Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Entity Registrant Name | ARIDIS PHARMACEUTICALS, INC. | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,912,227 | |
Entity Central Index Key | 0001614067 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 8,519 | $ 24,237 |
Accounts receivable | 1,000 | 1,660 |
Other receivables | 1,448 | 438 |
Prepaid expenses and other current assets | 2,390 | 2,012 |
Total current assets | 13,357 | 28,347 |
Property and equipment, net | 1,135 | 1,271 |
Intangible assets, net | 35 | 38 |
Equity method investment | 332 | 960 |
Other assets | 1,015 | 995 |
Total assets | 15,874 | 31,611 |
Current liabilities: | ||
Accounts payable | 1,544 | 2,331 |
Accrued liabilities | 3,468 | 2,944 |
Deferred revenue | 22 | |
Total current liabilities | 5,012 | 5,297 |
Total liabilities | 5,012 | 5,297 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity: | ||
Common stock (par value $0.0001; 100,000,000 shares authorized; shares issued and outstanding: 8,107,290 and 8,104,757, as of June 30, 2019 and December 31, 2018, respectively) | 1 | 1 |
Additional paid-in capital | 98,395 | 97,401 |
Accumulated deficit | (87,534) | (71,088) |
Total stockholders' equity | 10,862 | 26,314 |
Total liabilities and stockholders' equity | 15,874 | 31,611 |
Series A Convertible Preferred Stock | ||
Stockholders' equity: | ||
Series A convertible preferred stock (par value $0.0001; 60,000,000 shares authorized; zero shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively) | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 8,107,290 | 8,104,757 |
Common stock, shares outstanding (in shares) | 8,107,290 | 8,104,757 |
Series A Convertible Preferred Stock | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Convertible preferred stock, shares issued (in shares) | 0 | 0 |
Convertible preferred stock, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue: | ||||
Grant revenue | $ 22 | $ 1,022 | $ 344 | |
Operating expenses: | ||||
Research and development | $ 6,653 | 3,885 | 13,771 | 10,511 |
General and administrative | 1,613 | 687 | 3,254 | 1,753 |
Total operating expenses | 8,266 | 4,572 | 17,025 | 12,264 |
Loss from operations | (8,266) | (4,550) | (16,003) | (11,920) |
Other income (expense): | ||||
Interest and other income, net | 69 | 68 | 185 | 142 |
Change in fair value of warrant liability | 3,058 | 3,021 | ||
Equity in net loss from equity method investment | 186 | 628 | ||
Net loss | (8,383) | (1,424) | (16,446) | (8,757) |
Preferred dividends | (535) | (1,352) | ||
Net loss available to common stockholders | $ (8,383) | $ (1,959) | $ (16,446) | $ (10,109) |
Weighted-average shares outstanding used in computing net loss available to common stockholders: | ||||
Basic (in shares) | 8,107,290 | 166,373 | 8,106,484 | 166,373 |
Diluted (in shares) | 8,107,290 | 166,373 | 8,106,484 | 166,373 |
Net loss per common share: | ||||
Basic (in dollars per share) | $ (1.03) | $ (8.56) | $ (2.03) | $ (52.63) |
Diluted (in dollars per share) | (1.03) | (8.56) | (2.03) | (52.63) |
Preferred dividends: | ||||
Basic (in dollars per share) | (3.22) | (8.13) | ||
Diluted (in dollars per share) | (3.22) | (8.13) | ||
Net loss per share available to common stockholders: | ||||
Basic (in dollars per share) | (1.03) | (11.78) | (2.03) | (60.76) |
Diluted (in dollars per share) | $ (1.03) | $ (11.78) | $ (2.03) | $ (60.76) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Series A Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balances at the beginning of the period at Dec. 31, 2017 | $ 74,202 | $ (15,140) | $ (47,626) | $ (62,766) | |
Balances at the beginning of the period (in shares) at Dec. 31, 2017 | 36,196,193 | 166,373 | |||
Changes in equity | |||||
Series A convertible preferred stock dividends accrued | (1,352) | (1,352) | |||
Stock-based compensation | 855 | 855 | |||
Net Loss | (8,757) | (8,757) | |||
Balances at the end of the period at Jun. 30, 2018 | $ 74,202 | (14,285) | (57,735) | (72,020) | |
Balances at the end of the period (shares) at Jun. 30, 2018 | 36,196,193 | 166,373 | |||
Balances at the beginning of the period at Mar. 31, 2018 | $ 74,202 | (14,637) | (55,776) | (70,413) | |
Balances at the beginning of the period (in shares) at Mar. 31, 2018 | 36,196,193 | 166,373 | |||
Changes in equity | |||||
Series A convertible preferred stock dividends accrued | (535) | (535) | |||
Stock-based compensation | 352 | 352 | |||
Net Loss | (1,424) | (1,424) | |||
Balances at the end of the period at Jun. 30, 2018 | $ 74,202 | (14,285) | (57,735) | (72,020) | |
Balances at the end of the period (shares) at Jun. 30, 2018 | 36,196,193 | 166,373 | |||
Balances at the beginning of the period at Dec. 31, 2018 | $ 1 | 97,401 | (71,088) | 26,314 | |
Balances at the beginning of the period (in shares) at Dec. 31, 2018 | 8,104,757 | ||||
Changes in equity | |||||
Exercise of stock options | 8 | $ 8 | |||
Exercise of stock options (in shares) | 2,533 | 2,533 | |||
Stock-based compensation | 986 | $ 986 | |||
Net Loss | (16,446) | (16,446) | |||
Balances at the end of the period at Jun. 30, 2019 | $ 1 | 98,395 | (87,534) | 10,862 | |
Balances at the end of the period (shares) at Jun. 30, 2019 | 8,107,290 | ||||
Balances at the beginning of the period at Mar. 31, 2019 | $ 1 | 97,859 | (79,151) | 18,709 | |
Balances at the beginning of the period (in shares) at Mar. 31, 2019 | 8,107,290 | ||||
Changes in equity | |||||
Stock-based compensation | 536 | 536 | |||
Net Loss | (8,383) | (8,383) | |||
Balances at the end of the period at Jun. 30, 2019 | $ 1 | $ 98,395 | $ (87,534) | $ 10,862 | |
Balances at the end of the period (shares) at Jun. 30, 2019 | 8,107,290 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (16,446) | $ (8,757) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 166 | 124 |
Stock-based compensation expense | 986 | 855 |
Equity in net loss from equity method investment | 628 | |
Change in fair value of preferred stock warrants | (3,021) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 660 | |
Other receivables | (1,010) | |
Prepaid expenses and other current assets | (833) | (560) |
Other assets | (20) | |
Accounts payable | (787) | (55) |
Accrued liabilities | 979 | 51 |
Deferred revenue | (22) | 656 |
Net cash used in operating activities | (15,699) | (10,707) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (27) | (919) |
Net cash used in investing activities | (27) | (919) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 8 | |
Net cash provided by financing activities | 8 | |
Net decrease in cash and cash equivalents | (15,718) | (11,626) |
Cash and cash equivalents at: | ||
Cash and cash equivalents at beginning of period | 24,237 | 25,096 |
Cash and cash equivalents at end of period | 8,519 | 13,470 |
Supplemental cash flow disclosures: | ||
Cash paid for taxes | $ 2 | |
Supplemental noncash financing activities: | ||
Preferred stock dividends accrued | $ 1,352 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation Organization Aridis Pharmaceuticals, Inc. (the "Company" or "we" or "our") was established as a California limited liability corporation in 2003. The Company converted to a Delaware C corporation on May 21, 2014. Our principal place of business is in San Jose, California. We are a late-stage biopharmaceutical company focused on developing new breakthrough therapies for infectious diseases and addressing the growing problem of antibiotic resistance. The Company has a deep, diversified portfolio of clinical and pre-clinical stage anti-infective product candidates that are complimented by a fully human monoclonal antibody discovery platform technology. Two of the Company’s clinical candidates are at pivotal trial stage. The Company's suite of anti-infective monoclonal antibodies offers opportunities to profoundly alter the current trajectory of increasing antibiotic resistance and improve the health outcome of many of the most serious life-threatening infections particularly in hospital settings. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements (unaudited) include the amounts of the Company and our wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated financial statements (unaudited) have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying condensed consolidated financial statements (unaudited) reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the preceding fiscal year contained in the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on March 28, 2019. The condensed consolidated financial statements (unaudited) include the accounts of the Company and its two wholly‑owned subsidiaries, Aridis Biopharmaceuticals, Inc. and Aridis Pharmaceuticals, C.V. All intercompany balances and transactions have been eliminated in consolidation. The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. Certain prior period amounts have been reclassified to conform to current period presentation. Reverse Stock Split On August 3, 2018, the Company effected a 1 for 6.417896 reverse stock split of the Company’s common stock. The par value and the number of authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock share and per-share amounts for all periods presented in this Quarterly Report on Form 10-Q have been adjusted retroactively to reflect the reverse stock split. Going Concern The accompanying condensed consolidated financial statements (unaudited) have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities in their normal course of business. The Company has suffered recurring losses from operations since inception and negative cash flows from operating activities during the six months ended June 30, 2019 and the year ended December 31, 2018. At June 30, 2019, the Company had cash and cash equivalents of $8.5 million, working capital of $8.3 million and an accumulated deficit of $87.5 million. In July 2019, the Company issued and sold 801,820 shares of restricted common stock at a price of approximately $12.47 per share and received total net proceeds of approximately $9.2 million (see Note 12). Management expects to incur additional operating losses in the foreseeable future as the Company continues its product development programs. The Company believes that its current available cash and cash equivalents, along with the additional cash raised from the sale of restricted common stock in July 2019, will not be sufficient to fund its planned expenditures and meet the Company’s obligations for at least the one-year period following its financial statement issuance date. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company plans to fund its losses from operations and capital funding needs through current cash on hand and future debt and equity financings which we may obtain through one or more public or private equity offerings, debt financings, government or other third-party funding, strategic alliances and licensing or collaboration arrangements. The Company may be unable to secure additional financing or other sources of funding on acceptable terms, or at all. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate its research and development programs or future commercialization efforts, which could adversely affect its future business prospects and its ability to continue as a going concern. Our expenses and resulting cash burn during the six months ended June 30, 2019, were largely due to costs associated with launching the Phase 3 study of AR-301 for the treatment of ventilator associated pneumonia (VAP) caused by the Staphylococus aureus bacteria and the Phase 2 study of AR-105 for the treatment of VAP caused by the Pseudomonas aeruginosa bacteria. The AR-301 study start up phase contains a disproportionately high percentage of total study expenses which have been largely completed. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the condensed consolidated financial statements (unaudited) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Such estimates include those related to the evaluation of our ability to continue as a going concern, revenue recognition, allowance for doubtful accounts, long-lived assets, income taxes, assumptions used in the Black-Scholes-Merton (“BSM”) model to calculate the fair value of stock-based compensation, Monte Carlo Simulation (“MSM”) model to calculate the fair value of warrants, deferred tax asset valuation allowances, valuation of the Company’s common and convertible preferred stock, fair value assumptions used in the valuation of warrants, preclinical study and clinical trial accruals and various accrued liabilities. Actual results could differ from those estimates. Concentration of Risk The Company’s cash and cash equivalents are maintained at financial institutions in the United States of America. Deposits held by these institutions may exceed the amount of insurance provided on such deposits. For the three and six months ended June 30, 2019 and 2018, one customer accounted for 100% of total revenue. This customer is located in the United States. As of June 30, 2019, one customer accounted for 100% of accounts receivable. As of December 31, 2018, two customers accounted for 60% and 40% of total accounts receivable. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of checking account and money market account balances. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company considers the credit worthiness of its customers but does not require collateral in advance of a sale. The Company evaluates collectability and maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio when necessary. The allowance is based on the Company’s best estimate of the amount of losses in the Company’s existing accounts receivable, which is based on customer creditworthiness, facts and circumstances specific to outstanding balances, and payment terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2019 and December 31, 2018, there were no allowances for doubtful accounts. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight‑line method over the estimated useful lives of the assets, generally between three and five years. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the condensed consolidated statement of operations in the period realized. Intangible Assets Intangible assets are recorded at cost and amortized over the estimated useful life of the asset. Intangible assets consist of licenses with various institutions whereby the Company has rights to use intangible property obtained from such institutions. Impairment of Long‑Lived Assets The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment is measured by the excess of the carrying amount of the assets over fair value less the costs to sell the assets, generally determined using the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets as of June 30, 2019 and December 31, 2018. Revenue Recognition Effective January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. Under this method, results for reporting periods beginning after January 1, 2019 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with ASC 605, Revenue Recognition (“ASC 605”). ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue at a point in time, or over time, as the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company enters into licensing and development agreements which are within the scope of ASC 606, under which it may collaborate with third parties to research, develop, manufacture and commercialize its product candidates. The terms of these arrangements may include payment to the Company of one or more of the following: nonrefundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. As part of the accounting for customer arrangements, the Company must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment to determine whether milestones or other variable consideration should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. In developing the stand-alone price for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validates the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance obligations. The Company records any amounts received prior to satisfying the revenue recognition criteria as deferred revenue. Amounts recognized as revenue, but not yet received or invoiced are recorded within other receivables on the condensed consolidated balance sheet. The Company only has one contract within the scope of ASC 606, the Development Program Letter Agreement (the “CFF Agreement”) with Cystic Fibrosis Foundation (CFF or CF Foundation). Under the CFF Agreement, CFF made an upfront payment of $200,000 and will make milestone payments to the company as certain milestones defined in the agreement are met. The Company has determined that there is one performance obligation under the CFF Agreement. Hence, all of the estimated transaction price is allocated to this combined performance obligation and is recognized as revenue by measuring progress using the input (cost-to-cost) method, limited by the variable consideration attributed to the probable completion of certain milestones as defined in the agreement. For the three months ended June 30, 2019 and 2018, grant revenue totaled approximately $0 and $22,000, respectively, and for the six months ended June 30, 2019 and 2018, grant revenue totaled approximately $1.0 million and $344,000, respectively. All grant revenue was derived from our award agreement with the CF Foundation. Costs for Collaborative Arrangements Costs incurred under collaborative arrangements include personnel costs, laboratory supplies, and fees paid to third parties. These amounts are included in research and development in the accompanying condensed consolidated statement of operations. For the three and six months ended June 30, 2018, the Company incurred expenses of $161,000 and $318,000, respectively, related to its collaborative arrangement. The Company did not incur any expenses related to its collaborative arrangement during the three and six months ended June 30, 2019 due to the termination of the Company’s collaborative arrangement in 2018. Research and Development We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of: · salaries and related overhead expenses, which include stock-based compensation and benefits for personnel in research and development functions; · fees paid to consultants and contract research organizations, or CROs, including in connection with our preclinical studies and clinical trials and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial material management and statistical compilation and analyses; · costs related to acquiring and manufacturing clinical trial materials; · costs related to compliance with regulatory requirements; and · payments related to licensed products and technologies. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered or when the services are performed. Stock‑Based Compensation Effective January 1, 2019, the Company early adopted Accounting Standards Update (“ASU”) No. 