Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 13, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Monopar Therapeutics | ||
Entity Central Index Key | 0001645469 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 10,621,535 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | DE | ||
Entity File Number | 001-39070 |
Balance Sheet
Balance Sheet - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 13,213,929 | $ 6,892,772 |
Deferred offering cost | 10,335 | 344,936 |
Other current assets | 5,376 | 14,516 |
Total current assets | 13,229,640 | 7,252,224 |
Other non-current assets | 122,381 | 65,731 |
Total assets | 13,352,021 | 7,317,955 |
Current liabilities: | ||
Accounts payable and accrued expenses | 724,165 | 399,551 |
Total current liabilities | 724,165 | 399,551 |
Total liabilities | 724,165 | 399,551 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity: | ||
Common stock, par value of $0.001 per share, 40,000,000 authorized, 10,587,632 and 9,291,421 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively | 10,587 | 9,291 |
Additional paid-in capital | 38,508,825 | 28,567,221 |
Accumulated other comprehensive loss | (10,970) | (2,396) |
Accumulated deficit | (25,880,586) | (21,655,712) |
Total stockholders' equity | 12,627,856 | 6,918,404 |
Total liabilities and stockholders' equity | $ 13,352,021 | $ 7,317,955 |
Balance Sheet (Parenthetical)
Balance Sheet (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ .001 | $ 0.001 |
Common stock, authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 10,587,632 | 9,291,421 |
Common stock, outstanding | 10,587,632 | 9,291,421 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 0 | $ 0 |
Operating expenses: | ||
Research and development | 1,968,518 | 1,774,454 |
General and administrative | 2,355,243 | 1,556,693 |
Total operating expenses | 4,323,761 | 3,331,147 |
Loss from operations | (4,323,761) | (3,331,147) |
Other income: | ||
Interest income | 98,887 | 103,215 |
Net loss | (4,224,874) | (3,227,932) |
Other comprehensive income (loss): | ||
Foreign currency translation loss | (8,574) | (2,396) |
Comprehensive loss | $ (4,233,448) | $ (3,230,328) |
Net loss per share: | ||
Basic and diluted | $ (.45) | $ (0.35) |
Weighted average shares outstanding: | ||
Basic and diluted | 9,321,195 | 9,291,421 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Other Comprehensive Loss | Total |
Beginning balance, shares at Dec. 31, 2017 | 9,291,421 | ||||
Beginning balance, amount at Dec. 31, 2017 | $ 9,291 | $ 28,037,889 | $ (18,427,780) | $ 0 | $ 9,619,400 |
Issuance of common stock upon exercise of stock options, amount | 0 | ||||
Shares issued in Gem transaction, net of issuance costs of $169,257, amount | 0 | ||||
Non-cash stock compensation | 529,332 | 529,332 | |||
Net loss | (3,227,932) | (3,227,932) | |||
Accumulated other comprehensive loss | (2,396) | (2,396) | |||
Ending balance, shares at Dec. 31, 2018 | 9,291,421 | ||||
Ending balance, amount at Dec. 31, 2018 | $ 9,291 | 28,567,221 | (21,655,712) | (2,396) | 6,918,404 |
Issuance of common stock at $8 per share for cash, net of $1,400,492 issuance costs, shares | 1,277,778 | ||||
Issuance of common stock at $8 per share for cash, net of $1,400,492 issuance costs, amount | $ 1,278 | 8,820,454 | 8,821,732 | ||
Issuance of common stock upon exercise of stock options, shares | 18,433 | ||||
Issuance of common stock upon exercise of stock options, amount | $ 18 | 109,980 | 109,998 | ||
Non-cash stock compensation | 1,011,170 | 1,011,170 | |||
Net loss | (4,224,874) | (4,224,874) | |||
Accumulated other comprehensive loss | (8,574) | (8,574) | |||
Ending balance, shares at Dec. 31, 2019 | 10,587,632 | ||||
Ending balance, amount at Dec. 31, 2019 | $ 10,587 | $ 38,508,825 | $ (10,970) | $ (25,880,586) | $ 12,627,856 |
Statement of Cash Flows
Statement of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (4,224,874) | $ (3,227,932) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock compensation expense (non-cash) | 1,011,170 | 529,332 |
Changes in operating assets and liabilities, net | ||
Other current assets | (9,140) | 3,840 |
Other non-current assets | (56,650) | (65,731) |
Accounts payable and accrued expenses | 243,534 | 87,684 |
Net cash used in operating activities | (3,017,680) | (2,680,487) |
Cash flows from financing activities: | ||
Proceeds from the initial public offering of common stock | 10,222,224 | 0 |
Issuance cost for the initial public offering, net of deferred offering costs paid in previous periods and accrued at year-end | (974,476) | (206,270) |
Proceeds from the exercise of stock options | 109,998 | 0 |
Deferred offering costs for shelf registration | (10,335) | 0 |
Net cash provided by financing activities | 9,347,411 | (206,270) |
Effect of exchange rates on cash, cash equivalents, and restricted cash | (8,574) | (2,396) |
Net change in cash and cash equivalents | 6,321,157 | (2,889,153) |
Cash, cash equivalents and restricted cash at beginning of period | 6,892,772 | 9,781,925 |
Cash, cash equivalents and restricted cash at end of period | 13,213,929 | 6,892,772 |
Supplemental disclosure of non-cash items for cash flow information: | ||
Accrued but unpaid issuance costs for the initial public offering | $ 81,080 | $ 0 |
1. Nature of Business and Liqui
1. Nature of Business and Liquidity | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Liquidity | Nature of Business Monopar Therapeutics Inc. (“Monopar” or the “Company”) is a clinical-stage biopharmaceutical company focused on developing proprietary therapeutics designed to extend life or improve quality of life for cancer patients. Monopar currently has three compounds in development: Validive® (clonidine mucobuccal tablet; clonidine MBT), a Phase 3-ready, first-in-class mucoadhesive buccal anti-inflammatory tablet for the prevention and treatment of radiation induced severe oral mucositis (“SOM”) in oropharyngeal cancer patients; camsirubicin (generic name for MNPR-201, GPX-150; 5-imino-13-deoxydoxorubicin), a proprietary Phase 2 clinical stage topoisomerase II-alpha targeted analog of doxorubicin engineered specifically to retain anticancer activity while minimizing toxic effects on the heart; and MNPR-101 (formerly huATN-658), a pre-IND stage humanized monoclonal antibody, which targets the urokinase plasminogen activator receptor (“uPAR”), for the treatment of advanced solid cancers. The Company was originally formed in the State of Delaware on December 5, 2014 as a limited liability company (“LLC”) and on December 16, 2015 converted to a C Corporation in a tax-free exchange. Liquidity The Company has incurred an accumulated deficit of approximately $25.9 million as of December 31, 2019. To date, the Company has primarily funded its operations with the net proceeds from private placements of convertible preferred stock and of common stock and from the cash provided in the camsirubicin asset purchase transaction and the Company’s initial public offering of its common stock on Nasdaq. Management believes that currently available resources will provide sufficient funds to enable the Company to meet its minimum obligations through March 2021. The Company’s ability to fund its future operations, including the clinical development of Validive and camsirubicin, is dependent primarily upon its ability to execute its business strategy, to obtain additional funding and/or to execute collaboration research transactions. There can be no certainty that future financing or collaborative research transactions will occur. |
2. Significant Accounting Polic
2. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Basis of Presentation These consolidated financial statements include the financial results of Monopar Therapeutics Inc., its wholly-owned French subsidiary, Monopar Therapeutics, SARL, and its wholly-owned Australian subsidiary, Monopar Therapeutics Australia Pty Ltd and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all disclosures required by GAAP for financial reporting. All intercompany accounts have been eliminated. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below and have been consistently applied in all periods presented. The Company has been primarily involved in performing research activities, developing product candidates, and raising capital to support and expand these activities. Certain reclassifications have been made to the Company’s consolidated financial statements for the year ended December 31, 2018 to conform to the year ended December 31, 2019 presentation. In order to properly classify the Company's federal research and development credit that the Company applied towards federal payroll tax expense, the Company has reclassified income tax benefit of $71,615 to a reduction in payroll tax expense in general and administrative expenses on the statement of operations and comprehensive loss for the year ended December 31, 2018. In addition, the Company has reclassified $71,615 of deferred tax asset as follows: $5,884 to other current assets; and $65,731 to other non-current assets on the Company's balance sheet as of December 31, 2018. The reclassifications had no impact on the Company’s comprehensive loss, total assets, or stockholders’ equity. Functional Currency The Company's consolidated functional currency is the U.S. Dollar. The Company's Australian subsidiary and French subsidiary use the Australian Dollar and European Euro, respectively, as their functional currency. At each quarter-end, each foreign subsidiary's balance sheets are translated into U.S. Dollars based upon the quarter-end exchange rate, while their statements of operations and comprehensive loss are translated into U.S. Dollars based upon an average exchange rate during the period. Comprehensive Loss Comprehensive loss represents net loss plus any gains or losses not reported in the statements of operations, such as foreign currency translations gains and losses that are typically reflected on the Company’s statements of stockholders’ equity. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Going Concern Assessment The Company adopted Accounting Standards Updates (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. Cash equivalents as of December 31, 2019 and 2018 consist entirely of money market accounts. Deferred Offering Costs Deferred offering costs represent legal, auditing, travel and filing fees related to fundraising efforts that have not yet been concluded. Prepaid Expenses Prepayments are expenditures for goods or services before the goods are used or the services are received and are charged to operations as the benefits are realized. Prepaid expenses include insurance premiums and software costs that are expensed monthly over the life of the contract. Prepaid expenses are reflected on the Company’s balance sheets as other current assets. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents at two financial institutions. As of December 31, 2019, balances at one financial institution was in excess of the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurable limit. Fair Value of Financial Instruments For financial instruments consisting of cash and cash equivalents, prepaid expenses, deferred offering costs, other current assets, accounts payable, accrued expenses, and other current liabilities, the carrying amounts are reasonable estimates of fair value due to their relatively short maturities. The Company adopted Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures, In determining fair values of all reported assets and liabilities that represent financial instruments, the Company uses the carrying market values of such amounts. The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect a reporting entity’s pricing an asset or liability developed based on the best information available under the circumstances. The fair value hierarchy consists of the following three levels: Level 1 Level 2 Level 3 Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1, 2 or 3 of the fair value hierarchy during the years ended December 31, 2019 and 2018. The following table presents the assets and liabilities recorded that are reported at fair value on our consolidated balance sheets on a recurring basis. No values were recorded in Level 2 or Level 3 at December 31, 2019 and 2018. Assets and Liabilities Measured at Fair Value on a Recurring Basis December 31, 2019 Level 1 Total Assets Cash equivalents(1) $ 13,083,536 $ 13,083,536 Total $ 13,083,536 $ 13,083,536 December 31, 2018 Level 1 Total Assets Cash equivalents(1) $ 6,788,333 $ 6,788,333 Total $ 6,788,333 $ 6,788,333 (1) Cash equivalents represent the fair value of the Company’s investment in a money market account at year-end. Net Loss per Share Net loss per share for the years ended December 31, 2019 and 2018 is calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share for the years ended December 31, 2019 and 2018 is calculated by dividing net loss by the weighted-average shares of the sum of a) common stock outstanding (10,587,632 shares as of December 31, 2019; 9,291,421 shares as of December 31, 2018) and b) potentially dilutive shares of common stock (such as stock options and warrants) outstanding during the period. As of December 31, 2019 and 2018, potentially dilutive securities included stock options to purchase up to 1,087,463 and 1,105,896 shares of the Company’s common stock, respectively. For the years ended December 31, 2019 and 2018, potentially dilutive securities are excluded from the computation of fully diluted net loss per share as their effect is anti-dilutive. Research and Development Expenses Research and development (“R&D”) costs are expensed as incurred. Major components of R&D expenses include salaries and benefits paid to the Company’s R&D staff, fees paid to consultants and to the entities that conduct certain R&D activities on the Company’s behalf and materials and supplies which are used in R&D activities during the reporting period. The Company accrues and expenses the costs for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with contract research organizations and clinical trial sites. The Company determines the estimates through discussions with internal clinical personnel and external service providers as to progress or stage of completion of trials or services and the agreed upon fee to be paid for such services. Costs of setting up clinical trial sites for participation in the trials are expensed immediately as R&D expenses. Clinical trial site costs related to patient screening and enrollment are accrued as patients are screened/entered into the trial. During the years ended December 31, 2019 and 2018, the Company had no clinical trials in progress. Collaborative Arrangements The Company and its future collaborative partners would be active participants in collaborative arrangements and all parties would be exposed to significant risks and rewards depending on the technical and commercial success of the activities. Contractual payments to the other parties in collaboration agreements and costs incurred by the Company when the Company is deemed to be the principal participant for a given transaction are recognized on a gross basis in R&D expenses. Royalties and license payments are recorded as earned. During the years ended December 31, 2019 and 2018, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments. Licensing Agreements The Company has various agreements licensing technology utilized in the development of its product or technology programs. The licenses contain success milestone obligations and royalties on future sales. During the years ended December 31, 2019 and 2018, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments under any of its license agreements. Patent Costs The Company expenses costs relating to issued patents and patent applications, including costs relating to legal, renewal and application fees, as a component of general and administrative expenses in its consolidated statements of operations and comprehensive loss. Income Taxes From December 2014 to December 16, 2015, the Company was an LLC taxed as a partnership under the Internal Revenue Code, during which period the members separately accounted for their pro-rata share of income, deductions, losses, and credits of the Company. On December 16, 2015, the Company converted from an LLC to a C Corporation. On December 16, 2015, the Company began using an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements, but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are more likely than not to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently realizes deferred income tax assets that were previously determined to be unrealizable are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made. Internal Revenue Code Section 382 provides that, after an ownership change, the amount of a loss corporation’s net operating loss (“NOL”) for any post-change year that may be offset by pre-change losses shall not exceed the section 382 limitation for that year. Because the Company will continue to raise equity in the coming years, section 382 will limit the Company’s usage of NOLs in the future. Accounting Standards Codification (“ASC”) 740, Income Taxes The Company is subject to U.S. Federal, Illinois and California income taxes. In addition, due to the new operations in certain foreign countries, the Company became subject to local tax laws of such countries. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company was incorporated on December 16, 2015 and is subject to U.S. Federal, state and local tax examinations by tax authorities for the years ended December 31, 2019, 2018, 2017 and 2016, and for the short tax period December 16, 2015 to December 31, 2015. The Company does not anticipate significant changes to its current uncertain tax positions through December 31, 2019. The Company plans on filing its tax returns for the year ending December 31, 2019 prior to the extended filing deadlines in all jurisdictions. Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based awards, including stock option grants. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model. Stock-based compensation costs for options granted to employees and non-employee directors are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating the future stock price volatility, forfeiture rates and expected terms. The expected volatility rates are estimated based on the actual volatility of comparable public companies over recent historical periods of the same length as the expected term. The Company selected these companies based on reasonably comparable characteristics, including market capitalization, stage of corporate development and with historical share price information sufficient to meet the expected term (life) of the stock-based awards. The expected term for options granted to date is estimated using the simplified method. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has not paid dividends and does not anticipate paying a cash dividend in the future vesting period and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior to January 1, 2019, the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vested and was recognized as an expense over the period in which services were rendered. Since January 1, 2019, consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period in which services are rendered. Recent Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. |
3. Capital Stock
3. Capital Stock | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | Holders of the common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor. Upon dissolution and liquidation of the Company, holders of the common stock are entitled to a ratable share of the net assets of the Company remaining after payments to creditors of the Company. The holders of shares of common stock are entitled to one vote per share for the election of directors and on all other matters submitted to a vote of stockholders. The Company’s amended and restated certificate of incorporation authorizes the Company to issue 40,000,000 shares of common stock with a par value of $0.001 per share. Contribution to Capital In August 2017, the Company’s then largest stockholder, Tactic Pharma, LLC (“Tactic Pharma”), surrendered 2,888,727 shares of common stock back to the Company as a contribution to the capital of the Company. This resulted at that time in reducing Tactic Pharma’s ownership in Monopar from 79.5% to 69.9%. As of December 31, 2019, Tactic Pharma owned 41.6% of Monopar. Issuance of Common Stock in Camsirubicin Purchase In August 2017, the Company issued 3,055,394 shares of its common stock in exchange for cash and intellectual property related to camsirubicin (formerly known as MNPR-201 or GPX-150). Sales of Common Stock On December 23, 2019, the Company completed the initial public offering of its common stock. The Company sold 1,277,778 shares of its common stock at a public offering price of $8.00 per share pursuant to an underwriting agreement with JonesTrading Institutional Services, LLC (“JonesTrading”). The Company paid JonesTrading a customary commission and reimbursement of a portion of their legal fees incurred in connection with the offering, which in aggregate totaled approximately $0.7 million. Net proceeds were approximately $9.4 million, after deducting underwriting discounts and accrued, unpaid offering expenses. The Company had incurred and paid prior to the initial public offering approximately $0.6 million of fundraising expenses which were capitalized on the Company’s balance sheet as deferred offering costs and were reclassified as fundraising expenses (a contra-equity balance sheet account) upon the closing of the Company’s initial public offering. The Company’s common stock began trading on the Nasdaq Capital Market on December 19, 2019. As of December 31, 2019, the Company had 10,587,632 shares of common stock issued and outstanding. In April 2016, the Company adopted the 2016 Stock Incentive Plan and the Company’s Board of Directors reserved 700,000 shares of common stock for issuances under the plan. In October 2017, the Company’s Board of Directors voted to increase the stock award pool to 1,600,000 shares of common stock, which subsequently was approved by the Company’s stockholders. |
4. Stock Incentive Plan
4. Stock Incentive Plan | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Option Plan | In April 2016, the Company’s Board of Directors and stockholders representing a majority of the Company’s outstanding stock at that time, approved the Monopar Therapeutics Inc. 2016 Stock Incentive Plan, as amended (the “Plan”), allowing the Company to grant up to an aggregate 700,000 shares of stock awards, stock options, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants. In October 2017, the Company’s Board of Directors voted to increase the stock award pool to 1,600,000 shares of common stock, which subsequently was approved by the Company’s stockholders. In January 2018, the Company granted stock options to purchase up to 32,004 shares of common stock to its acting chief medical officer, at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering prior to such grant. In May 2018 and August 2018, the Company granted stock options to two employees each to purchase up to 5,000 shares of common stock, at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering prior to such grant. Also in August 2018, the Company granted stock options to all four of its non-employee directors, the Company’s chief executive officer, chief scientific officer, and chief financial officer to purchase up to an aggregate 425,300 shares of the Company’s common stock at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering prior to such grant; vesting of such stock options commenced on October 1, 2018. In December 2018, the Company granted stock options to purchase up to 20,000 shares of common stock to its acting chief medical officer, at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering prior to such grant. Vesting of such stock options commenced on January 1, 2019. Under the Plan, the per share exercise price for the shares to be issued upon exercise of an option shall be determined by the Plan Administrator, except that the per share exercise price shall be no less than 100% of the fair market value per share on the grant date. Fair market value is established by the Company’s Board of Directors, using third party valuation reports, recent financings and the Company’s closing prices on Nasdaq since the Company’s listing on December 19, 2019. Stock options generally expire after ten years. Stock option activity under the Plan was as follows: Options Outstanding Options Available Number ofOptions Weighted-Average Exercise Price Balances at January 1, 2018 941,408 658,592 $ 0.94 Granted(1) (487,304) 487,304 6.00 Forfeited(2) 40,000 (40,000) 6.00 Balances at December 31, 2018 494,104 1,105,896 2.99 Exercised - (18,433) 5.97 Balances at December 31, 2019 494,104 1,087,463 2.94 (1) 32,004 options vest as follows: options to purchase up to 12,000 shares of common stock vest on the grant date, options to purchase up to 1,667 shares of common stock vest on the 1st of each month thereafter. 