Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 11, 2020 | |
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, 2020 | |
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 | 12,619,369 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 001-34600 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 4,085,305 | $ 4,905,993 |
Marketable securities | 468,218 | 493,884 |
Prepaid expenses | 660,906 | 780,952 |
Total current assets | 5,214,429 | 6,180,829 |
Marketable securities | 10,723 | 0 |
Right of use asset | 115,225 | 169,448 |
Property and equipment, net | 4,409 | 6,559 |
Other assets | 8,435 | 8,435 |
Total assets | 5,353,221 | 6,365,271 |
Current liabilities | ||
Accounts payable | 1,555,038 | 1,661,054 |
Accrued liabilities | 524,356 | 871,341 |
Note payable | 107,606 | 0 |
Total current liabilities | 2,187,000 | 2,532,395 |
Note payable | 137,051 | 0 |
Lease liability | 0 | 60,379 |
Total long term liabilities | 137,051 | 60,379 |
Total liabilities | 2,324,051 | 2,592,774 |
Commitments and contingencies; see Note 5 | ||
Stockholders' equity | ||
Series A Preferred stock, par value $.0001, issued and outstanding 210 and 38,606, respectively | 0 | 4 |
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 10,095,758 and 6,741,860, respectively | 1,010 | 674 |
Additional paid-in capital | 243,995,716 | 239,939,797 |
Accumulated other comprehensive gain | 2,074 | 458 |
Accumulated deficit | (240,969,630) | (236,168,436) |
Total stockholders' equity | 3,029,170 | 3,772,497 |
Total liabilities and stockholders' equity | $ 5,353,221 | $ 6,365,271 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 400,000,000 | 400,000,000 |
Common stock, issued | 10,095,758 | 6,741,860 |
Common stock, outstanding | 10,095,758 | 6,741,860 |
Series A Preferred Stock | ||
Stockholders' equity | ||
Preferred stock, par value | $ .0001 | $ 0.0001 |
Preferred stock, authorized | 9,999,790 | 9,961,394 |
Preferred stock, issued | 210 | 38,606 |
Preferred stock, outstanding | 210 | 38,606 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating expenses | ||||
General and administrative | $ 869,206 | $ 1,170,405 | $ 2,192,165 | $ 2,349,415 |
Research and development | 1,274,837 | 649,254 | 2,617,363 | 1,132,020 |
Total operating expenses | 2,144,043 | 1,819,659 | 4,809,528 | 3,481,435 |
Net operating loss | 2,144,043 | 1,819,659 | 4,809,528 | 3,481,435 |
Interest expense | 406 | 0 | 406 | 0 |
Other expense (income), net | 2,101 | (58,122) | (8,740) | (102,453) |
Net loss | 2,146,550 | 1,761,537 | 4,801,194 | 3,378,982 |
Unrealized gain on marketable securities | (3,238) | (474) | (1,616) | (1,763) |
Total comprehensive loss | $ 2,143,312 | $ 1,761,063 | $ 4,799,578 | $ 3,377,219 |
Net loss per share, basic and diluted | $ (0.23) | $ (0.28) | $ (0.59) | $ (0.60) |
Weighted average number of common shares outstanding, basic and diluted | 9,339,309 | 6,385,381 | 8,156,848 | 5,640,367 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
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 stock issued, shares | 12,195 | |||||
Compensation on options and restricted stock 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 | 50,000 | |||||
Exercise of warrants, amount | $ 5 | 96,495 | 96,500 | |||
Adoption of ASC 842: leases | 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 |
Ending balance, shares at Jun. 30, 2019 | 554,603 | 6,154,434 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 55 | $ 615 | 239,728,883 | 1,805 | (229,391,518) | 10,339,840 |
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 stock issued, shares | 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 | 554,603 | 6,154,434 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 55 | $ 615 | $ 239,728,883 | 1,805 | (229,391,518) | 10,339,840 |
Beginning balance, shares at Dec. 31, 2019 | 38,606 | 6,741,860 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 4 | $ 674 | 239,939,797 | 458 | (236,168,436) | 3,772,497 |
Common stock and pre-funded warrants sold, net of offering costs, shares | 750,000 | |||||
Common stock and pre-funded warrants sold, net of offering costs, amount | $ 75 | 2,129,930 | 2,130,005 | |||
Compensation on options and restricted stock issued, amount | 72,376 | 72,376 | ||||
Common stock issued for services rendered, shares | 77,987 | |||||
Common stock issued for services rendered, amount | $ 8 | 99,992 | 100,000 | |||
Common stock issued for convertible preferred stock, shares | (38,396) | 38,396 | ||||
Common stock issued for convertible preferred stock, amount | $ (4) | $ 4 | 0 | |||
Exercise of warrants, shares | 400,000 | |||||
Exercise of warrants, amount | $ 40 | 40 | ||||
Unrealized gain on marketable securities | (1,622) | (1,622) | ||||
Net loss | (2,654,644) | (2,654,644) | ||||
Ending balance, shares at Mar. 31, 2020 | 210 | 8,008,243 | ||||
Ending balance, amount at Mar. 31, 2020 | $ 0 | $ 801 | 242,242,095 | (1,164) | (238,823,080) | 3,418,652 |
Beginning balance, shares at Dec. 31, 2019 | 38,606 | 6,741,860 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 4 | $ 674 | 239,939,797 | 458 | (236,168,436) | 3,772,497 |
