Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 08, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TFF Pharmaceuticals, Inc. | |
Entity Central Index Key | 0001733413 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 18,671,658 | |
Entity File Number | 001-39102 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 21,924,119 | $ 28,094,936 |
Prepaid assets and other current assets | 610,376 | 1,092,462 |
Total assets | 22,534,495 | 29,187,398 |
Current liabilities: | ||
Accounts payable | 689,803 | 410,638 |
Total current liabilities | 689,803 | 410,638 |
Accrued research and development expense (see Note 5) | 1,132,013 | |
Total liabilities | 689,803 | 1,542,651 |
Stockholders’ equity: | ||
Common stock; $0.001 par value, 45,000,000 shares authorized; 18,671,658 and 18,450,992 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 18,672 | 18,451 |
Additional paid-in capital | 45,191,702 | 43,338,710 |
Accumulated other comprehensive loss | (39,491) | |
Accumulated deficit | (23,326,191) | (15,712,414) |
Total stockholders’ equity | 21,844,692 | 27,644,747 |
Total liabilities and stockholders’ equity | $ 22,534,495 | $ 29,187,398 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 18,671,658 | 18,450,992 |
Common stock, Shares outstanding | 18,671,658 | 18,450,992 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating expenses: | ||||
Research and development | $ 2,567,771 | $ 1,319,656 | $ 4,803,313 | $ 2,990,518 |
General and administrative | 1,274,803 | 889,453 | 2,892,727 | 1,421,051 |
Total operating expenses | 3,842,574 | 2,209,109 | 7,696,040 | 4,411,569 |
Loss from operations | (3,842,574) | (2,209,109) | (7,696,040) | (4,411,569) |
Other income: | ||||
Interest income | 25,995 | 22,189 | 82,263 | 41,834 |
Total other income | 25,995 | 22,189 | 82,263 | 41,834 |
Net loss | (3,816,579) | (2,186,920) | (7,613,777) | (4,369,735) |
Preferred stock dividend | (288,962) | (510,240) | ||
Net loss applicable to common stock | (3,816,579) | (2,475,882) | (7,613,777) | (4,879,975) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (19,208) | (39,491) | ||
Comprehensive loss | $ (3,835,787) | $ (2,475,882) | $ (7,653,268) | $ (4,879,975) |
Net loss applicable to common stock per share, basic and diluted | $ (0.20) | $ (0.56) | $ (0.40) | $ (1.11) |
Weighted average common shares outstanding, basic and diluted | 19,071,658 | 4,400,000 | 19,040,134 | 4,400,000 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 4,000 | $ 596,724 | $ (3,842,186) | $ (3,241,462) | |
Balance, shares at Dec. 31, 2018 | 4,000,000 | ||||
Stock-based compensation | 121,226 | 121,226 | |||
Dividends on preferred stock | (221,279) | (221,279) | |||
Net loss | (2,182,815) | (2,182,815) | |||
Balance at Mar. 31, 2019 | $ 4,000 | 496,671 | (6,025,001) | (5,524,330) | |
Balance, shares at Mar. 31, 2019 | 4,000,000 | ||||
Stock-based compensation | 486,396 | 486,396 | |||
Dividends on preferred stock | (288,962) | (288,962) | |||
Net loss | (2,186,920) | (2,186,920) | |||
Balance at Jun. 30, 2019 | $ 4,000 | 694,106 | (8,211,921) | (7,513,815) | |
Balance, shares at Jun. 30, 2019 | 4,000,000 | ||||
Balance at Dec. 31, 2019 | $ 18,451 | 43,338,710 | (15,712,414) | 27,644,747 | |
Balance, shares at Dec. 31, 2019 | 18,450,992 | ||||
Issuance of common stock for accrued research and development expense | $ 221 | 1,131,792 | 1,132,013 | ||
Issuance of common stock for accrued research and development expense, Shares | 220,666 | ||||
Stock-based compensation | 425,844 | 425,844 | |||
Foreign currency translation adjustment | (20,283) | (20,283) | |||
Net loss | (3,797,198) | (3,797,198) | |||
Balance at Mar. 31, 2020 | $ 18,672 | 44,896,346 | (20,283) | (19,509,612) | 25,385,123 |
Balance, shares at Mar. 31, 2020 | 18,671,658 | ||||
Stock-based compensation | 295,356 | 295,356 | |||
Foreign currency translation adjustment | (19,208) | (19,208) | |||
Net loss | (3,816,579) | (3,816,579) | |||
Balance at Jun. 30, 2020 | $ 18,672 | $ 45,191,702 | $ (39,491) | $ (23,326,191) | $ 21,844,692 |
Balance, shares at Jun. 30, 2020 | 18,671,658 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (7,613,777) | $ (4,369,735) |
Adjustment to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation | 721,200 | 607,622 |
Changes in operating assets and liabilities: | ||
Prepaid assets | 491,273 | (15,025) |
Accounts payable | 274,255 | (60,812) |
Net cash used in operating activities | (6,127,049) | (3,837,950) |
Cash flows from investing activities: | ||
Net cash from investing activities | ||
Cash flows from financing activities: | ||
Proceeds from issuance of preferred stock | 7,208,393 | |
Net cash from financing activities | 7,208,393 | |
Effect of exchange rate changes on cash and cash equivalents | (43,768) | |
Net change in cash and cash equivalents | (6,170,817) | 3,370,443 |
Cash and cash equivalents at beginning of period | 28,094,936 | 10,261,671 |
Cash and cash equivalents at end of period | 21,924,119 | 13,632,114 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Accrued offering costs | 17,158 | |
Accrued dividend | $ 510,240 | |