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting . The Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair values, which the Company determines using the BSM option pricing model, on a straight-line basis over the requisite service period for the award. The Company accounts for forfeitures as they occur. The BSM option pricing model incorporates various highly sensitive assumptions, including the fair value of our common stock, expected volatility, expected term and risk-free interest rates. The weighted average expected life of options was calculated using the simplified method as prescribed by the SEC’s Staff Accounting Bulletin, Topic 14 (“SAB Topic 14”). This decision was based on the lack of relevant historical data due to our limited historical experience. In addition, due to our limited historical data, the estimated volatility also reflects the application of SAB Topic 14, incorporating the historical volatility of comparable companies whose stock prices are publicly available. The risk-free interest rate for the periods within the expected term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield was zero, as we have never declared or paid dividends and have no plans to do so in the foreseeable future. Prior to the completion of the Company’s initial public offering of common stock on August 16, 2018, due to the absence of a public market trading for the Company’s common stock, it was necessary to estimate the fair value of the common stock underlying the Company’s stock-based awards when performing fair value calculations. Income Taxes The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by the relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the positions sustainability and is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. At each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. Comprehensive Loss The Company has no items of comprehensive income or loss other than net loss. Loss Per Share Basic loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted‑average number of common shares outstanding during the period. For diluted loss per share calculation purposes, the net loss available to commons shareholders is adjusted to add back any preferred stock dividends reflected in the condensed consolidated statement of operations for the respective periods. The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive: Three and Six Months Ended June 30, 2019 2018 (unaudited) (unaudited) Convertible preferred stock — 5,723,919 Stock options to purchase common stock 1,250,145 742,124 Preferred stock warrants — 1,359,635 Common stock warrants 1,966,930 607,295 3,217,075 8,432,973 The convertible preferred stock and preferred stock warrants in the previous table reflect the conversion of these instruments into their common stock equivalents as of the dates reported. JOBS Act Accounting Election The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to take advantage of this provision and, as a result, we will adopt the extended transition period available under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided under the JOBS Act. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC 605 and creates a new topic, ASC 606. In 2015 and 2016, the FASB issued additional ASUs related to ASC 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. Companies have the option of applying this new guidance retrospectively to each prior reporting period presented (the full retrospective method) or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application (the modified retrospective method). The Company only has one contract, the CFF Agreement, within the scope of ASC 606. The cumulative-effect of adopting ASC 606 on January 1, 2019, using the modified retrospective method, was immaterial. The most significant changes under ASC 606 relate to the Company’s determination of transaction price at inception and each reporting period, the revenue recognition pattern under step (v) above for the CFF Agreement as well as treatment of variable consideration in the form of milestone payments. Under ASC 605, the Company recognized revenue under the milestone method up to the limit of the prior approval funding amounts, and when the Company determined that it had earned the right to receive the recognized portion according to the terms of the grant awarded. Upfront payment of $200,000 was recognized straight-line over the term of the contract as the Company believed the upfront fee related to services performed throughout the contract period and the upfront fee did not represent a substantive milestone within the agreement. Under ASC 606, the Company is recognizing the revenue allocated to the one performance obligation measuring progress using the input (cost-to-cost) method, limited by the variable consideration attributed to the probable completion of certain milestones as defined in the agreement. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting , which is intended to simplify the accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. For public entities, ASU 2018-07 is effective for fiscal years beginning after December 15, 2018. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-07 is effective for the Company for the year ending on December 31, 2020, and all interim periods within. Early adoption is permitted. The Company early adopted this standard on January 1, 2019. The adoption of this standard did not have a material effect on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases , which provides clarification to ASU 2016-02. These ASUs (collectively, the new lease standard) require an entity to recognize a lease liability and a right-of-use asset on the balance sheet for leases with lease terms of more than twelve months. Lessor accounting is largely unchanged, while lessees will no longer be provided with a source of off-balance sheet financing. Initial guidance required the adoption of the new lease standard using the modified retrospective transition method. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842)—Targeted Improvements , which allows entities to elect an optional transition method where entities may continue to apply the existing lease guidance during the comparative periods and apply the new lease requirements through a cumulative effect adjustment in the period of adoptions rather than in the earliest period presented. In March 2019, FASB issued ASU 2019-01, Codification improvements , which provides clarification on implementation issued associated with adopting ASU 2016-02. ASU 2019-01 enhances the guidance in ASC 842 surrounding the fair value of underlying assets for lessors, presentation of sales-type and direct financing leases on the statement of cash flows, and transition guidance surrounding accounting changes and error corrections. This guidance is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As a result of Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2016-02 is effective for the Company for the year ended December 31, 2020, and all interim periods within. In July 2019, the FASB voted to issue proposals that would delay the effective date for adopting the leasing standard updates to Topic 842 for private companies, not-for-profit organizations, and smaller reporting companies. If the proposed adoption date deferral is passed, ASU 2016-02 would be effective for the Company for the year ended December 31, 2021, and all interim periods within, due to its option to defer the adoption of new accounting standards under the JOBS Act. Early adoption is permitted. While the Company continues to review its current accounting policies and practices to identify potential differences that would result from applying the new guidance, the Company expects that its non-cancellable operating lease commitments with a term of more than twelve months will be subject to the new guidance and recognized as right-of-use assets and operating lease liabilities on the Company's condensed consolidated balance sheets upon adoption. The Company expects to elect transitional practical expedients such that the Company will not need to reassess whether contracts are leases and will retain lease classification and initial direct costs for leases existing prior to the adoption of the new lease standard. |
Fair Value Disclosure
Fair Value Disclosure | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosure | |
Fair Value Disclosure | 3. Fair Value Disclosure The carrying value of the Company’s cash and cash equivalents, prepaid expenses and other current assets, other assets, accounts payable, accrued liabilities, and convertible notes payable approximate fair value due to the short‑term nature of these items. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three‑level valuation hierarchy for disclosure of fair value measurements as follows: Level I Unadjusted quoted prices in active markets for identical assets or liabilities; Level II Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level III Unobservable inputs that are supported by little or no market activity for the related assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There were no fair value measurements as of June 30, 2019. Fair Value at December 31, 2018 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Deferred charge related to stock options $ 455 $ — $ 455 $ — Totals $ 455 $ — $ 455 $ — Liabilities: Stock option liability $ 455 $ — $ 455 $ — Totals $ 455 $ — $ 455 $ — |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Components | |
Balance Sheet Components | 4. Balance Sheet Components Property and Equipment, net Property and equipment, net consist of the following (in thousands): June 30, December 31, 2019 2018 (unaudited) Lab equipment $ 1,764 $ 1,737 Computer equipment and software 25 25 Total property and equipment 1,789 1,762 Less: Accumulated depreciation (654) (491) Property and equipment, net $ 1,135 $ 1,271 Depreciation expense was approximately $82,000 and $72,000 for the three months ended June 30, 2019 and 2018, respectively, and approximately $163,000 and $122,000 for the six months ended June 30, 2019 and 2018, respectively. Intangible Assets, net Intangible assets, net consist of the following (in thousands): June 30, December 31, 2019 2018 (unaudited) Licenses $ 81 $ 81 Less: Accumulated amortization (46) (43) Intangible assets, net $ 35 $ 38 Amortization expense was approximately $1,000 and $1,000 for the three months ended June 30, 2019 and 2018, respectively, and approximately $3,000 and $2,000 for the six months ended June 30, 2019 and 2018, respectively. Accrued Liabilities Accrued liabilities consist of the following (in thousands): June 30, December 31, 2019 2018 (unaudited) Research and development services $ 3,072 $ 2,179 Stock option liability — 455 Payroll related expenses 199 254 Professional services 197 56 Accrued liabilities $ 3,468 $ 2,944 |
