Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 09, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | TENAX THERAPEUTICS, INC. | |
Entity Central Index Key | 0000034956 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,741,860 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 8,407,232 | $ 12,367,321 |
Marketable securities | 502,132 | 494,633 |
Prepaid expenses | 515,526 | 458,286 |
Total current assets | 9,424,890 | 13,320,240 |
Right to use asset | 221,578 | 0 |
Property and equipment, net | 9,177 | 8,525 |
Other assets | 8,435 | 8,435 |
Total assets | 9,664,080 | 13,337,200 |
Current liabilities | ||
Accounts payable | 448,824 | 749,814 |
Accrued liabilities | 489,265 | 815,855 |
Total current liabilities | 938,089 | 1,565,669 |
Lease liability | 105,547 | 0 |
Total liabilities | 1,043,636 | 1,565,669 |
Commitments and contingencies; see Note 5 | ||
Stockholders' equity | ||
Series A Preferred stock, par value $.0001, issued 5,181,346 shares; outstanding 38,606 and 2,854,593, respectively | 4 | 285 |
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 6,670,431 and 3,792,249, respectively | 667 | 379 |
Additional paid-in capital | 239,770,549 | 239,572,094 |
Accumulated other comprehensive loss | 2,279 | 516 |
Accumulated deficit | (231,153,055) | (227,801,743) |
Total stockholders' equity | 8,620,444 | 11,771,531 |
Total liabilities and stockholders' equity | $ 9,664,080 | $ 13,337,200 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Stockholders' equity | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 400,000,000 | 400,000,000 |
Common stock, issued | 6,670,431 | 3,792,249 |
Common stock, outstanding | 6,670,431 | 3,792,249 |
Series A Preferred Stock | ||
Stockholders' equity | ||
Preferred stock, par value | $ .0001 | $ 0.0001 |
Preferred stock, authorized | 4,818,654 | 4,818,654 |
Preferred stock, issued | 5,181,346 | 5,181,346 |
Preferred stock, outstanding | 38,606 | 2,854,593 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating expenses | ||||
General and administrative | $ 1,170,405 | $ 1,577,724 | $ 2,349,415 | $ 2,742,191 |
Research and development | 649,254 | 311,151 | 1,132,020 | 369,738 |
Total operating expenses | 1,819,659 | 1,888,875 | 3,481,435 | 3,111,929 |
Net operating loss | 1,819,659 | 1,888,875 | 3,481,435 | 3,111,929 |
Other income | (58,122) | (21,311) | (102,453) | (51,399) |
Net loss | 1,761,537 | 1,867,564 | 3,378,982 | 3,060,530 |
Unrealized (gain) loss on marketable securities | (474) | (10,556) | (1,763) | 302 |
Total comprehensive loss | $ 1,761,063 | $ 1,857,008 | $ 3,377,219 | $ 3,060,832 |
Net loss per share, basic and diluted | $ (0.28) | $ (1.28) | $ (0.60) | $ (2.13) |
Weighted average number of common shares outstanding, basic and diluted | 6,385,381 | 1,453,676 | 5,640,367 | 1,438,356 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Gain (Loss) | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 0 | 1,411,840 | ||||
Beginning balance, amount at Dec. 31, 2017 | $ 0 | $ 141 | $ 222,397,198 | $ (16,193) | $ (213,499,285) | $ 8,881,861 |
Compensation on options and restricted stocks issued, shares | 25,600 | |||||
Compensation on options and restricted stocks issued, amount | $ 3 | 209,442 | 209,445 | |||
Common stock issued for services rendered, shares | 10,241 | |||||
Common stock issued for services rendered, amount | $ 1 | 100,361 | 100,362 | |||
Fractional shares of common stock due to reverse stock split, shares | 5,995 | |||||
Unrealized gain on marketable securities | (10,857) | (10,857) | ||||
Net loss | (1,192,967) | (1,192,967) | ||||
Ending balance, shares at Mar. 31, 2018 | 0 | 1,453,676 | ||||
Ending balance, amount at Mar. 31, 2018 | $ 0 | $ 145 | 222,707,001 | (27,050) | (214,692,252) | 7,987,844 |
Beginning balance, shares at Dec. 31, 2017 | 0 | 1,411,840 | ||||
Beginning balance, amount at Dec. 31, 2017 | $ 0 | $ 141 | 222,397,198 | (16,193) | (213,499,285) | 8,881,861 |
Net loss | (3,060,530) | |||||
Ending balance, shares at Jun. 30, 2018 | 0 | 1,453,676 | ||||
Ending balance, amount at Jun. 30, 2018 | $ 0 | $ 145 | 222,800,079 | (16,495) | (216,559,815) | 6,223,914 |
Beginning balance, shares at Mar. 31, 2018 | 0 | 1,453,676 | ||||
Beginning balance, amount at Mar. 31, 2018 | $ 0 | $ 145 | 222,707,001 | (27,050) | (214,692,252) | 7,987,844 |
Compensation on options and restricted stocks issued, amount | 93,078 | 93,078 | ||||
Unrealized gain on marketable securities | 10,555 | 10,555 | ||||
Net loss | (1,867,564) | (1,867,564) | ||||
Ending balance, shares at Jun. 30, 2018 | 0 | 1,453,676 | ||||
Ending balance, amount at Jun. 30, 2018 | $ 0 | $ 145 | 222,800,079 | (16,495) | (216,559,815) | 6,223,914 |
Beginning balance, shares at Dec. 31, 2018 | 2,854,593 | 3,792,249 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 285 | $ 379 | 239,572,094 | 516 | (227,801,743) | 11,771,531 |
Compensation on options and restricted stocks issued, shares | 12,195 | |||||
Compensation on options and restricted stocks issued, amount | $ 1 | 60,294 | 60,295 | |||
Common stock issued for convertible preferred stock, shares | (2,299,990) | 2,299,990 | ||||
Common stock issued for convertible preferred stock, amount | $ (230) | $ 230 | 0 | |||
Exercise of warrants, shares | 500,000 | |||||
Exercise of warrants, amount | $ 5 | 96,495 | 96,500 | |||
Adoption of ASC 842: cumulative impact of lease standard | 27,670 | 27,670 | ||||
Unrealized gain on marketable securities | 1,289 | 1,289 | ||||
Net loss | (1,617,445) | (1,617,445) | ||||
Ending balance, shares at Mar. 31, 2019 | 554,603 | 6,154,434 | ||||
Ending balance, amount at Mar. 31, 2019 | $ 55 | $ 615 | 239,728,883 | 1,805 | (229,391,518) | 10,339,840 |
Beginning balance, shares at Dec. 31, 2018 | 2,854,593 | 3,792,249 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 285 | $ 379 | 239,572,094 | 516 | (227,801,743) | 11,771,531 |
Net loss | (3,378,982) | |||||
Ending balance, shares at Jun. 30, 2019 | 38,606 | 6,670,431 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 4 | $ 667 | 239,770,549 | 2,279 | (231,153,055) | 8,620,444 |
Beginning balance, shares at Mar. 31, 2019 | 554,603 | 6,154,434 | ||||
Beginning balance, amount at Mar. 31, 2019 | $ 55 | $ 615 | 239,728,883 | 1,805 | (229,391,518) | 10,339,840 |
Compensation on options and restricted stocks issued, amount | 41,666 | 41,666 | ||||
Common stock issued for convertible preferred stock, shares | (515,997) | 515,997 | ||||
Common stock issued for convertible preferred stock, amount | $ (51) | $ 52 | 1 | |||
Unrealized gain on marketable securities | 474 | 474 | ||||
Net loss | (1,761,537) | (1,761,537) | ||||