Issuance of common stock for accrued research and development expense | $ 1,132,013 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Description of Business [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS TFF Pharmaceuticals, Inc. (the "Company") was incorporated in the State of Delaware on January 24, 2018 by Lung Therapeutics, Inc. ("LTI"), at which time the Company and LTI entered into a Contribution and Subscription Agreement ("Contribution Agreement") pursuant to which LTI agreed to transfer to the Company certain of LTI's non-core intellectual property rights and other assets, including LTI's rights under a patent license agreement with the University of Texas at Austin (see Note 5), in exchange for 4,000,000 shares of the Company's common stock. The transactions under the Contribution Agreement closed in March 2018. LTI's basis in such assets were minimal. LTI is an early-stage biotechnology company focused on the development of certain technologies in the pulmonary field. The Company's initial focus is on the development of inhaled dry powder drugs to enhance the treatment of pulmonary diseases and conditions. In December 2019, the Company established a wholly-owned Australian subsidiary, TFF Pharmaceuticals Australia Pty Ltd ("TFF Australia"), in order to conduct clinical research. TFF Pharmaceuticals, Inc., along with TFF Australia, are collectively referred to as the "Company". The Company is in the development stage and is devoting substantially all of its efforts toward technology research and development. In October 2019, the Company completed an initial public offering ("IPO"), selling 4,400,000 shares of common stock at an offering price of $5.00 per share. The Company received gross proceeds of approximately $22,000,000. In addition, the Company granted the underwriter a 45-day option to purchase an additional 660,000 shares of common stock at the initial public offering price, less underwriting discounts and commissions. The option was exercised in November 2019 and the underwriter purchased an additional 479,300 shares of common stock and the Company received additional gross proceeds of approximately $2,397,000. On March 11, 2020, the World Health Organization declared a novel strain of coronavirus disease ("COVID-19") a global pandemic. We had expected to commence Phase I clinical trials our thin film freezing, or TFF, formulation of Tacrolimus in Australia in the first quarter of 2020, and on March 13, 2020 we had received the approval of the Alfred Hospital Human Research Ethics Committee to commence Phase I trials, however later in March 2020 our contract research organization in Australia informed us that because of the spread of the COVID-19 virus in Australia, there would be a delay in initiating the trial. During the second quarter of 2020, we were able to begin dosing in the Phase I Tacrolimus trial in Melbourne, Victoria, Australia. However, due to the resurgence of COVID-19 in the Melbourne area, in July 2020 the Phase I trials were delayed. With the flaring of COVID-19 in the Melbourne area and in order to remain dynamic, we are opening a second clinical trial site in Brisbane, Queensland, Australia and we expect to resume dosing in the Phase I clinical trials in Australia before the end of the third quarter 2020. Any financial impact cannot be reasonably estimated at this time, but may materially affect our business and financial condition. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. |
Liquidity and Management's Plan
Liquidity and Management's Plans | 6 Months Ended |
Jun. 30, 2020 | |
Liquidity and Managements Plans [Abstract] | |
LIQUIDITY AND MANAGEMENT'S PLANS | NOTE 2 - LIQUIDITY AND MANAGEMENT'S PLANS As of June 30, 2020, the Company had cash and cash equivalents of approximately $21,924,000 and a working capital of approximately $21,845,000. The Company has not generated revenues since inception and has incurred recurring operating losses. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital to pursue its product development. The Company expects to further increase its research and development activities, which will increase the amount of cash utilized subsequent to June 30, 2020. Specifically, the Company expects increased spending on research and development activities and higher payroll expenses as it increases its professional and scientific staff and continues to prepare for anticipated manufacturing activities. The Company currently believes its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of these condensed consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission ("SEC"). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2020 and the results of operations, changes in stockholders' equity and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Principles of Consolidation The consolidated financial statements include the accounts of TFF Pharmaceuticals, Inc. and its wholly-owned subsidiary, TFF Australia. All material intercompany accounts and transactions have been eliminated in consolidation. Foreign Currency The currency of TFF Australia, the Company's international subsidiary, is in Australian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at each balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of stockholders' equity in accumulated other comprehensive income (loss). Fair Value of Financial Instruments Authoritative guidance requires disclosure of the fair value of financial instruments. The Company's financial instruments consist of cash and cash equivalents and accounts payable, the carrying amounts of which approximate their estimated fair values primarily due to the short-term nature of the instruments or based on information obtained from market sources and management estimates. The Company measures the fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the 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 assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Basic and Diluted Earnings per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive share equivalents outstanding for the period, determined using the treasury-stock and if-converted methods. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Basic weighted average shares outstanding for the three and six months ended June 30, 2020 and 2019 include 400,000 shares underlying a warrant to purchase common shares. As the shares underlying this warrant can be issued for little consideration (an aggregate exercise price of $0.01 per share), these shares are deemed to be issued for purposes of basic earnings per share. For the six months ended June 30, 2020 and 2019, the Company had the following potential common stock equivalents outstanding which were not included in the calculation of diluted net loss per common share because inclusion thereof would be anti-dilutive: Six Months Ended Six Months Ended June 30, June 30, Stock Options 2,301,333 1,333,594 Series A Convertible Preferred Stock* — 9,425,436 Warrants 1,076,463 985,012 3,377,796 11,744,042 * On an as-converted basis Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include the fair value of stock-based compensation and warrants and the valuation allowance against deferred tax assets and related disclosures. Actual results could differ from those estimates. Recent Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) Leases. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 4 - COMMITMENTS AND CONTINGENCIES Operating Leases In October 2018, the Company entered into a lease agreement for office space in Doylestown, Pennsylvania. The lease commenced on October 15, 2018 and the Company exercised a one-year lease renewal in October 2019 that will expire on October 31, 2020. The lease has an additional one-year option for renewal, and the base rent is $36,000 per year. The Company has determined that the lease agreement is considered a short-term lease under ASC 842 and has not recorded a right-of-use asset or liability. Short-term lease expense for the three and six months ended June 30, 2020 was $9,000 and $18,000, respectively. Approximate future minimum lease payments required under the operating leases are as follows: Year ending December 31, Amount 2020 – Remaining $ 12,000 Legal The Company may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of its business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which the Company is or could become involved in litigation may have a material adverse effect on its business and financial condition. To the Company's knowledge, neither the Company nor any of its properties are subject to any pending legal proceedings. |
License and Agreements
License and Agreements | 6 Months Ended |
Jun. 30, 2020 | |
License and Agreements [Abstract] | |
LICENSE AND AGREEMENTS | NOTE 5 - LICENSE AND AGREEMENTS In July 2015, the University of Texas at Austin ("UT") granted to the Company's former parent, LTI, an exclusive worldwide, royalty bearing license to the patent rights for the TFF platform in all fields of use, other than vaccines for which LTI received a non-exclusive worldwide, royalty bearing license to the patent rights for the TFF platform. In March 2018, LTI completed an assignment to the Company all of its interest to the TFF platform, including the patent license agreement with UT, at which time the Company paid UT an assignment fee of $100,000 in accordance with the patent license agreement. In November 2018, the Company and UT entered into an amendment to the patent license agreement pursuant to which, among other things, the Company's exclusive patent rights to the TFF platform were expanded to all fields of use. The patent license agreement requires the Company to pay royalties and milestone payments and conform to a variety of covenants and agreements, and in the event of the Company's breach of agreement, UT may elect to terminate the agreement. During the year ended December 31, 2019, the Company achieved one milestone by gaining IND approval on first indication of a licensed product on November 24, 2019. The milestone fee associated with this achievement to be paid is $50,000 and the Company must issue UT common shares equal to 1% of the Company's outstanding shares of common stock, on a fully diluted basis, as of 30 days after IND approval, which was December 24, 2019. The total amount of common shares due and payable on December 31, 2019 to UT were 220,666 common shares, which have a fair value of approximately $1,132,000 based on the closing stock price of $5.13 on December 24, 2019. As of December 31, 2019, the Company had not paid the $50,000 or issued the shares and has included the $50,000 in accounts payable and the share amount due as a research and development expense payable. The Company paid the $50,000 and issued the shares in January 2020. As of the date of these condensed consolidated financial statements, the Company is in compliance with the patent license agreement as all required amounts have been paid in accordance with the agreement. In May 