,992 | |
Level 2 inputs [Member] | Corporate Bonds, Notes and Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | 4,340,041 | |
Level 3 inputs [Member] | ||
Assets: | ||
Assets, Fair Value | 0 | 0 |
Warrant liability | 1,170,051 | 4,591,200 |
Liabilities, Fair Value Disclosure | 1,170,051 | 4,591,200 |
Level 3 inputs [Member] | Money Market Funds [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 0 | |
Level 3 inputs [Member] | Money Market Funds and Commercial Paper [Member] | ||
Assets: | ||
Cash equivalents - money market funds | 0 | |
Level 3 inputs [Member] | Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | $ 0 | |
Level 3 inputs [Member] | Corporate Bonds, Notes and Commercial Paper [Member] | ||
Assets: | ||
Marketable Investment Securities | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Basic loss per share attributable to common stock: Numerator | ||
Net loss | $ (20,964,819) | $ (13,007,344) |
Denominator | ||
Weighted avg. common shares outstanding (in shares) | 55,688,085 | 25,882,273 |
Basic loss per share attributable to common stock (in dollars per share) | $ (0.38) | $ (0.50) |
Diluted loss per share attributable to common stock: Numerator | ||
Net loss | $ (20,964,819) | $ (13,007,344) |
Denominator | ||
Weighted avg. common shares outstanding (in shares) | 55,688,085 | 25,882,273 |
Diluted loss per share attributable to common stock (in dollars per share) | $ (0.38) | $ (0.50) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Unvested Restricted Stock Awards [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 661,307 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,944,366 | 12,000,000 |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,564,458 | 2,310,485 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Allocated Share-based Compensation Expense | $ 1,373,182 | $ 1,035,834 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 972,000 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 6 months | |
Cash Equivalents, at Carrying Value | $ 19,200,000 | $ 9,700,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.72 | $ 1.25 |
Expected volatility | 100.32% | 80.38% |
Risk-free interest rate | 0.93% | 1.82% |
Expected term | 5 years 9 months 29 days | 5 years 8 months 1 day |
Warrants | ||
Expected volatility | 88.46% | 225.93% |
Risk-free interest rate | 0.27% | 1.69% |
Strike price | $ 0.50 | $ 0.50 |
Fair value of common stock | $ 1.36 | $ 0.385 |
Expected term | 3 years 10 months 24 days | 4 years 10 months 24 days |
Office Equipment [Member] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,360,000 | 79,000 |
Restricted Stock Units (RSUs) [Member] | ||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 0 | 280,120 |
Marketable Investment Securit_3
Marketable Investment Securities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 449,992 | $ 4,340,079 |
Gross unrealized holding gains | 0 | 0 |
Gross unrealized holding losses | (38) | |
Aggregate fair value | 449,992 | 4,340,041 |
Commercial Paper [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 449,992 | |
Gross unrealized holding gains | 0 | |
Aggregate fair value | $ 449,992 | |
Corporate Bonds, Notes and Commercial Paper [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 4,340,079 | |
Gross unrealized holding gains | 0 | |
Gross unrealized holding losses | (38) | |
Aggregate fair value | $ 4,340,041 |
Marketable Investment Securit_4
Marketable Investment Securities - Maturities of debt securities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due within one year | $ 449,992 | |
Amortized Cost, Total | 449,992 | $ 4,340,079 |
Aggregate fair value | ||
Due within one year | 449,992 | |
Aggregate fair value, Total | $ 449,992 | $ 4,340,041 |
Marketable Investment Securit_5
Marketable Investment Securities - Additional information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Marketable Investment Securities | ||
Available-for-sale Securities, Gross Realized Gain (Loss) | $ 0 | $ 0 |
Proceeds from Sale and Maturity of Marketable Securities | 10,200,000 | 19,800,000 |
Other-than-temporary impairments | $ 0 | $ 0 |
Contractual Agreements (Details
Contractual Agreements (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Contract Research And Development [Member] | ||