Ending balance, shares at Jun. 30, 2019 | 38,606 | 6,670,431 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 4 | $ 667 | $ 239,770,549 | $ 2,279 | $ (231,153,055) | $ 8,620,444 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,378,982) | $ (3,060,530) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 2,400 | 5,442 |
Amortization of right to use asset | 50,132 | 0 |
Loss (gain) on disposal of property and equipment | 522 | 0 |
Issuance and vesting of compensatory stock options and warrants | 101,961 | 163,666 |
Issuance of common stock as compensation | 0 | 263,861 |
Issuance of common stock for services rendered | 0 | 100,362 |
Amortization of premium on marketable securities | (302) | 79,878 |
Changes in operating assets and liabilities | ||
Accounts receivable, prepaid expenses and other assets | (57,240) | 33,127 |
Accounts payable and accrued liabilities | (717,324) | (331,931) |
Long term portion of lease liability | (48,747) | 0 |
Net cash used in operating activities | (4,047,580) | (2,746,125) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of marketable securities | (275,435) | 0 |
Sale of marketable securities | 270,000 | 5,050,000 |
Purchase of property and equipment | (3,574) | (5,807) |
Net cash provided by investing activities | (9,009) | 5,044,193 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the exercise of warrants | 96,500 | 0 |
Net cash provided by financing activities | 96,500 | 0 |
Net change in cash and cash equivalents | (3,960,089) | 2,298,068 |
Cash and cash equivalents, beginning of period | 12,367,321 | 1,604,810 |
Cash and cash equivalents, end of period | $ 8,407,232 | $ 3,902,878 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. DESCRIPTION OF BUSINESS | Tenax Therapeutics, Inc. (the “Company”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Oxygen Biotherapeutics was formed on April 17, 2008 by Synthetic Blood International to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics was the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted to one share of Oxygen Biotherapeutics common stock. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc. On October 18, 2013, the Company created a wholly owned subsidiary, Life Newco, Inc., a Delaware corporation (“Life Newco”), to acquire certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”) pursuant to an Asset Purchase Agreement, dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius (the “Phyxius Stockholders”). As further discussed in Note 5 below, on November 13, 2013, under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired certain assets, including a license granting Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring adjustments) necessary for a fair presentation of these financial statements. The condensed consolidated balance sheet at December 31, 2018 has been derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the period ended December 31, 2018. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) rules and regulations. Operating results for the three and six-month period ended June 30, 2019 are not necessarily indicative of results for the full year or any other future periods. As such, it is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2018. Reclassifications Certain prior period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to current period presentation. The Company adjusted certain previously reported financial statements to reflect the adoption of ASU 2017-11 during the year ended December 31, 2018. The Company has determined the impact of the adjustment on its condensed consolidated financial statements for the six months ended June 30, 2019 not to be material. Reverse Stock Split The Company initiated a 1-for-20 reverse stock split effective February 23, 2018. All shares and per share amounts in these condensed consolidated financial statements and notes thereto have been retroactively adjusted to give effect to the reverse stock split. Going Concern Management believes the accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $231,153,055 at June 30, 2019 and $227,801,743 at December 31, 2018 and used cash in operations of $4,047,580 and $2,746,125 during the six months ended June 30, 2019 and 2018, respectively. The Company requires substantial additional funds to complete clinical trials and pursue regulatory approvals. Management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying June 30, 2019 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Use of Estimates In preparing the unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and the operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts and transactions of the Company and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. Liquidity and Management’s Plan At June 30, 2019, the Company had cash and cash equivalents, including the fair value of its marketable securities, of approximately $8.9 million. The Company used $4.0 million of cash for operating activities during the six months ended June 30, 2019 and had stockholders’ equity of $8.6 million, versus $11.8 million at December 31, 2018. The Company expects to continue to incur expenses related to development of levosimendan for pulmonary hypertension and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at June 30, 2019, the Company believes that it has sufficient capital to fund its planned operations through the first quarter of calendar year 2020. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. Net Loss per Share Basic net loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted net loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants. The following outstanding options, warrants and restricted stock were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Six months ended June 30, 2019 2018 Warrants to purchase common stock 10,640,718 120,773 Options to purchase common stock 244,229 241,744 Convertible preferred shares outstanding 38,606 - Restricted stock grants - 39,828 Leases The Company determines if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-use assets, other current liabilities, and long-term lease liabilities in the Company’s consolidated balance sheet as of June 30, 2019. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses the incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that the Company will exercise any such option. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has elected to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company will recognize those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Prior period amounts continue to be reported in accordance with the Company’s historic accounting under previous lease guidance, see “Recent Accounting Pronouncements” below, for more information about the impact of the adoption of the new lease standard. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income. This standard requires that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2020, with early adoption permitted, but not earlier than annual reporting periods beginning January 1, 2019. A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued an accounting standard intended to improve financial reporting regarding leasing transactions. The standard will require the Company to recognize on its balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The standard will also require it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 months. The standard is effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company adopted this standard on January 1, 2019, using the required modified-retrospective approach as of the effective date. The Company will elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows it to carryforward the historical lease classification. The Company will make an accounting policy election to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company will recognize those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Results for the year ended December 31, 2018 continue to be reported in accordance with historical accounting under previous lease guidance, the FASB Accounting Standards Codification (“ASC”) Topic 840: Leases (Topic 840). The Company recorded a net reduction of $27,670 to opening accumulated deficit as of January 1, 2019, due to the cumulative impact of adopting the new leasing standard, with the impact relating to a change in the classification of the Company’s office space. The adoption of the lease standard did not have a material impact on the Company’s condensed consolidated balance sheets. The table below summarizes the impact of adopting the new standard on its condensed consolidated balance sheet as of January 1, 2019. As Previously Reported New Lease Standard Adjustment As Adjusted Operating lease right-of-use asset $ - $ 271,710 $ 271,710 Operating lease liabilities $ - $ 271,710 $ 271,710 Deferred lease liabilities $ 27,670 $ (27,670 ) $ - |
3. FAIR VALUE
3. FAIR VALUE | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
3. FAIR VALUE | The Company determines the fair value of its financial assets and liabilities in accordance with the ASC 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities, and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents to approximate fair value due to the short-term nature of these instruments. Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The fair value measurement hierarchy consists of three levels: Level one Quoted market prices in active markets for identical assets or liabilities; Level two Inputs other than level one inputs that are either directly or indirectly observable, and Level three Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use. The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s condensed consolidated financial statements. Investments in Marketable Securities The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income in the condensed consolidated statements of comprehensive loss and are determined using the specific identification method with transactions recorded on a settlement date basis. Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At June 30, 2019, the Company believes that the costs of its investments are recoverable in all material respects. The following table summarizes the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments is classified as Level 2 in the fair value hierarchy as defined in GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs: June 30, 2019 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Obligations of U.S. Government and its agencies $ 113,816 $ 278 $ 866 $ (6) $ 114,953 Corporate debt securities 383,554 2,209 1,415 - 387,179 Total investments $ 497,370 $ 2,487 $ 2,281 $ (6) $ 502,132 The following table summarizes the scheduled maturity for the Company’s investments at June 30, 2019 and December 31, 2018. June 30, 2019 December 31, 2018 Maturing in one year or less $ 502,132 $ 494,633 Maturing after one year through three years - - Total investments $ 502,132 $ 494,633 The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018: Fair Value Measurements at Reporting Date Using Balance as of June 30, 2019 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 8,407,232 $ 8,407,232 $ - $ - Marketable securities $ 502,132 $ - $ 502,132 $ - Fair Value Measurements at Reporting Date Using Balance as of December 31, 2018 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 12,367,321 $ 12,367,321 $ - $ - Marketable securities $ 494,633 $ - $ 494,633 $ - There were no significant transfers between levels in the six months ended June 30, 2019. |
4. BALANCE SHEET COMPONENTS
4. BALANCE SHEET COMPONENTS | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
4. BALANCE SHEET COMPONENTS | Property and equipment, net Property and equipment consist of the following as of June 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 Office furniture and fixtures $ 130,192 $ 130,192 Computer equipment and software 80,669 96,593 Laboratory equipment - 354,861 210,861 581,646 Less: Accumulated depreciation (201,684 ) (573,121 ) $ 9,177 $ 8,525 Depreciation expense was approximately $1,300 and $3,000 for the three months ended June 30, 2019 and 2018, and approximately $2,400 and $5,000 for the six months ended June 30, 2019 and 2018, respectively. Accrued liabilities Accrued liabilities consist of the following as of June 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 Operating costs $ 281,222 $ 244,456 Lease liability 117,416 - Employee related 90,627 571,399 $ 489,265 $ 815,855 |
5. COMMITMENTS AND CONTINGENCIE
5. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
5. COMMITMENTS AND CONTINGENCIES | Leases As described further in “NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” above, the Company adopted ASC 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840. In January 2011, the Company entered into the Lease with Concourse Associates, LLC for office facilities located at the premises in Morrisville, North Carolina (the “Lease”). The Lease was amended in August 2015 to extend the term for the 5,954 square foot rental. The current term began on March 1, 2016 and continues for 64 months to June 30, 2021. Rent payments began on July 1, 2016, following the conclusion of a four-month rent abatement period. The Company has two five-year options to extend the Lease and a one-time option to terminate the Lease thirty-six months after the commencement of the initial term if no additional space (“Expansion Space”) became available; none of these optional periods have been considered in the determination of the right-of-use asset or the lease liability for the Lease as