Ending balance, shares at Jun. 30, 2020 | 210 | 10,095,758 | ||||
Ending balance, amount at Jun. 30, 2020 | $ 0 | $ 1,010 | 243,995,716 | 2,074 | (240,969,630) | 3,029,170 |
Beginning balance, shares at Mar. 31, 2020 | 210 | 8,008,243 | ||||
Beginning balance, amount at Mar. 31, 2020 | $ 0 | $ 801 | 242,242,095 | (1,164) | (238,823,080) | 3,418,652 |
Compensation on options and restricted stock issued, amount | 63,166 | 63,166 | ||||
Exercise of warrants, shares | 2,087,515 | |||||
Exercise of warrants, amount | $ 209 | 1,690,455 | 1,690,664 | |||
Unrealized gain on marketable securities | 3,238 | 3,238 | ||||
Net loss | (2,146,550) | (2,146,550) | ||||
Ending balance, shares at Jun. 30, 2020 | 210 | 10,095,758 | ||||
Ending balance, amount at Jun. 30, 2020 | $ 0 | $ 1,010 | $ 243,995,716 | $ 2,074 | $ (240,969,630) | $ 3,029,170 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (4,801,194) | $ (3,378,982) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 2,150 | 2,400 |
Interest on debt instrument | 406 | 0 |
Amortization of right of use asset | 54,223 | 50,132 |
Loss on disposal of property and equipment | 0 | 522 |
Issuance and vesting of compensatory stock options and warrants | 135,542 | 101,961 |
Issuance of common stock for services rendered | 50,000 | 0 |
Amortization of premium on marketable securities | 2,647 | (302) |
Changes in operating assets and liabilities | ||
Accounts receivable, prepaid expenses and other assets | 170,046 | (57,240) |
Accounts payable and accrued liabilities | (453,406) | (717,324) |
Long term portion of lease liability | (60,379) | (48,747) |
Net cash used in operating activities | (4,899,965) | (4,047,580) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of marketable securities | (351,138) | (275,435) |
Sale of marketable securities | 365,049 | 270,000 |
Purchase of property and equipment | 0 | (3,574) |
Net cash provided by investing activities | 13,911 | (9,009) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the issuance of common stock and pre-funded warrants, net of issuance costs | 2,130,005 | 0 |
Proceeds from the exercise of warrants | 1,690,704 | 96,500 |
Proceeds from the issuance of notes payable | 244,657 | 0 |
Net cash provided by financing activities | 4,065,366 | 96,500 |
Net change in cash and cash equivalents | (820,688) | (3,960,089) |
Cash and cash equivalents, beginning of period | 4,905,993 | 12,367,321 |
Cash and cash equivalents, end of period | $ 4,085,305 | $ 8,407,232 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2020 | |
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 7 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, 2020 | |
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 on December 31, 2019 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, 2019. 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, 2020 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 year ended December 31, 2019. 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 $241 million on June 30, 2020 and $236 million on December 31, 2019 and used cash in operations of $4.9 million and $4.0 million during the six months ended June 30, 2020 and 2019, 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, 2020 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. All material intercompany transactions and balances have been eliminated in consolidation. Liquidity and Management’s Plan On June 30, 2020, the Company had cash and cash equivalents, including the fair value of its marketable securities, of approximately $4.6 million. The Company used $4.9 million of cash for operating activities during the six months ended June 30, 2020 and had stockholders’ equity of $3.0 million, versus $3.8 million on December 31, 2019. 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, 2020, and including the net proceeds from its July 2020 offering (as discussed in Note 9 below), the Company believes that it has sufficient capital to fund its planned operations through the third quarter of calendar year 2021. 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. The continued spread of COVID-19 globally could adversely affect the Company’s ability to retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography. Further, some of these investigators and site staff may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede movement or interrupt healthcare services, or if they become infected with COVID-19 themselves, which would delay the Company’s ability to complete its phase 2 clinical trial or release clinical trial results. 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, 2020 2019 Warrants to purchase common stock 12,274,492 10,640,718 Options to purchase common stock 450,203 244,229 Convertible preferred shares outstanding 210 38,606 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 condensed consolidated balance sheets. 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. Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued an accounting standard intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740, Income Taxes and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. The Company is currently evaluating this standard, but it does not believe the adoption of the new guidance will have a material impact on its consolidated financial statements. In June 2016, the 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, 2023, with early adoption permitted. 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 the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. |
