Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 10, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Entity Registrant Name | TITAN PHARMACEUTICALS INC | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 97,223,180 | |
Entity Central Index Key | 0000910267 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Trading Symbol | TTNP |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 5,498 | $ 5,223 |
Receivables | 1,061 | 993 |
Inventory | 969 | 998 |
Prepaid expenses and other current assets | 1,162 | 1,094 |
Total current assets | 8,690 | 8,308 |
Property and equipment, net | 799 | 817 |
Operating lease right-of-use asset | 273 | 397 |
Total assets | 9,762 | 9,522 |
Current liabilities: | ||
Accounts payable | 1,528 | 1,401 |
Accrued clinical trials expenses | 275 | 309 |
Accrued sales allowances | 64 | 809 |
Other accrued liabilities | 1,074 | 809 |
Operating lease liability, current | 292 | 272 |
Current portion of long-term debt | 1,624 | 0 |
Total current liabilities | 4,857 | 3,600 |
Operating lease liability, non-current | 0 | 150 |
Long-term debt | 3,345 | 4,019 |
Warrant liability | 0 | 320 |
Total liabilities | 8,202 | 8,089 |
Stockholders' equity: | ||
Common stock, at amounts paid-in | 97 | 57 |
Additional paid-in capital | 360,725 | 350,413 |
Accumulated deficit | (359,262) | (349,037) |
Total stockholders' equity | 1,560 | 1,433 |
Total liabilities and stockholders' equity | $ 9,762 | $ 9,522 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 1,325 | $ 502 | $ 2,661 | $ 1,447 |
Operating expenses: | ||||
Cost of goods sold | 228 | 246 | 399 | 550 |
Research and development | 2,007 | 1,907 | 4,284 | 3,751 |
Selling, general and administrative | 3,474 | 3,231 | 6,589 | 6,313 |
Total operating expenses | 5,709 | 5,384 | 11,272 | 10,614 |
Loss from operations | (4,384) | (4,882) | (8,611) | (9,167) |
Other expense: | ||||
Interest expense, net | (250) | (253) | (472) | (499) |
Non-cash loss on changes in the fair value of warrants | 0 | 0 | (923) | 0 |
Loss on debt extinguishment | 0 | (65) | (65) | |
Other income (expense), net | (7) | 3 | (219) | 17 |
Other expense, net | (257) | (315) | (1,614) | (547) |
Net loss and comprehensive loss | $ (4,641) | $ (5,197) | $ (10,225) | $ (9,714) |
Basic and diluted net loss per common share | $ (0.05) | $ (0.38) | $ (0.12) | $ (0.73) |
Weighted average shares used in computing basic and diluted net loss per common share | 94,930 | 13,576 | 88,785 | 13,397 |
License revenue | ||||
Revenues: | ||||
Total revenues | $ 6 | $ 0 | $ 6 | $ 313 |
Product revenue | ||||
Revenues: | ||||
Total revenues | 115 | 304 | 325 | 621 |
Grant revenue | ||||
Revenues: | ||||
Total revenues | $ 1,204 | $ 198 | $ 2,330 | $ 513 |
CONDENSED STATEMENTS OF STOCKHO
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | At-the-market offerings [Member]Common Stock [Member] | At-the-market offerings [Member]Additional Paid-In Capital [Member] | At-the-market offerings [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 13 | $ 339,397 | $ (332,579) | $ 6,831 | |||
Balance (in shares) at Dec. 31, 2018 | 13,010 | ||||||
Net loss | $ 0 | (4,517) | (4,517) | ||||
Issuance of common stock upon exercises of warrants, net | $ 0 | 605 | 605 | ||||
Issuance of common stock upon exercises of warrants, net (in shares) | 404 | ||||||
Stock-based compensation | $ 0 | 136 | 136 | ||||
Balance at Mar. 31, 2019 | $ 13 | 340,138 | (337,096) | 3,055 | |||
Balance (in shares) at Mar. 31, 2019 | 13,414 | ||||||
Balance at Dec. 31, 2018 | $ 13 | 339,397 | (332,579) | 6,831 | |||
Balance (in shares) at Dec. 31, 2018 | 13,010 | ||||||
Net loss | (9,714) | ||||||
Balance at Jun. 30, 2019 | $ 14 | 341,708 | (342,293) | (571) | |||
Balance (in shares) at Jun. 30, 2019 | 14,262 | ||||||
Balance at Mar. 31, 2019 | $ 13 | 340,138 | (337,096) | 3,055 | |||
Balance (in shares) at Mar. 31, 2019 | 13,414 | ||||||
Net loss | $ 0 | (5,197) | (5,197) | ||||
Issuance of common stock, net | $ 0 | $ 466 | $ 466 | ||||
Issuance of common stock, net (in shares) | 330 | ||||||
Issuance of common stock upon exercises of warrants, net | $ 0 | 105 | 105 | ||||
Issuance of common stock upon exercises of warrants, net (in shares) | 70 | ||||||
Issuance of common stock upon conversion of convertible loan | $ 1 | 649 | 650 | ||||
Issuance of common stock upon conversion of convertible loan, (in shares) | 448 | ||||||
Stock-based compensation | $ 0 | 350 | 350 | ||||
Balance at Jun. 30, 2019 | $ 14 | 341,708 | (342,293) | (571) | |||
Balance (in shares) at Jun. 30, 2019 | 14,262 | ||||||
Balance at Dec. 31, 2019 | $ 57 | 350,413 | (349,037) | 1,433 | |||
Balance (in shares) at Dec. 31, 2019 | 57,379 | ||||||
Net loss | $ 0 | 0 | (5,584) | (5,584) | |||
Issuance of common stock, net | $ 9 | 443 | 0 | 452 | |||
Issuance of common stock, net (in shares) | 8,700 | ||||||
Issuance of common stock upon exercises of warrants, net | $ 27 | 6,135 | 0 | 6,162 | |||
Issuance of common stock upon exercises of warrants, net (in shares) | 27,388 | ||||||
Reclassification of warrants from liability | $ 0 | 2,897 | 0 | 2,897 | |||
Stock-based compensation | 0 | (84) | 0 | (84) | |||
Balance at Mar. 31, 2020 | $ 93 | 359,804 | (354,621) | 5,276 | |||
Balance (in shares) at Mar. 31, 2020 | 93,467 | ||||||
Balance at Dec. 31, 2019 | $ 57 | 350,413 | (349,037) | 1,433 | |||
Balance (in shares) at Dec. 31, 2019 | 57,379 | ||||||
Net loss | (10,225) | ||||||
Balance at Jun. 30, 2020 | $ 97 | 360,725 | (359,262) | 1,560 | |||
Balance (in shares) at Jun. 30, 2020 | 97,223 | ||||||