the Company did not consider it reasonably certain that it would exercise any such options. The Lease further provides that the Company is obligated to pay to landlord certain variable costs, including taxes and operating expenses. The Company also has a right of first offer to lease the Expansion Space, of no less than 1,000 square feet, as that additional space becomes available adjacent to the premises over the remainder of the initial term of the Lease, at the same rate per square foot as the current premises, with an extension of the term of sixty additional months starting at the commencement date of acquiring the Expansion Space. The Company performed an evaluation of its other contracts with customers and suppliers in accordance with ASC 842 and determined that, except for the Lease described above, none of the Company’s contracts contain a lease. The balance sheet classification of our lease liabilities was as follows: June 30, 2019 December 31, 2018 Current portion included in accrued liabilities $ 117,416 $ - Long term lease liability 105,547 - $ 222,963 $ - As of June 30, 2019, the maturities of our operating lease liabilities were as follows: Year ending December 31, 2019 59,302 2020 121,084 2021 61,803 Total lease payments $ 242,189 Less: Imputed interest (19,226 ) Operating lease liability $ 222,963 Operating lease liabilities are based on the net present value of the remaining Lease payments over the remaining Lease term. In determining the present value of lease payments, the Company used the incremental borrowing rate based on the information available at the Lease commencement date. As of June 30, 2019, the remaining Lease term is 2 years and the discount rate used to determine the operating lease liability was 8.0%. For the six months ending June 30, 2019, the Company paid $62,610 in total lease expenses, including $3,794 for common area maintenance charges. Simdax license agreement On November 13, 2013, the Company acquired, through its wholly owned subsidiary, Life Newco, that certain License Agreement (the “License”), dated September 20, 2013 by and between Phyxius and Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”), and that certain Side Letter, dated October 15, 2013 by and between Phyxius and Orion. The License grants the Company an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan (the “Product”) in the United States and Canada (the “Territory”) from Orion. Pursuant to the License, the Company must use Orion’s “Simdax®” trademark to commercialize the Product. The License also grants to the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication. Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights. Additionally, the Company must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by the Company under the License. The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen-year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country. Pursuant to the terms of the License, the Company paid to Orion a non-refundable up-front payment in the amount of $1.0 million. The License also includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the term of the License, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as Life Newco sells the Product in the Territory. In June 2019, Orion filed a request for arbitration against the Company seeking a declaration regarding the correct interpretation of the line extension provisions of the License and whether or not such provisions apply to the oral form of levosimendan recently developed by Orion. Additionally, Orion requested the Company reimburse Orion for all legal fees associated with the arbitration. The Company recently submitted its response to the request for arbitration and rejected Orion’s position that the oral formation was not a line extension product under the License. As of June 30, 2019, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion. |
6. STOCKHOLDERS EQUITY
6. STOCKHOLDERS EQUITY | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' equity | |
6. STOCKHOLDERS' EQUITY | Preferred Stock Under the Company’s Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. Series A Stock On December 11, 2018, the Company closed its underwritten offering of 5,181,346 units for net proceeds of approximately $9 million. Each unit consists of (a) one share of the Company’s Series A convertible preferred stock, par value $0.0001 per share (the “Series A Stock”), (b) a two-year warrant to purchase one share of common stock at an exercise price of $1.93 (the “Series 1 Warrants”), and (c) a five-year warrant to purchase one share of common stock at an exercise price of $1.93 (the “Series 2 Warrants”). In accordance with ASC 480, the estimated fair value of $1,800,016 for the beneficial conversion feature was recognized as a deemed dividend on the Series A Stock during the year ended December 31, 2018. The table below sets forth a summary of the designation, powers, preferences and rights of the Series A Stock. Conversion Subject to the ownership limitations described below, the Series A Stock is convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion ratio determined by dividing the stated value of the Series A Stock by a conversion price of $1.93 per share. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. Until such time that 85% of the aggregate number of shares of Series A Stock issued to all holders on the original issue date have been converted to common stock, the Series A Stock has full ratchet price-based anti-dilution protection, subject to customary carve-outs, in the event of a down-round financing at a price per share below the conversion price of the Series A Stock. If during any 30 consecutive trading days (a “Measurement Period”) the volume weighted average price of the Company’s common stock exceeds 300% of the then-effective conversion price of the Series A Stock and the daily dollar trading volume for each trading day during such period exceeds $175,000, the anti-dilution protection in the Series A Stock will expire and cease to apply. Additionally, subject to certain exceptions, at any time after the issuance of the Series A Stock, and subject to the beneficial ownership limitations described below, the Company has the right to cause each holder of the Series A Stock to convert all or part of such holder’s Series A Stock in the event that (i) the volume weighted average price of the Company’s common stock for any Measurement Period exceeds 300% of the initial conversion price of the Series A Stock (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and similar transactions), (ii) the average daily trading volume for such Measurement Period exceeds $175,000 per trading day and (iii) the holder is not in possession of any