Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 10, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | 9 METERS BIOPHARMA, INC. | |
Entity Central Index Key | 0001551986 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity common stock, shares outstanding (in shares) | 138,933,764 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 13,473,467 | $ 4,592,932 |
Restricted deposit | 75,000 | 75,000 |
Prepaid expenses and other current assets | 1,061,273 | 555,052 |
Total current assets | 14,609,740 | 5,222,984 |
Property and equipment, net | 52,104 | 25,422 |
Right-of-use asset | 14,705 | 42,830 |
Other assets | 5,580 | 5,580 |
Total assets | 14,682,129 | 5,296,816 |
Current liabilities: | ||
Accounts payable | 3,447,824 | 3,890,094 |
Accrued expenses | 3,284,095 | 4,747,751 |
Convertible notes payable, net | 4,484,277 | 3,184,655 |
Derivative liabilities | 247,000 | 408,000 |
Warrant liabilities | 0 | 2,637,500 |
Accrued interest | 136,942 | 0 |
Lease liability, current portion | 14,705 | 42,830 |
Total current liabilities | 11,614,843 | 14,910,830 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity (deficit): | ||
Preferred stock $0.0001 par value, 10,000,000 shares authorized; 382,779 shares issued and 0 outstanding as of June 30, 2020 (unaudited); 0 issued and outstanding as of December 31, 2019 | 0 | 0 |
Common stock - $0.0001 par value, 350,000,000 shares authorized; 136,232,886 and 39,477,667 shares issued and outstanding as of June 30, 2020 (unaudited) and December 31, 2019, respectively | 13,625 | 3,948 |
Additional paid-in capital | 121,818,976 | 60,946,816 |
Accumulated deficit | (118,765,315) | (70,564,778) |
Total stockholders’ equity (deficit) | 3,067,286 | (9,614,014) |
Total liabilities and stockholders’ equity (deficit) | $ 14,682,129 | $ 5,296,816 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 382,779 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 350,000,000 | 350,000,000 |
Common stock, shares, issued (in shares) | 136,232,886 | 39,477,667 |
Common stock, shares, outstanding (in shares) | 136,232,886 | 39,477,667 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating expenses: | ||||
Research and development | $ 444,817 | $ 3,073,344 | $ 3,043,802 | $ 4,271,659 |
Acquired in-process research and development | 32,266,893 | 0 | 32,266,893 | 0 |
General and administrative | 5,659,721 | 3,049,711 | 7,329,528 | 6,164,206 |
Warrant inducement expense | 6,467,048 | 0 | 7,157,887 | 0 |
Total operating expenses | 44,838,479 | 6,123,055 | 49,798,110 | 10,435,865 |
Loss from operations | (44,838,479) | (6,123,055) | (49,798,110) | (10,435,865) |
Other income (expense): | ||||
Interest income | 8,550 | 72,641 | 21,365 | 99,097 |
Interest expense | (1,019,307) | (431,626) | (1,592,292) | (858,871) |
Loss on extinguishment of convertible note payable | 0 | 0 | 0 | (1,049,166) |
Change in fair value of derivative liability and extinguishment of derivative liability | 193,000 | 181,000 | 531,000 | 652,000 |
Change in fair value of warrant liabilities | 1,058,700 | 1,812,800 | 2,637,500 | 2,669,800 |
Total other income (expense), net | 240,943 | 1,634,815 | 1,597,573 | 1,512,860 |
Loss before income taxes | (44,597,536) | (4,488,240) | (48,200,537) | (8,923,005) |
Benefit from income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (44,597,536) | $ (4,488,240) | $ (48,200,537) | $ (8,923,005) |
Net loss per common share, basic and diluted (in usd per share) | $ (0.57) | $ (0.13) | $ (0.81) | $ (0.29) |
Weighted-average common shares, basic and diluted (in shares) | 78,584,900 | 33,973,788 | 59,873,598 | 30,631,601 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) - USD ($) | Total | Series A Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance (in shares) at Dec. 31, 2018 | 26,088,820 | ||||
Balance at Dec. 31, 2018 | $ (3,659,064) | $ 2,609 | $ 39,854,297 | $ (43,515,970) | |
Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock and warrants (in shares) | 4,886,782 | ||||
Issuance of common stock and warrants | 11,475,255 | $ 489 | 11,474,766 | ||
Allocation of warrants to liabilities | (1,970,000) | (1,970,000) | |||
Share-based compensation | 526,000 | 526,000 | |||
Stock issuance costs | (319,819) | (319,819) | |||
Issuance of RSUs (in shares) | 90,000 | ||||
Issuance of RSUs | 0 | $ 9 | (9) | ||
Net loss | (4,434,765) | (4,434,765) | |||
Balance (in shares) at Mar. 31, 2019 | 31,065,602 | ||||
Balance at Mar. 31, 2019 | 1,617,607 | $ 3,107 | 49,565,235 | (47,950,735) | |
Balance (in shares) at Dec. 31, 2018 | 26,088,820 | ||||
Balance at Dec. 31, 2018 | (3,659,064) | $ 2,609 | 39,854,297 | (43,515,970) | |
Stockholders' Equity [Roll Forward] | |||||
Beneficial conversion feature | 0 | ||||
Net loss | (8,923,005) | ||||
Balance (in shares) at Jun. 30, 2019 | 35,883,953 | ||||
Balance at Jun. 30, 2019 | 5,006,309 | $ 3,589 | 57,441,695 | (52,438,975) | |
Balance (in shares) at Mar. 31, 2019 | 31,065,602 | ||||
Balance at Mar. 31, 2019 | 1,617,607 | $ 3,107 | 49,565,235 | (47,950,735) | |
Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock and warrants (in shares) | 4,318,272 | ||||
Issuance of common stock and warrants | 8,744,501 | $ 432 | 8,744,069 | ||
Allocation of warrants to liabilities | (1,360,000) | (1,360,000) | |||
Share-based compensation | 852,000 | 852,000 | |||
Stock issuance costs | (389,623) | (389,623) | |||
Exercise of stock options (in shares) | 100,079 | ||||
Exercise of stock options | 30,064 | $ 10 | 30,054 | ||
Issuance of RSUs (in shares) | 400,000 | ||||
Issuance of RSUs | 0 | $ 40 | (40) | ||
Net loss | (4,488,240) | (4,488,240) | |||
Balance (in shares) at Jun. 30, 2019 | 35,883,953 | ||||
Balance at Jun. 30, 2019 | 5,006,309 | $ 3,589 | 57,441,695 | (52,438,975) | |
Balance (in shares) at Dec. 31, 2019 | 0 | 39,477,667 | |||
Balance at Dec. 31, 2019 | $ (9,614,014) | $ 0 | $ 3,948 | 60,946,816 | (70,564,778) |
Stockholders' Equity [Roll Forward] | |||||
Warrant exchange (in shares) | 1,847,308.8 | ||||
Warrant exchange | $ 690,839 | $ 185 | 690,654 | ||
Share-based compensation | 276,000 | 276,000 | |||
Stock issuance costs | (300,000) | (300,000) | |||
Net loss | (3,603,001) | (3,603,001) | |||
Balance (in shares) at Mar. 31, 2020 | 0 | 41,324,976 | |||
Balance at Mar. 31, 2020 | (12,550,176) | $ 0 | $ 4,133 | 61,613,470 | (74,167,779) |
Balance (in shares) at Dec. 31, 2019 | 0 | 39,477,667 | |||
Balance at Dec. 31, 2019 | (9,614,014) | $ 0 | $ 3,948 | 60,946,816 | (70,564,778) |
Stockholders' Equity [Roll Forward] | |||||
Beneficial conversion feature | (207,632) | ||||
Net loss | (48,200,537) | ||||
Balance (in shares) at Jun. 30, 2020 | 0 | 136,232,885.8 | |||
Balance at Jun. 30, 2020 | 3,067,286 | $ 0 | $ 13,625 | 121,818,976 | (118,765,315) |
Balance (in shares) at Mar. 31, 2020 | 0 | 41,324,976 | |||
Balance at Mar. 31, 2020 | (12,550,176) | $ 0 | $ 4,133 | 61,613,470 | (74,167,779) |
Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock and warrants (in shares) | 42,695,948 | ||||
Issuance of common stock and warrants | 28,754,026 | $ 4,270 | 28,749,756 | ||
Issuance of preferred stock and warrants (FN-1) (in shares) | 382,779 | ||||
Issuance of preferred stock and warrants (FN-1) | 22,560,994 | $ 38 | 22,560,956 | ||
Share-based compensation | 4,021,000 | 4,021,000 | |||
Exercise of warrants (in shares) | 12,230,418 | ||||
Exercise of warrants | 1,219,001 | $ 1,223 | 1,217,778 | ||
Inducement expense | 6,467,048 | 6,467,048 | |||
Stock issuance costs | (3,589,703) | (3,589,703) | |||
Conversion of convertible debt and accrued interest (in shares) | 1,287,696 | ||||
Conversion of convertible debt and accrued interest | 575,000 | $ 129 | 574,871 | ||
Beneficial conversion feature | 207,632 | 207,632 | |||
Conversion of preferred stock to common stock (in shares) | (382,779) | 38,277,900 | |||
Conversion of preferred stock to common stock | 0 | $ (38) | $ 3,828 | (3,790) | |
Issuance of RSUs (in shares) | 415,948 | ||||
Issuance of RSUs | 0 | $ 42 | (42) | ||
Net loss | (44,597,536) | (44,597,536) | |||
Balance (in shares) at Jun. 30, 2020 | 0 | 136,232,885.8 | |||
Balance at Jun. 30, 2020 | $ 3,067,286 | $ 0 | $ 13,625 | $ 121,818,976 | $ (118,765,315) |
Unaudited Condensed Statements
Unaudited Condensed Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (48,200,537) | $ (8,923,005) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 4,297,000 | 1,378,000 |
Write-off of deferred offering costs | 0 | 100,056 |
Accrued interest on convertible notes | 136,942 | 174,166 |
Amortization of debt discount | 1,154,847 | 382,212 |
Beneficial conversion feature | 207,632 | 0 |
Depreciation | 9,745 | 10,413 |
Loss on disposal and write-offs of property and equipment | 7,031 | 0 |
Change in fair value of derivative liability | (531,000) | (282,000) |
Change in fair value of warrant liability | (2,637,500) | (2,669,800) |
Warrant inducement expense | 7,157,887 | 0 |
Acquired in-process research and development | 28,754,026 | 0 |
Extinguishment of derivative liability | 0 | (370,000) |
Loss on extinguishment of debt | 0 | 1,049,166 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Prepaid expenses and other assets | (506,221) | (592,375) |
Accounts payable | (526,498) | (1,058,692) |
Accrued expenses | 1,764,111 | 147,764 |
Accrued interest | 82,579 | (101,624) |
Net cash used in operating activities | (8,829,956) | (10,755,719) |
Cash flows from investing activities | ||
Purchase of property and equipment | (2,543) | (9,475) |
Purchase of in-process research and development, net of assets acquired | (3,184,454) | 0 |
Net cash used in investing activities | (3,186,997) | (9,475) |
Cash flows from financing activities | ||
Borrowings from convertible notes | 2,500,000 | 5,000,000 |
Payments of convertible notes | (1,469,804) | (6,245,833) |
Payments of debt issuance costs | (23,000) | (57,000) |
Proceeds from the exercise of stock options | 0 | 15,574 |
Proceeds from issuance of common stock and warrants | 0 | 20,706,919 |
Proceeds from issuance of preferred stock and warrants | 22,560,994 | 0 |
Payment of offering costs | (3,889,703) | (1,045,468) |
Proceeds from exercise of warrants | 1,219,001 | 0 |
Net cash provided by financing activities | 20,897,488 | 18,374,192 |
Net increase in cash and cash equivalents | 8,880,535 | 7,608,998 |
Cash and cash equivalents as of beginning of period | 4,592,932 | 5,728,900 |
Cash and cash equivalents as of end of period | 13,473,467 | 13,337,898 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 54,578 | 418,927 |
Supplemental disclosure of non-cash financing activities | ||
Conversion of convertible notes and accrued interest to common stock | 575,000 | 0 |
Non-cash addition of derivative liability | 370,000 | 1,281,000 |
Addition of non-cash stock issuance and deferred offering costs | 28,754,026 | 151,137 |
Receivable for stock options and warrants exercised | $ 0 | $ 14,490 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Description 9 Meters Biopharma, Inc. (the “Company”) is a clinical-stage biopharmaceutical company focused on orphan, rare and unmet needs in gastroenterology. The Company’s pipeline includes drug candidates for NM-002, a proprietary long-acting GLP-1 agonist for short bowel syndrome (SBS), an orphan designated disease and larazotide, a Phase 3 tight junction regulator being evaluated for celiac disease. On April 30, 2020, the Company completed its merger with privately-held RDD Pharma, Ltd., an Israel corporation (“RDD”) (the “RDD Merger”) and changed its name from Innovate Biopharmaceuticals, Inc. to 9 Meters Biopharma, Inc. Basis of Presentation The unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the balance sheets, operating results, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020 . Certain information and footnote disclosure normally included in the annual financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s financial position, results of operations and cash flows are presented in U.S. Dollars. These financial statements and related notes should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2019 , included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , filed with the SEC on March 20, 2020. Except as noted below under the section entitled “Recently Issued Accounting Standards—Accounting Pronouncements Adopted,” there have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2020 , as compared to the significant accounting policies disclosed in Note 1 of the Company’s financial statements for the years ended December 31, 2019 and 2018 included in the Company’s Annual Report on Form 10-K. However, the following accounting policies are the most critical in fully understanding the Company’s financial condition and results of operations. Basis of Consolidation The accompanying consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Shelf Registration Filing On March 15, 2018, the Company filed a shelf registration statement that was declared effective on July 13, 2018. Under the shelf registration statement, the Company may, from time to time, sell its common stock in one or more offerings up to an aggregate dollar amount of $175 million (Prior to the program’s termination on March 19, 2020, $40 million of this amount could be sold in an “at-the-market” offering as defined in Rule 415 of the Securities Act of 1933, as amended (“ATM”)). In addition, the selling stockholders included in the shelf registration statement may from time to time sell up to an aggregate amount of 13,990,403 shares of the Company’s common stock (including up to 2,051,771 shares issuable upon exercise of warrants) in one or more offerings. On July 22, 2020, the Company filed a prospectus supplement and associated sales agreement related to an ATM pursuant to which the Company may sell, from time to time, common stock with an aggregate offering price of up to $40 million through SunTrust Robinson Humphrey, as sales agent, for general corporate purposes. As of August 12, 2020, the Company had not sold any shares under the ATM. See Note 9—Subsequent Events for additional details. March 2019 Offering On March 17, 2019, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with SDS Capital Partners II, LLC and certain other accredited investors, pursuant to which the Company sold, on March 18, 2019 , 4,181,068 shares of common stock and issued short-term warrants (the “Short-Term Warrants”) to purchase up to 4,181,068 shares of common stock, and long-term warrants (the “March Long-Term Warrants”) to purchase up to 2,508,634 shares of common stock. Pursuant to the Purchase Agreement, the Company issued the common stock and warrants at a purchase price of $2.33 per share for aggregate proceeds of approximately $9.7 million . The March Long-Term Warrants issued were exercisable for five years commencing on the six-month anniversary of March 18, 2019, had an initial exercise price of $2.56 per share, subject to certain adjustments, and had an expiration date of March 18, 2024 . The Short-Term Warrants were originally exercisable for a period of one year from March 18, 2019, had an expiration date of March 18, 2020 and had an initial exercise price of $4.00 per share, subject to certain adjustments. The Short-Term Warrants and March Long-Term Warrants were accounted for as warrant liabilities in accordance with Accounting Standards Codification (“ASC”) 480 —Distinguishing Liabilities from Equity . On February 6, 2020, the Company and the holders of the Company’s outstanding Short-Term Warrants amended the Short-Term Warrants to extend the exercise period of each Short-Term Warrant by six months . The Short-Term Warrants, as amended, were exercisable for up to an aggregate of 4,181,068 shares of the Company’s common stock, par value $0.0001 per share, until September 18, 2020. In addition, on February 12, 2020, the Company offered to amend outstanding warrants, including the Short-Term Warrants, to (i) shorten the exercise period to expire concurrently with the closing of the RDD Merger on April 30, 2020 and (ii) reduce the exercise price to $0.10 per share (the “Offer to Amend and Exercise”). All other terms of each Short-Term Warrant remained in full force and effect and were not impacted by this amendment. On April 29, 2020, upon closing of the Offer to Amend and Exercise, the Short-Term Warrants were fully exercised at an exercise price of $0.10 per share. Additional Issuance of Warrants On April 25, 2019, the Company entered into an amendment (the “Amendment”) to the Purchase Agreement dated as of March 17, 2019, between the Company and each purchaser party thereto. The Amendment (i) deleted Section 4.12 of the Purchase Agreement, which generally prohibited the Company from issuing, entering into agreements to issue, announcing proposed issuances, selling or granting certain securities between the date of the Purchase Agreement and the date that was 45 days following the closing date thereunder and (ii) gave each purchaser the right to purchase, for $0.125 per underlying share, an additional warrant to purchase shares of the Company’s common stock having an exercise price per share of $2.13 and otherwise having the terms of the March Long-Term Warrants (collectively, the “New Warrants”) pursuant to a securities purchase agreement to be entered into among the Company and each purchaser that desires to purchase the New Warrants. On May 17, 2019, the Company and each purchaser entered into such Securities Purchase Agreement (the “New Agreement”), and the Company issued New Warrants exercisable for an aggregate of 3,897,010 shares of the Company’s common stock. The New Warrants were exercisable for five years beginning on the six -month anniversary of the date of issuance until the five-year anniversary of their date of issuance. The New Warrants had an initial exercise price equal to $2.13 per share, subject to certain adjustments. The New Warrants were accounted for as warrant liabilities in accordance with ASC 480— Distinguishing Liabilities from Equity . Offer to Amend and Exercise On February 12, 2020, the Company offered to amend certain outstanding warrants in the Offer to Amend and Exercise. The warrants amended included the warrants classified as equity issued in 2018 (the “2018 Equity Warrants”), the outstanding Short-Term Warrants and the outstanding March Long-Term Warrants and the New Warrants. On April 29, 2020, an aggregate of 12,230,418 shares of common stock were tendered, amended and exercised for $0.10 per share for aggregate gross proceeds of approximately $1.2 million . All of the Short-Term Warrants, March Long-Term Warrants and New Warrants were fully exercised at an exercise price of $0.10 per share. April 2019 Offering On April 29, 2019, the Company entered into a Securities Purchase Agreement (the “April Purchase Agreement”) with certain institutional and accredited investors providing for the sale by the Company of up to 4,318,272 shares of its common stock at a purchase price of $2.025 per share. Pursuant to the April Purchase Agreement, the Company agreed to issue unregistered warrants (the “April Warrants”) to purchase up to 4,318,272 shares of common stock. Subject to certain ownership limitations, the April Warrants were exercisable beginning on the date of their issuance until the five-and-a-half-year anniversary of their date of issuance at an initial exercise price of $2.13 per share. The exercise price of the April Warrants was subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the April Warrants. The net proceeds from the offering and the private placement were approximately $7.9 million , after deducting commissions and estimated offering costs. The Company granted the placement agent warrants to purchase up to 215,914 