Balance at Mar. 31, 2020 | $ 93 | 359,804 | (354,621) | 5,276 | |||
Balance (in shares) at Mar. 31, 2020 | 93,467 | ||||||
Net loss | $ 0 | 0 | (4,641) | (4,641) | |||
Issuance of common stock upon exercises of warrants, net | $ 4 | 842 | 0 | 846 | |||
Issuance of common stock upon exercises of warrants, net (in shares) | 3,756 | ||||||
Stock-based compensation | $ 0 | 79 | 0 | 79 | |||
Balance at Jun. 30, 2020 | $ 97 | $ 360,725 | $ (359,262) | $ 1,560 | |||
Balance (in shares) at Jun. 30, 2020 | 97,223 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (10,225) | $ (9,714) |
Adjustments to reconcile loss to net cash used in operating activities: | ||
Depreciation and amortization | 128 | 123 |
Non-cash interest expense | 296 | 335 |
Non-cash loss on changes in fair value of warrants | 923 | 0 |
Stock-based compensation | (5) | 486 |
Finance costs attributable to issuance of warrants | 211 | 0 |
Other | (6) | 8 |
Changes in operating assets and liabilities: | ||
Receivables | (68) | 597 |
Inventory | 29 | (55) |
Contract assets | 0 | 99 |
Prepaid expenses and other assets | (68) | (197) |
Accounts payable | 127 | (501) |
Accrued sales allowances | (745) | 830 |
Other accrued liabilities | 208 | (155) |
Deferred revenue | 0 | (313) |
Net cash used in operating activities | (9,195) | (8,457) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (87) | (83) |
Net cash used in investing activities | (87) | (83) |
Cash flows from financing activities: | ||
Net proceeds from equity offering | 1,895 | 0 |
Net proceeds from the exercises of common stock warrants | 7,008 | 710 |
Net loan proceeds | 654 | 0 |
Net proceeds from the issuance of common stock in an at-the-market offering | 0 | 466 |
Net cash provided by financing activities | 9,557 | 1,176 |
Net increase (decrease) in cash and cash equivalents | 275 | (7,364) |
Cash, cash equivalents and restricted cash at beginning of period | 5,223 | 9,656 |
Cash, cash equivalents and restricted cash at end of period | 5,498 | 2,292 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 198 | 219 |
Non-cash conversion of Molteni Convertible Loan | $ 0 | $ 650 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies The Company We are a pharmaceutical company developing therapeutics utilizing our proprietary long-term drug delivery platform, ProNeuraTM, for the treatment of select chronic diseases for which steady state delivery of a drug provides an efficacy and/or safety benefit. We have transitioned to a commercial stage enterprise following the reacquisition of Probuphine® (buprenorphine) implant, or Probuphine, in May 2018 from our former licensee. Probuphine is the first product based on our ProNeura technology approved in the U.S., Canada and the European Union, or EU, for the maintenance treatment of opioid use disorder, or OUD, in select patients. We operate in only one business segment, the development and commercialization of pharmaceutical products. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statement presentation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or any future interim periods. The balance sheet at December 31, 2019 is derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in the Titan Pharmaceuticals, Inc. Annual Report on Form 10‑K/A for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements have been prepared assuming we will continue as a going concern. At June 30,2020, we had cash and cash equivalents of $5.5 million, which we believe is sufficient to fund our planned operations through the third quarter of 2020. We will require additional funds to finance our operations beyond such period. We are exploring several financing alternatives; however, there can be no assurance that our efforts to obtain the funding required to continue our operations will be successful. Going concern assessment We assess going concern uncertainty in our condensed financial statements to determine if we have sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued or available to be issued, which is referred to as the “look-forward period” as defined by Accounting Standard Update (“ASU”) No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to us, we will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, we make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent we deem probable those implementations can be achieved and we have the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15. Based upon the above assessment, we concluded that, at the date of filing the financial statements in this Quarterly Report on Form 10-Q for the six months ended June 30, 2020, we did not have sufficient cash to fund our operations for the next 12 months without additional funds and, therefore, there is substantial doubt about our ability to continue as a going concern within 12 months after the date the financial statements were issued. Use of Estimates The preparation of these unaudited condensed financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate our estimates, including critical accounting policies or estimates related to warrants issued in equity financing, research and development expenses, income taxes, inventories, revenues, accrued sales allowances, contingencies and litigation and share-based compensation. We base our estimates on historical experience, information received from third parties and on various market specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions or conditions. Inventories Inventories are recorded at the lower of cost or net realizable