Schedule of Contractual Agreements [Line Items] | ||
Other Research and Development Expense | $ 6.8 | $ 5.4 |
Abbott Products, Inc. [Member] | Collaborative Arrangement [Member] | ||
Schedule of Contractual Agreements [Line Items] | ||
Collaborative Arrangement, Royalties, Maximum Amount | $ 1 | |
Collaborative Arrangement, Royalties, Percentage of Reduction | 50.00% | |
Collaborative Arrangement, Royalties, Percentage of Net Sales | 1.00% |
Loan and Security Agreements -
Loan and Security Agreements - Future maturities of principal payments on the Loan and Security Agreement (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Loan and Security Agreements | |
2021 | $ 3,333 |
2022 | 1,667 |
Thereafter | 0 |
Long-term Debt | $ 5,000 |
Loan and Security Agreements _2
Loan and Security Agreements - Reconciliation of cash, cash equivalents, and restricted cash (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2017 |
Loan and Security Agreements | |||
Cash and cash equivalents | $ 19,217,382 | $ 9,728,523 | |
Restricted cash | 5,000,000 | 5,000,000 | |
Cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 24,217,382 | $ 14,728,523 | $ 13,077,539 |
Loan and Security Agreements _3
Loan and Security Agreements - Additional information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Apr. 21, 2020 | May 31, 2018 | Jan. 05, 2018 | |
Debt Instrument, Face Amount | $ 233,537 | |||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 1.00% | |||
Total deferred tax included in accrued liabilities | $ 36,000 | |||
Loan and Security Agreement | Silicon Valley Bank | ||||
Debt Instrument, Face Amount | $ 10,000,000 | |||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 4.25% | |||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 650,000 | |||
Amount of increase in the principal balance | $ 590,000 | |||
Cash Collateral for Borrowed Securities | $ 5,000,000 | |||
Debt Instrument Basis Spread On Interest Rate On Debt Default | 5.00% | |||
Debt Instrument, Minimum Amount considered for Insolvency | $ 100,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property and Equipment | ||
Computer equipment and software | $ 43,361 | $ 43,361 |
Lab and office equipment | 1,048,932 | 1,048,932 |
Furniture and fixtures | 51,404 | 51,404 |
Property, Plant and Equipment, Gross | 1,143,697 | 1,143,697 |
Less accumulated depreciation | $ (1,143,697) | (1,140,143) |
Property, Plant and Equipment, Net, Total | $ 3,554 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property and Equipment | ||
Depreciation, Depletion and Amortization, Nonproduction | $ 3,554 | $ 15,443 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | ||
U.S. federal | $ 0 | $ 0 |
State and local | 200 | 200 |
Deferred | 0 | 0 |
Income Tax Expense (Benefit), Total | $ 200 | $ 200 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | ||
Computed "expected" tax benefit | $ (4,402,570) | $ (2,731,500) |
Increase (reduction) in income taxes resulting from: | ||
Change in valuation allowance | 4,248,002 | 3,037,041 |
State and local income taxes, net of federal income tax benefit | 158 | 158 |
Stock expense | 86,209 | 114,458 |
Research and development tax credits | (485,254) | (357,561) |
Orphan drug tax credit | (4,797) | (14,357) |
Warrant liability | 607,360 | (49,644) |
Other, net | (48,908) | 1,605 |
Income Tax Expense (Benefit), Total | $ 200 | $ 200 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Stock-based compensation | $ 1,651,482 | $ 1,637,731 |
Net operating loss carryforwards | 35,102,326 | 30,574,751 |
Employee benefits | 54,108 | 48,423 |
Research and development tax credits | 4,472,003 | 3,833,189 |
Orphan drug tax credits | 1,168,828 | 1,162,757 |
Plant and equipment | 959 | 1,782 |
Other deductible temporary differences | 5,386 | 5,806 |
Total gross deferred tax assets | 42,455,092 | 37,264,439 |
Less valuation allowance | (42,455,092) | $ (37,264,439) |
Net deferred tax assets | $ 0 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Taxes | ||
Balance, beginning of year | $ 0 | $ 0 |
Balance, end of year | $ 0 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Line Items] | ||
Income Tax Expense (Benefit) | $ 200 | $ 200 |
Operating Loss Carryforwards | $ 136,700,000 | $ 1,300,000 |