3. FAIR VALUE
3. FAIR VALUE | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
3. FAIR VALUE | The Company determines the fair value of its financial assets and liabilities in accordance with the Accounting Standards Codification (“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. As of June 30, 2020, 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, 2020 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Corporate debt securities $ 473,421 $ 3,451 $ 2,125 $ (56 ) $ 478,941 Total investments $ 473,421 $ 3,451 $ 2,125 $ (56 ) $ 478,941 All of the Company’s investments have scheduled maturities of less than one year as of June 30, 2020 and December 31, 2019. The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019: Fair Value Measurements at Reporting Date Using Balance as of June 30, 2020 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 $ 4,085,305 $ 4,085,305 $ - $ - Marketable securities $ 478,941 $ - $ 478,941 $ - Fair Value Measurements at Reporting Date Using Balance as of December 31, 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 $ 4,905,993 $ 4,905,993 $ - $ - Marketable securities $ 493,884 $ - $ 493,884 $ - There were no significant transfers between levels in the six months ended June 30, 2020. |
4. BALANCE SHEET COMPONENTS
4. BALANCE SHEET COMPONENTS | 6 Months Ended |
Jun. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
4. BALANCE SHEET COMPONENTS | Property and equipment, net Property and equipment consist of the following as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Office furniture and fixtures $ 43,034 $ 130,192 Computer equipment and software 22,280 80,669 65,314 210,861 Less: Accumulated depreciation (60,905 ) (204,302 ) $ 4,409 $ 6,559 Depreciation expense was approximately $1,000 and $1,300 for the three months ended June 30, 2020 and 2019, and approximately $2,200 and $2,400 for the six months ended June 30, 2020 and 2019, respectively. Accrued liabilities Accrued liabilities consist of the following as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Operating costs $ 285,348 $ 426,115 Lease liability 117,416 111,353 Employee related 121,592 333,873 $ 524,356 $ 871,341 |
5. LEASE
5. LEASE | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
5. LEASE | 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, 2020 December 31, 2019 Current portion included in accrued liabilities $ 117,416 $ 111,353 Long term lease liability - 60,379 $ 117,416 $ 171,732 As of June 30, 2020, the maturities of our operating lease liabilities were as follows: Year ending December 31, 2020 $ 60,790 2021 61,803 Total lease payments $ 122,593 Less: Imputed interest (5,177 ) Operating lease liability $ 117,416 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, 2020, the remaining Lease term is 1 year and the discount rate used to determine the operating lease liability was 8.0%. For the six months ending June 30, 2020, the Company paid $65,103 in total lease expenses, including $4,902 for common area maintenance charges. |
6. NOTES PAYABLE
6. NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
6. NOTES PAYABLE | On April 30, 2020, the Company received a loan pursuant to the Paycheck Protection Program (the “PPP Loan”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as administered by the U.S. Small Business Administration. The PPP Loan in the principal amount of $244,657 was disbursed by First Horizon Bank (the “Lender”) pursuant to a promissory note issued by us (the “Note”). The PPP Loan has a two-year term and bears interest at a rate of 1.00% per annum. Monthly principal and interest payments are deferred for six months. Beginning November 30, 2020, the Company is required to make monthly payments of principal and interest of approximately $13,672 to the Lender. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. The Note provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations, and material adverse effects. The Company may prepay the principal of the PPP Loan at any time, subject to certain notice requirements. Under the terms of the CARES Act, Paycheck Protection Program loan recipients can apply for and be granted forgiveness for all or a portion of a loan granted under the program. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The Company is using the proceeds from the PPP Loan to fund payroll costs in accordance with the relevant terms and conditions of the CARES Act. However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained. As of June 30, 2020, the current and long-term portions of the PPP Loan were $107,606 and $137,051, respectively. |
7. COMMITMENTS AND CONTINGENCIE
7. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
7. COMMITMENTS AND CONTINGENCIES | 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, i.e. line extension products. 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 the Company sells the Product in the Territory. As of June 30, 2020, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion. On July 3, 2019, Orion filed a request for arbitration against the Company under the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce 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 submitted its response to the request for arbitration July 31, 2019 and rejected Orion’s position that the oral formation was not a line extension product under the License and requested Orion reimburse the Company for all legal fees associated with the arbitration. The hearing on this matter was held before the arbitral tribunal on April 7 and April 8, 2020. |
8. STOCKHOLDERS EQUITY
8. STOCKHOLDERS EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' equity | |
8. 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, 2019. 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. 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. As of December 31, 2019, there were 38,606 shares of Series A Stock outstanding. During the six months ended June 30, 2020; an additional 38,396 shares of Series A Stock were converted into 38,396 shares of common stock. As of June 30, 2020, there were 210 shares of Series A Stock outstanding. 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, 2020, and December 31, 2019, there were 10,095,758 and 6,741,860 shares of common stock issued and outstanding, respectively. On March 13, 2020, the Company completed a registered direct offering to a single healthcare-focused institutional investor (the “Investor”) for the issuance and sale of 750,000 shares of its common stock at a purchase price of $1.1651 per share and pre-funded warrants to purchase up to 1,610,313 shares of its common stock, at a purchase price of $1.1650 per pre-funded warrant (which represents the per share offering price for the common stock less $0.0001, the exercise price of each pre-funded warrant), for gross proceeds of approximately $2.75 million, priced at-the-market under Nasdaq rules. Additionally, in a concurrent private placement, the Company issued to the Investor unregistered warrants to purchase up to 2,360,313 shares of its common stock. The unregistered warrants have an exercise price of $1.04 per share and exercise period commencing immediately upon the issuance date and a term of five and one-half years. The net proceeds from the offerings, after deducting placement agent fees and other direct offering expenses were approximately $2.125 million. The fair value allocated to the common stock, warrants and pre-funded warrants was $0.5 million, $1.1 million and $1.1 million, respectively. During the six months ended June 30, 2020, the Company issued 1,610,313 shares of common stock upon the exercise of all of the pre-funded warrants issued in the offering. Warrants March 2020 Warrants As part of the March 2020 registered direct offering, the Company issued unregistered warrants to purchase 2,360,313 shares of its common stock at an exercise price of $1.04 per share and contractual term of five and one-half years. The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. In accordance with ASC 480, these warrants are classified as equity and their relative fair value of approximately $1.1 million was recognized as additional paid in capital. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. Warrants Issued for Services In connection with the March 2020 offering described above, the Company issued designees of the placement agent warrants to purchase 177,023 shares of common stock at an exercise price of $1.4564 and a contractual term of five years. In accordance with ASC 815, these warrants are classified as equity and its estimated fair value of $66,201 was recognized as additional paid in capital. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. In connection with the March 2020 offering described above, the Company issued to its previous underwriter a warrant to purchase 94,413 shares of common stock at an exercise price of $1.4564 per share and contractual term of five years. In accordance with ASC 815, this warrant is classified as equity and its estimated fair-value of $35,308 was recognized as additional paid in capital. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. On June 2, 2020, the Company received approximately $1.7 million and issued 877,202 shares of common stock upon the exercise of previously outstanding warrants issued in connection with the Company’s December 2018 offering. As of June 30, 2020, the Company has 12,274,492 warrants outstanding. The following table summarizes the Company’s warrant activity for the six months ended June 30, 2020: Warrants Weighted Average Exercise Price Outstanding at December 31, 2019 10,519,945 $ 1.94 Issued 4,242,062 0.67 Exercised (2,487,515 ) 0.68 Outstanding at June 30, 2020 12,274,492 $ 1.76 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, 2020: Shares Available for Grant Balances, at December 31, 2019 697,500 Options granted (340,000 ) Balances, at June 30, 2020 357,500 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, 2020: Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2019 52,500 $ 5.89 Options granted 340,000 $ 1.18 Balances at June 30, 2020 392,500 $ 1.81 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 $52,672 and $16,008 for the three months ended June 30, 2020 and 2019, and $112,833 and $45,739 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, there were unrecognized compensation costs of approximately $269,307 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 1.64 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, 2020: For the six months ended June 30, 2020 2019 Risk-free interest rate (weighted average) 1.03 % 2.39 % Expected volatility (weighted average) 97.61 % 106.74 % 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, 2020 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 ISOs or 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, 2020: Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2019 191,706 $ 93.40 Options cancelled (134,003 ) $ 113.29 Balances at June 30, 2020 57,703 $ 47.20 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 $10,494 and $25,658 for the three months ended June 30, 2020 and 2019, and $22,709 and $56,222 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, there were unrecognized compensation costs of approximately $14,696 related to non-vested stock option awards under the 1999 Plan that will be recognized on a straight-line basis over the weighted average remaining vesting period of 0.56 years . |
9. SUBSEQUENT EVENTS
9. SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
9. SUBSEQUENT EVENTS | On July 6, 2020, the Company entered into a Securities Purchase Agreement for Class C and Class D Units (the “RDO Purchase Agreement”) and a Securities Purchase Agreement for Class E and Class F Units (the “PIPE Purchase Agreement” and, together with the RDO Purchase Agreement, the “Purchase Agreements”) with the Investor, pursuant to which the Company agreed to issue in a registered direct offering 2,523,611 shares of the Company’s common stock, $0.0001 par value per share, at a purchase price of $1.02780 per share and pre-funded warrants (the “Registered Pre-Funded Warrants”) to purchase up to 652,313 shares of common stock at a purchase price of $1.02770 per Registered Pre-Funded Warrant, and issue in a concurrent private placement unregistered pre-funded warrants (the “Unregistered Pre-Funded Warrants”) to purchase up to 4,607,692 shares of common stock at the same purchase price as the Registered Pre-Funded Warrants, and unregistered common stock warrants (the “Unregistered Warrants”) to purchase up to 7,783,616 shares of common stock (such registered direct offering and private placement, collectively, the “Offerings”). The aggregate gross proceeds to the Company of the Offerings was approximately $8.0 million. The Registered Pre-Funded Warrants and the Unregistered Pre-Funded Warrants have an exercise price of $0.0001 per share of common stock, are immediately exercisable, may be exercised at any time until exercised in full and are subject to customary adjustments. The Unregistered Warrants have an exercise price of $0.903 per share of common stock, are immediately exercisable, will expire five and one-half years from the date of issuance and are subject to customary adjustments. The Registered Pre-Funded Warrants, the Unregistered Pre-Funded Warrants and Unregistered Warrants may not be exercised if the aggregate number of shares of the Company’s common stock beneficially owned by the holder (together with its affiliates) would exceed 19.99% of the Company’s outstanding common stock immediately after exercise. However, the holder may increase or decrease such percentage, provided that in no event such percentage exceeds 19.99%, upon at least 61 days’ prior notice from the holder to the Company. The Company intends to use the net proceeds of approximately $6.5 million from the Offerings to further its clinical trials of levosimendan, for research and development and for general corporate purposes, including working capital and potential acquisitions. Also on July 6, 2020 and in connection with the private placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investor, pursuant to which the Company agreed to register for resale the shares of the Company’s common stock issuable upon exercise of the Unregistered Pre-Funded Warrants and the Unregistered Warrants (collectively, the “Unregistered Warrant Shares”). Under the Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale by the Investor of the Unregistered Warrant Shares within 120 days following the date of the Registration Rights Agreement. Under certain circumstances, including, but not limited to, (i) if the registration statement is not filed within the time period specified above or (ii) if the registration statement has not been declared effective (A) by the 