information that constitutes or might constitute, material non-public information which was provided by the Company. The Company will not affect any conversion of the Series A Stock, nor shall a holder convert its shares of Series A Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series A Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99% (or, at the election of the holder prior to the issuance of any shares of Series A Stock, 9.99%) of the common stock outstanding after giving effect to such exercise. Dividends In the event the Company pays dividends on its shares of common stock, the holders of the Series A Stock will be entitled to receive dividends on shares of Series A Stock equal, on an as-if-converted basis, to and in the same form as paid on the common stock. No other dividends will be paid on the shares of Series A Stock. Liquidation Upon any liquidation, dissolution or winding up of the Company after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to the amount that a holder of common stock would receive if the Series A Stock were fully converted to common stock, which amounts will be paid pari passu with all holders of common stock. Voting rights Shares of Series A Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series A Stock will be required to amend the terms of the Series A Stock or to take other action that adversely affects the rights of the holders of Series A Stock. During the year ended December 31, 2018, 2,326,753 shares of Series A Stock were converted into 2,326,753 shares of common stock. As of December 31, 2018, there were 2,854,593 shares of Series A Stock outstanding. During the six months ended June 30, 2019, an additional 2,815,987 shares of Series A Stock were converted into 2,815,987 shares of common stock. As of June 30, 2019, there were 38,606 shares of Series A Stock outstanding, which represents approximately 1% of the aggregate number of shares of Series A Stock issued to all holders on the original issue date. In accordance with the Series A Stock Certificate of Designations, following the conversion of 85% of the aggregate number of shares of Series A Stock issued to all holders on the original issue date, the full ratchet price-based anti-dilution protection in the event of a down-round financing at a price per share below the conversion price of the Series A Stock is no longer in effect for the remaining shares. Common Stock The Company’s Certificate of Incorporation authorizes it to issue 400,000,000 shares of $0.0001 par value common stock. As of June 30, 2019, there were 6,670,431 shares of common stock issued and outstanding. Warrants As of June 30, 2019, the Company has 10,640,718 warrants outstanding. The following table summarizes the Company’s warrant activity for the six months ended June 30, 2019. Warrants Weighted Average Exercise Price Outstanding at December 31, 2018 10,690,718 $ 2.45 Exercised (50,000 ) 1.93 Outstanding at June 30, 2019 10,640,718 $ 2.45 On March 14, 2019, the Company received $96,500 and issued 50,000 shares of common stock upon the exercise of its outstanding Series 1 Warrants. 2016 Stock Incentive Plan In June 2016, the Company adopted the 2016 Stock Incentive Plan (the “2016 Plan”). Under the 2016 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards. On June 16, 2016, the Company’s stockholders approved the 2016 Plan and authorized for issuance under the 2016 Plan a total of 150,000 shares of common stock. On June 13, 2019, the Company’s stockholders approved an amendment to the 2016 Plan which increased the number of shares of common stock authorized for issuance under the 2016 Plan to a total of 750,000 shares, up from 150,000 previously authorized. The following table summarizes the shares available for grant under the 2016 Plan for the six months ended June 30, 2019: Shares Available for Grant Balances, at December 31, 2018 100,000 Additional shares reserved 600,000 Options granted (2,500 ) Balances, at June 30, 2019 697,500 2016 Plan Stock Options Stock options granted under the 2016 Plan may be either incentive stock options (“ISOs”), or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the 2016 Plan may be granted with a term of up to ten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest over three to four years. The following table summarizes the outstanding stock options under the 2016 Plan for the six months ended June 30, 2019: Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2018 50,000 $ 6.10 Options granted 2,500 $ 1.72 Balances at June 30, 2019 52,500 $ 5.89 The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. The Company recorded compensation expense for these stock option grants of $16,008 and $29,731 for the three months ended June 30, 2019 and 2018, and $45,739 and $29,731 for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, there were unrecognized compensation costs of approximately $108,622 related to non-vested stock option awards under the 2016 Plan that will be recognized on a straight-line basis over the weighted average remaining vesting period of 1.98 years. The Company used the following assumptions to estimate the fair value of options granted under the 2016 Plan for the six months ended June 30, 2019 and 2018: For the six months ended June 30, 2019 2018 Risk-free interest rate (weighted average) 2.39 % 2.85 % Expected volatility (weighted average) 106.74 % 102.37 % Expected term (in years) 7 7 Expected dividend yield 0.00 % 0.00 % Risk-Free Interest Rate The risk-free interest rate assumption was based on U.S. Treasury instruments with a term that is consistent with the expected term of the Company’s stock options. Expected Volatility The expected stock price volatility for the Company’s common stock was determined by examining the historical volatility and trading history for its common stock over a term consistent with the expected term of its options. Expected Term The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. It was calculated based on the Company’s historical experience with its stock option grants. Expected Dividend Yield The expected dividend yield of 0% is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not anticipate paying any dividends in the near future. Forfeitures Stock compensation expense recognized in the statements of operations for the six months ended June 30, 2019 and 2018 is based on awards ultimately expected to vest, and it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on the Company’s historical experience. 