Operating Loss Carry forwards Expiration Date1 | Approximately $25.7 million of the NOL will expire between 2023 and 2033 and $70.8 million of the NOL will expire 2034 through 2037. Pursuant to the Tax Cuts and Jobs Act of 2017, NOL's generated in 2018 and subsequent years have an unlimited carryforward therefore the 2020, 2019 and 2018 NOL of $40.2 million can be carried forward indefinitely. The research and development credits will begin to expire in 2033 through 2038. | |
Tax Credit Carryforward, Amount | $ 3,200,000 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% |
Deferred Tax Assets, Valuation Allowance | $ 42,455,092 | $ 37,264,439 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 5,200,000 | $ 3,800,000 |
Operating Loss Carry forwards Limitations On Use Amount | 1,100,000 | |
Operating Loss Carry forwards Pre-ownership Change Amount | 20,200,000 | |
Operating Loss Forgive Pre-ownership Change Amount | 5,500,000 | |
Tax Credit Carryforward Pre-ownership Change Amount | $ 1,200,000 | |
Domestic Tax Authority [Member] | ||
Income Taxes [Line Items] | ||
Operating loss carry forwards non expire date | Pursuant to the Tax Cuts and Jobs Act of 2017, NOL's generated in 2018 and subsequent years have an unlimited carryforward therefore the 2020, 2019 and 2018 NOL of $40.2 million can be carried forward indefinitely. | |
State And Local [Member] | ||
Income Taxes [Line Items] | ||
Operating Loss Carryforwards | $ 129,200,000 | |
Operating Loss Carry forwards Expiration Date1 | Approximately $2.1 million of the Company's state NOL expires in 2021, $34.8 million expires between 2022 and 2029, and $92.3 million will expire in 2030 through 2035. The state research and development credits expire in 2023 through 2032. | |
State And Local [Member] | Research and Development Expense [Member] | ||
Income Taxes [Line Items] | ||
Tax Credit Carryforward, Amount | $ 1,200,000 | |
Tax Credit Carryforward, Description | expire in 2023 through 2032. | |
U.S. Federal [Member] | Research and Development Expense [Member] | ||
Income Taxes [Line Items] | ||
Tax Credit Carryforward, Description | expire in 2033 through 2038. |
Leases (Details)
Leases (Details) | Dec. 31, 2020USD ($) |
Year ending December 31: | |
2021 | $ 55,064 |
Total minimum lease payments | $ 55,064 |
Leases - Additional information
Leases - Additional information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | ||
Operating Leases, Rent Expense | $ 330,000 | $ 329,000 |
Stockholders' Equity - Stock op
Stockholders' Equity - Stock option activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares, Options exercised (in shares) | 0 | (20,000) |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares, Balance at beginning of the period (in shares) | 2,310,485 | |
Number of shares, Options granted (in shares) | 1,360,000 | 79,000 |
Number of shares, Options exercised (in shares) | 0 | |
Number of shares, Options forfeited (in shares) | (51,776) | |
Number of shares, Options cancelled (in shares) | (54,251) | |
Number of shares, Balance at end of the period (in shares) | 3,564,458 | 2,310,485 |
Number of shares, Options exercisable (in shares) | 2,122,086 | |
Weighted average exercise price, Balance at beginning of the period (in dollars per share) | $ 4.81 | |
Weighted average exercise price, Options granted (in dollars per share) | 0.92 | |
Weighted average exercise price, Options exercised (in dollars per share) | 0 | |
Weighted average exercise price, Options forfeited (in dollars per share) | 0.88 | |
Weighted average exercise price, Options cancelled (in dollars per share) | 6.32 | |
Weighted average exercise price, Balance at end of the period (in dollars per share) | 3.36 | $ 4.81 |
Weighted average exercise price, Options exercisable (in dollars per share) | $ 4.98 |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock options outstanding and exercisable (Details) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of options outstanding | 3,564,458 | 2,310,485 |
Options outstanding, Weighted average remaining contractual life (Years) | 6 years 7 months 21 days | |
Options outstanding, Weighted average exercise price (in dollars per share) | $ 3.36 | $ 4.81 |
Options outstanding, Aggregate intrinsic value | $ 576,889 | |
Number of options exercisable | 2,122,086 | |