Equity Method Investment
Equity Method Investment | 6 Months Ended |
Jun. 30, 2019 | |
Equity Method Investment | |
Equity Method Investment | 5. Equity Method Investment On February 11, 2018, the Company entered into a joint venture agreement (the “JV Agreement”) with Shenzen Hepalink Pharmaceutical Group Co., Ltd., a related party, principal shareholder of the Company, and a Chinese entity (“Hepalink”), for developing and commercializing products for infectious diseases. Under the terms of the JV Agreement, the Company is obligated to contribute $1 million and the license of its technology relating to the Company’s AR-101 and AR-301 product candidates for use in the joint venture entity (the “JV Entity”) in the territories of the Republic of China, Hong Kong, Macau and Taiwan (the “Territory”) and initially owns 49% of the JV Entity. On July 2, 2018, the JV Entity received final approval from the government of the Peoples Republic of China. On August 6, 2018, the Company entered into an amendment to the JV Agreement with Hepalink whereby the Company agreed to additionally contribute an exclusive, revocable, and royalty-free right and license to its AR-105 product candidate in the Territory. Pursuant to the JV Agreement and the amendment, Hepalink initially owns 51% of the JV Entity and is obligated to contribute the equivalent of $7.2 million to the JV Entity. Additionally, Hepalink is obligated to make an additional equity investment of $10.8 million or more at the time of the JV Entity’s first future financing. The Company evaluated the accounting for the JV Agreement entered into noting that it did not meet the accounting definition of a joint venture and instead meets the definition of a variable interest entity. The Company concluded that it is not the primary beneficiary of the JV Entity and therefore is not required to consolidate the entity. This conclusion was based on the fact that the equity-at-risk is insufficient to support operations without additional investment and that the Company does not hold decision-making power over activities that significantly impact the JV Entity’s operations. The Company accounted for its investment in the JV Entity as an equity method investment. The Company recorded the equity method investment at $1 million which represents the Company’s contribution into the JV Entity. The Company’s license contributed to the JV Entity was recorded at its carryover basis of $0. For the three and six months ended June 30, 2019, the Company recognized approximately $186,000 and $628,000 losses from the operations of the JV Entity, respectively. For the three and six months ended June 30, 2018, the Company did not recognize any losses from the operations of the JV Entity as the JV operations had not started until the third quarter of 2018. As of June 30, 2019 and December 31, 2018, the Company’s equity method investment in the JV Entity was approximately $332,000 and $960,000, respectively. |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2019 | |
Warrants | |
Warrants | 6. Warrants Common Stock Warrant Expense In November 2015, an engagement letter was effectuated with the Company’s current Vice Chairman of the Board of Directors. Under the terms of the engagement, upon being appointed the Company’s Vice Chairman and the closing of a minimum of $25 million in gross proceeds from sales of its Series A convertible preferred stock under a private placement memorandum, the Vice Chairman would receive 234,860 common stock warrants. On December 12, 2016, both of the aforementioned conditions had been met and the Company issued 234,860 common stock warrants at an exercise price of $14.50 per share. The fair value of the warrants was determined using a Monte Carlo simulation method which calculates the estimated value based on running numerous simulations and analyzing the various outcomes. The total fair value of the award was approximately $661,000 and is being amortized over the five-year vesting period. For each of the three months ended June 30, 2019 and 2018 and for each of the six months ended June 30, 2019 and 2018, the Company recorded stock-based compensation expense of approximately $33,000 and $66,000, respectively, related to these warrants. |
Convertible Preferred Stock
Convertible Preferred Stock | 6 Months Ended |
Jun. 30, 2019 | |
Convertible Preferred Stock | |
Convertible Preferred Stock | 7. Convertible Preferred Stock In connection with the IPO, the holders of a majority of the Series A Preferred Stock approved the mandatory conversion of the Series A Preferred Stock into one share of common stock for every 6.417896 shares of Series A Preferred Stock which converted immediately prior to the consummation of the IPO. Upon conversion, a total of 5,744,586 shares of common stock were issued for the converted Series A Preferred Stock which includes accrued dividends upon conversion. All warrants to purchase Series A Preferred Stock became warrants to purchase common stock, adjusted for the 1 for 6.417896 shares reverse stock split. |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2019 | |
Common Stock | |
Common Stock | 8. Common Stock As of June 30, 2019 (unaudited), the Company had reserved the following common stock for future issuance: Shares reserved for exercise of outstanding warrants to purchase common stock 1,966,930 Shares reserved for exercise of outstanding options to purchase common stock 1,250,145 Shares reserved for issuance of future options 336,500 Total 3,553,575 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9. Stock‑Based Compensation In May 2014, the Company adopted, and the shareholders approved, the 2014 Equity Incentive Plan (the “2014 Plan”). Under the 2014 Plan, 233,722 shares of the Company’s common stock have been reserved for the issuance of stock options to employees, directors, and consultants, under terms and provisions established by the Board of Directors. Under the terms of the 2014 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options may not be less than 110% of fair market value. The terms of options granted under the 2014 Plan may not exceed ten years. In addition, the 2014 Plan contains an “evergreen” provision allowing for an annual increase in the number of shares of our common stock available for issuance under the 2014 Plan on the first day of each fiscal year beginning in fiscal year 2015. The annual increase in the number of shares shall be equal to the greater of: · 77,908 shares of our common stock; or · Such number of shares that are equal to the number of shares sufficient to cause the option pool to equal 20% of the issued and outstanding common stock of the Company, provided, however, that if on any calculation date the number of shares equal to 20% of the total issued and outstanding shares of common stock is less than the number of shares of common stock available for issuance under the 2014 Plan, no change will be made to the aggregate number of shares of common stock issuable under the 2014 Plan for that year (such that the aggregate number of shares of common stock available for issuance under the 2014 Plan will never decrease). The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an option by option basis. Options generally vest ratably over service periods of up to four years and expire ten years from the date of grant. The fair value of the options granted during the periods presented were estimated using the following assumptions: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Expected term (in years) 6.25 N/A 6.25 6.25 Expected volatility 95% N/A 78% - 95% 78% - 79% Risk-free interest-rate 2.06% N/A 2.06% - 2.67% 2.22% - 2.62% Dividend yield 0% N/A 0% 0% Stock option activity for the six months ended June 30, 2019 is represented in the following table: Options Outstanding Shares Weighted- Available Number Average for Grant of Shares Exercise Price Balances at December 31, 2018 — 825,205 $ 12.15 Additional shares reserved 763,973 — — Options granted (460,292) 460,292 8.78 Options exercised — (2,533) 2.89 Options cancelled 32,819 (32,819) 10.81 Balances at June 30, 2019 336,500 1,250,145 $ 10.54 The Company recognized stock compensation related to stock options as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 (unaudited) (unaudited) (unaudited) (unaudited) Research and development $ 198 $ 139 $ 371 $ 280 General and administrative 305 179 549 509 Total $ 503 $ 318 $ 920 $ 789 As of June 30, 2019, the Company had unrecognized stock-based compensation related to stock options of approximately $5.1 million. As of June 30, 2019, the intrinsic value of all vested options and outstanding options was approximately $1.3 million and $2.0 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Leases The Company leases office and lab space in San Jose, California under an operating lease arrangement which can be terminated at any time with 90 days’ notice. The Company recognizes rent expense as incurred. The Company recognized rent expense of $82,000 and $77,000 for the three months ended June 30, 2019 and 2018, respectively, and $163,000 and $155,000 for the six months ended June 30, 2019 and 2018, respectively. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may incur charges in the future as a result of these indemnification obligations. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. From time to time, the Company may be involved in various legal proceedings, claims and litigation arising in the ordinary course of business. As of June 30, 2019 and December 31, 2018, there were no pending legal proceedings. Grant Income The Company receives various grants that are subject to an audit by the grantors or their representatives. Such audits could result in requests for reimbursement for expenditures disallowed under the terms of the grant; however, management believes that these disallowances, if any, would be immaterial. Cystic Fibrosis Foundation Agreement In December 2016, the Company received an award for up to $2,902,097 from the Cystic Fibrosis Foundation to advance research on potential drugs utilizing inhaled gallium citrate anti-infective. In November 2018, the Cystic Fibrosis Foundation increased the award to $7,466,000. Under the award agreement, the Cystic Fibrosis Foundation will make payments to the Company as certain milestones are met. The award agreement also contains a provision whereby if the Company spends less on developing a potential drug utilizing inhaled gallium citrate anti-infective than the Company actually receives under this award agreement, the Company will be required to return the excess portion of the award to the Cystic Fibrosis Foundation. At the end of any reporting period, if the Company determines that the cumulative amount spent on this program is less than the cumulative cash received from the Cystic Fibrosis Foundation, the Company will record the excess amount received as a liability. In the event that development efforts are successful and the Company commercialized a drug from these related development efforts, the Company may be subject to pay to Cystic Fibrosis Foundation a one-time amount equal to nine times the actual award received. Such amount shall be paid in not more than five annual installments, as follows: within ninety days of the end of the calendar year in which the First Commercial Sale occurs, and within ninety days of the end of each subsequent calendar year until the amount is paid. The Company shall pay 15% of Net Sales for that calendar year up to the amount of the award (except that in the fifth installment, if any, the Company shall pay the remaining unpaid portion of the awarded amount). In the event that Aridis licenses rights to the product in the field to a third party, sells the product, or consummates a change of control transaction prior to the first commercial sale, the Company shall pay to Cystic Fibrosis Foundation an amount equal to 15% of the amounts received by Aridis and its shareholders in connection with a Disposition Transaction (whether paid upfront or in accordance with subsequent milestones and whether paid in cash or property) up to nine times the actual award received. The payment shall be made within sixty days after the closing of such a transaction. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Related Parties | |
Related Parties | 11. Related Parties On February 11, 2018, the Company entered into a JV Agreement with Hepalink which is a related party and principal shareholder in the Company, pursuant to which the Company formed a JV Entity for developing and commercializing products for infectious diseases in the greater China territories. It was agreed by the parties that the Company shall be reimbursed for certain legal and contract manufacturing expenses related to the clinical drug supply for a Phase 3 clinical study of AR-301 and the clinical drug supply for a clinical study of AR-105. As of June 30, 2019 and December 31, 2018, the Company recorded approximately $1.3 million and $360,000, respectively, in other receivables on the condensed consolidated balance sheet for amounts owed to the Company by the JV Entity under this arrangement. The Company expects the amounts to be collectable and as a result, no reserve for uncollectability was established. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent Events In July 2019, the Company and Serum International B.V. (“SIBV”), an affiliate of Serum Institute of India Private Limited, entered into an option agreement which grants SIBV the option to license multiple programs from the Company and access the Company’s MabIgX® platform technology for asset identification and selection (the “License Agreement”). As part of the option agreement, SIBV made an equity investment whereby the Company issued 801,820 shares of its restricted common stock to SIBV at a price of approximately $12.47 per share for total gross proceeds of $10 million, and after deducting commissions of approximately $0.8 million, the net proceeds were approximately $9.2 million. In addition, the Company received an upfront cash payment of $5 million upon execution of this option agreement and expects to receive an additional $10 million upon the completion of the License Agreement by August 31, 2019. The upfront payment of $5 million is refundable should the parties not complete the License Agreement by August 31, 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements (unaudited) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Such estimates include those related to the evaluation of our ability to continue as a going concern, revenue recognition, allowance for doubtful accounts, long-lived assets, income taxes, assumptions used in the Black-Scholes-Merton (“BSM”) model to calculate the fair value of stock-based compensation, Monte Carlo Simulation (“MSM”) model to calculate the fair value of warrants, deferred tax asset valuation allowances, valuation of the Company’s common and convertible preferred stock, fair value assumptions used in the valuation of warrants, preclinical study and clinical trial accruals and various accrued liabilities. Actual results could differ from those estimates. |
Concentration of Risk | Concentration of Risk The Company’s cash and cash equivalents are maintained at financial institutions in the United States of America. Deposits held by these institutions may exceed the amount of insurance provided on such deposits. For the three and six months ended June 30, 2019 and 2018, one customer accounted for 100% of total revenue. This customer is located in the United States. As of June 30, 2019, one customer accounted for 100% of accounts receivable. As of December 31, 2018, two customers accounted for 60% and 40% of total accounts receivable. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of checking account and money market account balances. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company considers the credit worthiness of its customers but does not require collateral in advance of a sale. The Company evaluates collectability and maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio when necessary. The allowance is based on the Company’s best estimate of the amount of losses in the Company’s existing accounts receivable, which is based on customer creditworthiness, facts and circumstances specific to outstanding balances, and payment terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2019 and December 31, 2018, there were no allowances for doubtful accounts. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight‑line method over the estimated useful lives of the assets, generally between three and five years. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the condensed consolidated statement of operations in the period realized. |
Intangible Assets | Intangible Assets Intangible assets are recorded at cost and amortized over the estimated useful life of the asset. Intangible assets consist of licenses with various institutions whereby the Company has rights to use intangible property obtained from such institutions. |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment is measured by the excess of the carrying amount of the assets over fair value less the costs to sell the assets, generally determined using the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets as of June 30, 2019 and December 31, 2018. |
Revenue Recognition | Revenue Recognition Effective January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. Under this method, results for reporting periods beginning after January 1, 2019 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with ASC 605, Revenue Recognition (“ASC 605”). ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue at a point in time, or over time, as the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company enters into licensing and development agreements which are within the scope of ASC 606, under which it may collaborate with third parties to research, develop, manufacture and commercialize its product candidates. The terms of these arrangements may include payment to the Company of one or more of the following: nonrefundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. As part of the accounting for customer arrangements, the Company must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment to determine whether milestones or other variable consideration should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. In developing the stand-alone price for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validates the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance obligations. The Company records any amounts received prior to satisfying the revenue recognition criteria as deferred revenue. Amounts recognized as revenue, but not yet received or invoiced are recorded within other receivables on the condensed consolidated balance sheet. The Company only has one contract within the scope of ASC 606, the Development Program Letter Agreement (the “CFF Agreement”) with Cystic Fibrosis Foundation (CFF or CF Foundation). Under the CFF Agreement, CFF made an upfront payment of $200,000 and will make milestone payments to the company as certain milestones defined in the agreement are met. The Company has determined that there is one performance obligation under the CFF Agreement. Hence, all of the estimated transaction price is allocated to this combined performance obligation and is recognized as revenue by measuring progress using the input (cost-to-cost) method, limited by the variable consideration attributed to the probable completion of certain milestones as defined in the agreement. For the three months ended June 30, 2019 and 2018, grant revenue totaled approximately $0 and $22,000, respectively, and for the six months ended June 30, 2019 and 2018, grant revenue totaled approximately $1.0 million and $344,000, respectively. All grant revenue was derived from our award agreement with the CF Foundation. |