5,000 options vest 6/48ths on the grant date and 1/48th per month thereafter. 5,000 options vest 6/48ths on the six-month anniversary of grant date and 1/48th per month thereafter. 320,900 options vest 6/51 at the six-month anniversary of vesting commencement date and 1/51 per month thereafter, with vesting commenced on October 1, 2018. 104,400 options vest quarterly over 5 quarters, with the first quarter commenced on October 1, 2018. 20,000 options vest as follows: options to purchase up to 1,667 shares of common stock vest on January 31, 2019 and the last day of each month thereafter. (2) Forfeited options resulted from an employee termination. A summary of options outstanding as of December 31, 2019 is shown below: Exercise Prices Number of Shares Subject to Options Outstanding Weighted-Average Contractual Term in Years Number of Shares Subject to Options Fully Vested and Exercisable Weighted-Average Remaining Contractual Term $0.001 555,420 6.7 years 475,060 6.6 years $6.00 532,043 8.6 years 283,521 8.4 years 1,087,463 758,581 During the years ended December 31, 2019 and 2018, the Company recognized $653,997 and $232,625 of employee and non-employee director stock-based compensation expense as general and administrative expenses, respectively, and $274,345 and $171,238 as research and development expenses, respectively. The stock-based compensation expense is allocated on a departmental basis, based on the classification of the stock-based award holder. No income tax benefits have been recognized in the consolidated statements of operations and comprehensive loss for stock-based compensation awards. The Company recognizes as an expense the fair value of options granted to persons (currently consultants) who are neither employees nor non-employee directors. Stock-based compensation expense for consultants for the years ended December 31, 2019 and 2018 was $82,828 and $125,469, respectively, which was recorded as research and development expenses. The fair value of options granted from inception to December 31, 2019 was based on the Black-Scholes option-pricing model assuming the following factors: 4.7 to 6.2 years expected term, 55% to 85% volatility, 1.2% to 2.9% risk free interest rate and zero dividends. The expected term for options granted to date was estimated using the simplified method. There were no stock option grants during the year ended December 31, 2019. For the year ended December 31, 2018, the weighted-average grant date fair value was $2.05 per share. For the years ended December 31, 2019 and 2018 the fair value of shares vested was $0.8 million and $0.4 million, respectively. At December 31, 2019, the aggregate intrinsic value of outstanding stock options was approximately $14.9 million of which approximately $10.7 million was vested and approximately $4.2 million is expected to vest (representing options to purchase up to 350,200 shares of the Company's common stock), and the weighted-average exercise price in aggregate was $2.94 which includes $2.13 for fully vested stock options and $4.62 for stock options expected to vest, representing 1,087,463 shares of common stock. At December 31, 2019, unamortized unvested balance of stock-based compensation was $1.3 million, to be amortized over 2.4 years. |
5. Development and Collaboratio
5. Development and Collaboration Agreements | 12 Months Ended |
Dec. 31, 2019 | |
Development And Collaboration Agreements | |
Development and Collaboration Agreements | Onxeo S.A. In June 2016, the Company executed an option and license agreement with Onxeo S.A. (“Onxeo”), a public French company, which gave Monopar the exclusive option to license (on a world-wide exclusive basis) Validive to pursue treating severe oral mucositis in patients undergoing chemoradiation treatment for head and neck cancers. The pre-negotiated Onxeo license agreement for Validive as part of the option agreement includes clinical, regulatory, developmental and sales milestones that could reach up to $108 million if the Company achieves all milestones, and escalating royalties on net sales from 5% to 10%. On September 8, 2017, the Company exercised the license option, and therefore paid Onxeo the $1 million fee under the option and license agreement. Under the agreement, the Company is required to pay royalties to Onxeo on a product-by-product and country-by-country basis until the later of (1) the date when a given product is no longer within the scope of a patent claim in the country of sale or manufacture, (2) the expiry of any extended exclusivity period in the relevant country (such as orphan drug exclusivity, pediatric exclusivity, new chemical entity exclusivity, or other exclusivity granted beyond the expiry of the relevant patent), or (3) a specific time period after the first commercial sale of the product in such country. In most countries, including the U.S., the patent term is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country, not taking into consideration any potential patent term adjustment that may be filed in the future or any regulatory extensions that may be obtained. The royalty termination provision pursuant to (3) described above is shorter than 20 years and is the least likely cause of termination of royalty payments. The Onxeo license agreement does not have a pre-determined term, but expires on a product-by-product and country-by-country basis; that is, the agreement expires with respect to a given product in a given country whenever the Company’s royalty payment obligations with respect to such product have expired. The agreement may also be terminated early for cause if either the Company or Onxeo materially breach the agreement, or if either the Company or Onxeo become insolvent. The Company may also choose to terminate the agreement, either in its entirety or as to a certain product and a certain country, by providing Onxeo with advance notice. The Company plans to internally develop Validive with the near-term goal of commencing a Phase 3 clinical development program, which, if successful, may allow the Company to apply for marketing approval within the next several years. The Company will need to raise significant funds to support the further development of Validive. As of December 31, 2019, the Company had not reached any of the pre-specified milestones and has not been required to pay Onxeo any funds under this license agreement other than the one-time license fee. XOMA Ltd. The intellectual property rights contributed by Tactic Pharma to the Company included the non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, the Company is obligated to pay XOMA Ltd. clinical, regulatory and sales milestones for MNPR-101 that could reach up to $14.925 million if the Company achieves all milestones. The agreement does not require the payment of sales royalties. There can be no assurance that the Company will reach any milestones under the XOMA agreement. As of December 31, 2019, the Company had not reached any milestones and has not been required to pay XOMA Ltd. any funds under this license agreement. |
6. Related Party Transactions
6. Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | In March 2017, Tactic Pharma, the Company’s largest shareholder at that time, wired $1 million to the Company in advance of the sale of the Company’s common stock at $6 per share under a private placement memorandum. In April, the Company issued to Tactic Pharma 166,667 shares in exchange for the $1 million at $6 per share once the Company began selling stock to unaffiliated parties under the private placement memorandum. In August 2017, Tactic Pharma surrendered 2,888,727 shares of common stock back to the Company as a contribution to the capital of the Company. This resulted in reducing Tactic Pharma’s ownership in Monopar at that time from 79.5% to 69.9%. In August 2017, the Company executed definitive agreements with Gem Pharmaceuticals, LLC (“Gem”), pursuant to which Tactic Pharma and Gem formed a limited liability company, TacticGem, LLC (“TacticGem”). Tactic Pharma contributed 4,111,273 shares of its holdings in Monopar’s common stock to TacticGem and Gem contributed cash and assets to TacticGem. TacticGem then contributed cash and assets to the Company in exchange for stock. The Gem transaction is discussed in detail in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2019. As of December 31, 2019, Tactic Pharma beneficially owned 41.6% of Monopar’s common stock, and TacticGem owned 67.7% of Monopar’s common stock. During the years ended December 31, 2019 and 2018, the Company was governed by six members of its Board of Directors, of which four Board members were also Managers of the LLC prior to the Company’s conversion to a C Corporation (“Related Parties”). The Related Parties are also current common stockholders (owning approximately an aggregate 3% of the common stock outstanding as of December 31, 2019). None of the Related Parties received compensation other than market-based salary and benefits or cash and stock-based compensation as non-employee directors. Three of the former Managers are also Managing Members of Tactic Pharma as of December 31, 2019. Chandler D. Robinson is the Company’s Co-Founder, Chief Executive Officer, common stockholder, Managing Member of Tactic Pharma, former Manager of the predecessor LLC, Manager of CDR Pharma, LLC and Board member of Monopar as a C Corporation. Andrew P. Mazar is the Company’s Co-Founder, Chief Scientific Officer, common stockholder, Managing Member of Tactic Pharma, former Manager of the predecessor LLC and Board member of Monopar as a C Corporation. Michael Brown is a Managing Member of Tactic Pharma (as of February 1, 2019 with no voting power as it relates to the Company), a previous managing member of Monopar as an LLC, common stockholder and Board member of Monopar as a C Corporation. Christopher M. Starr is the Company’s Co-Founder, Executive Chairman of the Board of Directors, common stockholder, former Manager of the predecessor LLC and Board member of Monopar as a C Corporation. During the years ended December 31, 2019 and 2018, the Company paid or accrued legal fees to a large national law firm, in which a family member of the Company’s Chief Executive Officer was a law partner through January 31, 2019, approximately $33,725 (first quarter of 2019) and $152,094 (year ended December 31, 2018). The family member personally billed a de minimis |
7. Income Taxes
7. Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | ASC 740 requires that the tax benefit of net operating losses, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. The Company has reviewed the positive and negative evidence relating to the realizability of the deferred tax assets and has concluded that the deferred tax assets are not more likely than not to be realized. The valuation allowance increased by approximately $877,000 and $690,000 during the years ended December 31, 2019 and 2018, respectively. The difference between the effective tax rate and the U.S. federal tax rate is as follows: % Federal income tax 21.00% State income taxes, less federal benefit 1.12% Permanent differences (1.75%) Change in valuation allowances (20.38%) Other 0.01% Effective Tax Rate Benefit (expense) 0.00% Deferred tax assets and liabilities consist of the following: As of December 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 741,547 $ 467,186 Tax credits carryforwards 80,162 31,997 Stock compensation 308,171 138,111 Intangible asset basis differences 1,438,051 1,053,518 Gross deferred tax assets 2,567,931 1,690,812 Valuation allowance (2,567,931) (1,690,812) Income tax expense $ — $ — As of December 31, 2019, Company had total federal net operating loss carryforwards of approximately $3,438,000, which will begin to expire in 2035. Losses generated after 2017 will be carried forward indefinitely. At December 31, 2019, the Company had state net operating loss carryforwards of approximately $259,000 which will begin to expire in 2027. The net operating loss related deferred tax assets do not include excess tax benefits from employee stock option exercises. As of December 31, 2019, Company had R&D credit carryforwards of approximately $101,000 available to reduce future taxable income, if any, for state income tax purposes. Federal R&D credits are currently used to offset payroll taxes. The state R&D credit carryforwards expire beginning 2020. The Tax Reform Act of 1986 limits the use of net operating carryforwards in certain situations where changes occur in the stock ownership of a company. In the event the Company has had a change in ownership, utilization of the carryforwards could be limited. The Company has not performed a net operating loss utilization study to date. On January 1, 2015, the Company adopted the provisions of FASB Accounting Standards Codification (ASC 740-10), " Accounting for Uncertainty in Income Taxes No liability related to uncertain tax positions is recorded on the financial statements related to uncertain tax positions. There are no unrecognized tax benefits as of December 31, 2019. The Company does not expect that uncertain tax benefits will materially change in the next 12 months. The Company files U.S. federal, California and Illinois State tax returns. Company is subject to California State minimum franchise taxes. All tax returns will remain open for examination by the federal and state taxing authorities for three and four years, respectively, from the date of utilization of any net operating loss carryforwards or R&D credits. In addition, due to the new operations in certain foreign countries, the Company became subject to local tax laws of such countries. Nonetheless, as of December 31, 2019, due to the insignificant expenditures in such countries, there was no material tax effect to the Company’s 2019 consolidated financial statements. |
8. Commitments and Contingencie
8. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Development and Collaboration Agreements Onxeo S.A. The Onxeo license agreement for Validive includes clinical, regulatory, developmental and sales milestones that could reach up to $108 million if the Company achieves all milestones, and escalating royalties on net sales from 5% to 10%. During the year ended December 31, 2019, the Company had not reached any of these milestones and has not been required to pay Onxeo any funds under this license agreement other than the $1 million one-time license fee. Grupo Español de Investigación en Sarcomas (“GEIS”) In June 2019, the Company executed a clinical collaboration agreement with GEIS for the development of camsirubicin in patients with advanced soft tissue sarcoma (“ASTS”). GEIS will be the study sponsor and will lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against the current 1st-line treatment for ASTS, doxorubicin. Enrollment of the trial is anticipated to begin in the second half of 2020 and will include approximately 170 ASTS patients. The Company will provide study drug and supplemental financial support for the clinical trial averaging approximately $2 million to $3 million per year. During the year ended December 31, 2019, the Company provided a nominal amount of financial support and incurred a nominal amount of drug manufacturing costs. The Company can terminate the agreement by providing GEIS with advance notice, and without affecting the Company’s rights and ownership to any intellectual