value. Cost is based on the first in, first out method. We regularly review inventory quantities on hand and write down to its net realizable value any inventory that we believe to be impaired. The determination of net realizable value requires judgment including consideration of many factors, such as estimates of future product demand, product net selling prices, current and future market conditions and potential product obsolescence, among others. The components of inventories are as follows: As of June 30, 2020 December 31, 2019 Raw materials and supplies 532 563 Finished goods 437 435 $ 969 $ 998 Revenue Recognition We generate revenue principally from the sale of Probuphine in the U.S., collaborative research and development arrangements, technology licenses and sales, and government grants. Consideration received for revenue arrangements with multiple components is allocated among the separate performance obligations based upon their relative estimated standalone selling price. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreements, we perform the following steps for our revenue recognition: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation. Net Product Revenue We recognize revenue from product sales when control of the product transfers, generally upon shipment or delivery, to our customers, which include distributors. As customary in the pharmaceutical industry, our gross product revenue is subject to a variety of deductions in the forms of variable consideration, which include rebates, chargebacks, returns and discounts, in arriving at reported net product revenue. This variable consideration is estimated using the most-likely amount method, which is the single most-likely outcome under a contract and is typically at stated contractual rates. The actual outcome of this variable consideration may materially differ from our estimates. From time to time, we will adjust our estimates of this variable consideration when trends or significant events indicate that a change in estimate is appropriate to reflect the actual experience. Additionally, we will continue to assess the estimates of our variable consideration as we continue to accumulate additional historical data. Changes in the estimates of our variable consideration could materially affect our financial statements. Returns – Consistent with the provisions of ASC 606, we estimate returns at the inception of each transaction, based on multiple considerations, including historical sales, historical experience of actual customer returns, levels of inventory in our distribution channel, expiration dates of purchased products and significant market changes which may impact future expected returns to the extent that we would not reverse any receivables, revenues, or contract assets already recognized under the agreement. We have entered into agreements with large national specialty pharmacies with a distribution channel different from that of our existing customers and, therefore, the related reserves have unique considerations. We will continue to evaluate the activities with these specialty pharmacies during upcoming quarters and will update the related reserves accordingly. Rebates – Our provision for rebates is estimated based on our customers’ contracted rebate programs and our historical experience of rebates paid. Discounts –The provision is estimated based upon invoice billings, utilizing historical customer payment experience. The following table provides a summary of activity with respect to our product returns, and discounts and rebates, which are included on our condensed consolidated balance sheets within accrued sales allowances (in thousands): Accrued Sales Allowances Product Discounts and Allowance for Return Rebates Doubtful Allowance Allowance Total Accounts Balance at December 31, 2019 $ 721 $ 88 $ 809 $ 63 Provision 28 25 53 14 Payments/credits (709) (89) (798) (12) Balance at June 30, 2020 $ 40 $ 24 $ 64 $ 65 During the six months ended June 30, 2020, we received customer returns of approximately $0.7 million that had been reserved for previously. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Our performance obligations include commercialization license rights, development services and services associated with the regulatory approval process. We have optional additional items in contracts, which are accounted for as separate contracts when the customer elects such options. Arrangements that include a promise for future commercial product supply and optional research and development services at the customer’s discretion are generally considered as options. We assess if these options provide a material right to the customer and, if so, such material rights are accounted for as separate performance obligations. If we are entitled to additional payments when the customer exercises these options, any additional payments are recorded in revenue when the customer obtains control of the goods or services. Transaction Price We have both fixed and variable consideration. Non-refundable upfront payments are considered fixed, while milestone payments are identified as variable consideration when determining the transaction price. Funding of research and development activities is considered variable until such costs are reimbursed at which point they are considered fixed. We allocate the total transaction price to each performance obligation based on the relative estimated standalone selling prices of the promised goods or services for each performance