shares of common stock (the “Placement Agent Warrants”). The Placement Agent Warrants had substantially the same terms as the April Warrants, except that the Placement Agent Warrants had an exercise price of $2.53 per share and had a term of 5 years from the effective date of the offering. The Company also paid the placement agent a reimbursement for non-accountable expenses in the amount of $35,000 and a reimbursement for legal fees and expenses of the placement agent in the amount of $25,000 . On December 19, 2019, the Company and each of the purchasers of the April Warrants and Placement Agent Warrants (collectively, the “Exchange Warrants”) entered into separate exchange agreements (the “Exchange Agreement”), pursuant to which the Company agreed to issue to the purchasers an aggregate of 5,441,023 shares of the Company’s common stock (the “Exchange Shares”), at a ratio of 1.2 Exchange Shares for each purchaser warrant in exchange for the cancellation and termination of all of the outstanding Exchange Warrants. See “Fair Value of Financial Instruments” below for additional details. RDD Merger Financing On April 29, 2020, the Company entered into a securities purchase agreement with various investors (the “Private Placement”) pursuant to which the Company agreed to issue and sell to the investors units consisting of one share of Series A Convertible Preferred Stock (the "Series A Preferred Stock") and one five -year warrant (the "Warrants") to purchase one share of Series A Preferred stock (the "Units"). On May 4, 2020, the Company closed the Private Placement with accredited investors pursuant to which the Company sold an aggregate of (i) 382,779 shares of Series A Convertible Preferred Stock, par value $0.0001 per share, which converted into 38,277,900 shares of common stock on June 30, 2020, and (ii) five -year warrants to purchase up to 382,779 shares of Series A Preferred Stock (the “Preferred Warrants”), which are convertible into 38,277,900 shares of common stock (the “RDD Merger Financing”). The exercise price of the warrants is $58.94 per share of Series A Preferred Stock, subject to adjustments as provided under the terms of the warrants. In addition, broker warrants covering 8,112 Units and broker warrants covering 10,899 shares of Series A Preferred Stock, which are convertible into 2,712,300 shares of common stock, were issued in connection with the RDD Merger Financing. Gross proceeds from the RDD Merger Financing were approximately $22.6 million with net proceeds of approximately $19.2 million after deducting commissions and estimated offering costs. See Note 3 — Merger & Acquisition for additional details. Business Risks The Company faces risks, including those associated with biopharmaceutical companies whose products are in various stages of development. These risks include, among others, risks related to the potential effects of the ongoing coronavirus outbreak and related mitigation efforts on the Company's clinical, financial and operational activities, the Company’s need for additional financing to achieve key development milestones, the need to defend intellectual property rights, and the dependence on key members of management. See Note 2—Liquidity and Going Concern for further discussion of the risks related to the coronavirus outbreak. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Areas of the financial statements where estimates may have the most significant effect include accrued expenses, share-based compensation, valuation of the derivative liability and warrant liabilities, valuation allowance for income tax assets, management’s estimate of the acquisition costs associated with acquired in-process research and development and management’s assessment of the Company’s ability to continue as a going concern. Changes in the facts or circumstances underlying these estimates could result in material changes and actual results could differ from these estimates. Accrued Expenses The Company incurs periodic expenses such as research and development, licensing fees, salaries and benefits, and professional fees. The Company is required to estimate its expenses resulting from obligations under contracts with clinical research organizations, vendors and consulting agreements that have been incurred by the Company prior to being invoiced. This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice monthly in arrears for services performed or when contractual milestones are met. The Company estimates accrued expenses as of each balance sheet date based on facts and circumstances known at that time. Accrued expenses consisted of the following: June 30, December 31, 2019 Accrued compensation and benefits $ 1,105,521 $ 574,332 Accrued clinical expenses 1,995,441 4,143,269 Other accrued expenses 183,133 30,150 Total $ 3,284,095 $ 4,747,751 Derivative Liability The Company accounts for derivative instruments in accordance with ASC 815, Derivative and Hedging, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the condensed consolidated balance sheet at fair value. The Company’s derivative financial instruments consist of embedded options in the Company’s convertible notes. The embedded derivatives include provisions that provide the noteholder with certain conversion and put rights at various conversion or redemption values as well as certain call options for the Company. See Note 4—Debt for further details. Classification of Warrants The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging, to determine whether the warrants should be classified as equity or liability. The warrants the Company issued during 2019 are freestanding financial instruments that contain net settlement options and may require the Company to settle these warrants in cash under certain circumstances. As such, the Company has classified these warrants as liabilities on the accompanying condensed consolidated balance sheets. The warrant liabilities were initially recorded at fair value on the date of issuance and were subsequently re-measured to fair value at each balance sheet date until the warrant liabilities were exercised. Changes in the fair value of the warrants are recognized as a non-cash component of other income and expense in the accompanying condensed consolidated statements of operations and comprehensive loss. All of the warrants accounted for as warrant liabilities have been exercised or settled as of June 30, 2020. On May 4, 2020, the Company issued the Preferred Warrants, which are freestanding financial instruments that give the warrant holder the right but not the obligation to purchase the equity security at the warrant exercise price. The Company is not required to settle these warrants in cash and as such, the Company has classified these warrants as equity on the accompanying condensed consolidated balance sheets. Research and Development Research and development expenses consist of costs incurred to further the Company’s research and development activities and include salaries and related employee benefits, manufacturing of pharmaceutical active ingredients and drug products, costs associated with clinical trials, nonclinical activities, regulatory activities, research-related overhead expenses and fees paid to expert consultants, external service providers and contract research organizations which conduct certain research and development activities on behalf of the Company. Costs incurred in the research and development of products are charged to research and development expense as incurred. Costs for preclinical studies and clinical trial activities are recognized based on an evaluation of the vendors’ progress towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided by vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. The Company determines accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. The estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Although the Company does not expect its estimates to be materially different from amounts incurred, the Company’s estimates and assumptions for clinical trial costs could differ significantly from actual costs incurred, which could result in increases or decreases in research and development expenses in future periods when actual results are known. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the goods have been received or when the activity is performed, rather than when payment is made. Acquired In-process Research and Development The Company has acquired, and may in the future acquire, rights to develop and commercialize new drug candidates and/or other in-process research and development assets. The up-front acquisition payments, as well as future milestone payments that are deemed probable to achieve and do not meet the definition of a derivative, are expensed as acquired in-process research and development provided that the drug has not achieved regulatory approval for marketing, and, absent obtaining such approval, have no alternative future use. Share-Based Compensation The Company recognizes share-based compensation expense for grants of stock options based on the grant-date fair value of those awards using the Black-Scholes option-pricing model. Share-based compensation expense is generally recognized on a straight-line basis over the requisite service period for awards expected to vest. Share-based compensation expense 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. Under the Black-Scholes option-pricing model, fair value is calculated based on assumptions with respect to: • Expected dividend yield. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock. • Expected stock-price volatility. Due to limited trading history as a public company, the expected volatility is derived from the average historical volatilities of publicly traded companies within the Company’s industry that the Company considers to be comparable to the Company’s business over a period approximately equal to the expected term. In evaluating comparable companies, the Company considers factors such as industry, stage of life cycle, financial leverage, size and risk profile. • Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term. • Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. Due to limited history of stock option exercises, the Company estimates the expected term of employee stock options based on the simplified method, which calculates the expected term as the average of the time-to-vesting and the contractual life of the options. Pursuant to Accounting Standards Update (“ASU”) 2018-07, the Company has elected to use the contractual life of the option as the expected term for non-employee options. Periodically, the Board may approve the grant of restricted stock units (“RSUs”) pursuant to the Company’s 2012 Omnibus Incentive Plan, as amended, which represent the right to receive shares of the Company’s common stock based on terms of the agreement. The fair value of RSUs is recognized as share-based compensation expense generally on a straight-line basis over the service period, net of estimated forfeitures. The grant date fair value of an RSU represents the closing price of the Company’s common stock on the date of grant. Fair Value of Financial Instruments Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to valuation techniques as follows: • Level 1 - defined as observable inputs based on unadjusted quoted prices for identical instruments in active markets; • Level 2 - defined as inputs other than Level 1 that are either directly or indirectly observable in the marketplace for identical or similar instruments in markets that are not active; and • Level 3 - defined as unobservable inputs in which little or no market data exists where valuations are derived from techniques in which one or more significant inputs are unobservable. The fair value of the embedded derivative issued in connection with the Unsecured Convertible Note and the Additional Note, further described in Note 4—Debt, was determined by using a Monte Carlo simulation technique (“MCS”) to value the embedded derivative associated with each note. As part of the MCS valuation, a discounted cash flow (“DCF”) model is used to value the debt on a stand-alone basis and determine the discount rate to utilize in both the DCF and MCS models. The significant estimates used in the DCF model include the time to maturity of the convertible debt and calculated discount rate, which includes an estimate of the Company’s specific risk premium. The MCS methodology calculates the theoretical value of an option based on certain parameters, including: (i) the threshold of exercising the option, (ii) the price of the underlying security, (iii) the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free rate and (vi) the number of paths. These valuation techniques involve management’s estimates and judgment based on unobservable inputs and are classified in Level 3. The table below summarizes the valuation inputs into the MCS model for the derivative liability associated with the Unsecured Convertible Note and the Additional Convertible Note on their respective dates of issuance as of March 8, 2019 and January 10, 2020, respectively, and at the end of the period as of June 30, 2020. Derivative Liability June 30, January 10, March 8, 2020 2020 2019 Expected dividend yield Discount rate 24.5 % 21.6 % 29.3 % Expected stock price volatility 76.7 % 103.9 % 101.1 % Risk-free interest rate 0.2 % 1.6 % 2.5 % Expected term 1.1 years 2 years 2 years Price of the underlying common stock $ 0.57 $ 0.65 $ 1.99 The fair values of the warrants at their respective dates of issuance further described above in the sections entitled “March 2019 Offering,” “Additional Issuance of Warrants,” and “April 2019 Offering” were determined through the use of an MCS model. The MCS methodology calculates the theoretical value of an option based on certain parameters, including (i) the threshold of exercising the option, (ii) the price of the underlying security, (iii) the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free interest rate and (vi) the number of paths. Given the high level of the selected volatilities, the methodology selected simulates the Company’s market value of invested capital (“MVIC”) through the maturity date of the respective warrants (ranging from one year to five-and-a-half years). Further, the estimated future stock price of the Company is calculated by subtracting the debt plus accrued interest from the MVIC. The significant estimates used in the MCS model include management’s estimated probability of future financing and liquidation events. Upon a fundamental transaction (as defined in the applicable warrant agreement), each holder of Short-Term Warrants and each holder of the March Long-Term Warrants and New Warrants (collectively, the “Long-Term Warrants”) can elect to require the Company or a successor entity to purchase such holder’s outstanding, unexercised warrants for a cash payment (or under certain circumstances other consideration) equal to the Black-Scholes value of the warrants on the date of consummation of the fundamental transaction, calculated in accordance with the terms and using the assumptions specified in the applicable warrant agreement. Due to the RDD Merger, the Company entered into the Exchange Agreements with the holders of the Exchange Warrants, pursuant to which the Company agreed to issue the purchasers an aggregate of 5,441,023 shares in exchange for the cancellation and termination of the Exchange Warrants. On December 26, 2019, an aggregate of 2,994,762 warrants were exchanged for 3,593,714 shares of the Company’s common stock. During the six months ended June 30, 2020, 1,539,424 warrants were exchanged for 1,847,309 shares of the Company’s common stock. In addition, the Company amended the Short-Term Warrants and Long-Term Warrants in the Offer to Amend in Exercise on February 12, 2020. Management assumed that the holders of the Short-Term Warrants and Long-Term Warrants would elect to receive cash payments under the respective warrant agreements following completion of the RDD Merger. As such, the Company determined the fair value of the Short-Term Warrants and Long-Term Warrants immediately prior to the Offer to Amend and Exercise, for financial reporting purposes, through the use of the Black-Scholes model. Subsequent to the Offer to Amend and Exercise, the Company determined the fair value of the Short-Term Warrants and Long-Term Warrants using the reduced exercise price of $0.10 as of March 31, 2020 and April 28, 2020. The estimates underlying the assumptions used in both the MCS model and Black-Scholes model are subject to risks and uncertainties and may change over time, and the assumptions used in both the MCS model and the Black-Scholes model for financial reporting purposes generally differ from the assumptions that would be applied in determining a payout under the applicable warrant agreements. These valuation techniques involve management’s estimates and judgment based on unobservable inputs and are classified in Level 3. The Company recognized a gain in fair value of the Short-Term Warrants and Long-Term Warrants of approximately $1.1 million and $2.6 million during the three and six months ended June 30, 2020, respectively, and $1.8 million and $2.7 million during the three and six months ended June 30, 2019, respectively. All of the Short-Term Warrants and Long-Term Warrants were exercised in the Offer to Amend and Exercise, which closed on April 29, 2020. During the three and six months ended June 30, 2020, the Company recognized warrant inducement expense of approximately $6.5 million and $7.2 million , respectively. There was no warrant inducement expense recognized during the three and six months ended June 30, 2019. The warrant inducement expense represents the accounting fair value of consideration issued to induce conversion of the Exchange Warrants and exercise of the warrants in the Offer to Amend and Exercise. The table below summarizes the valuation inputs into the MCS model for the Short-Term Warrants and Long-Term Warrants at their respective dates of issuance. Short-Term Warrants Long-Term Warrants March 18, 2019 March 18, 2019 May 17, 2019 Conversion price $ 4.00 $ 2.56 $ 2.13 Expected stock price volatility 122.0 % 85.2 % 83.4 % Risk-free interest rate 2.5 % 2.2 % 2.2 % Expected term 1 year 5 years 5 years Price of the underlying common stock $ 2.48 $ 2.48 $ 1.58 The table below summarizes the range of valuation inputs into the Black-Scholes model for the Exchange Warrants on their date of issuance and immediately prior to the exchange. Exchange Warrants May 1, 2019 January 6, 2020 Conversion price $ 2.13 - $ 2.53 $ 2.13 Expected stock price volatility 84.1 % 87.3 % Risk-free interest rate 2.2 % 1.7 % Expected term 5 - 5.5 years 4.9 years Price of the underlying common stock $ 1.54 $ 0.58 The table below summarizes the range of valuation inputs into the Black-Scholes model for the warrant liabilities as of February 11, 2020, immediately prior to the reduction in exercise price pursuant to the Offer to Amend and Exercise. Short-Term Warrants Long-Term Warrants February 11, 2020 Conversion price $ 4.00 $2.13 - $2.56 Expected stock price volatility 97.1 % 87.9% - 89.2% Risk-free interest rate 1.6 % 1.7 % Expected term 7 months 4 years 2 months Price of the underlying common stock $ 0.79 $ 0.79 The following table summarizes the fair value hierarchy of financial liabilities measured at fair value as of June 30, 2020 and December 31, 2019, respectively. June 30, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Derivative liability $ — $ — $ 247,000 $ 247,000 Warrant liabilities — — — — Total liabilities at fair