2018, the Company entered into a master services agreement and associated individual study contracts with ITR Canada, Inc. ("ITR") to provide initial contract pre-clinical research and development services for the Company's drug product candidates. The fees payable for pre-clinical research and development services under these study contracts totaled $1,790,000, with no minimum fee requirement. In January 2019, the Company cancelled all of the individual study contracts with ITR and entered into a contract with Canada Inc. (dba VJO Non-Clinical Development ("VJO")) to complete additional pre-clinical research and development services in order to take advantage of eligible Canadian Tax Credits. The services related to the contract with VJO were sub-contracted to ITR under substantially the same terms as the initial contract with ITR, with fees payable for services under statements of work that are currently open totaling $3,715,000, as amended. During the three and six months ended June 30, 2020, the Company recorded research and development costs of approximately $0 and $779,000, respectively. During the three and six months ended June 30, 2019, the Company recorded research and development costs of approximately $693,000 and $1,753,000, respectively. In April 2019, the Company entered into a master services agreement with Irisys, LLC to provide contract manufacturing services for one of the Company's drug product candidates, Voriconazole. The fees payable for contract manufacturing services under this agreement total $2,224,500, as amended, with additional pass-through costs. During the three and six months ended June 30, 2020, the Company recorded research and development costs of approximately $682,000 and $1,017,000, respectively. During the three and six months ended June 30, 2019, the Company recorded research and development costs of approximately $58,000 and $58,000, respectively In June 2019, the Company entered into a master services agreement with CoreRx to provide contract manufacturing services for one of the Company's drug product candidates, Tacrolimus. The fees payable for contract manufacturing services under this agreement total $958,994, as amended, with additional pass-through costs. During the three and six months ended June 30, 2020, the Company recorded research and development costs of approximately $123,000 and $242,000, respectively. During the three and six months ended June 30, 2019, the Company recorded research and development costs of approximately $122,000 and $122,000, respectively In August 2019, the Company entered into a master services agreement and associated individual study contracts with Conform Clinical Development, Inc. and its affiliates, Les Entreprises Envie Inc. (dba Envie Ventures) and Desire Ventures LLC, which sub-contracted with Inflamax Research Limited (dba Cliantha Research) to perform a Phase I study of one of the Company's drug candidates, Voriconazole. The fees payable for the services under this contract total approximately $1,483,000, as amended. During the three and six months ended June 30, 2020, the Company recorded research and development costs of approximately $70,000 and 225,000, respectively. In January 2020, TFF Australia entered into a master consultancy agreement with Clinical Network Services Pty Ltd. to provide initial contract clinical research and development services for the Company's drug product candidates. The fees payable for clinical research and development services under these study contracts totaled AUD$909,405, as amended. During the three and six months ended June 30, 2020, the Company recorded research and development costs of approximately AUD$99,000 (US$65,000) and AUD$184,000 (US$121,000), respectively. In May 2020, TFF Australia entered into an amended clinical trial research agreement with Nucleus Network Pty Ltd. to provide a Phase I study of one of the Company's drug candidates, Tacrolimus. The fees payable for services under this contract totaled AUD$1,392,805, as amended. During the three and six months ended June 30, 2020, the Company recorded research and development costs of approximately AUD$335,000 (US$221,000) and AUD$368,000 (US$242,000), respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 6 – STOCKHOLDERS' EQUITY Series A Convertible Preferred Stock Prior to the close of the Company's IPO, the Company was authorized to issue up to 10,000,000 shares of preferred stock, $0.001 par value, all of which had been designated as Series A Preferred Stock and had a stated value of $2.50 per share. All outstanding shares of Series A Preferred Stock converted to shares of the Company's common stock, and all authorized and unissued shares of Series A Preferred Stock was extinguished, upon the close of the Company's IPO in October 2019. As of June 30, 2020 and December 31, 2019, there are no shares of Series A Preferred Stock authorized, issued or outstanding. The Series A Preferred Stock ranked senior to common stock with respect to dividends rights and liquidation preferences and had full voting rights. The Series A Preferred Stock accrued a dividend at a rate of 6% per annum with no amounts outstanding as of June 30, 2020 and December 31, 2019. The Company recorded $288,962 and $510,240 of preferred dividends during the three and six months ended June 30, 2019, respectively. Common Stock In November 2019, the Company achieved a milestone in connection with the UT agreement (see Note 5). As a result of the milestone, the Company owed UT 220,666 shares of common stock, which had a fair value of approximately $1,132,000, which was accrued in accrued research and development expense as of December 31, 2019. In January 2020, the Company issued the 220,666 shares of common stock to UT. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK BASED COMPENSATION | NOTE 7 – STOCK BASED COMPENSATION In January 2018, the Company's board of directors approved its 2018 Stock Incentive Plan ("2018 Plan"). The 2018 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company's common stock, the grant of restricted and unrestricted share awards and grant of restricted stock units. The Company initially reserved 1,630,000 shares of its common stock under the 2018 Plan; however, upon completion of the Company's IPO the number of shares reserved for issuance under the 2018 Plan increased to 3,284,480, representing 15% of the Company's outstanding shares of common stock calculated on a fully diluted basis upon the close of the IPO. All of the Company's employees and any subsidiary employees (including officers and directors who are also employees), as well as all of the Company's nonemployee directors and other consultants, advisors and other persons who provide services to the Company will be eligible to receive incentive awards under the 2018 Plan. The following table summarizes the stock-based compensation expense recorded in the Company's results of operations during the periods ended June 30, 2020 and 2019 for stock options and warrants: Three Months Six Months Three Months Six Months Research and development $ 43,605 $ 43,605 $ — $ — General and administrative 251,751 677,595 486,396 607,622 $ 295,356 $ 721,200 $ 486,396 $ 607,622 As of June 30, 2020, there was approximately $4,043,000 of total unrecognized compensation expense related to non-vested options that are expected to vest. This cost is expected to be recognized over a weighted-average period of 2.5 years. The Company records compensation expense for awards with graded vesting using the straight-line method. The Company recognizes compensation expense over the requisite service period applicable to each individual award, which generally equals the vesting term. The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. Forfeitures are recognized when realized. The Company estimated the fair value stock options using the Black-Scholes option pricing model. The fair value of stock options is being amortized on a straight-line basis over the requisite service periods of the respective awards. The fair value of stock options issued was estimated using the following weighted-average assumptions: Six Months Ended Weighted average exercise price $ 5.18 Weighted average grant date fair value $ 4.02 Assumptions Expected volatility 87-90 % Expected terms (in years) 6.3-10 Risk-free interest rate 0.43-1.47 % Expected dividend yield 0.00 % The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company's expected volatility was based upon the historical volatility for industry peers and used an average of those volatilities. The expected life of the Company's options was determined using the simplified method as a result of limited historical data regarding the Company's activity. The dividend yield considers that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future. For grants prior to the IPO, the fair value of the common stock was determined by the board of directors based on a variety of factors, including valuations prepared by third parties, the Company's financial position, the status of development efforts within the Company, the current climate in the marketplace and the prospects of a liquidity event, among others. For grants after the IPO, the Company uses the closing stock price on the date of grant as the fair value of the common stock. The following table summarizes stock option activity during the six months ended June 30, 2020: Number of Weighted- Weighted- Intrinsic Outstanding at January 1, 2020 2,139,078 $ 3.46 9.17 $ 4,052,512 Granted 182,255 5.18 — — Cancelled (20,000 ) 5.24 — — Outstanding at June 30, 2020 2,301,333 $ 3.58 8.75 $ 5,027,263 Exercisable at June 30, 2020 681,381 $ 2.50 8.13 $ 2,219,552 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS August 2020 Private Placement On August 10, 2020, the Company engaged Jefferies LLC to act as its placement agent ("Placement Agent") in connection with a private placement (the "Private Placement") of approximately 3,048,653 shares of our common stock, at a purchase price per share of $8.50, for aggregate gross proceeds to the Company of approximately $25,910,000, before deducting Placement Agent fees and other offering expenses payable by the Company. UNION therapeutics Agreement On August 12, 2020, the Company entered into a licensing and collaboration agreement (the "License Agreement") with UNION therapeutics A/S ("UNION") in which UNION acquired an option to obtain a worldwide exclusive license for the TFF technology in combination with Niclosamide ("Licensed Product"). Pursuant to the terms of the License Agreement, UNION can exercise its option to obtain the license within 45 days after the complete data has been received by UNION from investigator-initiated trials. Upon exercise of the option, UNION shall be responsible to pay all expenses incurred in the development of any Licensed Product. The Company will be eligible to receive up to $40,000,000 upon the achievement of certain milestones in the development the Licensed Products, based on completion of clinical trials, pre-marketing approvals and/or the receipt of at least $25,000,000 of grant funding. The Company will receive a single-digit tiered royalty on net sales. The Company will also be entitled to receive sales-related milestone payments of up to $160,000,000 based on the commercial success of the Licensed Products. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission ("SEC"). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2020 and the results of operations, changes in stockholders' equity and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of TFF Pharmaceuticals, Inc. and its wholly-owned subsidiary, TFF Australia. All material intercompany accounts and transactions have been eliminated in consolidation. |
Foreign Currency | Foreign Currency The currency of TFF Australia, the Company's international subsidiary, is in Australian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at each balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of stockholders' equity in accumulated other comprehensive income (loss). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Authoritative guidance requires disclosure of the fair value of financial instruments. The Company's financial instruments consist of cash and cash equivalents and accounts payable, the carrying amounts of which approximate their estimated fair values primarily due to the short-term nature of the instruments or based on information obtained from market sources and management estimates. The Company measures the fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the 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 assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Basic and Diluted Earnings per Common Share | Basic and Diluted Earnings per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive share equivalents outstanding for the period, determined using the treasury-stock and if-converted methods. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Basic weighted average shares outstanding for the three and six months ended June 30, 2020 and 2019 include 400,000 shares underlying a warrant to purchase common shares. As the shares underlying this warrant can be issued for little consideration (an aggregate exercise price of $0.01 per share), these shares are deemed to be issued for purposes of basic earnings per share. For the six months ended June 30, 2020 and 2019, the Company had the following potential common stock equivalents outstanding which were not included in the calculation of diluted net loss per common share because inclusion thereof would be anti-dilutive: Six Months Ended Six Months Ended June 30, June 30, Stock Options 2,301,333 1,333,594 Series A Convertible Preferred Stock* — 9,425,436 Warrants 1,076,463 985,012 3,377,796 11,744,042 * On an as-converted basis |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include the fair value of stock-based compensation and warrants and the valuation allowance against deferred tax assets and related disclosures. Actual results could differ from those estimates. |
Recent Accounting Standards | Recent Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) Leases. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Basic and Diluted Earnings per Common Share | Six Months Ended Six Months Ended June 30, June 30, Stock Options 2,301,333 1,333,594 Series A Convertible Preferred Stock* — 9,425,436 Warrants 1,076,463 985,012 3,377,796 11,744,042 * On an as-converted basis |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum lease payments | Year ending December 31, Amount 2020 – Remaining $ 12,000 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock-based compensation expense stock options and restricted stock | Three Months Six Months Three Months Six Months Research and development $ 43,605 $ 43,605 $ — $ — General and administrative 251,751 677,595 486,396 607,622 $ 295,356 $ 721,200 $ 486,396 $ 607,622 |
Schedule of fair value of employee stock options | Six Months Ended Weighted average exercise price $ 5.18 Weighted average grant date fair value $ 4.02 Assumptions Expected volatility 87-90 % Expected terms (in years) 6.3-10 Risk-free interest rate 0.43-1.47 % Expected dividend yield 0.00 % |
Schedule of stock option activity | Number of Weighted- Weighted- Intrinsic Outstanding at January 1, 2020 2,139,078 $ 3.46 9.17 $ 4,052,512 Granted 182,255 5.18 — — Cancelled (20,000 ) 5.24 — — Outstanding at June 30, 2020 2,301,333 $ 3.58 8.75 $ 5,027,263 Exercisable at June 30, 2020 681,381 $ 2.50 8.13 $ 2,219,552 |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) | 1 Months Ended | |
Oct. 31, 2019 | Jun. 30, 2020 | |
Organization and Description of Business (Textual) | ||
Exchange of common stock | 4,000,000 | |
Stock issued | 4,400,000 | |
Stock issued, Value | $ 22,000,000 | |
Share price | $ 5 | |
Organization and description of business, description | The underwriter a 45-day option to purchase an additional 660,000 shares of common stock at the initial public offering price, less underwriting discounts and commissions. The option was exercised in November 2019 and the underwriter purchased an additional 479,300 shares of common stock and the Company received additional gross proceeds of approximately $2,397,000. |