property or clinical data. XOMA Ltd. The intellectual property rights contributed by Tactic Pharma to the Company included the non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, the Company is obligated to pay XOMA Ltd. clinical, regulatory and sales milestones for MNPR-101 but is not required to pay royalties on product sales. During the year ended December 31, 2019, the Company had not reached any milestones and has not been required to pay XOMA Ltd. any funds under this license agreement. Operating Leases Commencing January 1, 2018, the Company entered into a lease for its executive headquarters at 1000 Skokie Blvd., Suite 350, Wilmette, Illinois. The lease term is January 1, 2018 through December 31, 2019, at which time the lease was on a month-to-month basis. In addition, effective February 2019, the Company leases additional office space in the same building on a month-to-month basis. During the years ended December 31, 2019 and 2018, the Company recognized operating lease expenses of $51,888 and $40,594, respectively. Effective January 1, 2019, the Company adopted ASU 2016-02, as amended by ASU 2018-10, which requires the Company to record leases on its consolidated balance sheet (a) a lease liability and (b) a right-of-use asset. Due to the adoption of the standard using the retrospective cumulative-effect adjustment method, there are no changes to our previously reported results prior to January 1, 2019. The effect on the operating lease expense was nominal as a result of the adoption of ASU 2016-02, as amended by ASU 2018-10. Because the Company had no lease obligation (other than on a month-to-month basis) past December 31, 2019, the Company had no lease liability and right-of-use asset on its consolidated balance sheet as of December 31, 2019. Legal Contingencies The Company is subject to claims and assessments from time to time in the ordinary course of business. No claims have been asserted to date. 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 indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims nor been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of future claims against these indemnification obligations. In accordance with its amended and restated certificate of incorporation and bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacities. There have been no claims to date. |
9. Subsequent Events
9. Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | On January 13, 2020, the Company entered into a Capital on DemandTM Sales Agreement with JonesTrading, as sales agent, pursuant to which Monopar may offer and sell (at its discretion), from time to time, through or to JonesTrading shares of its common stock, having an aggregate offering price of up to $19.7 million. Pursuant to this agreement, as of March 13, 2020, the Company sold 33,903 shares of its common stock at an average gross price of $15.9994 for net proceeds of $526,143, after fees and commissions of $16,284. On January 4, January 31 and February 11, 2020, the Company's Plan Administrator Committee (with regards to non-officer employees) and the Company's Compensation Committee, as ratified by the full Board (in the case of officers and non-employee direrectors) granted an aggregate of 205,110 stock options with exercise prices ranging from $12.93 to $19.50 for an aggregate grant date fair value of approximately $2.1 million which will be expensed over the vesting period. All stock options have a 10 year term and vest from 1 to 4 years. The Company also granted an aggregate 45,722 restricted stock units on January 31, 2020 and February 11, 2020, with an aggregate value of approximately $0.7 million which vest from 1 to 4 years. In December 2019, a novel strain of coronavirus (“Covid-19”) surfaced in China and by March 2020 Covid-19 was designated a global pandemic, resulting in travel restrictions and temporary shut-downs of non-essential businesses in many states in the United States. The Company is able to remain open but has required their employees work from home. Due to the volatility of the stock markets resulting from the travel restrictions and temporary business shut-downs, the Company may face challenges in raising substantial cash in the near-term. Due to many uncertainties, the Company is unable to estimate the pandemic’s financial impact or duration at this time, or its potential impact on the Company’s planned clinical trials. |
Schedule II_ Valuation and Qual
Schedule II: Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II: Valuation and Qualifying Accounts | As of December 31, 2019 2018 Balance at beginning of year $1,690,812 $1,000,988 Additions to charged to expenses/other accounts 877,119 689,824 Balance at end of year $2,567,931 $1,690,812 |
2. Significant Accounting Pol_2
2. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | These consolidated financial statements include the financial results of Monopar Therapeutics Inc., its wholly-owned French subsidiary, Monopar Therapeutics, SARL, and its wholly-owned Australian subsidiary, Monopar Therapeutics Australia Pty Ltd and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all disclosures required by GAAP for financial reporting. All intercompany accounts have been eliminated. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below and have been consistently applied in all periods presented. The Company has been primarily involved in performing research activities, developing product candidates, and raising capital to support and expand these activities. Certain reclassifications have been made to the Company’s consolidated financial statements for the year ended December 31, 2018 to conform to the year ended December 31, 2019 presentation. In order to properly classify the Company's federal research and development credit that the Company applied towards federal payroll tax expense, the Company has reclassified income tax benefit of $71,615 to a reduction in payroll tax expense in general and administrative expenses on the statement of operations and comprehensive loss for the year ended December 31, 2018. In addition, the Company has reclassified $71,615 of deferred tax asset as follows: $5,884 to other current assets; and $65,731 to other non-current assets on the Company's balance sheet as of December 31, 2018. The reclassifications had no impact on the Company’s comprehensive loss, total assets, or stockholders’ equity. |
Functional Currency | The Company's consolidated functional currency is the U.S. Dollar. The Company's Australian subsidiary and French subsidiary use the Australian Dollar and European Euro, respectively, as their functional currency. At each quarter-end, each foreign subsidiary's balance sheets are translated into U.S. Dollars based upon the quarter-end exchange rate, while their statements of operations and comprehensive loss are translated into U.S. Dollars based upon an average exchange rate during the period. |
Comprehensive Loss | Comprehensive loss represents net loss plus any gains or losses not reported in the statements of operations, such as foreign currency translations gains and losses that are typically reflected on the Company’s statements of stockholders’ equity. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Going Concern Assessment | The Company adopted Accounting Standards Updates (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, |
Cash Equivalents | The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. Cash equivalents as of December 31, 2019 and 2018 consist entirely of money market accounts. |
Deferred Offering Costs | Deferred offering costs represent legal, auditing, travel and filing fees related to fundraising efforts that have not yet been concluded. |
Prepaid Expenses | Prepayments are expenditures for goods or services before the goods are used or the services are received and are charged to operations as the benefits are realized. Prepaid expenses include insurance premiums and software costs that are expensed monthly over the life of the contract. Prepaid expenses are reflected on the Company’s balance sheets as other current assets. |