value $ — $ — $ 247,000 $ 247,000 December 31, 2019 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total Derivative liability $ — $ — $ 408,000 $ 408,000 Warrant liabilities — — 2,637,500 2,637,500 Total liabilities at fair value $ — $ — $ 3,045,500 $ 3,045,500 The following table summarizes the cha |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Going Concern | LIQUIDITY AND GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Although, the Company received gross proceeds of approximately $22.6 million upon completion of the RDD Merger Financing, further described in Note 1—Summary of Significant Accounting Policies, the Company expects to incur substantial losses in the future as it conducts planned operating activities. Based on the Company’s limited operating history, recurring negative cash flows from operations, current plans and available resources, the Company will need substantial additional funding to support its planned and future operating activities, including progression of research and development programs. The Company has concluded that the prevailing conditions and ongoing liquidity risks faced by the Company raise substantial doubt about the Company’s ability to continue as a going concern for at least 1 year following the date these financial statements are issued. The effect of the COVID-19 pandemic and its associated restrictions may increase the anticipated aggregate costs for the development of the Company's product candidates and may adversely impact the anticipated timelines for the development of the Company's product candidates by, among other things, causing disruptions in the supply chain for clinical supplies, delays in the timing and pace of subject enrollment in clinical trials and lower than anticipated subject enrollment and completion rates, delays in the review and approval of the Company’s regulatory submissions by the FDA and other agencies with respect to the Company's product candidates, and other unforeseen disruptions. The economic impact of the COVID-19 pandemic and its effect on capital markets and investor sentiment may adversely impact the Company's ability to raise capital when needed or on terms favorable to the Company and its stockholders to fund its development programs and operations. The Company does not yet know the full extent of potential delays or impacts on its business, clinical trial activities, ability to access capital or on healthcare systems or the global economy as a whole. However, these effects could have a material adverse impact on the Company's business and financial condition. There can be no assurance that the Company will be able to obtain additional capital on terms acceptable to the Company, on a timely basis or at all. The failure to obtain sufficient additional funding or enter into strategic partnerships could adversely affect the Company’s ability to achieve its business objectives and product development timelines and could have a material adverse effect on the Company’s results of operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. |
MERGER AND ACQUISITION
MERGER AND ACQUISITION | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Merger and Acquisition | MERGER AND ACQUISITION RDD Merger On April 30, 2020, the Company completed its merger with RDD. Upon closing of the RDD Merger, the Company issued the RDD shareholders upfront consideration consisting of 37,860,510 shares of the Company’s common stock. In addition, the Company assumed 1,014,173 options that had been previously issued to RDD employees. See Note 7—Share-based Compensation for additional details regarding the options assumed. Naia Acquisition On May 6, 2020, the Company consummated its merger with Naia Rare Diseases, Inc. in accordance with the terms of an Agreement and Plan of Merger (the “Naia Acquisition”). The consideration for the Naia Acquisition at closing consisted of $2.1 million in cash and 4,835,438 shares of common stock, plus the pre-payment of certain operating costs on behalf of Naia totaling $0.1 million . Consideration for the Naia Acquisition also included future development and sales milestone payments worth up to $80.4 million and royalties on net sales of certain products to which Naia has exclusive rights by license. Accounting Treatment Both the RDD Merger and the Naia Acquisition were accounted for as asset acquisitions under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The net tangible and intangible assets acquired, and liabilities assumed in connection with the transactions were recorded at their estimated fair values on the respective dates of acquisition. The excess of purchase price over fair value of identified assets acquired and liabilities assumed was expensed as in-process research and development. The Company acquired the RDD net assets for shares of the Company’s common stock valued at $26.6 million and assumed liabilities of $1.3 million . The net assets received were less than $0.1 million . The Company acquired the Naia technology for $2.1 million in cash, common stock valued at $2.2 million , excluding contingent consideration, and the pre-payment of certain operating costs on behalf of Naia totaling $0.1 million . No contingent consideration associated with the Naia Acquisition was recorded as of June 30, 2020 since the related development and sales milestones were not deemed probable. See Note 9—Subsequent Events for recent developments that occurred subsequent to June 30, 2020. As a result of the RDD Merger and the Naia Acquisition, approximately $32.3 million was expensed as acquired in-process research and development expense in the accompanying condensed consolidated statements of operations and comprehensive loss. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Senior Convertible Note The principal amount of the senior convertible note issued on October 4, 2018 (the “Senior Convertible Note”), was $5.2 million and bore interest at a rate of eight percent ( 8% ) per annum payable quarterly in cash, with a scheduled maturity date of October 4, 2020. The interest rate would automatically increase to 18% per annum if there was an event of default during the period. During January 2019, the noteholder issued a redemption notice to the Company requiring the Company to repay the noteholder $1,049,167 of principal and $1,399 of accrued interest. On January 7, 2019, the Company entered into an Option to Purchase Senior Convertible Note (the “Option Agreement”) with the noteholder. The Company paid the noteholder $250,000 in consideration for the noteholder entering into the Option Agreement with the Company, which was recorded as interest expense in the accompanying statements of operations and comprehensive loss. The Option Agreement provided the Company with the ability to repay (purchase) the outstanding principal and accrued interest of the Senior Convertible Note any time from January 7, 2019 until March 31, 2019 (“Option Period”). During March 2019, the Company exercised its repurchase rights under the Option Agreement and paid the noteholder of the Senior Convertible Note approximately $5,200,000 in principal and $60,000 in interest, which was the full purchase amount of the Senior Convertible Note pursuant to the terms of the Option Agreement. There are no further amounts outstanding under the Senior Convertible Note and the Senior Convertible Note has been canceled. The Company accounted for the repayment of the Senior Convertible Note as a liability extinguishment in accordance with ASC 405, Extinguishments of Liabilities, which resulted in the Company recording a loss on extinguishment of debt of approximately $1.0 million in the accompanying statements of operations and comprehensive loss for the six months ended June 30, 2019 . Unsecured Convertible Promissory Note On March 8, 2019, the Company entered into a Securities Purchase Agreement (the “Note Purchase Agreement”) with a purchaser (the “Convertible Noteholder”). Pursuant to the Note Purchase Agreement, the Company issued the Convertible Noteholder an unsecured Convertible Promissory Note (the “Unsecured Convertible Note”) in the principal amount of $5.5 million . The Convertible Noteholder may elect to convert all or a portion of the Unsecured Convertible Note at any time and from time to time into the Company’s common stock at a conversion price of $3.25 per share, subject to adjustment for stock splits, dividends, combinations and similar events. The Company may prepay all or a portion of the Unsecured Convertible Note at any time for an amount equal to 115% of then outstanding obligations or the portion of the obligations the Company is prepaying. The purchase price of the Unsecured Convertible Note was $5.0 million , and the Unsecured Convertible Note carries an original issuance discount (“OID”) of $0.5 million , which is included in the principal amount of the Unsecured Convertible Note. In addition, the Company agreed to pay $20,000 of transaction expenses, which were netted out of the purchase price of the Unsecured Convertible Note. The Company also incurred additional transaction costs of approximately $37,000 , which were recorded as debt issuance costs. As a result of the redemption features of the Unsecured Convertible Note, further described below, the Company is amortizing the debt issuance costs and accreting the OID to interest expense over the estimated redemption period of 15 months , using the effective interest method. The various conversion and redemption features contained in the Unsecured Convertible Note are embedded derivative instruments, which were recorded as a debt discount and derivative liability at the issuance date at their estimated fair value of $1.3 million. Amortization of debt discount and accretion of the OID for the Unsecured Convertible Note recorded as interest expense was approximately $0.4 million and $0.8 million for the three and six months ended June 30, 2020 , respectively, and $0.3 million and $0.4 million for the three and six months ended June 30, 2019, respectively. The Unsecured Convertible Note bears interest at the rate of 10% (which will increase to 18% upon and during the continuance of an event of default) per annum, compounding on a daily basis. All principal and accrued interest on the Unsecured Convertible Note is due on the second-year anniversary of the Unsecured Convertible Note’s issuance. During the six months ended June 30, 2020 , the Company made principal payments of $2.0 million on the Unsecured Convertible Note, consisting of $1.5 million in cash payments and $0.5 million in stock conversions. There were no principal payments made on the Unsecured Convertible Note during the three and six months ended June 30, 2019. The principal amount of $0.5 million and accrued interest of $0.1 million were converted into 1,287,696 shares of the Company’s common stock at a weighted-average exercise price of $0.45 , which reflected a discount of approximately 26% (the “Conversion Discount”). The Conversion Discount represented a beneficial conversion feature of approximately $0.2 million which was recorded as a charge to interest expense and a credit to additional paid-in capital in the accompanying condensed consolidated financial statements. At any time after the six-month anniversary of the issuance of the Unsecured Convertible Note, (i) if the average volume weighted average price (“VWAP”) over twenty trading dates exceeds $10.00 per share, the Company may generally require that the Unsecured Convertible Note convert into shares of its common stock at the $3.25 (as adjusted) conversion price, and (ii) the Convertible Noteholder may elect to require all or a portion of the Unsecured Convertible Note be redeemed by the Company. If the Convertible Noteholder requires a redemption, the Company, at its discretion, may pay the redeemed portion of the Unsecured Convertible Note in cash or in the Company’s common stock at a conversion rate equal to the lesser of (i) the $3.25 (as adjusted) conversion rate or (ii) 80% of the average of the five lowest volume weighted average price of the Company’s Common Stock over the preceding twenty trading days. The Convertible Noteholder may not redeem more than $500,000 per calendar month during the period between the six -month anniversary of the date of issuance until the first-year anniversary of the date of issuance and $750,000 per calendar month thereafter. The obligation or right of the Company to deliver its shares upon the conversion or redemption of the Unsecured Convertible Note is subject to a 19.99% cap and subject to a floor price trading price of $3.25 (unless waived by the Company). Any amounts redeemed once the cap is reached or if the market price is less than the $3.25 floor price must be paid in cash. If there is an Event of Default under the Unsecured Convertible Note, the Convertible Noteholder may accelerate the Company’s obligations or elect to increase the outstanding obligations under the Unsecured Convertible Note. The amount of the increase ranges from 5% to 15% depending on the type of default (as defined in the Unsecured Convertible Note). In addition, the Unsecured Convertible Note obligations will be increased if there are delays in the Company’s delivery requirements for the shares or cash issuable upon the conversion or redemption of the Unsecured Convertible Note in certain circumstances. If the Company issues convertible debt in the future with any terms, including conversion terms, that are more favorable to the terms of the Unsecured Convertible Note, the Convertible Noteholder may elect to incorporate the more favorable terms into the Unsecured Convertible Note. Standstill Agreement On April 3, 2020, the Company entered into a standstill agreement with the Convertible Noteholder (the “Standstill Agreement”). Pursuant to the Standstill Agreement, the Convertible Noteholder will not seek to redeem any portion of the Unsecured Convertible Note between April 1, 2020 and May 31, 2020. The outstanding balance of the Unsecured Convertible Note was increased by $150,000 on April 3, 2020 as consideration for the Standstill Agreement and was recorded as interest expense during the three and six months ended June 30, 2020. All other terms of the Unsecured Convertible Note remain in full force and effect. Additional Note On January 10, 2020, the Company entered into an additional securities purchase agreement and unsecured convertible promissory note with the Convertible Noteholder in the principal amount of $2,750,000 (the “Additional Note”). The Convertible Noteholder may elect to convert all or a portion of the Additional Note, at any time from time to time into the Company’s common stock at a conversion price of $3.25 per share, subject to adjustment for stock splits, dividends, combinations and similar events. The Company may prepay all or a portion of the Additional Note at any time for an amount equal to 115% of then outstanding obligations or the portion of the obligations we are prepaying. The purchase price of the Additional Note was $2.5 million and carries an original issuance discount of $250,000 , which is included in the principal amount of the Additional Note. The various conversion and redemption features contained in the Additional Note are embedded derivative instruments, which were recorded as a debt discount and derivative liability at the issuance date at their estimated fair value of $0.4 million. Amortization of debt discount and accretion of the OID for the Additional Note recorded as interest expense was approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2020. The Additional Note bears interest at the rate of 10% (which will increase to 18% upon and during the continuance of an event of default) per annum, compounding on a daily basis. All principal and accrued interest on the Additional Note is due on the second anniversary of the date of the Additional Note’s issuance. There were no principal payments made on the Additional Note during the six months ended June 30, 2020. At any time after the six-month anniversary of the issuance of the Additional Note, (i) if the average VWAP of the Company’s common stock over twenty trading dates exceeds $10.00 per share, the Company may generally require that the Additional Note convert into share of its common stock at the $3.25 (as adjusted) conversion rate or (ii) 80% of the average of the five lowest VWAP of the Company’s common stock over the preceding twenty trading days. The Convertible Noteholder may not redeem more than $500,000 per calendar month during the period between the six -month anniversary of the date of issuance until the first anniversary of the date of issuance and $750,000 per calendar month thereafter. The obligation or right of the Company to deliver its shares upon the conversion or redemption of the Additional Note is subject to a 19.99% cap and subject to a floor price of $3.25 (unless waived by the Company). Any amounts redeemed or converted once the cap is reached or if the market price is less than the $3.25 floor price must be paid in cash. If there is an Event of Default under the Additional Note, the Convertible Noteholder may accelerate the Company’s obligations or the Convertible Noteholder may elect to increase the outstanding obligations under the Additional Note. The amount of the increase ranges from 15% for certain “Major Defaults,” 10% for failure to obtain the Convertible Noteholder’s approval for certain equity issuances with anti-dilution, price reset or variable pricing features of less than $2,500,000 , and 5% for certain “Minor Defaults.” In addition, the Additional Note obligations will be increased if there are delays in the Company’s delivery requirements for the shares or cash issuable upon the conversion or redemption of the Additional Note in certain circumstances. If the Company issues convertible debt in the future with any terms, including conversion terms, that are more favorable to the terms of the Additional Note, the Convertible Noteholder may elect to incorporate the more favorable terms into the Additional Note. The convertible notes payable as of June 30, 2020 and December 31, 2019 consists of the following: June 30, 2020 December 31, 2019 Convertible Notes $ 8,400,000 $ 5,500,000 Less: principal payments of debt (3,506,951 ) (1,544,724 ) Less: unamortized debt discount and OID accretion (408,772 ) (770,621 ) Total $ 4,484,277 $ 3,184,655 |
LICENSE AGREEMENTS
LICENSE AGREEMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Of License Agreements [Abstract] | |