Options exercisable, Weighted average remaining contractual life (Years) | 4 years 9 months 7 days | |
Options exercisable, Weighted average exercise price | $ 4.98 | |
Options exercisable, Aggregate intrinsic value | $ 564,443 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted stock units (Details) - Restricted Stock [Member] | 12 Months Ended |
Dec. 31, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Balance at beginning of the period | 661,307 |
Number of shares, Granted | 0 |
Number of shares, Vested | (628,807) |
Number of shares, Forfeited | (32,500) |
Number of shares, Balance at end of the period | 0 |
Stockholders' Equity - Black-Sc
Stockholders' Equity - Black-Scholes option pricing model (Details) - $ / shares | Nov. 18, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Expected term | 5 years 9 months 29 days | 5 years 8 months 1 day | |
Risk-free interest rate | 0.93% | 1.82% | |
Dividend yield | 0.00% | 0.00% | |
Volatility | 100.32% | 80.38% | |
Level 3 inputs [Member] | Warrants | November 2019 | |||
Expected term | 5 years | 3 years 10 months 17 days | 4 years 10 months 17 days |
Risk-free interest rate | 1.63% | 0.27% | 1.69% |
Volatility | 224.47% | 88.46% | 225.93% |
Stock price | $ 0.41 | $ 1.36 | $ 0.39 |
Stockholders' Equity - Reconcil
Stockholders' Equity - Reconciliation of warrant liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stockholders' Equity | ||
Warrant liability, Beginning balance | $ 4,591,200 | |
Initial fair value of common stock warrants issued in November 2019 Offering | $ 4,827,600 | |
Settlement of liability on warrant exercise | (6,313,338) | |
Change in fair value of common stock warrants | 2,892,189 | (236,400) |
Warrant liability, Ending balance | $ 1,170,051 | $ 4,591,200 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of shares, Balance at ending of the period | 1,944,366 | |
Weighted average Exercise Price, Beginning of the period | $ 0.51 | |
Weighted average Exercise Price, Ending of the period | $ 0.51 | |
Weighted Average Remaining Contractual Life | 4 years | |
Aggregate intrinsic value | $ 1,646,945 | |
Warrants | ||
Number of shares, Balance at beginning of the period | 12,000,000 | |
Issued | 5,042,017 | |
Exercised | (15,097,651) | 0 |
Number of shares, Balance at ending of the period | 1,944,366 | 12,000,000 |
Weighted average Exercise Price, Beginning of the period | $ 0.50 | |
Issued | 0.53 | |
Exercised | 0.51 | |
Weighted average Exercise Price, Ending of the period | $ 0.51 | $ 0.50 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional information (Details) - USD ($) | Feb. 27, 2020 | Feb. 07, 2020 | Jan. 28, 2020 | Nov. 18, 2019 | Mar. 06, 2017 | Nov. 13, 2015 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2018 | Jun. 30, 2016 | Apr. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 0 | 20,000 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 0 | $ 1,000 | ||||||||||
Proceeds from Issuance of Common Stock | $ 5,653,140 | 5,595,542 | ||||||||||
Class of Warrant or Right, Redemption Price of Warrants or Rights | $ 63.96 | $ 0.001 | ||||||||||
Controlled Equity Offering Sales Agreement Maximum Amount Authorized | $ 50,000,000 | |||||||||||
Warrants exercise price | $ 0.50 | |||||||||||
Equity Method Investment, Ownership Percentage | 15.00% | |||||||||||
Allocated Share-based Compensation Expense | $ 1,373,182 | 1,035,834 | ||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 6 months | |||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 972,000 | |||||||||||
Fair Value Adjustment of Warrants | 2,892,189 | (236,400) | ||||||||||
Proceeds from exercise of warrants | 7,674,876 | 155 | ||||||||||
Warrant Liability | $ 1,170,051 | $ 4,591,200 | ||||||||||
Employee Stock Option [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 0 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,360,000 | 79,000 | ||||||||||
Warrants | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Issued | 5,042,017 | |||||||||||
Common warrants to purchase share of our common stock | 15,097,651 | 0 | ||||||||||
Proceeds from exercise of warrants | $ 7,700,000 | $ 0 | ||||||||||
ATM under new Form S-3 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Proceeds from Issuance of Common Stock, Gross | 5,100,000 | |||||||||||
Agent fees and other offering expenses | $ 148,000 | |||||||||||