Concentration of Credit Risk | Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents at two financial institutions. As of December 31, 2019, balances at one financial institution was in excess of the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurable limit. |
Fair Value of Financial Instruments | For financial instruments consisting of cash and cash equivalents, prepaid expenses, deferred offering costs, other current assets, accounts payable, accrued expenses, and other current liabilities, the carrying amounts are reasonable estimates of fair value due to their relatively short maturities. The Company adopted Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures, In determining fair values of all reported assets and liabilities that represent financial instruments, the Company uses the carrying market values of such amounts. The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect a reporting entity’s pricing an asset or liability developed based on the best information available under the circumstances. The fair value hierarchy consists of the following three levels: Level 1 Level 2 Level 3 Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1, 2 or 3 of the fair value hierarchy during the years ended December 31, 2019 and 2018. The following table presents the assets and liabilities recorded that are reported at fair value on our consolidated balance sheets on a recurring basis. No values were recorded in Level 2 or Level 3 at December 31, 2019 and 2018. |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | December 31, 2019 Level 1 Total Assets Cash equivalents(1) $ 13,083,536 $ 13,083,536 Total $ 13,083,536 $ 13,083,536 December 31, 2018 Level 1 Total Assets Cash equivalents(1) $ 6,788,333 $ 6,788,333 Total $ 6,788,333 $ 6,788,333 (1) Cash equivalents represent the fair value of the Company’s investment in a money market account at year-end. |
Net Loss per Share | Net loss per share for the years ended December 31, 2019 and 2018 is calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share for the years ended December 31, 2019 and 2018 is calculated by dividing net loss by the weighted-average shares of the sum of a) common stock outstanding (10,587,632 shares as of December 31, 2019; 9,291,421 shares as of December 31, 2018) and b) potentially dilutive shares of common stock (such as stock options and warrants) outstanding during the period. As of December 31, 2019 and 2018, potentially dilutive securities included stock options to purchase up to 1,087,463 and 1,105,896 shares of the Company’s common stock, respectively. For the years ended December 31, 2019 and 2018, potentially dilutive securities are excluded from the computation of fully diluted net loss per share as their effect is anti-dilutive. |
Research and Development Expenses | Research and development (“R&D”) costs are expensed as incurred. Major components of R&D expenses include salaries and benefits paid to the Company’s R&D staff, fees paid to consultants and to the entities that conduct certain R&D activities on the Company’s behalf and materials and supplies which are used in R&D activities during the reporting period. The Company accrues and expenses the costs for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with contract research organizations and clinical trial sites. The Company determines the estimates through discussions with internal clinical personnel and external service providers as to progress or stage of completion of trials or services and the agreed upon fee to be paid for such services. Costs of setting up clinical trial sites for participation in the trials are expensed immediately as R&D expenses. Clinical trial site costs related to patient screening and enrollment are accrued as patients are screened/entered into the trial. During the years ended December 31, 2019 and 2018, the Company had no clinical trials in progress. |
Collaborative Arrangements | The Company and its future collaborative partners would be active participants in collaborative arrangements and all parties would be exposed to significant risks and rewards depending on the technical and commercial success of the activities. Contractual payments to the other parties in collaboration agreements and costs incurred by the Company when the Company is deemed to be the principal participant for a given transaction are recognized on a gross basis in R&D expenses. Royalties and license payments are recorded as earned. During the years ended December 31, 2019 and 2018, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments. |
Licensing Agreements | The Company has various agreements licensing technology utilized in the development of its product or technology programs. The licenses contain success milestone obligations and royalties on future sales. During the years ended December 31, 2019 and 2018, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments under any of its license agreements. |
Patent Costs | The Company expenses costs relating to issued patents and patent applications, including costs relating to legal, renewal and application fees, as a component of general and administrative expenses in its consolidated statements of operations and comprehensive loss. |
Income Taxes | From December 2014 to December 16, 2015, the Company was an LLC taxed as a partnership under the Internal Revenue Code, during which period the members separately accounted for their pro-rata share of income, deductions, losses, and credits of the Company. On December 16, 2015, the Company converted from an LLC to a C Corporation. On December 16, 2015, the Company began using an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements, but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are more likely than not to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently realizes deferred income tax assets that were previously determined to be unrealizable are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made. Internal Revenue Code Section 382 provides that, after an ownership change, the amount of a loss corporation’s net operating loss (“NOL”) for any post-change year that may be offset by pre-change losses shall not exceed the section 382 limitation for that year. Because the Company will continue to raise equity in the coming years, section 382 will limit the Company’s usage of NOLs in the future. Accounting Standards Codification (“ASC”) 740, Income Taxes The Company is subject to U.S. Federal, Illinois and California income taxes. In addition, due to the new operations in certain foreign countries, the Company became subject to local tax laws of such countries. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company was incorporated on December 16, 2015 and is subject to U.S. Federal, state and local tax examinations by tax authorities for the years ended December 31, 2019, 2018, 2017 and 2016, and for the short tax period December 16, 2015 to December 31, 2015. The Company does not anticipate significant changes to its current uncertain tax positions through December 31, 2019. The Company plans on filing its tax returns for the year ending December 31, 2019 prior to the extended filing deadlines in all jurisdictions. |
Stock-Based Compensation | The Company accounts for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based awards, including stock option grants. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model. Stock-based compensation costs for options granted to employees and non-employee directors are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating the future stock price volatility, forfeiture rates and expected terms. The expected volatility rates are estimated based on the actual volatility of comparable public companies over recent historical periods of the same length as the expected term. The Company selected these companies based on reasonably comparable characteristics, including market capitalization, stage of corporate development and with historical share price information sufficient to meet the expected term (life) of the stock-based awards. The expected term for options granted to date is estimated using the simplified method. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has not paid dividends and does not anticipate paying a cash dividend in the future vesting period and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior to January 1, 2019, the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vested and was recognized as an expense over the period in which services were rendered. Since January 1, 2019, consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period in which services are rendered. |