120th day after the date of the Registration Rights Agreement (or, in the event of a “full review” by the Securities and Exchange Commission (the “SEC”), the 150th day after the date of the Registration Rights Agreement) or (B) within five trading days following the date the Company is notified by the SEC that the registration statement will not be reviewed or is no longer subject to further review and comments then the Company has agreed to pay the Investor, as partial liquidated damages, an amount equal to 1.0% of the Investor’s aggregate subscription amount paid pursuant to the PIPE Purchase Agreement. Pursuant to the terms of the PIPE Purchase Agreement, the Company agreed to appoint to its Board of Directors two directors designated in writing by a majority in interest of the purchasers named therein (the “Designor”) following the closing of the Offerings. In the event the Designor beneficially holds less than 19.90% but more than 9.99% of the Company’s issued and outstanding common stock, then the Designor shall have the right to designate only one director. On July 20, 2020, Steven J. Boyd and Keith Maher, MD were appointed to the Company’s Board of Directors. H.C. Wainwright & Co., LLC (the “Placement Agent”) was engaged by the Company to act as its exclusive agent for the Offerings. The Company agreed to pay the Placement Agent a cash fee equal to 7.5% of the gross proceeds received by the Company in the Offerings, totaling approximately $600,000. The Company also agreed to pay the Placement Agent $35,000 for non-accountable expenses, up to $40,000 for fees and expenses of legal counsel and other out-of-pocket expenses, a management fee equal to 1.0% of the gross proceeds raised in the Offerings and up to $12,900 for clearing fees. In addition, the Company has agreed to issue to the Placement Agent or its designees warrants to purchase up to 583,771 shares of common stock (representing 7.5% of the aggregate number of shares of common stock (or common stock equivalents) sold in the Offerings) (the “Placement Agent Warrants”). The Placement Agent Warrants have substantially the same terms as the Unregistered Warrants, except that the Placement Agent Warrants have an exercise price equal to $1.2848, or 125% of the offering price per share of common stock, and will be exercisable for five years from the effective date of the Offerings. The Company offered the shares of common stock and Registered Pre-Funded Warrants in the registered direct offering pursuant to the Company’s registration statement on Form S-3 (File No. 333-224951) filed with the SEC and declared effective by the Commission on May 23, 2018. A prospectus supplement relating to the shares of common stock and the Registered Pre-Funded Warrants offered pursuant to the registered direct offering was filed with the Commission on July 8, 2020. The issuance and sale of the Unregistered Pre-Funded Warrants, the Unregistered Warrants, the Placement Agent Warrants and the shares of common stock issuable upon exercise of the Unregistered Pre-Funded Warrants, the Unregistered Warrants and Placement Agent Warrants have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), were not offered pursuant to the registration statement and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder. |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
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 on December 31, 2019 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, 2019. 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, 2020 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 year ended December 31, 2019. |
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 $241 million on June 30, 2020 and $236 million on December 31, 2019 and used cash in operations of $4.9 million and $4.0 million during the six months ended June 30, 2020 and 2019, 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, 2020 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. All material intercompany transactions and balances have been eliminated in consolidation. |
Liquidity and Management's Plan | On June 30, 2020, the Company had cash and cash equivalents, including the fair value of its marketable securities, of approximately $4.6 million. The Company used $4.9 million of cash for operating activities during the six months ended June 30, 2020 and had stockholders’ equity of $3.0 million, versus $3.8 million on December 31, 2019. 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, 2020, and including the net proceeds from its July 2020 offering (as discussed in Note 9 below), the Company believes that it has sufficient capital to fund its planned operations through the third quarter of calendar year 2021. 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. The continued spread of COVID-19 globally could adversely affect the Company’s ability to retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography. Further, some of these investigators and site staff may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede movement or interrupt healthcare services, or if they become infected with COVID-19 themselves, which would delay the Company’s ability to complete its phase 2 clinical trial or release clinical trial results. 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, 2020 2019 Warrants to purchase common stock 12,274,492 10,640,718 Options to purchase common stock 450,203 244,229 Convertible preferred shares outstanding 210 38,606 |