obligation. At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within our control, such as approvals from regulators, are not considered probable of being achieved until those approvals are received. For arrangements that include sales-based royalties or earn-out payments, including milestone payments based on the level of sales, and the license or purchase agreement is deemed to be the predominant item to which the royalties or earn-out payments relate, we recognize revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty or earn-out payment has been allocated has been satisfied (or partially satisfied). Allocation of Consideration As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. Estimated selling prices for license rights are calculated using the residual approach. For all other performance obligations, we use a cost-plus margin approach. Timing of Recognition Significant management judgment is required to determine the level of effort required under an arrangement and the period over which we expect to complete our performance obligations under an arrangement. We estimate the performance period or measure of progress at the inception of the arrangement and re-evaluate it each reporting period. This re-evaluation may shorten or lengthen the period over which revenue is recognized. Changes to these estimates are recorded on a cumulative catch up basis. If we cannot reasonably estimate when our performance obligations either are completed or become inconsequential, then revenue recognition is deferred until we can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. Revenue is recognized for licenses or sales of functional intellectual property at the point in time the customer can use and benefit from the license. For performance obligations that are services, revenue is recognized over time proportionate to the costs that we have incurred to perform the services using the cost-to-cost input method. Research and Development Costs and Related Accrual Research and development expenses include internal and external costs. Internal costs include salaries and employment related expenses, facility costs, administrative expenses and allocations of corporate costs. External expenses consist of costs associated with outsourced contract research organization (“CRO”) activities, sponsored research studies, product registration, patent application and prosecution, and investigator sponsored trials. We also record accruals for estimated ongoing clinical trial costs. Clinical trial costs represent costs incurred by CROs and clinical sites. These costs are recorded as a component of research and development expenses. Under our agreements, progress payments are typically made to investigators, clinical sites and CROs. We analyze the progress of the clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of accrued liabilities. Significant judgments and estimates must be made and used in determining the accrued balance in any accounting period. Actual results could differ from those estimates under different assumptions. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016‑02, Leases (Topic 842), to enhance the transparency and comparability of financial reporting related to leasing arrangements. We determine whether the arrangement is or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at the present value of the future lease payments at commencement date. The interest rate implicit in lease contracts is typically not readily determinable, and therefore, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. Lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on our condensed balance sheet as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current. We no longer recognize deferred rent on our condensed balance sheet. The following table presents obligation related to our operating lease: 2020 $ 155 2021 156 Total minimum lease payments (base rent) 311 Less: imputed interest (19) Total operating lease liabilities $ 292 Recent Accounting Pronouncements Accounting Standards Adopted In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB's disclosure framework project. We adopted ASU 2018-13 effective January 1, 2020 with no material impact to our financial statements and related disclosures. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses, which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The amendments in this ASU are effective for us in our interim period ending March 31, 2023. We are currently assessing the impact of the adoption of Topic 326 on our financial statements and disclosures. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are evaluating the effects that the adoption of this guidance will have on our disclosures. Subsequent Events We have evaluated events that have occurred after June 30, 2020 and through the date that our condensed financial statements are issued. Fair Value Measurements Financial instruments, including receivables, accounts payable and accrued liabilities are carried at cost, approximate their fair values due to the short-term nature of these instruments. Our investments in money market funds are classified within Level 1 of the fair value hierarchy. Our derivative liability is classified within Level 3 of the fair value hierarchy because the fair value is calculated using significant judgment based on our own assumptions in the valuation of this liability. At June 30, 2020 and December 31, 2019, the fair value of our investments in money market funds were approximately $5.3 million and approximately $4.9 million, respectively, which are included within our cash and cash equivalents in our condensed balance sheets. |