Costs for Collaborative Arrangements | Costs for Collaborative Arrangements Costs incurred under collaborative arrangements include personnel costs, laboratory supplies, and fees paid to third parties. These amounts are included in research and development in the accompanying condensed consolidated statement of operations. For the three and six months ended June 30, 2018, the Company incurred expenses of $161,000 and $318,000, respectively, related to its collaborative arrangement. The Company did not incur any expenses related to its collaborative arrangement during the three and six months ended June 30, 2019 due to the termination of the Company’s collaborative arrangement in 2018. |
Research and Development | Research and Development We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of: · salaries and related overhead expenses, which include stock-based compensation and benefits for personnel in research and development functions; · fees paid to consultants and contract research organizations, or CROs, including in connection with our preclinical studies and clinical trials and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial material management and statistical compilation and analyses; · costs related to acquiring and manufacturing clinical trial materials; · costs related to compliance with regulatory requirements; and · payments related to licensed products and technologies. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered or when the services are performed. |
Stock-Based Compensation | Stock‑Based Compensation Effective January 1, 2019, the Company early adopted Accounting Standards Update (“ASU”) No. 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting . The Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair values, which the Company determines using the BSM option pricing model, on a straight-line basis over the requisite service period for the award. The Company accounts for forfeitures as they occur. The BSM option pricing model incorporates various highly sensitive assumptions, including the fair value of our common stock, expected volatility, expected term and risk-free interest rates. The weighted average expected life of options was calculated using the simplified method as prescribed by the SEC’s Staff Accounting Bulletin, Topic 14 (“SAB Topic 14”). This decision was based on the lack of relevant historical data due to our limited historical experience. In addition, due to our limited historical data, the estimated volatility also reflects the application of SAB Topic 14, incorporating the historical volatility of comparable companies whose stock prices are publicly available. The risk-free interest rate for the periods within the expected term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield was zero, as we have never declared or paid dividends and have no plans to do so in the foreseeable future. Prior to the completion of the Company’s initial public offering of common stock on August 16, 2018, due to the absence of a public market trading for the Company’s common stock, it was necessary to estimate the fair value of the common stock underlying the Company’s stock-based awards when performing fair value calculations. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by the relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the positions sustainability and is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. At each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. |
Comprehensive Loss | Comprehensive Loss The Company has no items of comprehensive income or loss other than net loss. |
Loss Per Share | Loss Per Share Basic loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted‑average number of common shares outstanding during the period. For diluted loss per share calculation purposes, the net loss available to commons shareholders is adjusted to add back any preferred stock dividends reflected in the condensed consolidated statement of operations for the respective periods. The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive: Three and Six Months Ended June 30, 2019 2018 (unaudited) (unaudited) Convertible preferred stock — 5,723,919 Stock options to purchase common stock 1,250,145 742,124 Preferred stock warrants — 1,359,635 Common stock warrants 1,966,930 607,295 3,217,075 8,432,973 The convertible preferred stock and preferred stock warrants in the previous table reflect the conversion of these instruments into their common stock equivalents as of the dates reported. |
JOBS Act Accounting Election | JOBS Act Accounting Election The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to take advantage of this provision and, as a result, we will adopt the extended transition period available under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided under the JOBS Act. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC 605 and creates a new topic, ASC 606. In 2015 and 2016, the FASB issued additional ASUs related to ASC 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. Companies have the option of applying this new guidance retrospectively to each prior reporting period presented (the full retrospective method) or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application (the modified retrospective method). The Company only has one contract, the CFF Agreement, within the scope of ASC 606. The cumulative-effect of adopting ASC 606 on January 1, 2019, using the modified retrospective method, was immaterial. The most significant changes under ASC 606 relate to the Company’s determination of transaction price at inception and each reporting period, the revenue recognition pattern under step (v) above for the CFF Agreement as well as treatment of variable consideration in the form of milestone payments. Under ASC 605, the Company recognized revenue under the milestone method up to the limit of the prior approval funding amounts, and when the Company determined that it had earned the right to receive the recognized portion according to the terms of the grant awarded. Upfront payment of $200,000 was recognized straight-line over the term of the contract as the Company believed the upfront fee related to services performed throughout the contract period and the upfront fee did not represent a substantive milestone within the agreement. Under ASC 606, the Company is recognizing the revenue allocated to the one performance obligation measuring progress using the input (cost-to-cost) method, limited by the variable consideration attributed to the probable completion of certain milestones as defined in the agreement. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting , which is intended to simplify the accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. For public entities, ASU 2018-07 is effective for fiscal years beginning after December 15, 2018. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-07 is effective for the Company for the year ending on December 31, 2020, and all interim periods within. Early adoption is permitted. The Company early adopted this standard on January 1, 2019. The adoption of this standard did not have a material effect on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases , which provides clarification to ASU 2016-02. These ASUs (collectively, the new lease standard) require an entity to recognize a lease liability and a right-of-use asset on the balance sheet for leases with lease terms of more than twelve months. Lessor accounting is largely unchanged, while lessees will no longer be provided with a source of off-balance sheet financing. Initial guidance required the adoption of the new lease standard using the modified retrospective transition method. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842)—Targeted Improvements , which allows entities to elect an optional transition method where entities may continue to apply the existing lease guidance during the comparative periods and apply the new lease requirements through a cumulative effect adjustment in the period of adoptions rather than in the earliest period presented. In March 2019, FASB issued ASU 2019-01, Codification improvements , which provides clarification on implementation issued associated with adopting ASU 2016-02. ASU 2019-01 enhances the guidance in ASC 842 surrounding the fair value of underlying assets for lessors, presentation of sales-type and direct financing leases on the statement of cash flows, and transition guidance surrounding accounting changes and error corrections. This guidance is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As a result of Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2016-02 is effective for the Company for the year ended December 31, 2020, and all interim periods within. In July 2019, the FASB voted to issue proposals that would delay the effective date for adopting the leasing standard updates to Topic 842 for private companies, not-for-profit organizations, and smaller reporting companies. If the proposed adoption date deferral is passed, ASU 2016-02 would be effective for the Company for the year ended December 31, 2021, and all interim periods within, due to its option to defer the adoption of new accounting standards under the JOBS Act. Early adoption is permitted. While the Company continues to review its current accounting policies and practices to identify potential differences that would result from applying the new guidance, the Company expects that its non-cancellable operating lease commitments with a term of more than twelve months will be subject to the new guidance and recognized as right-of-use assets and operating lease liabilities on the Company's condensed consolidated balance sheets upon adoption. The Company expects to elect transitional practical expedients such that the Company will not need to reassess whether contracts are leases and will retain lease classification and initial direct costs for leases existing prior to the adoption of the new lease standard. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of potentially dilutive securities excluded from computation of diluted net loss per share | Three and Six Months Ended June 30, 2019 2018 (unaudited) (unaudited) Convertible preferred stock — 5,723,919 Stock options to purchase common stock 1,250,145 742,124 Preferred stock warrants — 1,359,635 Common stock warrants 1,966,930 607,295 3,217,075 8,432,973 |
Fair Value Disclosure (Tables)
Fair Value Disclosure (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosure | |
Schedule of categorization of financial instruments within the valuation hierarchy | Fair Value at December 31, 2018 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Deferred charge related to stock options $ 455 $ — $ 455 $ — Totals $ 455 $ — $ 455 $ — Liabilities: Stock option liability $ 455 $ — $ 455 $ — Totals $ 455 $ — $ 455 $ — |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Components | |
Schedule of property and equipment, net | Property and equipment, net consist of the following (in thousands): June 30, December 31, 2019 2018 (unaudited) Lab equipment $ 1,764 $ 1,737 Computer equipment and software 25 25 Total property and equipment 1,789 1,762 Less: Accumulated depreciation (654) (491) Property and equipment, net $ 1,135 $ 1,271 |
Schedule of intangible assets, net | Intangible assets, net consist of the following (in thousands): June 30, December 31, 2019 2018 (unaudited) Licenses $ 81 $ 81 Less: Accumulated amortization (46) (43) Intangible assets, net $ 35 $ 38 |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): June 30, December 31, 2019 2018 (unaudited) Research and development services $ 3,072 $ 2,179 Stock option liability — 455 Payroll related expenses 199 254 Professional services 197 56 Accrued liabilities $ 3,468 $ 2,944 |
Common Stock (Tables)
Common Stock (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Common Stock | |
Schedule of company reserved common stock for future issuance | As of June 30, 2019 (unaudited), the Company had reserved the following common stock for future issuance: Shares reserved for exercise of outstanding warrants to purchase common stock 1,966,930 Shares reserved for exercise of outstanding options to purchase common stock 1,250,145 Shares reserved for issuance of future options 336,500 Total 3,553,575 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation | |
Schedule of fair value of the options granted estimated using assumptions | Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Expected term (in years) 6.25 N/A 6.25 6.25 Expected volatility 95% N/A 78% - 95% 78% - 79% Risk-free interest-rate 2.06% N/A 2.06% - 2.67% 2.22% - 2.62% Dividend yield 0% N/A 0% 0% |
Schedule of stock option activity | Options Outstanding Shares Weighted- Available Number Average for Grant of Shares Exercise Price Balances at December 31, 2018 — 825,205 $ 12.15 Additional shares reserved 763,973 — — Options granted (460,292) 460,292 8.78 Options exercised — (2,533) 2.89 Options cancelled 32,819 (32,819) 10.81 Balances at June 30, 2019 336,500 1,250,145 $ 10.54 |
Schedule of stock-based compensation expense related to stock options | The Company recognized stock compensation related to stock options as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 (unaudited) (unaudited) (unaudited) (unaudited) Research and development $ 198 $ 139 $ 371 $ 280 General and administrative 305 179 549 509 Total $ 503 $ 318 $ 920 $ 789 |
Description of Business and B_2
Description of Business and Basis of Presentation - Organization (Details) | 6 Months Ended |
Jun. 30, 2019project | |
Description of Business and Basis of Presentation | |
Clinical candidates at the pivotal trial stage (in products) | 2 |
Description of Business and B_3
Description of Business and Basis of Presentation - Basis of Presentation and Consolidation (Details) | 6 Months Ended |
Jun. 30, 2019segmentsubsidiary | |
Description of Business and Basis of Presentation | |
Subsidiaries (in subsidiaries) | subsidiary | 2 |
Operating segments (in segments) | 1 |
Reporting segments (in segments) | 1 |
Description of Business and B_4
Description of Business and Basis of Presentation - Reverse Stock Split and Going Concern (Details) $ / shares in Units, $ in Thousands | Aug. 03, 2018 | Jul. 31, 2019USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Description of Business and Basis of Presentation | ||||
Cash and cash equivalents | $ 8,519 | $ 24,237 | ||
Working capital | 8,300 | |||
Accumulated deficit | $ (87,534) | $ (71,088) | ||
Subsequent event | ||||
Description of Business and Basis of Presentation | ||||
Issuance of stock for option agreement (in shares) | shares | 801,820 | |||
Price per share issued for the option agreement | $ / shares | $ 12.47 | |||
Net proceeds from issuance of stock for the option agreement | $ 9,200 | |||
Common Stock | ||||
Description of Business and Basis of Presentation | ||||
Ratio of reverse stock split | 0.155814 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Concentration of Risk (Details) - Customer risk | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Contract revenue | Customer 1 | |||||
Summary of Significant Accounting Policies | |||||
Concentration risk percentage | 100.00% | 100.00% | 100.00% | 100.00% | |
Accounts receivable | Customer 1 | |||||
Summary of Significant Accounting Policies | |||||
Concentration risk percentage | 100.00% | 60.00% | |||
Accounts receivable | Customer 2 | |||||
Summary of Significant Accounting Policies | |||||
Concentration risk percentage | 40.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment and Impairment of Long-Lived Assets (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Property and Equipment, net | |
Estimated useful life (in years) | 3 years |
Maximum | |
Property and Equipment, net | |
Estimated useful life (in years) | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||
Impairments of long-lived assets | $ 0 | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||||
Grant revenue | $ 22,000 | $ 1,022,000 | $ 344,000 | ||
Deferred revenue | $ 22,000 | ||||
CF foundation | |||||
Summary of Significant Accounting Policies | |||||
Grant revenue | $ 0 | $ 22,000 | 1,000,000 | $ 344,000 | |
Upfront payment | |||||
Summary of Significant Accounting Policies | |||||
Deferred revenue | $ 200,000 | $ 200,000 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Costs for Collaborative Arrangements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Summary of Significant Accounting Policies | ||||
Research and Development Expense | $ 6,653,000 | $ 3,885,000 | $ 13,771,000 | $ 10,511,000 |
Collaboration revenue | ||||
Summary of Significant Accounting Policies | ||||
Research and Development Expense | $ 0 | $ 161,000 | $ 0 | $ 318,000 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Options | |||
Common Stock for future issuance | |||
Dividend yield (in percent) | 0.00% | 0.00% | 0.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Loss Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Summary of Significant Accounting Policies | ||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 3,217,075 | 8,432,973 | 3,217,075 | 8,432,973 |
Series A Convertible Preferred Stock | ||||
Summary of Significant Accounting Policies | ||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 5,723,919 | 5,723,919 | ||
Options | ||||
Summary of Significant Accounting Policies | ||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 1,250,145 | 742,124 | 1,250,145 | 742,124 |
Warrants | Preferred stock | ||||
Summary of Significant Accounting Policies | ||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 1,359,635 | 1,359,635 | ||
Warrants | Common Stock | ||||
Summary of Significant Accounting Policies | ||||
Potentially dilutive securities excluded from computation of diluted net loss per share | 1,966,930 | 607,295 | 1,966,930 | 607,295 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies | ||
Deferred revenue | $ 22,000 | |
Upfront payment | ||
Summary of Significant Accounting Policies | ||
Deferred revenue | $ 200,000 |
Fair Value Disclosure (Details)
Fair Value Disclosure (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Fair value | |
Assets | $ 455 |