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 condensed consolidated balance sheets. 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. |
Recent Accounting Pronouncements | In December 2019, the Financial Accounting Standards Board (“FASB”) issued an accounting standard intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740, Income Taxes and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. The Company is currently evaluating this standard, but it does not believe the adoption of the new guidance will have a material impact on its consolidated financial statements. In June 2016, the 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, 2023, with early adoption permitted. 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 the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Anti-dilutive securities | Six months ended June 30, 2020 2019 Warrants to purchase common stock 12,274,492 10,640,718 Options to purchase common stock 450,203 244,229 Convertible preferred shares outstanding 210 38,606 |
3. FAIR VALUE (Tables)
3. FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of investments in marketable securities | June 30, 2020 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Corporate debt securities $ 473,421 $ 3,451 $ 2,125 $ (56 ) $ 478,941 Total investments $ 473,421 $ 3,451 $ 2,125 $ (56 ) $ 478,941 |
Schedule of fair value on a recurring basis | Fair Value Measurements at Reporting Date Using Balance as of June 30, 2020 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 $ 4,085,305 $ 4,085,305 $ - $ - Marketable securities $ 478,941 $ - $ 478,941 $ - Fair Value Measurements at Reporting Date Using Balance as of December 31, 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 $ 4,905,993 $ 4,905,993 $ - $ - Marketable securities $ 493,884 $ - $ 493,884 $ - |
4. BALANCE SHEET COMPONENTS (Ta
4. BALANCE SHEET COMPONENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Property, plant and equipment | June 30, 2020 December 31, 2019 Office furniture and fixtures $ 43,034 $ 130,192 Computer equipment and software 22,280 80,669 65,314 210,861 Less: Accumulated depreciation (60,905 ) (204,302 ) $ 4,409 $ 6,559 |
Accrued liabilities | June 30, 2020 December 31, 2019 Operating costs $ 285,348 $ 426,115 Lease liability 117,416 111,353 Employee related 121,592 333,873 $ 524,356 $ 871,341 |
5. LEASE (Tables)
5. LEASE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Lease liabilities | June 30, 2020 December 31, 2019 Current portion included in accrued liabilities $ 117,416 $ 111,353 Long term lease liability - 60,379 $ 117,416 $ 171,732 |
Maturities of operating lease liabilities | Year ending December 31, 2020 $ 60,790 2021 61,803 Total lease payments $ 122,593 Less: Imputed interest (5,177 ) Operating lease liability $ 117,416 |
8. STOCKHOLDERS EQUITY (Tables)
8. STOCKHOLDERS EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' equity | |
Warrant activity | Warrants Weighted Average Exercise Price Outstanding at December 31, 2019 10,519,945 $ 1.94 Issued 4,242,062 0.67 Exercised (2,487,515 ) 0.68 Outstanding at June 30, 2020 12,274,492 $ 1.76 |
Shares available for grant under the Plan | Shares Available for Grant Balances, at December 31, 2019 697,500 Options granted (340,000 ) Balances, at June 30, 2020 357,500 |
Options activity | Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2019 52,500 $ 5.89 Options granted 340,000 $ 1.18 Balances at June 30, 2020 392,500 $ 1.81 |
Fair value assumptions | For the six months ended June 30, 2020 2019 Risk-free interest rate (weighted average) 1.03 % 2.39 % Expected volatility (weighted average) 97.61 % 106.74 % Expected term (in years) 7 7 Expected dividend yield 0.00 % 0.00 % |
Outstanding stock options under the 1999 plan | Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2019 191,706 $ 93.40 Options cancelled (134,003 ) $ 113.29 Balances at June 30, 2020 57,703 $ 47.20 |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Warrants to purchase common stock | ||
Anti-dilutive securities | 12,274,492 | 10,640,718 |
Options to purchase common stock | ||
Anti-dilutive securities | 450,203 | 244,229 |
Convertible preferred shares | ||
Anti-dilutive securities | 210 | 38,606 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Accumulated deficit | $ (240,969,630) | $ (236,168,436) | |
Cash used in operations | $ (4,899,965) | $ (4,047,580) |
3. FAIR VALUE (Details)
3. FAIR VALUE (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Amortized cost | $ 473,421 |
Accrued interest | 3,451 |
Gross unrealized gains | 2,125 |
Gross unrealized losses | (56) |
Estimated fair value | 478,941 |
Corporate debt securities | |
Amortized cost | 473,421 |
Accrued interest | 3,451 |