License Agreements | LICENSE AGREEMENTS During 2016, the Company entered into a license agreement (the “Alba License”) with Alba Therapeutics Corporation (“Alba”) to obtain the rights to certain intellectual property relating to larazotide acetate and related compounds. The Company’s initial area of focus for these assets relates to the treatment of celiac disease. Upon execution of the Alba License, the Company paid Alba a non-refundable license fee of $0.5 million . In addition, the Company is required to make milestone payments to Alba upon the achievement of certain clinical and regulatory milestones totaling up to $1.5 million and payments upon regulatory approval and commercial sales of a licensed product totaling up to $150 million , which is based on sales ranging from $100 million to $1.5 billion . Upon the Company paying Alba $2.5 million for the first commercial sale of a licensed product, the Alba License becomes perpetual and irrevocable. Upon the achievement of net sales in a year exceeding $ 1.5 billion , the Alba License also becomes free of milestone fees. The Alba License provides Alba with certain termination rights, including failure of the Company to use Commercially Reasonable Efforts to develop the licensed products. During 2013, the Company entered into an exclusive license agreement with Seachaid Pharmaceuticals, Inc. (the “Seachaid Agreement”) to further develop and commercialize the licensed product, the compound known as APAZA. The agreement shall continue in effect on a country-by-country basis, unless terminated sooner in accordance with the termination provisions of the agreement, until the expiration of the royalty term for such product and such country. The royalty term for each such product and such country shall continue until the earlier of the expiration of certain patent rights (as defined in the agreement) or the date that the sales for one or more generic equivalents makes up a certain percentage of sales in an applicable country during a calendar year. The Company was required to make an initial, non-refundable payment under the Seachaid Agreement in the amount of $0.2 million . The agreement also calls for milestone payments totaling up to $6.0 million to be paid when certain clinical and regulatory milestones are met. There are also commercialization milestone payments ranging from $1.0 million to $2.5 million depending on net sales of the products in a single calendar year, followed by royalty payments in the single digits based on net product sales. During 2014, the Company entered into an Asset Purchase Agreement with Repligen Corporation (“Repligen”) to acquire Repligen’s RG-1068 program for the development of Secretin for the Pancreatic Imaging Market and Magnetic Resonance Cholangiopancreatography. As consideration for the Asset Purchase Agreement, the Company agreed to make a non-refundable cash payment on the date of the agreement and future royalty payments consisting of a percentage between five and fifteen of annual net sales, with the royalty payment percentage increasing as annual net sales increase. The royalty payments are made on a product-by-product and country-by-country basis and the obligation to make the payments expires with respect to each country upon the later of (i) the expiration of regulatory exclusivity for the product in that country or (ii) 10 years after the first commercial sale in that country. The royalty amount is subject to reduction in certain situations, such as the entry of generic competition in the market. There were no milestone or royalty fees incurred during the six months ended June 30, 2020 and 2019. In connection with the Naia Acquisition, we entered into two amended and restated license agreements with Amunix Pharmaceuticals, Inc. (“Amunix”), pursuant to which we received an exclusive, worldwide, royalty-bearing license, with rights of sublicense, to lead molecules GLP-1 and GLP-2 along with a related XTEN sequence and other intellectual property referenced therein (the “Amunix Licenses”). Also in connection with the Naia Acquisition, we entered into an amended and restated license agreement with Cedars-Sinai Medical Center (“Cedars”), pursuant to which we licensed the rights to GLP-1 Agonist for the treatment of SBS (the “Cedars License” and together with the Amunix Licenses, the “Naia Licenses”). Collectively, the Naia Licenses are intended to support our development of a therapy to treat SBS. Naia paid initial licenses fees and other development milestone payments due under the Naia Licenses prior to the Naia Acquisition, therefore, we did not pay any initial licenses fees upon the amendment and restatement of the original Naia Licenses. Pursuant to the terms of the Amunix Licenses, we agreed to expend in certain minimum financial amounts in direct support of development of the GLP-1 and GLP-2 products during specified development stages. As consideration under the Amunix License for GLP-1, we agreed to pay Amunix certain royalty payments and (i) $70.4 million in milestone payments upon achievement of future development and sales milestones in the U.S. and major EU countries, (ii) $20.5 million in milestone payments upon achievement of future development and sales milestones in China and certain related territories, and (iii) $20.5 million in milestone payments upon achievement of future development and sales milestones in South Korean and certain other east Asian countries. As consideration under the Amunix License for GLP-2, we agreed to pay Amunix certain royalty payments and $60.1 million in milestone payments upon achievement of future development and sales milestones in the U.S. and major EU countries. As consideration under the Cedars License, we agreed to pay Cedars certain royalty payments and approximately $9.4 million in milestone payments upon achievement of future development and sales milestones. |
STOCKHOLDERS_ EQUITY (DEFICIT)
STOCKHOLDERS’ EQUITY (DEFICIT) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity (Deficit) | STOCKHOLDERS’ EQUITY (DEFICIT) The Company’s authorized capital stock consists of 360 million shares of capital stock, par value $0.0001 per share, of which 350 million shares are designated as common stock and 10 million shares are designated as preferred stock. Preferred Stock The Company’s amended and restated certificate of incorporation authorizes the Board to issue preferred stock in one or more classes or one or more series within any class from time to time. Voting powers, designations, preferences, qualifications, limitations, restrictions or other rights will be determined by the Board at that time. On April 29, 2020, the Board designated 600,000 shares of preferred stock as Series A Preferred Stock, par value of $0.0001 per share. On May 4, 2020, the Company closed the Private Placement, further described in Note 1—Summary of Significant Accounting Policies, pursuant to which the Company sold an aggregate of 382,779 shares of Series A Preferred Stock, par value $0.0001 , which were convertible into 38,277,900 shares of common stock. The Series A Preferred Stock was classified as equity in accordance with ASC 480—Distinguishing Liabilities from Equity. Shares of the Series A Preferred Stock and Series A Preferred Warrants were valued using the relative fair value method. The Series A Preferred Warrants were valued using a Black Scholes option pricing model. The Company determined the transaction created a beneficial conversion feature of approximately $3.1 million . The table below summarizes the inputs for the Black Scholes option pricing model on the date of issuance. May 4, 2020 (Unaudited) Conversion price $ 0.5894 Expected stock price volatility 73.7 % Risk-free interest rate 0.4 % Expected term 5 years Price of the underlying common stock $ 0.50 As of May 4, 2020, the stated value of the issued and outstanding Series A Preferred Stock and Series A Preferred Warrants was approximately $12.5 million and $7.0 million , respectively. On June 30, 2020, the Company’s outstanding Series A Preferred Stock automatically converted into 38,277,900 shares of common stock upon receipt of stockholder approval. Upon conversion of the Series A Preferred Stock, the Company reclassified the carrying value of the Series A Preferred Stock to common stock and additional paid-in capital. There were 382,779 shares of preferred stock issued as of June 30, 2020. There were no shares of preferred stock outstanding as of June 30, 2020 and December 31, 2019. Liquidation Preference Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, holders of the Series A Preferred Stock (the “Preferred Holders”) were entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series A Preferred Stock were fully converted. Dividends Except for stock dividends or distributions for which adjustments are to be made in accordance with Section 7 of the Series A Certificate of Designation, the Preferred Holders were entitled to receive dividends on shares of the Series A Preferred Stock equal to, on an as-if-converted-to-Common-Stock basis, and in the same form as dividends paid on shares of the Common Stock, if such dividends were paid on shares of the Common Stock. Voting The Preferred Holders had no voting rights. Conversion Each share of Series A Preferred Stock was convertible into 100 shares of fully paid and non-assessable shares of Common Stock. Each issued and outstanding shares of Series A Preferred Stock was automatically converted without the payment of additional consideration into 100 shares of fully paid and non-assessable shares of Common Stock on the date the Company’s stockholders approved the conversion of the Series A Preferred Stock in accordance with the Nasdaq Stock Market Rules, without any further action by the Preferred Holder or the Company. Common Stock The holders of the Company’s common stock (i) have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by the Board; (ii) are entitled to share in all the Company’s assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of the Company’s affairs; (iii) do not have preemptive, subscription or conversion rights (and there are no redemption or sinking fund provisions or rights); and (iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote. There were 136,232,886 and 39,477,667 shares of common stock outstanding as of June 30, 2020 and December 31, 2019, respectively. The Company had reserved shares of common stock for future issuance as follows: June 30, December 31, 2020 2019 Outstanding stock options 12,694,680 8,781,615 Warrants to purchase common stock 41,260,816 14,040,452 Shares issuable upon conversion of convertible debt 1,547,689 1,217,008 For possible future issuance under the Omnibus Plan 14,726,818 1,102,739 Total common shares reserved for future issuance 70,230,003 25,141,814 On December 19, 2019, the Company and each of the purchasers of the April Warrants and Placement Agent Warrants entered into the Exchange Agreements, pursuant to which the Company agreed to issue the purchasers an aggregate of 5,441,023 shares of Common Stock at a ratio of 1.2 Exchange Shares for each purchaser warrant in exchange for cancellation and termination of all of the outstanding April Warrants and Placement Agent Warrants. On December 26, 2019, an aggregate of 2,994,762 warrants were exchanged for 3,593,714 shares of the Company’s common stock. During the six months ended June 30, 2020, the Company issued 1,847,309 shares of common stock in exchange for cancellation and termination of the remaining outstanding Exchange Warrants. As of June 30, 2020, all of the April Warrants and Placement Agent Warrants were exchanged for Common Stock and there were no April Warrants or Placement Agent Warrants outstanding. See Note 1—Summary of Significant Accounting Policies for further details. On April 29, 2020, pursuant to the Offer to Amend and Exercise further described in Note 1—Summary of Significant Accounting Policies, warrants to purchase an aggregate of 12,230,418 shares of common stock were tendered, amended and exercised for aggregate gross proceeds of approximately $1.2 million . On October 26, 2018, the Company entered into a common stock sales agreement with H.C. Wainwright & Co., LLC and Ladenburg Thalmann & Co., Inc. and filed a prospectus with the SEC relating to such offering. The Company previously filed a Form S-3 that became effective July 13, 2018 that included the registration of $40 million of its shares of common stock in connection with a potential ATM offering. Pursuant to the sales agreement, the Company could issue and sell shares having an aggregate gross sales price of up to $40 million and was required to pay the sales agents commissions of 3% of the gross sales price per share sold. During the six months ended June 30, 2019 , the Company sold 705,714 shares under the ATM for total net proceeds of approximately $1,675,000 . The Company voluntarily suspended the ATM facility as of June 24, 2019 and effective March 19, 2020, the Company terminated the ATM facility. On July 22, 2020, the Company filed a prospectus supplement and associated sales agreement related to an ATM pursuant to which the Company may sell, from time to time, common stock with an aggregate offering price of up to $40 million through SunTrust Robinson Humphrey, as sales agent, for general corporate purposes. As of August 12, 2020, the Company had not sold any shares under the ATM. See Note 9 - Subsequent Events for additional details. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION The Company has two stock option plans in existence: the 2012 Omnibus Incentive Plan (the “Omnibus Plan”) and the Innovate 2015 Stock Incentive Plan (the “Private Innovate Plan”). In addition, the Company assumed 1,014,173 options in accordance with the terms of the RDD Merger Agreement. The shares reserved for issuance under the Omnibus Plan automatically increase on the first day of each calendar year beginning in 2019 and ending in 2022 by an amount equal to the lesser of (i) five percent of the number of shares of common stock outstanding as of December 31 st of the immediately preceding calendar year or (ii) such lesser number of shares of common stock as determined by the Board (the “Evergreen Provision”). On January 1, 2020 and 2019, the number of shares of common stock available under the Omnibus Plan automatically increased by 1,973,883 and 1,304,441 shares pursuant to the Evergreen Provision, respectively. Additionally, on June 30, 2020, stockholders approved an amendment to the Omnibus Plan to increase the number of shares of common stock available under the Omnibus Plan to 20,794,492 shares. The terms of the option agreements are determined by the Board. The Company’s stock options vest based on the terms in the stock option agreements and typically vest over a period of three or four years . These stock options typically have a maximum term of ten years. Private Innovate Plan As of June 30, 2020 , there were 6,028,781 stock options outstanding under the Private Innovate Plan. Since 2018, the Company has not issued, and does not intend to issue, any additional awards from the Private Innovate Plan. The range of assumptions used in estimating the fair value of the options granted or re-measured under the Private Innovate Plan using the Black-Scholes option pricing model for the periods presented were as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Expected dividend yield 0% 0% 0% 0% Expected stock-price volatility —% —% —% 67% Risk-free interest rate —% —% —% 2.6% Expected term of options (in years) 0 0 0 8.2 - 8.7 The following table summarizes stock option activity under the Private Innovate Plan: Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2019 6,063,745 $ 1.53 $ 496,275 5.4 Options granted — — — Options forfeited (34,964 ) 2.16 — Options exercised — — — Outstanding at June 30, 2020 6,028,781 1.53 526,849 3.7 Exercisable at June 30, 2020 5,910,695 1.52 526,849 3.6 Vested and expected to vest at June 30, 2020 6,026,508 $ 1.53 $ 526,849 3.7 There were no options granted under the Private Innovate Plan during the six months ended June 30, 2020 and 2019 . The total fair value of stock option awards vested during the six months ended June 30, 2020 under the Private Innovate Plan was approximately $361,000 . As of June 30, 2020 , there was approximately $0.1 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements under the Private Innovate Plan, which is expected to be recognized over a weighted average period of 1.5 years. The Private Innovate Plan provides for accelerated vesting under certain change-of-control transactions, if approved by the Company’s board of directors. Omnibus Plan As of June 30, 2020 , there were options to purchase 5,651,726 shares of the Company’s common stock outstanding under the Omnibus Plan and 14,726,818 shares available for future grants under the Omnibus Plan. The range of assumptions used in estimating the fair value of the options granted under the Omnibus Plan using the Black-Scholes option pricing model for the periods presented were as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Expected dividend yield 0% 0% 0% 0% Expected stock-price volatility 72% - 74% 70% 72% - 74% 68% - 72% Risk-free interest rate 0.4% - 0.6% 2.0% - 2.2% 0.4% - 0.6% 2.0% - 2.7% Expected term of options (in years) 5.0 - 10.0 5.7 5.0 - 10.0 5.4 - 10.0 The following table summarizes stock option activity under the Amended Omnibus Plan: Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2019 2,717,870 $ 1.87 $ — 9.4 Options granted 2,933,856 0.67 — Options forfeited — — — Options exercised — — — Outstanding at June 30, 2020 5,651,726 1.25 — 9.4 Exercisable at June 30, 2020 4,243,881 1.41 — 9.2 Vested and expected to vest at June 30, 2020 5,519,649 $ 1.25 $ — 9.4 The weighted-average grant date fair value of options granted under the Omnibus Plan was $0.41 during the three and six months ended June 30, 2020. There were 2,933,856 options granted and no options exercised under the Omnibus Plan during the three and six months ended June 30, 2020, respectively. The total fair value of stock option awards vested under the Omnibus Plan was approximately $1,825,893 during the six months ended June 30, 2020 . As of June 30, 2020 , there was approximately $0.6 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements under the Omnibus Plan. This cost is expected to be recognized over a weighted average period of 3.7 years. The Omnibus Plan provides for accelerated vesting under certain change-of-control transactions, if approved by the Company’s board of directors. Upon consummation of the RDD Merger on April 30, 2020, the Company’s board of directors approved the acceleration of certain options for employees, board members and key consultants. The Company recognized an additional $2.7 million in non-cash stock compensation expense related to the modification during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2020, the board approved grants of 415,948 RSUs, which vest immediately upon the date of grant. During the six months ended June 30, 2019, the board approved grants of 490,000 RSUs, which vest immediately upon the date of grant. The weighted-average fair value of RSUs was $0.57 during the three and six months ended June 30, 2020, and $1.44 during the three and six months ended June 30, 2019. The Company recognized share-based compensation expense for the RSUs of approximately $238,000 and $255,000 during the three and six months ended June 30, 2020, respectively, and $449,000 and $639,000 during the three and six months ended June 30, 2019, respectively. RDD Option Grants Pursuant to the RDD Merger Agreement, the Company assumed option grant agreements awarded to RDD employees upon consummation of the RDD Merger (the “RDD Options”) on April 30, 2020. There were 1,014,173 RDD Options outstanding as of June 30, 2020 at a weighted-average exercise price of $0.63 per share. The total fair value of RDD Options vested during the three and six months ended was approximately $471,000 . All of the RDD Options are fully vested and there is no unrecognized compensation expense as of June 30, 2020. The range of assumptions used in estimating the fair value of the RDD Options using the Black-Scholes option pricing model for the periods presented were as follows: Three and Six Months Ended Expected dividend yield — % Expected stock-price volatility 72% - 74% Risk-free interest rate 0.4% - 0.6% Expected term of options (in years) 5.0 - 10.0 Total share-based compensation expense recognized in the accompanying condensed consolidated statements of operations and comprehensive loss was as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Research and development $ 1,460,550 $ 351,000 $ 1,588,550 $ 443,000 General and administrative 2,560,450 501,000 2,708,450 935,000 