Liquidity and Management's Pl_2
Liquidity and Management's Plans (Details) | Jun. 30, 2020USD ($) |
Liquidity and Management's Plans (Textual) | |
Cash and cash equivalents | $ 21,924,000 |
Working capital surplus | $ 21,845,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - shares | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | ||
Potential common stock equivalents outstanding | 3,377,796 | 11,744,042 | |
Series A Convertible Preferred Stock [Member] | |||
Potential common stock equivalents outstanding | [1] | 9,425,436 | |
Stock Options [Member] | |||
Potential common stock equivalents outstanding | 2,301,333 | 1,333,594 | |
Warrants [Member] | |||
Potential common stock equivalents outstanding | 1,076,463 | 985,012 | |
[1] | On an as-converted basis |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - $ / shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Summary of Significant Accounting Policies (Textual) | ||
Basic weighted average shares outstanding | 400,000 | 400,000 |
Aggregate exercise price | $ 0.01 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Jun. 30, 2020USD ($) |
Summary of future minimum lease payments | |
2020 | $ 12,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Detail Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies (Textual) | ||
Rent Expenses | $ 36,000 | |
Expire Date | October 31, 2020. | |
Period Of Renewal Option | One year option. | |
Short-term lease expense | $ 9,000 | $ 18,000 |
License and Agreements (Details
License and Agreements (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2020 | Dec. 31, 2019 | May 31, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | May 31, 2020 | Dec. 24, 2019 | Aug. 31, 2019 | Jan. 31, 2019 | Mar. 31, 2018 | |
License and Agreements (Textual) | |||||||||||||
Assignment fee | $ 100,000 | ||||||||||||
Milestone fee | $ 50,000 | $ 50,000 | |||||||||||
Common shares outstanding price percentage | 1.00% | 1.00% | |||||||||||
Amount of Common shares due payable | 220,666 | ||||||||||||
Fair value of common stock | 1,132,000 | ||||||||||||
Closing stock price | $ 5.13 | ||||||||||||
Description of license and agreements | As of December 31, 2019, the Company had not paid the $50,000 or issued the shares and has included the $50,000 in accounts payable and the share amount due as a research and development expense payable. The Company paid the $50,000 and issued the shares in January 2020. As of the date of these condensed consolidated financial statements, the Company is in compliance with the patent license agreement as all required amounts have been paid in accordance with the agreement. | ||||||||||||
Research and development cost | $ 909,405 | $ 1,132,000 | $ 2,567,771 | $ 1,319,656 | $ 4,803,313 | $ 2,990,518 | |||||||
Master Services [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Assignment fee | $ 1,790,000 | $ 3,715,000 | |||||||||||
Research and development cost | 0 | 693,000 | 779,000 | 1,753,000 | |||||||||
Irisys, LLC [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Research and development cost | 682,000 | 58,000 | 1,017,000 | 58,000 | |||||||||
CoreRx [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Assignment fee | 958,994 | 958,994 | |||||||||||
Research and development cost | 123,000 | 122,000 | 242,000 | 122,000 | |||||||||
Conform Clinical Development, Inc. [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Assignment fee | $ 1,483,000 | ||||||||||||
Research and development cost | 70,000 | 70,000 | 225,000 | 225,000 | |||||||||
Cinical Network Services Pty Ltd. ("CNS") [Member] | AUD [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Assignment fee | $ 909,405 | ||||||||||||
Research and development cost | 99,000 | 184,000 | 65,000 | 121,000 | |||||||||
Patheon Development Services [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Description of license and agreements | The Company entered into a master services agreement and associated individual study contracts with ITR Canada, Inc. ("ITR") to provide initial contract pre-clinical research and development services for the Company's drug product candidates. | ||||||||||||
Nucleus Network Pty Ltd [Member] | AUD [Member] | |||||||||||||
License and Agreements (Textual) | |||||||||||||
Assignment fee | $ 1,392,805 | ||||||||||||
Research and development cost | $ 335,000 | $ 368,000 | $ 221,000 | $ 242,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Jan. 31, 2020 | Dec. 31, 2019 | Oct. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Nov. 30, 2019 | |
Common stock issued | 220,666 | 18,450,992 | 18,671,658 | 18,671,658 | 220,666 | |||
Purchase of common stock | 4,400,000 | |||||||
Research and development cost | $ 909,405 | $ 1,132,000 | $ 2,567,771 | $ 1,319,656 | $ 4,803,313 | $ 2,990,518 | ||
Series A Convertible Preferred Stock [Member] | ||||||||
Preferred stock Shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Preferred stock per value | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock Shares issued | 0 | 0 | 0 | |||||
Preferred stock Shares outstanding | 0 | 0 | 0 | |||||
Preferred stock per share | $ 2.50 | $ 2.50 | ||||||
Series A Preferred Stock [Member] | ||||||||