1999 Amended Stock Plan In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “1999 Plan”). Under the 1999 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company could grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On March 13, 2014, the Company’s stockholders approved an amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of 200,000 shares, up from 15,000 previously authorized. On September 15, 2015, the Company’s stockholders approved an additional amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of 250,000 shares, up from 200,000 previously authorized. The 1999 Plan expired on June 17, 2018 and no new grants may be made under that plan after that date. However, unexpired awards granted under the 1999 Plan remain outstanding and subject to the terms of the 1999 Plan. 1999 Plan Stock Options Stock options granted under the 1999 Plan may be either incentive stock options (“ISOs”), or nonqualified stock options (“NSOs”). ISOs could be granted only to employees. NSOs could be granted to employees, consultants and directors. Stock options under the 1999 Plan could be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to six years. The following table summarizes the outstanding stock options under the 1999 Plan for the six months ended June 30, 2019: Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2018 191,735 $ 93.72 Options cancelled (6 ) $ 1,793.00 Balances at June 30, 2019 191,729 $ 93.67 The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. The Company recorded compensation expense for these stock options grants of $25,658 and $63,347 for the three months ended June 30, 2019 and 2018, and $56,222 and $133,935 for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, there were unrecognized compensation costs of approximately $81,445 related to non-vested stock option awards that will be recognized on a straight-line basis over the weighted average remaining vesting period of 1.06 years. Additionally, there were unrecognized compensation costs of approximately $5.9 million related to non-vested stock option awards subject to performance-based vesting milestones with a weighted average remaining life of 0.76 years. As of June 30, 2019, none of these milestones have been achieved. Restricted Stock Grants The following table summarizes the restricted stock activity under the 1999 Plan for the six months ended June 30, 2019 . Outstanding Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Balances, at December 31, 2018 19,914 $ 6.29 Restricted stock vested (12,195 ) $ 6.28 Restricted stock cancelled (7,719 ) $ 6.27 Balances, at June 30, 2019 - $ - The Company did not record compensation expense for these restricted stock grants for the six months ended June 30, 2019. As of June 30, 2019, there was no unrecognized compensation costs related to the non-vested restricted stock grants. |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring adjustments) necessary for a fair presentation of these financial statements. The condensed consolidated balance sheet at December 31, 2018 has been derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the period ended December 31, 2018. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) rules and regulations. Operating results for the three and six-month period ended June 30, 2019 are not necessarily indicative of results for the full year or any other future periods. As such, it is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2018. |
Reclassifications | Certain prior period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to current period presentation. The Company adjusted certain previously reported financial statements to reflect the adoption of ASU 2017-11 during the year ended December 31, 2018. The Company has determined the impact of the adjustment on its condensed consolidated financial statements for the six months ended June 30, 2019 not to be material. |
Reverse Stock Split | The Company initiated a 1-for-20 reverse stock split effective February 23, 2018. All shares and per share amounts in these condensed consolidated financial statements and notes thereto have been retroactively adjusted to give effect to the reverse stock split. |
Going Concern | Management believes the accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $231,153,055 at June 30, 2019 and $227,801,743 at December 31, 2018 and used cash in operations of $4,047,580 and $2,746,125 during the six months ended June 30, 2019 and 2018, respectively. The Company requires substantial additional funds to complete clinical trials and pursue regulatory approvals. Management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying June 30, 2019 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
Use of Estimates | In preparing the unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and the operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts and transactions of the Company and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. |
Liquidity and Management's Plan | At June 30, 2019, the Company had cash and cash equivalents, including the fair value of its marketable securities, of approximately $8.9 million. The Company used $4.0 million of cash for operating activities during the six months ended June 30, 2019 and had stockholders’ equity of $8.6 million, versus $11.8 million at December 31, 2018. The Company expects to continue to incur expenses related to development of levosimendan for pulmonary hypertension and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at June 30, 2019, the Company believes that it has sufficient capital to fund its planned operations through the first quarter of calendar year 2020. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. |
Net Loss per Share | Basic net loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted net loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants. The following outstanding options, warrants and restricted stock were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Six months ended June 30, 2019 2018 Warrants to purchase common stock 10,640,718 120,773 Options to purchase common stock 244,229 241,744 Convertible preferred shares outstanding 38,606 - Restricted stock grants - 39,828 |
Leases | The Company determines if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-use assets, other current liabilities, and long-term lease liabilities in the Company’s consolidated balance sheet as of June 30, 2019. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses the incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that the Company will exercise any such option. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has elected to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company will recognize those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Prior period amounts continue to be reported in accordance with the Company’s historic accounting under previous lease guidance, see “Recent Accounting Pronouncements” below, for more information about the impact of the adoption of the new lease standard. |