Gross unrealized gains | 2,125 |
Gross unrealized losses | (56) |
Estimated fair value | $ 478,941 |
3. FAIR VALUE (Details 1)
3. FAIR VALUE (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 4,085,305 | $ 4,905,993 |
Marketable securities | 478,941 | 493,884 |
Level 1 | ||
Current Assets | ||
Cash and cash equivalents | 4,085,305 | 4,905,993 |
Marketable securities | 0 | 0 |
Level 2 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 478,941 | 493,884 |
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, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Office furniture and fixtures | $ 43,034 | $ 130,192 |
Computer equipment and software | 22,280 | 80,669 |
Property and equipment, gross | 65,314 | 210,861 |
Less: accumulated depreciation | (60,905) | (204,302) |
Property and equipment, net | $ 4,409 | $ 6,559 |
4. BALANCE SHEET COMPONENTS (_2
4. BALANCE SHEET COMPONENTS (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Operating costs | $ 285,348 | $ 426,115 |
Lease liability | 117,416 | 111,353 |
Employee related | 121,592 | 333,873 |
Total | $ 524,356 | $ 871,341 |
4. BALANCE SHEET COMPONENTS (_3
4. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | ||||
Depreciation expense | $ 1,000 | $ 1,300 | $ 2,200 | $ 2,400 |
5. LEASE (Details)
5. LEASE (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Current portion included in accrued liabilities | $ 117,416 | $ 111,353 |
Long term lease liability | 0 | 60,379 |
Total | $ 117,416 | $ 171,732 |
5. LEASE (Details 1)
5. LEASE (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 | $ 60,790 | |
2021 | 61,803 | |
Total | 122,593 | |
Less: imputed interest | (5,177) | |
Operating lease liability | $ 117,416 | $ 171,732 |
6. NOTES PAYABLE (Details Narra
6. NOTES PAYABLE (Details Narrative) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Note payable - current | $ 107,606 | $ 0 |
Note payable - noncurrent | 137,051 | $ 0 |
PPP Loan | ||
Note payable - current | 107,606 | |
Note payable - noncurrent | $ 137,051 |
8. STOCKHOLDERS EQUITY (Details
8. STOCKHOLDERS EQUITY (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Stockholders' equity | |
Number of warrants outstanding, beginning | shares | 10,519,945 |
Number of warrants, issued | shares | 4,242,062 |
Number of warrants, exercised | shares | (2,487,515) |
Number of warrants outstanding, ending | shares | 12,274,492 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 1.94 |
Weighted average exercise price, issued | $ / shares | .67 |
Weighted average exercise price, exercised | $ / shares | .68 |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.76 |
8. STOCKHOLDERS EQUITY (Detai_2
8. STOCKHOLDERS EQUITY (Details 1) - 2016 Stock Incentive Plan | 6 Months Ended |
Jun. 30, 2020shares | |
Shares available for grant, beginning | 697,500 |
Shares available for grant, options granted | (340,000) |
Shares available for grant, ending | 357,500 |
8. STOCKHOLDERS EQUITY (Detai_3
8. STOCKHOLDERS EQUITY (Details 2) - 2016 Stock Incentive Plan | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of options outstanding, beginning | shares | 52,500 |
Number of options granted | shares | 340,000 |
Number of options outstanding, ending | shares | 392,500 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 5.89 |
Weighted average exercise price granted | $ / shares | 1.18 |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.81 |
8. STOCKHOLDERS EQUITY (Detai_4
8. STOCKHOLDERS EQUITY (Details 3) - 2016 Stock Incentive Plan | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Risk-free interest rate (weighted average) | 1.03% | 2.39% |
Expected volatility (weighted average) | 97.61% | 106.74% |
Expected term (in years) | 7 years | 7 years |
Expected dividend yield | 0.00% | 0.00% |
8. STOCKHOLDERS EQUITY (Detai_5
8. STOCKHOLDERS EQUITY (Details 4) - 1999 Amended Stock Plan | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of options outstanding, beginning | shares | 191,706 |
Number of options cancelled | shares | (134,003) |
Number of options outstanding, ending | shares | 57,703 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 93.40 |
Weighted average exercise price cancelled | $ / shares | 113.29 |
Weighted average exercise price outstanding, ending | $ / shares | $ 47.20 |
8. STOCKHOLDERS EQUITY (Detai_6
8. STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
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 | 10,095,758 | 10,095,758 | 6,741,860 | ||
Common stock, outstanding | 10,095,758 | 10,095,758 | 6,741,860 | ||
Warrants outstanding | 12,274,492 | 12,274,492 | |||
Unrecognized compensation costs | $ 269,307 | $ 269,307 | |||
Unrecognized compensation costs period for recognition | 1 year 7 months 20 days | ||||
2016 Stock Incentive Plan | |||||
Compensation expense | $ 52,672 | $ 16,008 | $ 112,833 | $ 45,739 | |
Series A Preferred Stock | |||||
Preferred stock, par value | $ .0001 | $ .0001 | $ 0.0001 | ||
Preferred stock, authorized | 9,999,790 | 9,999,790 | 9,961,394 | ||
Preferred stock, issued | 210 | 210 | 38,606 | ||
Preferred stock, outstanding | 210 | 210 | 38,606 |