Liabilities | 455 |
Stock option liability | |
Fair value | |
Liabilities | 455 |
Deferred charge related to stock options | |
Fair value | |
Assets | 455 |
Level 2 | |
Fair value | |
Assets | 455 |
Liabilities | 455 |
Level 2 | Stock option liability | |
Fair value | |
Liabilities | 455 |
Level 2 | Deferred charge related to stock options | |
Fair value | |
Assets | $ 455 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Property and Equipment, net | |||||
Total property and equipment | $ 1,789,000 | $ 1,789,000 | $ 1,762,000 | ||
Less: Accumulated depreciation | (654,000) | (654,000) | (491,000) | ||
Property and equipment, net | 1,135,000 | 1,135,000 | 1,271,000 | ||
Depreciation expense | 82,000 | $ 72,000 | 163,000 | $ 122,000 | |
Lab equipment | |||||
Property and Equipment, net | |||||
Total property and equipment | 1,764,000 | 1,764,000 | 1,737,000 | ||
Computer equipment and software | |||||
Property and Equipment, net | |||||
Total property and equipment | $ 25,000 | $ 25,000 | $ 25,000 |
Balance Sheet Components - Inta
Balance Sheet Components - Intangible Assets, net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Intangible Assets, net | |||||
Less: Accumulated amortization | $ (46,000) | $ (46,000) | $ (43,000) | ||
Intangible assets, net | 35,000 | 35,000 | 38,000 | ||
Amortization expense | 1,000 | $ 1,000 | 3,000 | $ 2,000 | |
Licenses | |||||
Intangible Assets, net | |||||
Intangible assets, gross | $ 81,000 | $ 81,000 | $ 81,000 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities | ||
Research and development services | $ 3,072 | $ 2,179 |
Stock option liability | 455 | |
Payroll related expenses | 199 | 254 |
Professional services | 197 | 56 |
Accrued liabilities | $ 3,468 | $ 2,944 |
Equity Method Investment (Detai
Equity Method Investment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Aug. 06, 2018 | Feb. 11, 2018 | |
Equity Method Investment | |||||||
Loss from equity method investment | $ 186,000 | $ 628,000 | |||||
Equity method investment | 332,000 | 332,000 | $ 960,000 | ||||
JV Entity | |||||||
Equity Method Investment | |||||||
Contribution obligated | $ 1,000,000 | ||||||
Percentage of ownership interest | 49.00% | ||||||
Contributions owed to the joint venture | 1,000,000 | 1,000,000 | |||||
Loss from equity method investment | 186,000 | $ 0 | 628,000 | $ 0 | |||
Carryover basis of license contributed | 0 | 0 | |||||
Equity method investment | $ 332,000 | $ 332,000 | $ 960,000 | ||||
Hepalink | JV Entity | |||||||
Equity Method Investment | |||||||
Contribution obligated | $ 7,200,000 | ||||||
Percentage of ownership interest | 51.00% | ||||||
Minimum amount obligated to make an additional equity investment at first future financing | $ 10,800,000 |
Warrants (Details)
Warrants (Details) - USD ($) | Dec. 12, 2016 | Nov. 30, 2015 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Warrants to Purchase Common Stock | ||||||
Share-based Compensation | $ 986,000 | $ 855,000 | ||||
Performance Award | ||||||
Warrants to Purchase Common Stock | ||||||
Minimum gross proceeds for meeting performance requirement | $ 25,000,000 | |||||
Warrants potentially issued for meeting performance requirement | 234,860 | |||||
Number of warrants issued | 234,860 | |||||
Warrants exercise price | $ 14.50 | |||||
Total fair value of warrants | $ 661,000 | |||||
Vesting period | 5 years | |||||
Share-based Compensation | $ 33,000 | $ 33,000 | $ 66,000 | $ 66,000 |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) | Aug. 03, 2018shares |
Series A Convertible Preferred Stock | |
Convertible Preferred Stock | |
Convertible preferred stock conversion ratio | 6.417896 |
Common Stock | |
Convertible Preferred Stock | |
Stock issued upon conversion of convertible shares | 5,744,586 |
Ratio of reverse stock split | 0.155814 |
Common Stock (Details)
Common Stock (Details) | Jun. 30, 2019shares |
Common Stock for future issuance | |
Total common stock for future issuance | 3,553,575 |
Options | Options | |
Common Stock for future issuance | |
Total common stock for future issuance | 336,500 |
Common Stock | Options | |
Common Stock for future issuance | |
Total common stock for future issuance | 1,250,145 |
Warrants | Common Stock | |
Common Stock for future issuance | |
Total common stock for future issuance | 1,966,930 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares | 1 Months Ended | 6 Months Ended |
May 31, 2014 | Jun. 30, 2019 | |
Stock-Based Compensation | ||
Reserved for issuance (in shares) | 233,722 | |
Voting rights of all classes of stock (in percent) | 10.00% | |
Exercise price for incentive stock options to the percentage of fair market value | 110.00% | |
Annual increase in the number of shares to the shares of common stock | 77,908 | 763,973 |
Options | ||
Stock-Based Compensation | ||
Annual increase in the number of shares to the percentage of the issued and outstanding common stock | 20.00% | |
Vesting period (in years) | 4 years | |
Expiration period (in years) | 10 years |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) - Options | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair value of the options granted, estimated using assumptions | |||
Expected term (in years) | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Expected volatility, minimum | 95.00% | 78.00% | 78.00% |
Expected volatility, maximum | 95.00% | 79.00% | |
Risk-free interest-rate, minimum | 2.06% | 2.06% | 2.22% |
Risk-free interest-rate, maximum | 2.67% | 2.62% | |
Dividend yield (in percent) | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock option activity (Details) - $ / shares | 1 Months Ended | 6 Months Ended |
May 31, 2014 | Jun. 30, 2019 | |
Shares Available for Grant | ||
Additional shares reserved (in shares) | 77,908 | 763,973 |
Options granted (in shares) | (460,292) | |
Options cancelled (in shares) | 32,819 | |
End of the period (in shares) | 336,500 | |
Options Outstanding, Number of Shares | ||
Number of Shares, beginning of the period (in shares) | 825,205 | |
Number of Shares, Options granted (in shares) | 460,292 | |
Number of Shares, Options exercised (in shares) | (2,533) | |
Number of Shares, Options cancelled (in shares) | (32,819) | |
Number of Shares, end of the period (in shares) | 1,250,145 | |
Options Outstanding, Weighted-Average Exercise Price | ||
Weighted-Average Exercise Price, beginning of the period (in dollars per share) | $ 12.15 | |
Weighted-Average Exercise Price, Options granted (in dollars per share) | 8.78 | |
Weighted-Average Exercise Price, Options exercised (in dollars per share) | 2.89 | |
Weighted-Average Exercise Price, Options cancelled (in dollars per share) | 10.81 | |
Weighted-Average Exercise Price, end of the period (in dollars per share) | $ 10.54 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-Based Compensation | ||||
Total stock-based compensation expense | $ 503 | $ 318 | $ 920 | $ 789 |
Unrecognized stock-based compensation expenses related to stock options | 5,100 | 5,100 | ||
Aggregate intrinsic value, based on the fair market value of the common stock of options vested | 1,300 | 1,300 | ||
Aggregate intrinsic value, based on the fair market value of the common stock of options outstanding | 2,000 | 2,000 | ||
Research and development | ||||
Stock-Based Compensation | ||||
Total stock-based compensation expense | 198 | 139 | 371 | 280 |
General and administrative | ||||
Stock-Based Compensation | ||||
Total stock-based compensation expense | $ 305 | $ 179 | $ 549 | $ 509 |
Commitments and Contingencies -
Commitments and Contingencies - Leases and Contingencies (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | |
Commitments and Contingencies | ||||
Notice period for termination of lease | 90 days | |||
Rent expense | $ | $ 82,000 | $ 77,000 | $ 163,000 | $ 155,000 |
Number of pending legal proceedings | item | 0 | 0 |
Commitments and Contingencies_2
Commitments and Contingencies - Cystic Fibrosis Foundation Agreement and Joint Venture Agreement (Details) - CF foundation | 1 Months Ended | |
Dec. 31, 2016USD ($)iteminstallment | Nov. 30, 2018USD ($) | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||
Amount of award received for advance research on potential drugs | $ 7,466,000 | |
Period for payment of annual installments | 90 days | |
Maximum percentage of awarded amount of Net Sales | 15.00% | |
Payment of amount received in connection with Disposition Transaction (as a percent) | 15.00% | |
Number of multiplication on awarded amount payable if change of control prior to completion of the first commercial sale | item | 9 | |
One-time payment period if aggregate sales exceeds the specified limit | 60 days | |
Maximum | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||
Amount of award received for advance research on potential drugs | $ 2,902,097 | |
Number of annual installments for repayment of award | installment | 5 |
Related Parties (Details)
Related Parties (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Other receivables | Shenzen Hepalink Pharmaceutical Group Co., Ltd.("Hepalink") | ||
Related parties | ||
Outstanding receivable for reimbursable expenses | $ 1,300,000 | $ 360,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | |
Jul. 31, 2019 | Aug. 31, 2019 | |
Subsequent Events | ||
Issuance of stock for option agreement (in shares) | 801,820 | |
Price per share issued for the option agreement | $ 12.47 | |
Proceeds from issuance of stock for the option agreement after deducting commissions | $ 10 | |
Commissions deducted from gross proceed | 0.8 | |
Net proceeds from issuance of stock for the option agreement | $ 9.2 | |
Received upfront cash payment | $ 5 | |
Forecast | ||
Subsequent Events | ||
Additional cash payment | $ 10 |