Recent Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income. This standard requires that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2020, with early adoption permitted, but not earlier than annual reporting periods beginning January 1, 2019. A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued an accounting standard intended to improve financial reporting regarding leasing transactions. The standard will require the Company to recognize on its balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The standard will also require it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 months. The standard is effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company adopted this standard on January 1, 2019, using the required modified-retrospective approach as of the effective date. The Company will elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows it to carryforward the historical lease classification. The Company will make an accounting policy election to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company will recognize those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Results for the year ended December 31, 2018 continue to be reported in accordance with historical accounting under previous lease guidance, the FASB Accounting Standards Codification (“ASC”) Topic 840: Leases (Topic 840). The Company recorded a net reduction of $27,670 to opening accumulated deficit as of January 1, 2019, due to the cumulative impact of adopting the new leasing standard, with the impact relating to a change in the classification of the Company’s office space. The adoption of the lease standard did not have a material impact on the Company’s condensed consolidated balance sheets. The table below summarizes the impact of adopting the new standard on its condensed consolidated balance sheet as of January 1, 2019. As Previously Reported New Lease Standard Adjustment As Adjusted Operating lease right-of-use asset $ - $ 271,710 $ 271,710 Operating lease liabilities $ - $ 271,710 $ 271,710 Deferred lease liabilities $ 27,670 $ (27,670 ) $ - |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Anti-dilutive securities | Six months ended June 30, 2019 2018 Warrants to purchase common stock 10,640,718 120,773 Options to purchase common stock 244,229 241,744 Convertible preferred shares outstanding 38,606 - Restricted stock grants - 39,828 |
Effect of new accounting pronouncement | As Previously Reported New Lease Standard Adjustment As Adjusted Operating lease right-of-use asset $ - $ 271,710 $ 271,710 Operating lease liabilities $ - $ 271,710 $ 271,710 Deferred lease liabilities $ 27,670 $ (27,670 ) $ - |
3. FAIR VALUE (Tables)
3. FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of investments in marketable securities | June 30, 2019 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Obligations of U.S. Government and its agencies $ 113,816 $ 278 $ 866 $ (6) $ 114,953 Corporate debt securities 383,554 2,209 1,415 - 387,179 Total investments $ 497,370 $ 2,487 $ 2,281 $ (6) $ 502,132 |
Scheduled of investments maturity | June 30, 2019 December 31, 2018 Maturing in one year or less $ 502,132 $ 494,633 Maturing after one year through three years - - Total investments $ 502,132 $ 494,633 |
Schedule of fair value on a recurring basis | Fair Value Measurements at Reporting Date Using Balance as of June 30, 2019 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 8,407,232 $ 8,407,232 $ - $ - Marketable securities $ 502,132 $ - $ 502,132 $ - Fair Value Measurements at Reporting Date Using Balance as of December 31, 2018 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 12,367,321 $ 12,367,321 $ - $ - Marketable securities $ 494,633 $ - $ 494,633 $ - |
4. BALANCE SHEET COMPONENTS (Ta
4. BALANCE SHEET COMPONENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Property, plant and equipment | June 30, 2019 December 31, 2018 Office furniture and fixtures $ 130,192 $ 130,192 Computer equipment and software 80,669 96,593 Laboratory equipment - 354,861 210,861 581,646 Less: Accumulated depreciation (201,684 ) (573,121 ) $ 9,177 $ 8,525 |
Accrued liabilities | June 30, 2019 December 31, 2018 Operating costs $ 281,222 $ 244,456 Lease liability 117,416 - Employee related 90,627 571,399 $ 489,265 $ 815,855 |
5. COMMITMENTS AND CONTINGENC_2
5. COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease liability | June 30, 2019 December 31, 2018 Current portion included in accrued liabilities $ 117,416 $ - Long term lease liability 105,547 - $ 222,963 $ - |
Operating lease liability maturity | Year ending December 31, 2019 59,302 2020 121,084 2021 61,803 Total lease payments $ 242,189 Less: Imputed interest (19,226 ) Operating lease liability $ 222,963 |
6. STOCKHOLDERS EQUITY (Tables)
6. STOCKHOLDERS EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' equity | |
Warrant activity | Warrants Weighted Average Exercise Price Outstanding at December 31, 2018 10,690,718 $ 2.45 Exercised (50,000 ) 1.93 Outstanding at June 30, 2019 10,640,718 $ 2.45 |
Shares available for grant under the Plan | Shares Available for Grant Balances, at December 31, 2018 100,000 Additional shares reserved 600,000 Options granted (2,500 ) Balances, at June 30, 2019 697,500 |
Options activity | Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2018 50,000 $ 6.10 Options granted 2,500 $ 1.72 Balances at June 30, 2019 52,500 $ 5.89 |
Fair value assumptions | For the six months ended June 30, 2019 2018 Risk-free interest rate (weighted average) 2.39 % 2.85 % Expected volatility (weighted average) 106.74 % 102.37 % Expected term (in years) 7 7 Expected dividend yield 0.00 % 0.00 % |
Stock options | Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2018 191,735 $ 93.72 Options cancelled (6 ) $ 1,793.00 Balances at June 30, 2019 191,729 $ 93.67 |
Restricted stock grants | Outstanding Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Balances, at December 31, 2018 19,914 $ 6.29 Restricted stock vested (12,195 ) $ 6.28 Restricted stock cancelled (7,719 ) $ 6.27 Balances, at June 30, 2019 - $ - |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Warrants to purchase common stock | ||
Anti-dilutive securities | 10,640,718 | 120,773 |
Convertible preferred shares | ||
Anti-dilutive securities | 244,229 | 241,744 |
Options to purchase common stock | ||
Anti-dilutive securities | 38,606 | 0 |
Restricted stock | ||
Anti-dilutive securities | 0 | 39,828 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Operating lease right-of-use asset | $ 221,578 | $ 0 |
Operating lease liabilities | 222,963 | $ 0 |
As Previously Reported | ||
Operating lease right-of-use asset | 0 | |
Operating lease liabilities | 0 | |