Stock Plans
Stock Plans | 6 Months Ended |
Jun. 30, 2020 | |
Stock Plans | |
Stock Plans | 2. Stock Plans The following table summarizes the stock-based compensation expense recorded for awards under our stock option plans: (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Research and development $ — $ 14 $ — $ 91 Selling, general and administrative 79 336 (5) 395 Total stock-based compensation $ 79 $ 350 $ (5) $ 486 We use the Black-Scholes-Merton option-pricing model with the following assumptions to estimate the fair value of our stock options: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Weighted-average risk-free interest rate 0.4 % 2.1 % 0.4 % 2.2 % Expected dividend payments — — — — Expected holding period (years) 1 5.8 5.9 5.8 5.4 Weighted-average volatility factor 2 1.04 0.93 1.04 0.94 Estimated forfeiture rates for options granted 3 28 % 21 % 28 % 21 % (1) Expected holding period is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and the expectations of future employee behavior. (2) Weighted average volatility is based on the historical volatility of our common stock. (3) Estimated forfeiture rates are based on historical data. The following table summarizes option activity: Weighted Weighted Average Average Remaining Aggregate Exercise Option Intrinsic Options (in Price per Term (in Value (in (in thousands) thousands) share years) thousands) Outstanding December 31, 2019 1,192 $ 6.23 $ — Granted 50 0.28 Forfeited or expired (324) 1.88 Outstanding at June 30, 2020 918 7.44 1 Exercisable at June 30, 2020 824 8.19 — Options to purchase 50,000 common shares were granted during the three month periods ended June 30, 2020. As of June 30, 2020, there was approximately $39,000 of total unrecognized compensation expense related to non-vested stock options. This expense is expected to be recognized over a weighted-average period of approximately 1.8 years. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Net Loss Per Share | |
Net Loss Per Share | 3. Net Loss Per Share The table below presents common shares underlying stock options, warrants and convertible loans that are excluded from the calculation of the weighted average number of common shares outstanding used for the calculation of diluted net loss per common share. These are excluded from the calculation due to their anti-dilutive effect: Three Months Ended Six Months Ended (in thousands) June 30, June 30, 2020 2019 2020 2019 Weighted-average anti-dilutive common shares resulting from options 898 1,124 944 894 Weighted-average anti-dilutive common shares resulting from warrants 8,342 277 8,342 257 Weighted-average anti-dilutive common shares resulting from convertible loans 3,243 333 3,243 333 12,483 1,734 12,529 1,484 |
Molteni Purchase Agreement
Molteni Purchase Agreement | 6 Months Ended |
Jun. 30, 2020 | |
Molteni Purchase Agreement | |
Molteni Purchase Agreement | 4. Molteni Purchase Agreement On March 21, 2018, we entered into a purchase agreement (“Molteni Purchase Agreement”) with L. Molteni & C. Dei Frattelli Alitti Società Di Esercizio S.P.A. (“Molteni”) pursuant to which Molteni acquired the European intellectual property related to Probuphine, including the marketing authorization application under review by the European Medicines Agency (“EMA”), and gained the exclusive right to commercialize the Probuphine product supplied by us, to be marketed under the tradename Sixmo, in the EU, as well as certain countries of the Commonwealth of Independent States, the Middle East and North Africa (the “Molteni Territory”). In connection with the Molteni Purchase Agreement, we received an initial payment of €2.0 million (approximately $2.4 million), of which approximately $1.0 million was allocated to the transfer of the intellectual property, which was recognized immediately, and approximately $1.4 million to our efforts towards the approval by the EMA by using the expected cost-plus approach to estimate the standalone selling price of and other regulatory bodies (“Titan Services”), which was recorded as deferred revenue and amortized as the performance obligations associated with the Titan Services being satisfied over time. Titan Services included employee-related expenses as well as other manufacturing, regulatory and clinical costs. During the three months ended March 31, 2019, we fully amortized our deferred revenue and recognized approximately $0.3 million of revenue associated with the completion of Titan Services. In August 2018, we entered into an amendment to the Molteni Purchase Agreement, pursuant to which Molteni made an immediate payment of €950,000 (approximately $1.1 million) and a convertible loan of €550,000 (approximately $0.6 million) (“Molteni Convertible Loan”) (see Note 5) to us, both in exchange for the elimination of an aggregate of €2.0 million (approximately $2.3 million) of regulatory milestones provided for in the Molteni Purchase Agreement. In September 2019, we entered into an additional amendment to the Molteni Purchase Agreement, pursuant to which the percentage earn-out payments on net sales were reduced and payments of any earn-outs were delayed until the later of (i) January 1, 2021 or (ii) the one year anniversary of completion of compliance by our manufacturer with EU requirements (currently anticipated to occur during the second quarter of this year). The milestone payments under the Purchase Agreement remain unchanged. |