Total share-based compensation $ 4,021,000 $ 852,000 $ 4,297,000 $ 1,378,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Clinical Trial Agreement From time to time, the Company enters into agreements with contract research organizations and other service providers. In August 2018, the Company entered into such an agreement for its planned Phase 3 trial for the treatment of celiac disease. Under this agreement, the Company expects to pay approximately $1.1 million for data management over the course of the Phase 3 celiac disease trial for data management and biostatistics services. Employment Agreements The Company has entered into executive employment agreements with the executives (the “Executive Employment Agreements”). The Executive Employment Agreements provide an annual base salary and the opportunity to participate in the Company’s equity compensation, employee benefit and bonus plans once they are established and approved by the Board. The Executive Employment Agreements contain severance provisions if the executives are terminated under certain conditions that would provide the executive with 12 months of their base salary and up to 12 months of continuation of health insurance benefits. Effective upon the consummation of the RDD Merger, the Company entered into an employment agreement with Mr. Temperato for him to serve as the Company’s Chief Executive Officer (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Temperato began full-time employment with the Company upon the effective time of the RDD Merger on April 30, 2020, at an initial base salary of $450,000 per year, subject to review and adjustment by the Board from time to time. The Board approved an option grant to Mr. Temperato to purchase 1,000,000 shares of Common Stock, which will vest 25% upon grant, with the remainder vesting in 48 equal month installments, provided that Mr. Temperato remains an employee of the Company as of each such vesting date. Mr. Temperato will be eligible to receive a discretionary annual bonus with a target amount of 40% of his base salary, as determined by the Board in its sole discretion (and pro-rated for 2020). Mr. Temperato will also be eligible to participate in the Company’s other employee benefit plans in effect from time to time on the same basis as are generally made available to other senior executive employees of the Company. If the employment of Mr. Temperato is terminated by the Company without “Cause” or by Mr. Temperato for “Good Reason” (each as defined in the Employment Agreement), in each case subject to Mr. Temperato entering into and not revoking a separation agreement, Mr. Temperato will be eligible to receive 12 months of his then-current base salary, the prorated amount of his target year-end bonus, and accelerated vesting of his unvested options and restricted stock unit awards that were scheduled to vest in the 12 months following termination. Periodically, the Company enters into separation and general release agreements with former executives of the Company that include separation benefits consistent with the former executives’ employment agreements. The Company recognized severance expense totaling $0.8 million during the three and six months ended June 30, 2020 and $0.3 million during the three and six months ended June 30, 2019, which is paid in equal installments over 12 months from the date of separation. The accrued severance obligation in respect of the former executives was approximately $0.5 million as of June 30, 2020. Office Lease In October 2017, the Company entered into a three -year lease for office space that expires on September 30, 2020 . Base annual rent is $60,000 , or $5,000 per month. Monthly payments of $5,000 are due and payable over the 24 -month term. A security deposit of $5,000 was paid in October 2017. The lease contains a two -year renewal option. See Note 9—Subsequent Events for updated lease agreement executed in July 2020. The Company estimated the present value of the lease payments over the remaining term of the lease using a discount rate of 12% , which represented the Company’s estimated incremental borrowing rate. The two -year renewal option was excluded from the lease payments as the Company concluded the exercise of this option was not considered reasonably certain. Operating lease cost under ASC 842 was approximately $15,000 and $30,000 for the three and six months ended June 30, 2020 and 2019 and is included in general and administrative expenses on the accompanying condensed consolidated statement of operations and comprehensive loss. The total cash paid for amounts included in the measurement of the operating lease liability and reported within operating activities was less than $0.1 million during the six months ended June 30, 2020 . Future minimum payments under the Company’s lease liability were as follows: Year ended December 31, Operating Leases 2020 Lease payments 15,000 Less: imputed interest (295 ) Total $ 14,705 Legal On April 8, 2020, the Company received a summons and complaint that was filed in the Mecklenburg County Superior Court of North Carolina, regarding a vendor that alleges the Company owes approximately $1.7 million for services rendered prior to February 2019. The Company strongly denies any wrongdoing and firmly believes the allegations in the complaint are entirely without merit and intends to defend against them vigorously. From time to time, the Company could become involved in other disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict; therefore, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation. As of June 30, 2020, the Company has accrued approximately $0.6 million for the potential liability. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Subsequent Events ATM Sales Agreement On July 22, 2020, the Company filed a prospectus supplement and associated sales agreement related to an ATM pursuant to which the Company may sell, from time to time, common stock with an aggregate offering price of up to $40 million through SunTrust Robinson Humphrey, as sales agent, for general corporate purposes. Pursuant to the sales agreement, the Company will pay SunTrust Robinson Humphrey a commission rate of 3.0% of the gross proceeds from the sale of any shares of common stock under the ATM. As of August 12, 2020, the Company had not sold any shares under the ATM. Lease Agreement In July 2020, the Company entered into a 4 -year lease for office space that expires on September 30, 2024. Base annual rent is $72,000 , or $6,000 per month. Monthly payments of $6,000 are due and payable over the 4 -year term. The lease contains a 3 -year renewal option. Milestone Fees In July 2020, the Company dosed its first patients in a Phase 1b/2a clinical trial for treatment of short-bowel syndrome. Upon dosing of the first patient in the clinical trial, the Company is required to pay up to $2.1 million in milestone fees in accordance with the terms of the license agreement purchased in the Naia Acquisition. Stock Option Grants On July 6, 2020, the compensation committee approved the grant of options to purchase 4.6 million shares of the Company’s common stock, comprised of 2.5 million options granted to management, 1.5 million performance options, and 0.7 million options grant to the Company’s board of directors. The management options and performance options vest over 4 years and the options granted to the board of directors vest over 3 years . The performance options will begin to vest, if at all, upon satisfaction of certain performance criteria as determined by the board of directors in its discretion. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Presentation The unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the balance sheets, operating results, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020 . Certain information and footnote disclosure normally included in the annual financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s financial position, results of operations and cash flows are presented in U.S. Dollars. These financial statements and related notes should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2019 , included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , filed with the SEC on March 20, 2020. Except as noted below under the section entitled “Recently Issued Accounting Standards—Accounting Pronouncements Adopted,” there have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2020 , as compared to the significant accounting policies disclosed in Note 1 of the Company’s financial statements for the years ended December 31, 2019 and 2018 included in the Company’s Annual Report on Form 10-K. However, the following accounting policies are the most critical in fully understanding the Company’s financial condition and results of operations. |
Basis of Consolidation | Basis of Consolidation The accompanying consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Business Risks | Business Risks The Company faces risks, including those associated with biopharmaceutical companies whose products are in various stages of development. These risks include, among others, risks related to the potential effects of the ongoing coronavirus outbreak and related mitigation efforts on the Company's clinical, financial and operational activities, the Company’s need for additional financing to achieve key development milestones, the need to defend intellectual property rights, and the dependence on key members of management. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Areas of the financial statements where estimates may have the most significant effect include accrued expenses, share-based compensation, valuation of the derivative liability and warrant liabilities, valuation allowance for income tax assets, management’s estimate of the acquisition costs associated with acquired in-process research and development and management’s assessment of the Company’s ability to continue as a going concern. Changes in the facts or circumstances underlying these estimates could result in material changes and actual results could differ from these estimates. |
Accrued Expenses | Accrued Expenses The Company incurs periodic expenses such as research and development, licensing fees, salaries and benefits, and professional fees. The Company is required to estimate its expenses resulting from obligations under contracts with clinical research organizations, vendors and consulting agreements that have been incurred by the Company prior to being invoiced. This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice monthly in arrears for services performed or when contractual milestones are met. The Company estimates accrued expenses as of each balance sheet date based on facts and circumstances known at that time. |
Derivative Liability | Derivative Liability The Company accounts for derivative instruments in accordance with ASC 815, Derivative and Hedging, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the condensed consolidated balance sheet at fair value. The Company’s derivative financial instruments consist of embedded options in the Company’s convertible notes. The embedded derivatives include provisions that provide the noteholder with certain conversion and put rights at various conversion or redemption values as well as certain call options for the Company. |
Classification of Warrants | Classification of Warrants The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging, to determine whether the warrants should be classified as equity or liability. The warrants the Company issued during 2019 are freestanding financial instruments that contain net settlement options and may require the Company to settle these warrants in cash under certain circumstances. As such, the Company has classified these warrants as liabilities on the accompanying condensed consolidated balance sheets. The warrant liabilities were initially recorded at fair value on the date of issuance and were subsequently re-measured to fair value at each balance sheet date until the warrant liabilities were exercised. Changes in the fair value of the warrants are recognized as a non-cash component of other income and expense in the accompanying condensed consolidated statements of operations and comprehensive loss. All of the warrants accounted for as warrant liabilities have been exercised or settled as of June 30, 2020. On May 4, 2020, the Company issued the Preferred Warrants, which are freestanding financial instruments that give the warrant holder the right but not the obligation to purchase the equity security at the warrant exercise price. The Company is not required to settle these warrants in cash and as such, the Company has classified these warrants as equity on the accompanying condensed consolidated balance sheets. |
Research and Development | Research and Development Research and development expenses consist of costs incurred to further the Company’s research and development activities and include salaries and related employee benefits, manufacturing of pharmaceutical active ingredients and drug products, costs associated with clinical trials, nonclinical activities, regulatory activities, research-related overhead expenses and fees paid to expert consultants, external service providers and contract research organizations which conduct certain research and development activities on behalf of the Company. Costs incurred in the research and development of products are charged to research and development expense as incurred. Costs for preclinical studies and clinical trial activities are recognized based on an evaluation of the vendors’ progress towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided by vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. The Company determines accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. The estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Although the Company does not expect its estimates to be materially different from amounts incurred, the Company’s estimates and assumptions for clinical trial costs could differ significantly from actual costs incurred, which could result in increases or decreases in research and development expenses in future periods when actual results are known. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the goods have been received or when the activity is performed, rather than when payment is made. |
Acquired In-process Research and Development | Acquired In-process Research and Development The Company has acquired, and may in the future acquire, rights to develop and commercialize new drug candidates and/or other in-process research and development assets. The up-front acquisition payments, as well as future milestone payments that are deemed probable to achieve and do not meet the definition of a derivative, are expensed as acquired in-process research and development provided that the drug has not achieved regulatory approval for marketing, and, absent obtaining such approval, have no alternative future use. |
Share-based Compensation | Share-Based Compensation The Company recognizes share-based compensation expense for grants of stock options based on the grant-date fair value of those awards using the Black-Scholes option-pricing model. Share-based compensation expense is generally recognized on a straight-line basis over the requisite service period for awards expected to vest. Share-based compensation expense 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. Under the Black-Scholes option-pricing model, fair value is calculated based on assumptions with respect to: • Expected dividend yield. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock. • Expected stock-price volatility. Due to limited trading history as a public company, the expected volatility is derived from the average historical volatilities of publicly traded companies within the Company’s industry that the Company considers to be comparable to the Company’s business over a period approximately equal to the expected term. In evaluating comparable companies, the Company considers factors such as industry, stage of life cycle, financial leverage, size and risk profile. • Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term. • Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. Due to limited history of stock option exercises, the Company estimates the expected term of employee stock options based on the simplified method, which calculates the expected term as the average of the time-to-vesting and the contractual life of the options. Pursuant to Accounting Standards Update (“ASU”) 2018-07, the Company has elected to use the contractual life of the option as the expected term for non-employee options. Periodically, the Board may approve the grant of restricted stock units (“RSUs”) pursuant to the Company’s 2012 Omnibus Incentive Plan, as amended, which represent the right to receive shares of the Company’s common stock based on terms of the agreement. The fair value of RSUs is recognized as share-based compensation expense generally on a straight-line basis over the service period, net of estimated forfeitures. The grant date fair value of an RSU represents the closing price of the Company’s common stock on the date of grant. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to valuation techniques as follows: • Level 1 - defined as observable inputs based on unadjusted quoted prices for identical instruments in active markets; • Level 2 - defined as inputs other than Level 1 that are either directly or indirectly observable in the marketplace for identical or similar instruments in markets that are not active; and • Level 3 - defined as unobservable inputs in which little or no market data exists where valuations are derived from techniques in which one or more significant inputs are unobservable. The fair value of the embedded derivative issued in connection with the Unsecured Convertible Note and the Additional Note, further described in Note 4—Debt, was determined by using a Monte Carlo simulation technique (“MCS”) to value the embedded derivative associated with each note. As part of the MCS valuation, a discounted cash flow (“DCF”) model is used to value the debt on a stand-alone basis and determine the discount rate to utilize in both the DCF and MCS models. The significant estimates used in the DCF model include the time to maturity of the convertible debt and calculated discount rate, which includes an estimate of the Company’s specific risk premium. The MCS methodology calculates the theoretical value of an option based on certain parameters, including: (i) the threshold of exercising the option, (ii) the price of the underlying security, (iii) the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free rate and (vi) the number of paths. These valuation techniques involve management’s estimates and judgment based on unobservable inputs and are classified in Level 3. The table below summarizes the valuation inputs into the MCS model for the derivative liability associated with the Unsecured Convertible Note and the Additional Convertible Note on their respective dates of issuance as of March 8, 2019 and January 10, 2020, respectively, and at the end of the period as of June 30, 2020. Derivative Liability June 30, January 10, March 8, 2020 2020 2019 Expected dividend yield Discount rate 24.5 % 21.6 % 29.3 % Expected stock price volatility 76.7 % 103.9 % 101.1 % Risk-free interest rate 0.2 % 1.6 % 2.5 % Expected term 1.1 years 2 years 2 years Price of the underlying common stock $ 0.57 $ 0.65 $ 1.99 The fair values of the warrants at their respective dates of issuance further described above in the sections entitled “March 2019 Offering,” “Additional Issuance of Warrants,” and “April 2019 Offering” were determined through the use of an MCS model. The MCS methodology calculates the theoretical value of an option based on certain parameters, including (i) the threshold of exercising the option, (ii) the price of the underlying security, (iii) the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free interest rate and (vi) the number of paths. Given the high level of the selected volatilities, the methodology selected simulates the Company’s market value of invested capital (“MVIC”) through the maturity date of the respective warrants (ranging from one year to five-and-a-half years). Further, the estimated future stock price of the Company is calculated by subtracting the debt plus accrued interest from the MVIC. The significant estimates used in the MCS model include management’s estimated probability of future financing and liquidation events. Upon a fundamental transaction (as defined in the applicable warrant agreement), each holder of Short-Term Warrants and each holder of the March Long-Term Warrants and New Warrants (collectively, the “Long-Term Warrants”) can elect to require the Company or a successor entity to purchase such holder’s outstanding, unexercised warrants for a cash payment (or under certain circumstances other consideration) equal to the Black-Scholes value of the warrants on the date of consummation of the fundamental transaction, calculated in accordance with the terms and using the assumptions specified in the applicable warrant agreement. Due to the RDD Merger, the Company entered into the Exchange Agreements with the holders of the Exchange Warrants, pursuant to which the Company agreed to issue the purchasers an aggregate of 5,441,023 shares in exchange for the cancellation and termination of the Exchange Warrants. On December 26, 2019, an aggregate of 2,994,762 warrants were exchanged for 3,593,714 shares of the Company’s common stock. During the six months ended June 30, 2020, 1,539,424 warrants were exchanged for 1,847,309 shares of the Company’s common stock. In addition, the Company amended the Short-Term Warrants and Long-Term Warrants in the Offer to Amend in Exercise on February 12, 2020. Management assumed that the holders of the Short-Term Warrants and Long-Term Warrants would elect to receive cash payments under the respective warrant agreements following completion of the RDD Merger. As such, the Company determined the fair value of the Short-Term Warrants and Long-Term Warrants immediately prior to the Offer to Amend and Exercise, for financial reporting purposes, through the use of the Black-Scholes model. Subsequent to the Offer to Amend and Exercise, the Company determined the fair value of the Short-Term Warrants and Long-Term Warrants using the reduced exercise price of $0.10 as of March 31, 2020 and April 28, 2020. The estimates underlying the assumptions used in both the MCS model and Black-Scholes model are subject to risks and uncertainties and may change over time, and the assumptions used in both the MCS model and the Black-Scholes model for financial reporting purposes generally differ from the assumptions that would be applied in determining a payout under the applicable warrant agreements. These valuation techniques involve management’s estimates and judgment based on unobservable inputs and are classified in Level 3. The Company recognized a gain in fair value of the Short-Term Warrants and Long-Term Warrants of approximately $1.1 million and $2.6 million during the three and six months ended June 30, 2020, respectively, and $1.8 million and $2.7 million during the three and six months ended June 30, 2019, respectively. All of the Short-Term Warrants and Long-Term Warrants were exercised in the Offer to Amend and Exercise, which closed on April 29, 2020. During the three and six months ended June 30, 2020, the Company recognized warrant inducement expense of approximately $6.5 million and $7.2 million , respectively. There was no warrant inducement expense recognized during the three and six months ended June 30, 2019. The warrant inducement expense represents the accounting fair value of consideration issued to induce conversion of the Exchange Warrants and exercise of the warrants in the Offer to Amend and Exercise. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs consist principally of legal, accounting and underwriters’ fees related to offerings or the Company’s shelf registration. Offering costs incurred prior to an offering are initially capitalized and then subsequently reclassified to additional paid-in capital upon completion of the offering. Deferred offering costs associated with the shelf registration will be charged to additional paid-in capital on a pro-rata basis in the event the Company completes an offering under the shelf registration. |
Patent Costs | Patent Costs Costs associated with the submission of patent applications are expensed as incurred given the uncertainty of the future economic benefits of the patents. |
Earnings Per Share | Net Loss Per Share The Company calculates net loss per share as a measurement of the Company’s performance while giving effect to all potentially dilutive shares that were outstanding during the reporting period. Because the Company had a net loss for all periods presented, the inclusion of common stock options or other similar instruments would be anti-dilutive. Therefore, the weighted average shares outstanding used to calculate both basic and diluted net loss per share are the same. |
Segment Reporting | Segments Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and the Company’s primary operations are in North America. |
Accounting Pronouncements | Recently Issued Accounting Standards Accounting Pronouncements Adopted In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This standard no longer requires public companies to disclose transfers between Level 1 and 2 of the fair value hierarchy and adds additional disclosure requirements about the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The Company adopted this guidance effective January 1, 2020 and the adoption of ASU 2018-13 did not have a material impact on the Company’s consolidated financial statements. Accounting Pronouncements being Evaluated In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . ASU 2019-12 amends the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improves consistent application of other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. Early adoption is permitted and the Company is currently evaluating the impact this standard will have on the Company’s consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Accrued Liabilities | Accrued expenses consisted of the following: June 30, December 31, 2019 Accrued compensation and benefits $ 1,105,521 $ 574,332 Accrued clinical expenses 1,995,441 4,143,269 Other accrued expenses 183,133 30,150 Total $ 3,284,095 $ 4,747,751 |
Fair Value Measurement Inputs and Valuation Techniques | The table below summarizes the valuation inputs into the MCS model for the derivative liability associated with the Unsecured Convertible Note and the Additional Convertible Note on their respective dates of issuance as of March 8, 2019 and January 10, 2020, respectively, and at the end of the period as of June 30, 2020. Derivative Liability June 30, January 10, March 8, 2020 2020 2019 Expected dividend yield Discount rate 24.5 % 21.6 % 29.3 % Expected stock price volatility 76.7 % 103.9 % 101.1 % Risk-free interest rate 0.2 % 1.6 % 2.5 % Expected term 1.1 years 2 years 2 years Price of the underlying common stock $ 0.57 $ 0.65 $ 1.99 The table below summarizes the valuation inputs into the MCS model for the Short-Term Warrants and Long-Term Warrants at their respective dates of issuance. Short-Term Warrants Long-Term Warrants March 18, 2019 March 18, 2019 May 17, 2019 Conversion price $ 4.00 $ 2.56 $ 2.13 Expected stock price volatility 122.0 % 85.2 % 83.4 % Risk-free interest rate 2.5 % 2.2 % 2.2 % Expected term 1 year 5 years 5 years Price of the underlying common stock $ 2.48 $ 2.48 $ 1.58 The table below summarizes the range of valuation inputs into the Black-Scholes model for the Exchange Warrants on their date of issuance and immediately prior to the exchange. Exchange Warrants May 1, 2019 January 6, 2020 Conversion price $ 2.13 - $ 2.53 $ 2.13 Expected stock price volatility 84.1 % 87.3 % Risk-free interest rate 2.2 % 1.7 % Expected term 5 - 5.5 years 4.9 years Price of the underlying common stock $ 1.54 $ 0.58 The table below summarizes the range of valuation inputs into the Black-Scholes model for the warrant liabilities as of February 11, 2020, immediately prior to the reduction in exercise price pursuant to the Offer to Amend and Exercise. Short-Term Warrants Long-Term Warrants February 11, 2020 Conversion price $ 4.00 $2.13 - $2.56 Expected stock price volatility 97.1 % 87.9% - 89.2% Risk-free interest rate 1.6 % 1.7 % Expected term 7 months 4 years 2 months Price of the underlying common stock $ 0.79 $ 0.79 The table below summarizes the inputs for the Black Scholes option pricing model on the date of issuance. May 4, 2020 (Unaudited) Conversion price $ 0.5894 Expected stock price volatility 73.7 % Risk-free interest rate 0.4 % Expected term 5 years Price of the underlying common stock $ 0.50 |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following table summarizes the fair value hierarchy of financial liabilities measured at fair value as of June 30, 2020 and December 31, 2019, respectively. June 30, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Derivative liability $ — $ — $ 247,000 $ 247,000 Warrant liabilities — — — — Total liabilities at fair value $ — $ — $ 247,000 $ 247,000 December 31, 2019 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total Derivative liability $ — $ — $ 408,000 $ 408,000 Warrant liabilities — — 2,637,500 2,637,500 Total liabilities at fair value $ — $ — $ 3,045,500 $ 3,045,500 |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the changes in fair value of the derivative liability and warrant liabilities classified in Level 3. Gains and losses reported in this table include changes in fair value that are attributable to unobservable inputs. Six Months Ended June 30, 2020 Beginning balance as of December 31, 2019 $ 3,045,500 Issuance of derivative liability (the Additional Note) 370,000 Exchange of the April Warrants (380,600 ) Change in fair value of warrant liabilities (1,198,200 ) Change in fair value of derivative liability (531,000 ) Exercise of the Short-Term Warrants and Long-Term Warrants (1,058,700 ) Ending balance as of June 30, 2020 $ 247,000 The amount of total gain for the period included in earnings attributable to the change in unrealized gains relating to the fair value liabilities still held at the end of the period $ 531,000 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The potentially dilutive securities consisted of the following: Six Months Ended 2020 2019 Options outstanding under the Private Innovate Plan 6,028,781 6,240,792 Options outstanding under the Omnibus Plan 5,651,726 1,266,546 Options outstanding under the Option Grant Agreements granted to RDD Employees 1,014,173 — Warrants issued at a weighted-average exercise price of $55.31 154,403 154,403 Warrants issued at an exercise price of $2.54 2,233 349,555 Warrants issued at an exercise price of $3.18 113,980 1,410,358 Warrants issued at an exercise price of $0.5894 40,990,200 — Short-term warrants issued at an exercise price of $4.00 — 4,181,068 Long-term warrants issued at a weighted-average exercise price of $2.24 — 10,939,830 Total 53,955,496 24,542,552 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The convertible notes payable as of June 30, 2020 and December 31, 2019 consists of the following: June 30, 2020 December 31, 2019 Convertible Notes $ 8,400,000 $ 5,500,000 Less: principal payments of debt (3,506,951 ) (1,544,724 ) Less: unamortized debt discount and OID accretion (408,772 ) (770,621 ) Total $ 4,484,277 $ 3,184,655 |
STOCKHOLDERS_ EQUITY (DEFICIT)
STOCKHOLDERS’ EQUITY (DEFICIT) (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Fair Value Measurement Inputs and Valuation Techniques | The table below summarizes the valuation inputs into the MCS model for the derivative liability associated with the Unsecured Convertible Note and the Additional Convertible Note on their respective dates of issuance as of March 8, 2019 and January 10, 2020, respectively, and at the end of the period as of June 30, 2020. Derivative Liability June 30, January 10, March 8, 2020 2020 2019 Expected dividend yield Discount rate 24.5 % 21.6 % 29.3 % Expected stock price volatility 76.7 % 103.9 % 101.1 % Risk-free interest rate 0.2 % 1.6 % 2.5 % Expected term 1.1 years 2 years 2 years Price of the underlying common stock $ 0.57 $ 0.65 $ 1.99 The table below summarizes the valuation inputs into the MCS model for the Short-Term Warrants and Long-Term Warrants at their respective dates of issuance. Short-Term Warrants Long-Term Warrants March 18, 2019 March 18, 2019 May 17, 2019 Conversion price $ 4.00 $ 2.56 $ 2.13 Expected stock price volatility 122.0 % 85.2 % 83.4 % Risk-free interest rate 2.5 % 2.2 % 2.2 % Expected term 1 year 5 years 5 years Price of the underlying common stock $ 2.48 $ 2.48 $ 1.58 The table below summarizes the range of valuation inputs into the Black-Scholes model for the Exchange Warrants on their date of issuance and immediately prior to the exchange. Exchange Warrants May 1, 2019 January 6, 2020 Conversion price $ 2.13 - $ 2.53 $ 2.13 Expected stock price volatility 84.1 % 87.3 % Risk-free interest rate 2.2 % 1.7 % Expected term 5 - 5.5 years 4.9 years Price of the underlying common stock $ 1.54 $ 0.58 The table below summarizes the range of valuation inputs into the Black-Scholes model for the warrant liabilities as of February 11, 2020, immediately prior to the reduction in exercise price pursuant to the Offer to Amend and Exercise. Short-Term Warrants Long-Term Warrants February 11, 2020 Conversion price $ 4.00 $2.13 - $2.56 Expected stock price volatility 97.1 % 87.9% - 89.2% Risk-free interest rate 1.6 % 1.7 % Expected term 7 months 4 years 2 months Price of the underlying common stock $ 0.79 $ 0.79 The table below summarizes the inputs for the Black Scholes option pricing model on the date of issuance. May 4, 2020 (Unaudited) Conversion price $ 0.5894 Expected stock price volatility 73.7 % Risk-free interest rate 0.4 % Expected term 5 years Price of the underlying common stock $ 0.50 |
Schedule of Stock by Class | The Company had reserved shares of common stock for future issuance as follows: June 30, December 31, 2020 2019 Outstanding stock options 12,694,680 8,781,615 Warrants to purchase common stock 41,260,816 14,040,452 Shares issuable upon conversion of convertible debt 1,547,689 1,217,008 For possible future issuance under the Omnibus Plan 14,726,818 1,102,739 Total common shares reserved for future issuance 70,230,003 25,141,814 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The range of assumptions used in estimating the fair value of the RDD Options using the Black-Scholes option pricing model for the periods presented were as follows: Three and Six Months Ended Expected dividend yield — % Expected stock-price volatility 72% - 74% Risk-free interest rate 0.4% - 0.6% Expected term of options (in years) 5.0 - 10.0 The range of assumptions used in estimating the fair value of the options granted under the Omnibus Plan using the Black-Scholes option pricing model for the periods presented were as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Expected dividend yield 0% 0% 0% 0% Expected stock-price volatility 72% - 74% 70% 72% - 74% 68% - 72% Risk-free interest rate 0.4% - 0.6% 2.0% - 2.2% 0.4% - 0.6% 2.0% - 2.7% Expected term of options (in years) 5.0 - 10.0 5.7 5.0 - 10.0 5.4 - 10.0 The range of assumptions used in estimating the fair value of the options granted or re-measured under the Private Innovate Plan using the Black-Scholes option pricing model for the periods presented were as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Expected dividend yield 0% 0% 0% 0% Expected stock-price volatility —% —% —% 67% Risk-free interest rate —% —% —% 2.6% Expected term of options (in years) 0 0 0 8.2 - 8.7 |
Share-based Compensation, Activity | The following table summarizes stock option activity under the Amended Omnibus Plan: Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2019 2,717,870 $ 1.87 $ — 9.4 Options granted 2,933,856 0.67 — Options forfeited — — — Options exercised — — — Outstanding at June 30, 2020 5,651,726 1.25 — 9.4 Exercisable at June 30, 2020 4,243,881 1.41 — 9.2 Vested and expected to vest at June 30, 2020 5,519,649 $ 1.25 $ — 9.4 The following table summarizes stock option activity under the Private Innovate Plan: Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life (in years) Outstanding at December 31, 2019 6,063,745 $ 1.53 $ 496,275 5.4 Options granted — — — Options forfeited (34,964 ) 2.16 — Options exercised — — — Outstanding at June 30, 2020 6,028,781 1.53 526,849 3.7 Exercisable at June 30, 2020 5,910,695 1.52 526,849 3.6 Vested and expected to vest at June 30, 2020 6,026,508 $ 1.53 $ 526,849 3.7 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Total share-based compensation expense recognized in the accompanying condensed consolidated statements of operations and comprehensive loss was as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Research and development $ 1,460,550 $ 351,000 $ 1,588,550 $ 443,000 General and administrative 2,560,450 501,000 2,708,450 935,000 Total share-based compensation $ 4,021,000 $ 852,000 $ 4,297,000 $ 1,378,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments for Operating Leases | Future minimum payments under the Company’s lease liability were as follows: Year ended December 31, Operating Leases 2020 Lease payments 15,000 Less: imputed interest (295 ) Total $ 14,705 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | Jun. 30, 2020USD ($)$ / sharesshares | May 04, 2020USD ($)$ / sharesshares | Apr. 29, 2020USD ($)$ / sharesshares | Feb. 06, 2020$ / shares | Dec. 26, 2019shares | Dec. 19, 2019shares | Apr. 29, 2019USD ($)$ / sharesshares | Apr. 25, 2019$ / sharesshares | Mar. 18, 2019USD ($)$ / sharesshares | Jul. 13, 2018USD ($)shares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($)shares | Mar. 31, 2019shares | Jun. 30, 2020USD ($)$ / sharessegmentshares | Jun. 30, 2019USD ($)shares | Jul. 22, 2020USD ($) | Feb. 12, 2020$ / shares | Dec. 31, 2019$ / shares |
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Sale of stock, shelf registration maximum equity offering price | $ | $ 175,000,000 | |||||||||||||||||
Sale of stock, stockholders aggregate shares available-for-sale (in shares) | 13,990,403 | |||||||||||||||||
Sale of stock, shares issuable upon exercise of warrant (in shares) | 2,051,771 | |||||||||||||||||
Number of shares issued in transaction (in shares) | 4,318,272 | 4,181,068 | ||||||||||||||||
Number of securities called by each warrant (in shares) | 3,897,010 | |||||||||||||||||
Shares issued, price per share (in usd per share) | $ / shares | $ 2.025 | $ 2.33 | ||||||||||||||||
Proceeds from issuance of common stock | $ | $ 7,900,000 | $ 9,700,000 | ||||||||||||||||
Warrant term | 5 years | |||||||||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 0.10 | $ 2.13 | ||||||||||||||||
Common stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||
Restriction period | 45 days | |||||||||||||||||
Purchase price of each additional warrant (in dollars per share) | $ / shares | $ 0.125 | |||||||||||||||||