Recent Accounting Pronouncements | In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. |
2. Significant Accounting Pol_3
2. Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Assets and liabilities measured at fair value on a recurring basis | December 31, 2019 Level 1 Total Assets Cash equivalents(1) $ 13,083,536 $ 13,083,536 Total $ 13,083,536 $ 13,083,536 December 31, 2018 Level 1 Total Assets Cash equivalents(1) $ 6,788,333 $ 6,788,333 Total $ 6,788,333 $ 6,788,333 (1) Cash equivalents represent the fair value of the Company’s investment in a money market account at year-end. |
4. Stock Incentive Plan (Tables
4. Stock Incentive Plan (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity | Options Outstanding Options Available Number ofOptions Weighted-Average Exercise Price Balances at January 1, 2018 941,408 658,592 $ 0.94 Granted(1) (487,304) 487,304 6.00 Forfeited(2) 40,000 (40,000) 6.00 Balances at December 31, 2018 494,104 1,105,896 2.99 Exercised - (18,433) 5.97 Balances at December 31, 2019 494,104 1,087,463 2.94 |
Summary of options outstanding | Exercise Prices Number of Shares Subject to Options Outstanding Weighted-Average Contractual Term in Years Number of Shares Subject to Options Fully Vested and Exercisable Weighted-Average Remaining Contractual Term $0.001 555,420 6.7 years 475,060 6.6 years $6.00 532,043 8.6 years 283,521 8.4 years 1,087,463 758,581 |
7. Income Taxes (Tables)
7. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Effective income tax rate reconciliation | % Federal income tax 21.00% State income taxes, less federal benefit 1.12% Permanent differences (1.75%) Change in valuation allowances (20.38%) Other 0.01% Effective Tax Rate Benefit (expense) 0.00% |
Deferred tax assets and liabilities | As of December 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 741,547 $ 467,186 Tax credits carryforwards 80,162 31,997 Stock compensation 308,171 138,111 Intangible asset basis differences 1,438,051 1,053,518 Gross deferred tax assets 2,567,931 1,690,812 Valuation allowance (2,567,931) (1,690,812) Income tax expense $ — $ — |
Schedule II_ Valuation and Qu_2
Schedule II: Valuation and Qualifying Accounts (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II: Valuation and Qualifying Accounts | As of December 31, 2019 2018 Balance at beginning of year $1,690,812 $1,000,988 Additions to charged to expenses/other accounts 877,119 689,824 Balance at end of year $2,567,931 $1,690,812 |
1. Nature of Business and Liq_2
1. Nature of Business and Liquidity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
State of incorporation | Delaware | |
Date of incorporation | Dec. 5, 2014 | |
Accumulated loss | $ (25,880,586) | $ (21,655,712) |
2. Significant Accounting Pol_4
2. Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash equivalents | $ 13,083,536 | $ 6,788,333 |
Total | 13,083,536 | 6,788,333 |
Level 1 | ||
Assets | ||
Cash equivalents | 13,083,536 | 6,788,333 |
Total | $ 13,083,536 | $ 6,788,333 |
2. Significant Accounting Pol_5
2. Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Restricted cash | $ 0 | $ 0 |
Potentially dilutive securities | 1,087,463 | 1,105,896 |
3. Capital Stock (Details Narra
3. Capital Stock (Details Narrative) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Stockholders' Equity Note [Abstract] | ||
Common stock, issued | 10,587,632 | 9,291,421 |
Common stock, outstanding | 10,587,632 | 9,291,421 |
4. Stock Incentive Plan (Detail
4. Stock Incentive Plan (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options available outstanding, beginning | 494,104 | 941,408 |
Stock options available, granted | 0 | (487,304) |
Stock options available, forfeited | 0 | 40,000 |
Stock options available, exercised | 0 | 0 |
Stock options available outstanding, ending | 494,104 | 494,104 |
Stock options outstanding, beginning | 1,105,896 | 658,592 |
Stock options, granted | 0 | 487,304 |
Stock options, forfeited | 0 | (40,000) |
Stock options, exercised | (18,433) | 0 |
Stock options outstanding, ending | 1,087,463 | 1,105,896 |
Weighted average exercise price outstanding, beginning | $ 2.990 | $ 0.940 |
Weighted average exercise price, granted | 0 | 6 |
Weighted average exercise price, forfeited | .0000 | 6 |
Weighted average exercise price, exercised | 5.970 | 0 |
Weighted average exercise price outstanding, ending | $ 2.940 | $ 2.990 |
4. Stock Incentive Plan (Deta_2
4. Stock Incentive Plan (Details 1) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Number of shares outstanding | 1,087,463 | 1,105,896 | 658,592 |
Number of shares fully vested and exercisable | 758,581 | ||
Option 1 | |||
Exercise price | $ .001 | ||
Number of shares outstanding | 555,420 | ||
Weighted average remaining contractual life | 6 years 8 months 12 days | ||
Number of shares fully vested and exercisable | 475,060 | ||
Weighted average remaining contractual life | 6 years 7 months 6 days | ||
Option 2 | |||
Exercise price | $ 6 | ||
Number of shares outstanding | 532,043 | ||
Weighted average remaining contractual life | 8 years 7 months 6 days | ||
Number of shares fully vested and exercisable | 283,521 | ||
Weighted average remaining contractual life | 8 years 4 months 24 days |
4. Stock Incentive Plan (Deta_3
4. Stock Incentive Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation expense for non-employees | $ 82,828 | $ 125,469 |
Unamortized unvested balance of stock base compensation | $ 13,000,000 | |
Unamortized unvested balance of stock base compensation, period | 2 years 4 months 24 days | |
General and Administrative Expenses | ||
Employee and non-employee director stock-based compensation expense | $ 653,997 | 232,625 |
Stock-based compensation expense for non-employees | 125,469 | |
Research and Development Expenses | ||
Employee and non-employee director stock-based compensation expense | $ 274,345 | 171,238 |
Stock-based compensation expense for non-employees | $ 0 |
6. Related Party Transactions (
6. Related Party Transactions (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Chief Executive Officer | ||
Legal fees | $ 33,725 | $ 152,094 |
8. Income Taxes (Details 1)
8. Income Taxes (Details 1) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Federal income tax | 21.00% |
State income taxes, less federal benefit | 1.12% |
Permanent differences | (1.75%) |
Change in valuation allowance | (20.38%) |
Other | 0.01% |
Effective tax rate benefit (expense) | 0.00% |
8. Income Taxes (Details 2)
8. Income Taxes (Details 2) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 741,547 | $ 467,186 |
Tax credit carryforwards | 80,162 | 107,969 |
Stock compensation | 308,171 | 138,111 |
Intangible asset basis differences | 1,438,051 | 1,053,518 |
Gross deferred tax assets | 2,567,931 | 1,766,784 |
Valuation allowance | $ (2,567,931) | $ (1,690,811) |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Research and development credit carryforwards | $ 101,000 | $ 76,000 |
Federal | ||
Net operating loss carryforwards | $ 3,438,000 | |
Net operating loss carryforwards expiration | Dec. 31, 2035 | |
State | ||
Net operating loss carryforwards | $ 259,000 | |
Net operating loss carryforwards expiration | Dec. 31, 2027 |
9. Commitments and Contingencie
9. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease expense | $ 51,888 | $ 40,594 |
Schedule II_ Valuation and Qu_3
Schedule II: Valuation and Qualifying Accounts (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||
Balance at beginning of year | $ 1,690,811 | $ 1,000,987 |
Additions to charged to expenses/other accounts | 877,119 | 689,824 |
Balance at end of year | $ 2,567,931 | $ 1,690,811 |