Dividends accrued | $ 288,962 | $ 510,240 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock based compensation expenses | $ 295,356 | $ 486,396 | $ 721,200 | $ 607,622 |
Research and development [Member] | ||||
Stock based compensation expenses | 43,605 | 43,605 | ||
General and administrative [Member] | ||||
Stock based compensation expenses | $ 251,751 | $ 486,396 | $ 677,595 | $ 607,622 |
Stock Based Compensation (Det_2
Stock Based Compensation (Details 1) | 6 Months Ended |
Jun. 30, 2020$ / shares | |
Weighted average exercise price | $ 5.18 |
Weighted average grant date fair value | $ 4.02 |
Assumptions | |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Assumptions | |
Expected volatility | 87.00% |
Weighted average expected term (in years) | 6 years 3 months 19 days |
Risk-free interest rate | 0.43% |
Maximum [Member] | |
Assumptions | |
Expected volatility | 90.00% |
Weighted average expected term (in years) | 10 years |
Risk-free interest rate | 1.47% |
Stock Based Compensation (Det_3
Stock Based Compensation (Details 2) - Stock option [Member] | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Number of shares, outstanding, beginning balance shares | shares | 2,139,078 |
Granted | shares | 182,255 |
Cancelled | shares | (20,000) |
Number of shares, outstanding, ending balance | shares | shares | 2,301,333 |
Number of options, exercisable | shares | shares | 681,381 |
Weighted-average exercise prices, outstanding, beginning balance | $ / shares | $ / shares | $ 3.46 |
Granted | $ / shares | 5.18 |
Cancelled | $ / shares | 5.24 |
Weighted-average exercise prices, outstanding, ending balance | $ / shares | $ / shares | 3.58 |
Weighted-Average Exercise Price, exercisable, | $ / shares | $ / shares | $ 2.50 |
Weighted-average remaining contractual term, outstanding beginning balance | 9 years 2 months 1 day |
Granted | |
Cancelled | |
Weighted-average remaining contractual term, outstanding ending balance | 8 years 9 months |
Weighted-average remaining contractual term, exercisable | 8 years 1 month 16 days |
Aggregate intrinsic value, outstanding beginning balance | $ | $ 4,052,512 |
Granted | $ | |
Cancelled | $ | |
Aggregate intrinsic value, outstanding ending balance | $ | 5,027,263 |
Aggregate intrinsic value, exercisable | $ | $ | $ 2,219,552 |
Stock Based Compensation (Det_4
Stock Based Compensation (Details Textual) - USD ($) | 1 Months Ended | 6 Months Ended |
Jan. 31, 2018 | Jun. 30, 2020 | |
Stock Based Compensation (Textual) | ||
Unrecognized compensation expense | $ 4,043,000 | |
Weighted-average period | 2 years 6 months | |
Stock based compensation, description | The Company's board of directors approved its 2018 Stock Incentive Plan ("2018 Plan"). The 2018 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company's common stock, the grant of restricted and unrestricted share awards and grant of restricted stock units. The Company initially reserved 1,630,000 shares of its common stock under the 2018 Plan; however, upon completion of the Company's IPO the number of shares reserved for issuance under the 2018 Plan increased to 3,284,480, representing 15% of the Company's outstanding shares of common stock calculated on a fully diluted basis upon the close of the IPO. All of the Company's employees and any subsidiary employees (including officers and directors who are also employees), as well as all of the Company's nonemployee directors and other consultants, advisors and other persons who provide services to the Company will be eligible to receive incentive awards under the 2018 Plan. |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | Aug. 12, 2020 | Aug. 10, 2020 |
UNION Therapeutics Agreement [Member] | ||
Subsequent Events (Textual) | ||
Licensing and collaboration, description | The Company entered into a licensing and collaboration agreement (the "License Agreement") with UNION therapeutics A/S ("UNION") in which UNION acquired an option to obtain a worldwide exclusive license for the TFF technology in combination with Niclosamide ("Licensed Product"). Pursuant to the terms of the License Agreement, UNION can exercise its option to obtain the license within 45 days after the complete data has been received by UNION from investigator-initiated trials. Upon exercise of the option, UNION shall be responsible to pay all expenses incurred in the development of any Licensed Product. The Company will be eligible to receive up to $40,000,000 upon the achievement of certain milestones in the development the Licensed Products, based on completion of clinical trials, pre-marketing approvals and/or the receipt of at least $25,000,000 of grant funding. The Company will receive a single-digit tiered royalty on net sales. The Company will also be entitled to receive sales-related milestone payments of up to $160,000,000 based on the commercial success of the Licensed Products. | |
August 2020 Private Placement [Member] | ||
Subsequent Events (Textual) | ||
Shares issued, descrption | The Company engaged Jefferies LLC to act as its placement agent ("Placement Agent") in connection with a private placement (the "Private Placement") of approximately 3,048,653 shares of our common stock, at a purchase price per share of $8.50, for aggregate gross proceeds to the Company of approximately $25,910,000, before deducting Placement Agent fees and other offering expenses payable by the Company. |