Exercise commencement period | 6 months | |||||||||||||||||
Proceeds from issuance of common stock and warrants | $ | $ 1,200,000 | $ 0 | $ 20,706,919 | |||||||||||||||
Issuance of common stock and warrants (in shares) | 12,230,418 | |||||||||||||||||
Number of shares issued per warrant (in shares) | 1.2 | |||||||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||
Proceeds from issuance of preferred stock and warrants | $ | $ 22,600,000 | $ 22,560,994 | 0 | |||||||||||||||
Proceeds from issuance of preferred stock and warrants, net. | $ | $ 19,200,000 | |||||||||||||||||
Exercise of warrants (in shares) | 3,593,714.4 | 1,847,309 | 1,847,309 | |||||||||||||||
Warrants, accumulated gross unrealized gain | $ | $ 1,729,200 | $ 1,729,200 | $ 1,729,200 | |||||||||||||||
Change in fair value of warrant liabilities | $ | 1,058,700 | $ 1,812,800 | 2,637,500 | 2,669,800 | ||||||||||||||
Warrant inducement expense | $ | 6,467,048 | 0 | 7,157,887 | 0 | ||||||||||||||
General and administrative expense | $ | 5,659,721 | 3,049,711 | $ 7,329,528 | $ 6,164,206 | ||||||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 53,955,496 | 24,542,552 | ||||||||||||||||
Number of operating segments | segment | 1 | |||||||||||||||||
Patent Costs | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
General and administrative expense | $ | $ 108,000 | $ 126,000 | $ 193,000 | $ 287,000 | ||||||||||||||
Short-term Warrants | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Number of securities called by each warrant (in shares) | 4,181,068 | |||||||||||||||||
Warrant term | 1 year | |||||||||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 0.10 | $ 4 | $ 0.10 | |||||||||||||||
Extension period | 6 months | |||||||||||||||||
Short-term Warrants | Measurement Input, Exercise Price | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, measurement input | $ / shares | 0.10 | 0.10 | 0.10 | |||||||||||||||
Long-term Warrants | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Number of securities called by each warrant (in shares) | 2,508,634 | |||||||||||||||||
Warrant term | 5 years | |||||||||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 2.56 | |||||||||||||||||
Long-term Warrants | Measurement Input, Exercise Price | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Warrants and rights outstanding, measurement input | $ / shares | 0.10 | 0.10 | 0.10 | |||||||||||||||
Warrant | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 2.13 | |||||||||||||||||
Number of securities called by warrants or rights (in shares) | 1,539,424 | 2,994,762 | 5,441,023 | 4,318,272 | 1,539,424 | 1,539,424 | ||||||||||||
Placement Agent Warrants | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Warrant term | 5 years | |||||||||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 2.53 | |||||||||||||||||
Number of securities called by warrants or rights (in shares) | 215,914 | |||||||||||||||||
Placement agent fees | $ | $ 35,000 | |||||||||||||||||
Deferred offering costs | $ | $ 25,000 | |||||||||||||||||
Exchange Warrants | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Number of shares issued per warrant (in shares) | 1.2 | |||||||||||||||||
Warrant inducement expense | $ | $ 0 | |||||||||||||||||
Offer to Amend and Exercise | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Change in fair value of warrant liabilities | $ | $ (1,058,700) | |||||||||||||||||
Private Placement | Series A Preferred Stock | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Warrant term | 5 years | |||||||||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 58.94 | |||||||||||||||||
Number of securities called by warrants or rights (in shares) | 382,779 | |||||||||||||||||
Warrant issuable per investment unit (in shares) | 1 | |||||||||||||||||
Broker Warrants | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Units warrant units issued (in shares) | 8,112 | |||||||||||||||||
Broker Warrants | Series A Preferred Stock | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Number of securities called by warrants or rights (in shares) | 10,899 | |||||||||||||||||
Warrant | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Gain on exchange of warrants | $ | $ 380,600 | |||||||||||||||||
Series A Preferred Stock | Private Placement | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Number of shares issued in transaction (in shares) | 382,779 | |||||||||||||||||
Shares issuable per investment unit (in shares) | 1 | |||||||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | |||||||||||||||||
Common shares issuable upon conversion (in shares) | 38,277,900 | |||||||||||||||||
Series A Preferred Stock | Broker Warrants | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Common shares issuable upon conversion (in shares) | 2,712,300 | |||||||||||||||||
H.C. Wainwright & Co., LLC and Ladenburg Thalmann & Co., Inc. | At-the-Market Offering | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Sale of stock, ATM maximum equity offering price | $ | $ 40,000,000 | |||||||||||||||||
Number of shares issued in transaction (in shares) | 705,714 | |||||||||||||||||
SunTrust Robinson Humphrey | Subsequent Event | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Sale of stock, ATM maximum equity offering price | $ | $ 40,000,000 | |||||||||||||||||
Common Stock | ||||||||||||||||||
Significant Accounting Policies Disclosure [Line Items] | ||||||||||||||||||
Issuance of common stock and warrants (in shares) | 42,695,948 | 4,318,272 | 4,886,782 | |||||||||||||||
Conversion of preferred stock to common stock (in shares) | 38,277,900 | 38,277,900 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accrued Expenses (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Accrued compensation and benefits | $ 1,105,521 | $ 574,332 |
Accrued clinical expenses | 1,995,441 | 4,143,269 |
Other accrued expenses | 183,133 | 30,150 |
Total | $ 3,284,095 | $ 4,747,751 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Valuation Input for Warrant and Derivative Liabilities (Details) | Jun. 30, 2020$ / sharesyear | May 04, 2020$ / sharesyear | Feb. 11, 2020$ / shares | Jan. 10, 2020$ / sharesyear | Jan. 06, 2020$ / shares | May 17, 2019$ / shares | May 01, 2019$ / shares | Mar. 18, 2019$ / shares | Mar. 08, 2019$ / sharesyear |
Discount rate | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Derivative liability, measurement input | 0.245 | 0.216 | 0.293 | ||||||
Conversion price | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.5894 | ||||||||
Conversion price | Short-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 4 | 4 | |||||||
Conversion price | Long-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 2.13 | 2.56 | |||||||
Conversion price | Exchange Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 2.13 | ||||||||
Expected stock price volatility | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Derivative liability, measurement input | 0.767 | 1.039 | 1.011 | ||||||
Warrants and rights outstanding, measurement input | 0.737 | ||||||||
Expected stock price volatility | Short-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.971 | 1.220 | |||||||
Expected stock price volatility | Long-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.834 | 0.852 | |||||||
Expected stock price volatility | Exchange Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.873 | 0.841 | |||||||
Risk-free interest rate | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Derivative liability, measurement input | 0.002 | 0.016 | 0.025 | ||||||
Warrants and rights outstanding, measurement input | 0.004 | ||||||||
Risk-free interest rate | Short-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.016 | 0.025 | |||||||
Risk-free interest rate | Long-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.017 | 0.022 | 0.022 | ||||||
Risk-free interest rate | Exchange Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.017 | 0.022 | |||||||
Expected Term | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Derivative liability, measurement input | year | 1.1 | 2 | 2 | ||||||
Warrants and rights outstanding, measurement input | year | 5 | ||||||||
Price of the underlying common stock | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Derivative liability, measurement input | 0.57 | 0.65 | 1.99 | ||||||
Warrants and rights outstanding, measurement input | 0.50 | 0.79 | |||||||
Price of the underlying common stock | Short-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 2.48 | ||||||||
Price of the underlying common stock | Long-term Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.79 | 1.58 | 2.48 | ||||||
Price of the underlying common stock | Exchange Warrants | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||||
Warrants and rights outstanding, measurement input | 0.58 | 1.54 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Fair Value Hierarchy of Financial Liabilities Measured at Fair Value (Details) - Fair Value, Measurements, Recurring - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Derivative liability | $ 247,000 | $ 408,000 |
Warrant liabilities | 0 | 2,637,500 |
Total liabilities at fair value | 247,000 | 3,045,500 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Derivative liability | 0 | 0 |
Warrant liabilities | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Derivative liability | 0 | 0 |
Warrant liabilities | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Derivative liability | 247,000 | 408,000 |
Warrant liabilities | 0 | 2,637,500 |
Total liabilities at fair value | $ 247,000 | $ 3,045,500 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes in Fair Value Derivative Liability (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Beginning balance of net derivative asset (liability) | $ 3,045,500 |
Ending balance of net derivative asset (liability) | 247,000 |
The amount of total gain for the period included in earnings attributable to the change in unrealized gains relating to the fair value liabilities still held at the end of the period | 531,000 |
Warrant | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Extinguishment of derivative liability | (380,600) |
Change in fair value | (1,198,200) |
Derivative Liability | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Issuance | 370,000 |
Change in fair value | (531,000) |
Short-Term and Long-Term Warrants | Warrant | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Extinguishment of derivative liability | $ (1,058,700) |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Potential Dilutive Securities (Details) - $ / shares | 6 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Apr. 29, 2020 | Feb. 12, 2020 | Apr. 25, 2019 | Mar. 18, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 53,955,496 | 24,542,552 | ||||
Exercise price of warrants or rights (in usd per share) | $ 0.10 | $ 2.13 | ||||
Short-term warrants issued at an exercise price of $4.00 | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Exercise price of warrants or rights (in usd per share) | $ 0.10 | $ 0.10 | $ 4 | |||
Long-term Warrants | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Exercise price of warrants or rights (in usd per share) | $ 2.56 | |||||
Stock options | Private Innovate 2015 Stock Incentive Plan | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 6,028,781 | 6,240,792 | ||||
Stock options | Omnibus Plan | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 5,651,726 | 1,266,546 | ||||
Stock options | RDD Employees | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,014,173 | 0 | ||||
Warrant | Warrants issued at a weighted-average exercise price of $55.31 | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 154,403 | 154,403 | ||||
Exercise price of warrants or rights (in usd per share) | $ 55.31 | |||||
Warrant | Warrants issued at an exercise price of $2.54 | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,233 | 349,555 | ||||
Exercise price of warrants or rights (in usd per share) | $ 2.54 | |||||
Warrant | Warrants issued at an exercise price of $3.18 | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 113,980 | 1,410,358 | ||||
Exercise price of warrants or rights (in usd per share) | $ 3.18 | |||||
Warrant | Warrants issued at an exercise price of $0.5894 | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 40,990,200 | 0 | ||||
Exercise price of warrants or rights (in usd per share) | $ 0.5894 | |||||
Warrant | Short-term warrants issued at an exercise price of $4.00 | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 4,181,068 | ||||
Exercise price of warrants or rights (in usd per share) | $ 4 | |||||
Warrant | Long-term Warrants | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 10,939,830 | ||||
Exercise price of warrants or rights (in usd per share) | $ 2.24 |
LIQUIDITY AND GOING CONCERN Nar
LIQUIDITY AND GOING CONCERN Narrative (Details) - USD ($) | May 04, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Proceeds from issuance of preferred stock and warrants | $ 22,600,000 | $ 22,560,994 | $ 0 |
MERGER AND ACQUISITION (Details
MERGER AND ACQUISITION (Details) - USD ($) $ in Millions | May 06, 2020 | Apr. 30, 2020 | Jun. 30, 2020 |
RDD Merger | |||
Business Acquisition [Line Items] | |||
Common stock consideration (in shares) | 37,860,510 | ||
Stock options outstanding (in shares) | 1,014,173 | ||
Value of common stock acquired | $ 26.6 | ||
Liabilities assumed | 1.3 | ||
Net assets received | $ 0.1 | ||
Naia Acquisition | |||
Business Acquisition [Line Items] | |||
Common stock consideration (in shares) | 4,835,438 | ||
Cash consideration | $ 2.1 | ||
Pre-payment consideration for operating costs | 0.1 | ||
Milestone payments | 80.4 | ||
Value of common stock acquired | 2.2 | ||
Liabilities assumed | $ 0.1 | ||
RDD Merger and Naia Acquisition | |||
Business Acquisition [Line Items] | |||
Purchase of in-process research and development expense | $ 32.3 |
DEBT - Senior Convertible Note
DEBT - Senior Convertible Note (Details) - USD ($) | Jan. 07, 2019 | Oct. 04, 2018 | Jan. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 |
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ 0 | $ 0 | $ 0 | $ 1,049,166 | ||||
Senior Convertible Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 5,196,667 | |||||||
Debt interest rate | 8.00% | |||||||
Interest rate upon default | 18.00% | |||||||
Repayments of short-term convertible debt | $ 1,049,167 | |||||||
Repayment of accrued interest convertible note payable | $ 1,399 | |||||||
Consideration paid to noteholder | $ 250,000 | |||||||
Convertible note option agreement purchase price | $ 5,200,000 | |||||||
Convertible note option accrued interest | $ 60,000 |
DEBT - Unsecured Convertible Pr
DEBT - Unsecured Convertible Promissory Note (Details) | Apr. 03, 2020USD ($) | Mar. 08, 2019USD ($)day$ / shares | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Short-term Debt [Line Items] | |||||||
Amortization of debt discount | $ (1,154,847) | $ (382,212) | |||||
Repayments of debt | 1,469,804 | 6,245,833 | |||||
Unsecured Convertible Promissory Note | |||||||
Short-term Debt [Line Items] | |||||||
Principal amount | $ 5,500,000 | $ 8,400,000 | $ 8,400,000 | $ 5,500,000 | |||
Conversion price (in dollars per share) | $ / shares | $ 3.25 | $ 0.45 | $ 0.45 | ||||
Redemption price, percentage | 115.00% | ||||||
Proceeds from notes payable | $ 5,000,000 | ||||||
Unamortized discount | (500,000) | ||||||
Financing costs | (20,000) | ||||||
Debt issuance costs | 37,000 | ||||||
Debt discount and derivative liability at the issuance date | $ 1,300,000 | ||||||
Amortization of debt discount | $ (400,000) | $ (300,000) | $ (800,000) | (400,000) | |||
Debt interest rate | 10.00% | ||||||
Interest rate upon default | 18.00% | ||||||
Repayments of debt | $ 0 | 2,000,000 | $ 0 | ||||
Repayments of debt, portion paid in cash | 1,500,000 | ||||||
Repayments of debt, portion paid in stock conversions | 500,000 | ||||||
Accrued interest | $ 100,000 | ||||||
Common stock, shares, issued (in shares) | shares | 1,287,696 | ||||||
Conversion discount | 26.00% | ||||||
Conversion feature | $ 200,000 | ||||||
Threshold trading days | day | 20 | ||||||
Stock price trigger (in dollars per share) | $ / shares | $ 10 | ||||||
Percentage of the VWAP | 80.00% | ||||||
Debt instrument, cap rate | 19.99% | ||||||
Unsecured Convertible Promissory Note | Standstill Agreement | |||||||
Short-term Debt [Line Items] | |||||||
Increase in outstanding balance | $ 150,000 | ||||||
Unsecured Convertible Promissory Note | Debt Instrument, Redemption, Period One | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, redemption period | 15 months | ||||||
Redemption price | $ 500,000 | ||||||
Unsecured Convertible Promissory Note | Debt Instrument, Redemption, Period Two | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, redemption period | 6 months | ||||||
Redemption price | $ 750,000 | ||||||
Unsecured Convertible Promissory Note | Minimum | |||||||
Short-term Debt [Line Items] | |||||||
Event of default rate of increase in outstanding obligations | 5.00% | ||||||
Unsecured Convertible Promissory Note | Maximum | |||||||
Short-term Debt [Line Items] | |||||||
Event of default rate of increase in outstanding obligations | 15.00% |
DEBT DEBT - Additional Note (De
DEBT DEBT - Additional Note (Details) | Jan. 10, 2020USD ($)day$ / shares | Mar. 08, 2019USD ($)day$ / shares | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |||||||
Amortization of debt discount | $ 1,154,847 | $ 382,212 | |||||
Repayments of debt | 1,469,804 | 6,245,833 | |||||
Unsecured Convertible Promissory Note | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | $ 5,500,000 | $ 8,400,000 | $ 8,400,000 | $ 5,500,000 | |||
Conversion price (in dollars per share) | $ / shares | $ 3.25 | $ 0.45 | $ 0.45 | ||||
Redemption price, percentage | 115.00% | ||||||
Proceeds from notes payable | $ 5,000,000 | ||||||
Unamortized discount | 500,000 | ||||||
Debt discount and derivative liability at the issuance date | $ 1,300,000 | ||||||
Amortization of debt discount | $ 400,000 | $ 300,000 | $ 800,000 | 400,000 | |||
Debt interest rate | 10.00% | ||||||
Interest rate upon default | 18.00% | ||||||
Repayments of debt | $ 0 | 2,000,000 | $ 0 | ||||
Threshold trading days | day | 20 | ||||||
Stock price trigger (in dollars per share) | $ / shares | $ 10 | ||||||
Percentage of the VWAP | 80.00% | ||||||
Debt instrument, cap rate | 19.99% | ||||||
Unsecured Convertible Promissory Note | Debt Instrument, Redemption, Period One | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price | $ 500,000 | ||||||
Unsecured Convertible Promissory Note | Debt Instrument, Redemption, Period Two | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price | $ 750,000 | ||||||
Unsecured Convertible Promissory Note | Additional Note | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | $ 2,750,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 3.25 | ||||||
Redemption price, percentage | 115.00% | ||||||
Proceeds from notes payable | $ 2,500,000 | ||||||
Unamortized discount | 250,000 | ||||||
Debt discount and derivative liability at the issuance date | $ 400,000 | ||||||
Amortization of debt discount | 100,000 | $ 200,000 | |||||
Debt interest rate | 10.00% | ||||||
Interest rate upon default | 18.00% | ||||||
Repayments of debt | $ 0 | ||||||
Threshold trading days | day | 20 | ||||||
Stock price trigger (in dollars per share) | $ / shares | $ 10 | ||||||
Percentage of the VWAP | 80.00% | ||||||
Debt instrument, cap rate | 19.99% | ||||||
Event of default rate of increase in outstanding obligations | 15.00% | ||||||
Interest rate increase in event of default | 10.00% | ||||||
Equity issuance with anti-dilution, price reset or variable pricing features (less than) | $ 2,500,000 | ||||||