Debt Agreements
Debt Agreements | 6 Months Ended |
Jun. 30, 2020 | |
Debt Agreements | |
Debt Agreements | 5. Debt Agreements Horizon and Molteni Loans In March 2018, we entered into an Amended and Restated Venture Loan and Security Agreement (the "Loan Agreement") with Horizon Technology Finance Corporation ("Horizon") and Molteni pursuant to which Horizon assigned approximately $2.4 million of the $4.0 million outstanding principal balance of its loan to us to Molteni and Molteni was appointed as the collateral agent and assumed majority and administrative control of the loan. Under the Loan Agreement, Molteni had the right to convert its portion of the debt into shares of our common stock at a conversion price of $7.20 per share and was required to effect this conversion of debt to equity upon completion of an equity financing meeting specified criteria. In connection with the Loan Agreement, we issued warrants to purchase an aggregate of 6,667 shares of our common stock with an exercise price per share of $7.20 to Horizon. In September 2019, we entered into an amendment to the Loan Agreement pursuant to which the interest-only payment and forbearance periods were extended by one year to December 31, 2020 and the maturity date was extended by one year to June 1, 2022. In connection with the amendment to the Loan Agreement, the final payments to the lenders were increased by an aggregate of approximately $0.3 million (exclusive of a restructuring fee payable to Horizon) and the conversion provisions related to Molteni's portion of the loan amount were revised to eliminate the mandatory conversion feature, to reduce the conversion price to $0.225 and to cap the number of shares issuable upon conversion to 3,422,777, with any balance repayable in cash. In accordance with ASC 470, the amendment to the loan from Molteni is accounted for under debt extinguishment accounting, which required us to extinguish the carrying amount of the loan prior to the amendment and reacquire the loan after the amendment. As a result, during the three months ended September 30, 2019, we recorded approximately $0.3 million gain on debt extinguishment related to the write-off of the balance of the accreted final payment of the loan. The modification to the loan from Horizon did not constitute debt extinguishment and, therefore, did not have any impact to our condensed financial statements. Repayment of the loans is on an interest-only basis, followed by monthly payments of principal and accrued interest for the balance of the 46-month term. The loans bear interest at a floating coupon rate of one-month LIBOR (floor of 1.10%) plus 8.40%. A final payment equal to 5.0% of each loan tranche will be due on the scheduled maturity date for such loan. In addition, if we repay all or a portion of the loan prior to the applicable maturity date, we will pay Horizon and Molteni prepayment penalty fees. Debt discount associated with the Horizon and Molteni Loans was approximately $0.3 million as of both June 30, 2020 and December 31, 2019. Molteni Convertible Loan In connection with the amendment to the Molteni Purchase Agreement (see Note 4), in June 2019, the Molteni Convertible Loan, together with unpaid accrued interest, was converted in full into 448,287 shares of our common stock at $1.50 per share upon the receipt of EMA approval of Sixmo. As a result, we recorded approximately $0.1 million loss on debt extinguishment. Paycheck Protection Program Loan On April 20, 2020, we received an approximately $0.7 million loan (“PPP Loan”) pursuant to the Paycheck Protection Program of the CARES Act. The PPP Loan matures in April 2022 with an annual interest rate of 1.0%. The PPP Loan has a six month deferral of payments period and may be prepaid at any time without penalty. Forgiveness of the loan, when requested, is not automatic and is only available for principal that is used for the limited purposes that expressly qualify for forgiveness under SBA requirements. The proceeds of the PPP Loan are to be used to retain workers and maintain payroll and make mortgage interest, lease and utility payments |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 6. Stockholders’ Equity Our common stock outstanding as of June 30, 2020 and December 31, 2019 was 97,223,180 shares and 57,378,794 shares, respectively. January 2020 Offering In January 2020, we completed a financing with several institutional investors pursuant to which we issued 8,700,000 shares of our common stock in a registered direct offering and warrants to purchase 8,700,000 shares of our common stock with an exercise price of $0.25 per share in a concurrent private placement (the “January 2020 Warrants") pursuant to which we received net cash proceeds of approximately $1.9 million, after deduction of underwriting fees and other offering expenses. The January 2020 Warrants become exercisable in July 2020 and expire in July 2025, however, the shares of common stock issuable upon exercise of the January 2020 Warrants have not been reserved and, accordingly, such warrants are not exercisable unless and until we receive stockholder approval of either a reverse stock split or an increase in our authorized shares of common stock. During the three months ended March 31, 2020, financing costs of $211,000 allocated to the January 2020 warrant liability were expensed and included in other income (expense) in the condensed statements of operations and comprehensive loss. Common Stock Warrants During the six months ended June 30, 2020, we received an aggregate of approximately $7.0 million in cash proceeds from the exercises of warrants to purchase 31,144,386 shares of our common stock. |