Deferred lease liabilities | 27,670 | |
New Lease Standard Adjustment | ||
Operating lease right-of-use asset | 271,710 | |
Operating lease liabilities | 271,710 | |
Deferred lease liabilities | (27,670) | |
As Adjusted | ||
Operating lease right-of-use asset | 271,710 | |
Operating lease liabilities | 271,710 | |
Deferred lease liabilities | $ 0 |
2. SUMMARY OF SIGNIFICANT ACC_6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Accumulated deficit | $ (231,153,055) | $ (227,801,743) | |
Cash used in operations | $ (4,047,580) | $ (2,746,125) |
3. FAIR VALUE (Details)
3. FAIR VALUE (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Amortized cost | $ 497,370 |
Accrued interest | 2,487 |
Gross unrealized gains | 2,281 |
Gross unrealized losses | (6) |
Estimated fair value | 502,132 |
Obligations of U.S. Government and its agencies | |
Amortized cost | 113,816 |
Accrued interest | 278 |
Gross unrealized gains | 866 |
Gross unrealized losses | (6) |
Estimated fair value | 114,953 |
Corporate debt securities | |
Amortized cost | 383,554 |
Accrued interest | 2,209 |
Gross unrealized gains | 1,415 |
Gross unrealized losses | 0 |
Estimated fair value | $ 387,179 |
3. FAIR VALUE (Details 1)
3. FAIR VALUE (Details 1) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Maturing in one year or less | $ 502,132 | $ 494,633 |
Maturing after one year through three years | 0 | 0 |
Total investments | $ 502,132 | $ 494,633 |
3. FAIR VALUE (Details 2)
3. FAIR VALUE (Details 2) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 8,407,232 | $ 12,367,321 |
Marketable securities | 502,132 | 494,633 |
Level 1 | ||
Current Assets | ||
Cash and cash equivalents | 8,407,232 | 12,367,321 |
Marketable securities | 0 | 0 |
Level 2 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 502,132 | 494,633 |
Level 3 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | $ 0 | $ 0 |
4. BALANCE SHEET COMPONENTS (De
4. BALANCE SHEET COMPONENTS (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Office furniture and fixtures | $ 130,192 | $ 130,192 |
Computer equipment and software | 80,669 | 96,593 |
Laboratory equipment | 0 | 354,861 |
Property and equipment, gross | 210,861 | 581,646 |
Less: accumulated depreciation | (201,684) | (573,121) |
Property and equipment, net | $ 9,177 | $ 8,525 |
4. BALANCE SHEET COMPONENTS (_2
4. BALANCE SHEET COMPONENTS (Details 1) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Operating costs | $ 281,222 | $ 244,456 |
Lease liability | 117,416 | 0 |
Employee related | 90,627 | 571,399 |
Total | $ 489,265 | $ 815,855 |
4. BALANCE SHEET COMPONENTS (_3
4. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||||
Depreciation expense | $ 1,300 | $ 3,000 | $ 2,400 | $ 5,000 |
5. COMMITMENTS AND CONTINGENC_3
5. COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Current portion included in accrued liabilities | $ 117,416 | $ 0 |
Long term lease liability | 105,547 | 0 |
Total | $ 222,963 | $ 0 |
5. COMMITMENTS AND CONTINGENC_4
5. COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
2019 | $ 59,302 | |
2020 | 121,084 | |
2021 | 61,803 | |
Total | 242,189 | |
Less: imputed interest | (19,226) | |
Operating lease liability | $ 222,963 | $ 0 |
6. STOCKHOLDERS EQUITY (Details
6. STOCKHOLDERS EQUITY (Details) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Stockholders' equity | |
Number of warrants outstanding, beginning | shares | 10,690,718 |
Number of warrants, exercised | shares | (50,000) |
Number of warrants outstanding, ending | shares | 10,640,718 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 2.45 |
Weighted average exercise price, exercised | $ / shares | 1.93 |
Weighted average exercise price outstanding, ending | $ / shares | $ 2.45 |
6. STOCKHOLDERS EQUITY (Detai_2
6. STOCKHOLDERS EQUITY (Details 1) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
2016 Plan | |
Number of options outstanding, beginning | shares | 50,000 |
Number of options granted | shares | 2,500 |
Number of options outstanding, ending | shares | 52,500 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 6.10 |
Weighted average exercise price granted | $ / shares | 1.72 |
Weighted average exercise price outstanding, ending | $ / shares | $ 5.89 |
1999 Plan | |
Number of options outstanding, beginning | shares | 191,735 |
Number of options cancelled | shares | (6) |
Number of options outstanding, ending | shares | 191,729 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 93.72 |
Weighted average exercise price cancelled | $ / shares | 1,793 |
Weighted average exercise price outstanding, ending | $ / shares | $ 93.67 |
6. STOCKHOLDERS EQUITY (Detai_3
6. STOCKHOLDERS EQUITY (Details 2) - 2016 Plan | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Risk-free interest rate (weighted average) | 2.39% | 2.85% |
Expected volatility (weighted average) | 106.74% | 102.37% |
Expected term (in years) | 7 years | 7 years |
Expected dividend yield | 0.00% | 0.00% |
6. STOCKHOLDERS EQUITY (Detai_4
6. STOCKHOLDERS EQUITY (Details 3) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Stockholders' equity | |
Number of restricted stock grants, beginning | shares | 19,914 |
Number of restricted stock grants, vested | shares | (12,195) |
Number of restricted stock grants, cancelled | shares | (7,719) |
Number of restricted stock grants, ending | shares | 0 |
Weighted average drant date fair value, beginning | $ / shares | $ 6.29 |
Weighted average drant date fair value, vested | $ / shares | 6.28 |
Weighted average drant date fair value, cancelled | $ / shares | 6.27 |
Weighted average drant date fair value, ending | $ / shares | $ .00 |
6. STOCKHOLDERS EQUITY (Detai_5
6. STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Common stock, authorized | 400,000,000 | 400,000,000 | 400,000,000 | ||
Common stock, issued | 6,670,431 | 6,670,431 | 3,792,249 | ||
Common stock, outstanding | 6,670,431 | 6,670,431 | 3,792,249 | ||
Warrants outstanding | 10,640,718 | 10,640,718 | |||
2016 Stock Incentive Plan | |||||
Compensation expense | $ 16,008 | $ 29,731 | $ 45,739 | $ 29,731 | |
Unrecognized compensation costs | 108,622 | $ 108,622 | |||
Unrecognized compensation costs period for recognition | 1 year 11 months 23 days | ||||
1999 Amended Stock Plan | |||||
Compensation expense | 25,658 | $ 63,347 | $ 56,222 | $ 133,935 | |
Unrecognized compensation costs | $ 81,445 | $ 81,445 | |||
Unrecognized compensation costs period for recognition | 1 year 22 days | ||||
Series A Preferred Stock | |||||
Preferred stock, par value | $ .0001 | $ .0001 | $ 0.0001 | ||
Preferred stock, authorized | 4,818,654 | 4,818,654 | 4,818,654 | ||
Preferred stock, issued | 5,181,346 | 5,181,346 | 5,181,346 | ||
Preferred stock, outstanding | 38,606 | 38,606 | 2,854,593 |