Interest rate increase for minor defaults | 5.00% | ||||||
Unsecured Convertible Promissory Note | Additional Note | Debt Instrument, Redemption, Period One | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price | $ 500,000 | ||||||
Redemption period exception | 6 months | ||||||
Unsecured Convertible Promissory Note | Additional Note | Debt Instrument, Redemption, Period Two | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price | $ 750,000 |
DEBT - Schedule of Convertible
DEBT - Schedule of Convertible Note (Details) - Unsecured Convertible Promissory Note - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | Mar. 08, 2019 |
Short-term Debt [Line Items] | |||
Convertible Note | $ 8,400,000 | $ 5,500,000 | $ 5,500,000 |
Less: principal payments of debt | (3,506,951) | (1,544,724) | |
Less: unamortized debt discount and OID accretion | (408,772) | (770,621) | |
Total | $ 4,484,277 | $ 3,184,655 |
LICENSE AGREEMENTS (Details)
LICENSE AGREEMENTS (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2016 | Dec. 31, 2014 | Dec. 31, 2013 | |
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Royalty payment expiration requirement | 10 years | ||||
Accrued milestone fees | $ 0 | $ 0 | |||
Minimum | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Royalty payment percentage | 5.00% | ||||
Maximum | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Royalty payment percentage | 15.00% | ||||
Alba Agreement | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
License fees | $ 500,000 | ||||
Milestone payment | 1,500,000 | ||||
Sales range minimum | 100,000,000 | ||||
Sales range maximum | 1,500,000,000 | ||||
Alba Agreement | License and Service | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
License and services revenue | 150,000,000 | ||||
Alba Agreement | License | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
License costs | 2,500,000 | ||||
Milestone fee free sales target value | $ 1,500,000,000 | ||||
Seachaid Agreement | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
License fees | $ 200,000 | ||||
Milestone payment | 6,000,000 | ||||
Sales range minimum | 1,000,000 | ||||
Sales range maximum | $ 2,500,000 | ||||
Cedars License | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Milestone payment | 9,350,000 | ||||
U.S and EU | Amunix License, GLP-1 | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Milestone payment | 70,350,000 | ||||
U.S and EU | Amunix License, GLP-2 | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Milestone payment | 60,100,000 | ||||
China and Related Territories | Amunix License, GLP-1 | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Milestone payment | 20,450,000 | ||||
South Korea and Eastern Asia | Amunix License, GLP-2 | |||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||
Milestone payment | $ 20,450,000 |
STOCKHOLDERS_ EQUITY (DEFICIT_2
STOCKHOLDERS’ EQUITY (DEFICIT) (Details) - USD ($) | May 04, 2020 | Apr. 29, 2020 | Dec. 26, 2019 | Dec. 19, 2019 | Apr. 29, 2019 | Mar. 18, 2019 | Jul. 13, 2018 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 22, 2020 | Feb. 06, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | |||||||||||||
Capital stock authorized (in shares) | 360,000,000 | 360,000,000 | |||||||||||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||
Common stock, shares authorized (in shares) | 350,000,000 | 350,000,000 | 350,000,000 | ||||||||||
Preferred stock, shares authorized (in shares) | 600,000 | 10,000,000 | 10,000,000 | 10,000,000 | |||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||
Number of shares issued in transaction (in shares) | 4,318,272 | 4,181,068 | |||||||||||
Conversion feature | $ 3,100,000 | ||||||||||||
Preferred stock, value, issued | 12,500,000 | $ 0 | $ 0 | $ 0 | |||||||||
Preferred stock, value, outstanding | 7,000,000 | ||||||||||||
Preferred stock, shares issued (in shares) | 382,779 | 382,779 | 0 | ||||||||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | ||||||||||
Shares issued upon conversion (in shares) | 100 | 100 | |||||||||||
Common stock, shares, outstanding (in shares) | 136,232,886 | 136,232,886 | 39,477,667 | ||||||||||
Number of shares issued per warrant (in shares) | 1.2 | ||||||||||||
Exercise of warrants (in shares) | 3,593,714.4 | 1,847,309 | 1,847,309 | ||||||||||
Exercise of warrants (in shares) | 12,230,418 | ||||||||||||
Proceeds from issuance of warrants | $ 1,200,000 | ||||||||||||
Proceeds from issuance of preferred stock and warrants | $ 22,600,000 | $ 22,560,994 | $ 0 | ||||||||||
Warrant | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of securities called by warrants or rights (in shares) | 2,994,762 | 5,441,023 | 4,318,272 | 1,539,424 | 1,539,424 | ||||||||
Exchange Warrants | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of shares issued per warrant (in shares) | 1.2 | ||||||||||||
Series A Preferred Stock | Private Placement | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | ||||||||||||
Number of shares issued in transaction (in shares) | 382,779 | ||||||||||||
H.C. Wainwright & Co., LLC and Ladenburg Thalmann & Co., Inc. | At-the-Market Offering | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of shares issued in transaction (in shares) | 705,714 | ||||||||||||
Consideration received on transaction | $ 1,675,000 | ||||||||||||
Sale of stock, agent commissions fee | 3.00% | ||||||||||||
Sale of stock, ATM maximum equity offering price | $ 40,000,000 | ||||||||||||
SunTrust Robinson Humphrey | Subsequent Event | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Sale of stock, ATM maximum equity offering price | $ 40,000,000 |
STOCKHOLDERS_ EQUITY (DEFICIT_3
STOCKHOLDERS’ EQUITY (DEFICIT) - Warrants Valuation Inputs (Details) | May 04, 2020$ / sharesyear | Feb. 11, 2020$ / shares |
Conversion price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants and rights outstanding, measurement input | 0.5894 | |
Expected stock price volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants and rights outstanding, measurement input | 0.737 | |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants and rights outstanding, measurement input | 0.004 | |
Expected Term | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants and rights outstanding, measurement input | year | 5 | |
Price of the underlying common stock | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants and rights outstanding, measurement input | 0.50 | 0.79 |
STOCKHOLDERS_ EQUITY (DEFICIT_4
STOCKHOLDERS’ EQUITY (DEFICIT) - Reserve Shares of Common Stock (Details) - shares | Jun. 30, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | ||
Capital shares reserved for future issuance (in shares) | 70,230,003 | 25,141,814 |
Outstanding stock options | ||
Class of Stock [Line Items] | ||
Capital shares reserved for future issuance (in shares) | 12,694,680 | 8,781,615 |
Warrants to purchase common stock | ||
Class of Stock [Line Items] | ||
Capital shares reserved for future issuance (in shares) | 41,260,816 | 14,040,452 |
Shares issuable upon conversion of convertible debt | ||
Class of Stock [Line Items] | ||
Capital shares reserved for future issuance (in shares) | 1,547,689 | 1,217,008 |
For possible future issuance under the Omnibus Plan | ||
Class of Stock [Line Items] | ||
Capital shares reserved for future issuance (in shares) | 14,726,818 | 1,102,739 |
SHARE-BASED COMPENSATION - Narr
SHARE-BASED COMPENSATION - Narrative (Details) | Jun. 30, 2020USD ($)plan$ / sharesshares | Jan. 01, 2020shares | Jan. 01, 2019shares | Jun. 30, 2020USD ($)plan$ / sharesshares | Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2020USD ($)plan$ / sharesshares | Jun. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018 | Apr. 30, 2020shares | Dec. 31, 2019$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of stock option plans | plan | 2 | 2 | 2 | |||||||
Allocated share-based compensation expense | $ | $ 4,021,000 | $ 852,000 | $ 4,297,000 | $ 1,378,000 | ||||||
Restricted Stock Units (RSUs) | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Weighted-average grant date fair value of shares granted (in usd per share) | $ / shares | $ 0.57 | $ 1.44 | $ 0.57 | $ 1.44 | ||||||
Number of shares granted (in shares) | 415,948 | 415,948 | 490,000 | |||||||
Allocated share-based compensation expense | $ | $ 238,000 | $ 449,000 | $ 255,000 | $ 639,000 | ||||||
For possible future issuance under the Omnibus Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock options outstanding (in shares) | 5,651,726 | 5,651,726 | 5,651,726 | 2,717,870 | ||||||
Purchase price of common stock, percent | 5.00% | |||||||||
Number of additional shares authorized (in shares) | 20,794,492 | 1,973,883.35 | 1,304,441 | |||||||
Expected term | 10 years | |||||||||
Options granted (in shares) | 2,933,856 | |||||||||
Fair value of stock option awards vested | $ | $ 1,826,000 | |||||||||
Unrecognized compensation cost | $ | $ 600,000 | $ 600,000 | $ 600,000 | |||||||
Weighted-average period for recognizing cost | 3 years 8 months 12 days | |||||||||
Options available for future grants (in shares) | 14,726,818.35 | 14,726,818.35 | 14,726,818.35 | |||||||
Weighted-average grant date fair value of shares granted (in usd per share) | $ / shares | $ 0.41 | $ 0.41 | ||||||||
Number of shares granted (in shares) | 2,933,856 | 2,933,856 | ||||||||
Options exercised (in shares) | 0 | 0 | ||||||||
Non-cash compensation expense | $ | $ 2,700,000 | $ 2,700,000 | ||||||||
Weighted-average exercise price of options outstanding (in usd per share) | $ / shares | $ 1.25 | $ 1.25 | $ 1.25 | $ 1.87 | ||||||
For possible future issuance under the Omnibus Plan | Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting period | 3 years | |||||||||
For possible future issuance under the Omnibus Plan | Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting period | 4 years | |||||||||
Private Innovate 2015 Stock Incentive Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock options outstanding (in shares) | 6,028,781 | 6,028,781 | 6,028,781 | 6,063,745 | ||||||
Options granted (in shares) | 0 | 0 | ||||||||
Fair value of stock option awards vested | $ | $ 361,000 | |||||||||
Unrecognized compensation cost | $ | $ 100,000 | $ 100,000 | $ 100,000 | |||||||
Weighted-average period for recognizing cost | 1 year 6 months | |||||||||
Options exercised (in shares) | 0 | |||||||||
Weighted-average exercise price of options outstanding (in usd per share) | $ / shares | $ 1.53 | $ 1.53 | $ 1.53 | $ 1.53 | ||||||
RDD Merger | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Fair value of stock option awards vested | $ | $ 471,000 | $ 471,000 | ||||||||
Unrecognized compensation cost | $ | $ 0 | $ 0 | $ 0 | |||||||
Weighted-average exercise price of options outstanding (in usd per share) | $ / shares | $ 0.63 | $ 0.63 | $ 0.63 | |||||||
RDD Merger | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock options outstanding (in shares) | 1,014,173 |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Options Assumptions (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Private Innovate 2015 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected stock-price volatility | 0.00% | 0.00% | 0.00% | 67.00% |
Risk-free interest rate | 0.00% | 0.00% | 0.00% | 2.60% |
Expected term of options | 0 years | 0 years | 0 years | |
Private Innovate 2015 Stock Incentive Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term of options | 8 years 2 months 12 days | |||
Private Innovate 2015 Stock Incentive Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term of options | 8 years 8 months 12 days | |||
For possible future issuance under the Omnibus Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected stock-price volatility | 70.00% | |||
Expected stock price volatility, minimum | 72.00% | 72.00% | 68.00% | |
Expected stock price volatility, maximum | 74.00% | 74.00% | 72.00% | |
Risk-free interest rate, minimum | 0.40% | 2.00% | 0.40% | 2.00% |
Risk-free interest rate, maximum | 0.60% | 2.20% | 0.60% | 2.70% |
Expected term of options | 5 years 8 months 12 days | |||
For possible future issuance under the Omnibus Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term of options | 5 years | 5 years | 5 years 4 months 24 days | |
For possible future issuance under the Omnibus Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term of options | 10 years | 10 years | 10 years | |
RDD Merger | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected dividend yield | 0.00% | 0.00% | ||
Expected stock price volatility, minimum | 72.00% | 72.00% | ||
Expected stock price volatility, maximum | 74.00% | 74.00% | ||
Risk-free interest rate, minimum | 0.40% | 0.40% | ||
Risk-free interest rate, maximum | 0.60% | 0.60% | ||
RDD Merger | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term of options | 5 years | 5 years | ||
RDD Merger | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term of options | 10 years | 10 years |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Option Activity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Private Innovate 2015 Stock Incentive Plan | ||||
Number of Shares | ||||
Beginning balance (in shares) | 6,063,745 | |||
Options granted (in shares) | 0 | 0 | ||
Options forfeited (in shares) | (34,964) | |||
Options exercised (in shares) | 0 | |||
Ending balance (in shares) | 6,028,781 | 6,028,781 | 6,063,745 | |
Exercisable (in shares) | 5,910,695 | 5,910,695 | ||
Vested and expected to vest (in shares) | 6,026,508 | 6,026,508 | ||
Weighted-Average Exercise Price | ||||
Beginning balance (in usd per share) | $ 1.53 | |||
Options granted (in usd per share) | 0 | |||
Options forfeited (in usd per share) | 2.16 | |||
Options exercised (in usd per share) | 0 | |||
Ending balance (in usd per share) | $ 1.53 | 1.53 | $ 1.53 | |
Exercisable (in usd per share) | 1.52 | 1.52 | ||
Vested and expected to vest (in usd per share) | $ 1.53 | $ 1.53 | ||
Aggregate Intrinsic Value | ||||
Outstanding | $ 526,849 | $ 526,849 | $ 496,275 | |
Exercisable | 526,849 | 526,849 | ||
Vested and expected to vest | $ 526,849 | $ 526,849 | ||
Weighted-Average Remaining Contractual Life (in years) | ||||
Outstanding (in years) | 3 years 8 months 12 days | 5 years 4 months 24 days | ||
Exercisable (in years) | 3 years 7 months 6 days | |||
Vested and expected to vest (in years) | 3 years 8 months 12 days | |||
For possible future issuance under the Omnibus Plan | ||||
Number of Shares | ||||
Beginning balance (in shares) | 2,717,870 | |||
Options granted (in shares) | 2,933,856 | |||
Options forfeited (in shares) | 0 | |||
Options exercised (in shares) | 0 | 0 | ||
Ending balance (in shares) | 5,651,726 | 5,651,726 | 2,717,870 | |
Exercisable (in shares) | 4,243,881 | 4,243,881 | ||
Vested and expected to vest (in shares) | 5,519,649 | 5,519,649 | ||
Weighted-Average Exercise Price | ||||
Beginning balance (in usd per share) | $ 1.87 | |||
Options granted (in usd per share) | 0.67 | |||
Options forfeited (in usd per share) | 0 | |||
Options exercised (in usd per share) | 0 | |||
Ending balance (in usd per share) | $ 1.25 | 1.25 | $ 1.87 | |
Exercisable (in usd per share) | 1.41 | 1.41 | ||
Vested and expected to vest (in usd per share) | $ 1.25 | $ 1.25 | ||
Aggregate Intrinsic Value | ||||
Outstanding | $ 0 | $ 0 | $ 0 | |
Exercisable | 0 | 0 | ||
Vested and expected to vest | $ 0 | $ 0 | ||
Weighted-Average Remaining Contractual Life (in years) | ||||
Outstanding (in years) | 9 years 4 months 24 days | 9 years 4 months 24 days | ||
Exercisable (in years) | 9 years 2 months 12 days | |||
Vested and expected to vest (in years) | 9 years 4 months 24 days |
SHARED-BASED COMPENSATION - Fin
SHARED-BASED COMPENSATION - Financial Statements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share-based compensation expense | $ 4,021,000 | $ 852,000 | $ 4,297,000 | $ 1,378,000 |
Research and Development Expense | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share-based compensation expense | 1,460,550 | 351,000 | 1,588,550 | 443,000 |
General and Administrative Expense | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share-based compensation expense | $ 2,560,450 | $ 501,000 | $ 2,708,450 | $ 935,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) | Apr. 30, 2020 | Aug. 31, 2018 | Oct. 31, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 08, 2020 |
Loss Contingencies [Line Items] | ||||||||
Payment for management fee | $ 1,100,000 | |||||||
Severance provisions, annual base salary | 12 months | |||||||
Severance provisions, continuation of health insurance benefits | 12 months | |||||||
Severance costs, equal installments | 12 months | |||||||
Severance costs | $ 800,000 | $ 300,000 | $ 800,000 | $ 300,000 | ||||
Accrued severance | 500,000 | 500,000 | ||||||
Term of contract | 3 years | |||||||
Operating lease annual rental payments | $ 60,000 | |||||||
Operating lease monthly rental payments | $ 5,000 | |||||||
Lease payment term | 24 months | |||||||
Security deposit | $ 5,000 | |||||||
Renewal term | 2 years | |||||||
Operating lease, cost | 15,000 | $ 15,000 | 30,000 | $ 30,000 | ||||
Cash paid for operating lease | 100,000 | |||||||
Loss contingency, potential damages sought, value | $ 1,700,000 | |||||||
Potential claims and litigation accrual | $ 600,000 | $ 600,000 | ||||||
Accounting Standards Update 2016-02 | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease, weighted average discount rate, percent | 12.00% | |||||||
Chief Executive Officer | ||||||||
Loss Contingencies [Line Items] | ||||||||
Base annual salary | $ 450,000 | |||||||
Options granted (in shares) | 1,000,000 | |||||||
Annual bonus, percentage of base salary | 40.00% | |||||||
Severance costs, equal installments | 12 months | |||||||
Accelerated vesting term upon termination | 12 months | |||||||
Tranche 1 | Chief Executive Officer | ||||||||
Loss Contingencies [Line Items] | ||||||||
Award vesting percentage | 25.00% | |||||||
Tranche 2 | Chief Executive Officer | ||||||||
Loss Contingencies [Line Items] | ||||||||
Award vesting period | 48 months |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Future Minimum Payments for Operating Lease Liabilities (Details) | Jun. 30, 2020USD ($) |
Operating Leases | |
2020 Lease payments | $ 15,000 |
Less: imputed interest | (295) |
Total | $ 14,705 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) shares in Millions | Jul. 06, 2020 | Jul. 31, 2020 | Oct. 31, 2017 | Jul. 22, 2020 |
Subsequent Event [Line Items] | ||||
Term of contract | 3 years | |||
Operating lease annual rental payments | $ 60,000 | |||
Operating lease monthly rental payments | $ 5,000 | |||
Renewal term | 2 years | |||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Term of contract | 4 years | |||
Operating lease annual rental payments | $ 72,000 | |||
Operating lease monthly rental payments | $ 6,000 | |||
Renewal term | 3 years | |||
Options granted (in shares) | 4.6 | |||
Subsequent Event | License agreement, Naia acquisition | ||||
Subsequent Event [Line Items] | ||||
Milestone payment | $ 2,100,000 | |||
Subsequent Event | Performance Shares | ||||
Subsequent Event [Line Items] | ||||
Options granted (in shares) | 1.5 | |||
Award vesting period | 4 years | |||
Subsequent Event | Management | ||||
Subsequent Event [Line Items] | ||||
Options granted (in shares) | 2.5 | |||
Award vesting period | 4 years | |||
Subsequent Event | Director | ||||
Subsequent Event [Line Items] | ||||
Options granted (in shares) | 0.7 | |||
Award vesting period | 3 years | |||
Subsequent Event | SunTrust Robinson Humphrey | ||||
Subsequent Event [Line Items] | ||||
Sale of stock, ATM maximum equity offering price | $ 40,000,000 | |||
Commission rate | 3.00% |