Warrant Liabilities
Warrant Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Warrant Liabilities | |
Warrant Liabilities | 7. Warrant Liabilities On March 3, 2020, we amended certain outstanding warrants to purchase an aggregate of 11,552,314 shares of common stock, including the January 2020 Warrants and warrants we issued in connection with a financing in August 2019 (the “August 2019 Warrants”), to modify certain provisions that had required them to be previously classified as liabilities and to enable them to now be classified as equity under the relevant accounting standards. As a result, during the three months ended March 31, 2020, we reclassified the fair value of the warrants on the date of the amendment from warrant liabilities to additional paid-in capital in the condensed balance sheet and recognized a non-cash loss on changes in the fair value of warrants in the condensed statement of operations and comprehensive loss. The following table provides a roll forward of the fair value of our warrant liabilities, the fair value of which was determined by Level 3 inputs for the six months ended June 30, 2020 (in thousands): Fair value, December 31, 2019 $ 320 Issuance of the January 2020 Warrants 1,654 Change in fair value (1) 923 Reclassification of warrants to additional paid-in capital (2,897) Fair value, June 30, 2020 $ — (1) Recognized as non-cash loss on changes in fair value of warrants in the condensed statement of operations and comprehensive loss. The warrant liability associated with the January 2020 Warrants was classified within Level 3 of the fair value hierarchy. The following table presents the weighted-average key assumptions used to calculate the fair value of the January 2020 Warrants: As of March 3,2020 January 7, 2020 Expected volatility 124 % 121 % Risk-free interest rate 0.8 % 1.6 % Dividend yield — — Expected term (in years) 4.9 5.0 Weighted-average fair value per share warrant $ 0.26 $ 0.19 The warrant liability associated with the August 2019 Warrants was classified within Level 3 of the fair value hierarchy. The following table presents the weighted-average key assumptions used to calculate the fair value of the August 2019 Warrants: As of March 3,2020 December 31, 2019 Expected volatility 124 % 125 % Risk-free interest rate 0.8 % 1.7 % Dividend yield — — Expected term (in years) 4.5 4.6 Weighted-average fair value per share warrant $ 0.21 $ 0.11 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Summary of Significant Accounting Policies | |
The Company | The Company We are a pharmaceutical company developing therapeutics utilizing our proprietary long-term drug delivery platform, ProNeuraTM, for the treatment of select chronic diseases for which steady state delivery of a drug provides an efficacy and/or safety benefit. We have transitioned to a commercial stage enterprise following the reacquisition of Probuphine® (buprenorphine) implant, or Probuphine, in May 2018 from our former licensee. Probuphine is the first product based on our ProNeura technology approved in the U.S., Canada and the European Union, or EU, for the maintenance treatment of opioid use disorder, or OUD, in select patients. We operate in only one business segment, the development and commercialization of pharmaceutical products. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statement presentation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or any future interim periods. The balance sheet at December 31, 2019 is derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in the Titan Pharmaceuticals, Inc. Annual Report on Form 10‑K/A for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements have been prepared assuming we will continue as a going concern. At June 30,2020, we had cash and cash equivalents of $5.5 million, which we believe is sufficient to fund our planned operations through the third quarter of 2020. We will require additional funds to finance our operations beyond such period. We are exploring several financing alternatives; however, there can be no assurance that our efforts to obtain the funding required to continue our operations will be successful. |
Going concern assessment | Going concern assessment We assess going concern uncertainty in our condensed financial statements to determine if we have sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued or available to be issued, which is referred to as the “look-forward period” as defined by Accounting Standard Update (“ASU”) No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to us, we will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, we make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent we deem probable those implementations can be achieved and we have the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15. Based upon the above assessment, we concluded that, at the date of filing the financial statements in this Quarterly Report on Form 10-Q for the six months ended June 30, 2020, we did not have sufficient cash to fund our operations for the next 12 months without additional funds and, therefore, there is substantial doubt about our ability to continue as a going concern within 12 months after the date the financial statements were issued. |