Stock Issued During Period, Shares, New Issues | 3,746,300 | |||||||||||
Shares Issued, Price Per Share | $ 1.41 | |||||||||||
ATM under old Form S-3 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Proceeds from Issuance of Common Stock, Gross | $ 3,900,000 | 8,000,000 | ||||||||||
Agent fees and other offering expenses | $ 165,000 | $ 249,000 | ||||||||||
Stock Issued During Period, Shares, New Issues | 2,830,000 | 3,650,479 | ||||||||||
Shares Issued, Price Per Share | $ 1.43 | $ 2.26 | ||||||||||
February 2020 Offering | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Proceeds from Issuance of Common Stock, Gross | $ 6,000,000 | |||||||||||
Agent fees and other offering expenses | $ 347,000 | |||||||||||
Issued | 5,042,017 | |||||||||||
November 2019 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Proceeds from Issuance of Common Stock, Gross | $ 6,000,000 | |||||||||||
Agent fees and other offering expenses | $ 404,000 | |||||||||||
Warrants outstanding | 1,104,030 | |||||||||||
Fair Value Adjustment of Warrants | $ 2,900,000 | $ 236,000 | ||||||||||
January 2021 Offering | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Proceeds from Issuance of Common Stock, Gross | $ 28,700,000 | |||||||||||
Agent fees and other offering expenses | $ 1,900,000 | |||||||||||
Stock Issued During Period, Shares, New Issues | 16,428,571 | |||||||||||
Plan 2014 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,721,906 | |||||||||||
2014 Equity Incentive Plans [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,940,790 | |||||||||||
2011 Equity Incentive Plan [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 271,906 | |||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 0 | 280,120 | ||||||||||
Sales Agreement | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Percentage of gross proceeds on sale of shares | 3.00% | |||||||||||
Stock available for sale under the Sales Agreement | $ 44,700,000 | |||||||||||
Class A unit [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares Issued, Price Per Share | $ 0.50 | |||||||||||
Class A unit [Member] | February 2020 Offering | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, New Issues | 10,084,034 | |||||||||||
Shares Issued, Price Per Share | $ 0.595 | |||||||||||
Class A unit [Member] | November 2019 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, New Issues | 10,450,000 | |||||||||||
Class B unit [Member] | November 2019 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, New Issues | 1,550,000 | |||||||||||
Shares Issued, Price Per Share | $ 0.4999 | |||||||||||
Common Stock [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares Issued, Price Per Share | $ 0.53 | |||||||||||
Common Stock [Member] | November 2019 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 768,000 | |||||||||||
Additional Paid-in Capital [Member] | November 2019 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 4,800,000 | |||||||||||
Pre Funded Warrants [Member] | November 2019 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares Issued, Price Per Share | $ 0.0001 | |||||||||||
Maximum [Member] | 2014 Equity Incentive Plans [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,721,906 | 3,221,906 | 2,471,906 | |||||||||
Minimum [Member] | 2014 Equity Incentive Plans [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 3,221,906 | 2,471,906 | 1,271,906 |
401(k) Plan (Details Textual)
401(k) Plan (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
401(k) Plan | ||
Defined Contribution Plan, Cost | $ 67,000 | $ 63,000 |
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 100.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Nov. 14, 2019USD ($) |
Commitments and Contingencies | |
Retention Payable | $ 1,250 |
Agreement with Spriaso, LLC (De
Agreement with Spriaso, LLC (Details) - USD ($) | Jul. 23, 2013 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 23, 2015 |
Agreement with Spriaso, LLC | ||||
Percentage Of Fee To Be Received | 20.00% | |||
Maximum Proceeds From Affiliates Under License Agreement | $ 10,000,000 | |||
Maximum percentage of service agreement by employees | 10.00% | |||
Service period of employees | 18 months | |||
Service Fee | $ 230 | |||
Proceeds from Royalties Received | $ 0 | $ 165,000 |