Use of Estimates | Use of Estimates The preparation of these unaudited condensed financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate our estimates, including critical accounting policies or estimates related to warrants issued in equity financing, research and development expenses, income taxes, inventories, revenues, accrued sales allowances, contingencies and litigation and share-based compensation. We base our estimates on historical experience, information received from third parties and on various market specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions or conditions. |
Inventories | Inventories Inventories are recorded at the lower of cost or net realizable value. Cost is based on the first in, first out method. We regularly review inventory quantities on hand and write down to its net realizable value any inventory that we believe to be impaired. The determination of net realizable value requires judgment including consideration of many factors, such as estimates of future product demand, product net selling prices, current and future market conditions and potential product obsolescence, among others. The components of inventories are as follows: As of June 30, 2020 December 31, 2019 Raw materials and supplies 532 563 Finished goods 437 435 $ 969 $ 998 |
Revenue Recognition | Revenue Recognition We generate revenue principally from the sale of Probuphine in the U.S., collaborative research and development arrangements, technology licenses and sales, and government grants. Consideration received for revenue arrangements with multiple components is allocated among the separate performance obligations based upon their relative estimated standalone selling price. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreements, we perform the following steps for our revenue recognition: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation. Net Product Revenue We recognize revenue from product sales when control of the product transfers, generally upon shipment or delivery, to our customers, which include distributors. As customary in the pharmaceutical industry, our gross product revenue is subject to a variety of deductions in the forms of variable consideration, which include rebates, chargebacks, returns and discounts, in arriving at reported net product revenue. This variable consideration is estimated using the most-likely amount method, which is the single most-likely outcome under a contract and is typically at stated contractual rates. The actual outcome of this variable consideration may materially differ from our estimates. From time to time, we will adjust our estimates of this variable consideration when trends or significant events indicate that a change in estimate is appropriate to reflect the actual experience. Additionally, we will continue to assess the estimates of our variable consideration as we continue to accumulate additional historical data. Changes in the estimates of our variable consideration could materially affect our financial statements. Returns – Consistent with the provisions of ASC 606, we estimate returns at the inception of each transaction, based on multiple considerations, including historical sales, historical experience of actual customer returns, levels of inventory in our distribution channel, expiration dates of purchased products and significant market changes which may impact future expected returns to the extent that we would not reverse any receivables, revenues, or contract assets already recognized under the agreement. We have entered into agreements with large national specialty pharmacies with a distribution channel different from that of our existing customers and, therefore, the related reserves have unique considerations. We will continue to evaluate the activities with these specialty pharmacies during upcoming quarters and will update the related reserves accordingly. Rebates – Our provision for rebates is estimated based on our customers’ contracted rebate programs and our historical experience of rebates paid. Discounts –The provision is estimated based upon invoice billings, utilizing historical customer payment experience. The following table provides a summary of activity with respect to our product returns, and discounts and rebates, which are included on our condensed consolidated balance sheets within accrued sales allowances (in thousands): Accrued Sales Allowances Product Discounts and Allowance for Return Rebates Doubtful Allowance Allowance Total Accounts Balance at December 31, 2019 $ 721 $ 88 $ 809 $ 63 Provision 28 25 53 14 Payments/credits (709) (89) (798) (12) Balance at June 30, 2020 $ 40 $ 24 $ 64 $ 65 During the six months ended June 30, 2020, we received customer returns of approximately $0.7 million that had been reserved for previously. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Our performance obligations include commercialization license rights, development services and services associated with the regulatory approval process. We have optional additional items in contracts, which are accounted for as separate contracts when the customer elects such options. Arrangements that include a promise for future commercial product supply and optional research and development services at the customer’s discretion are generally considered as options. We assess if these options provide a material right to the customer and, if so, such material rights are accounted for as separate performance obligations. If we are entitled to additional payments when the customer exercises these options, any additional payments are recorded in revenue when the customer obtains control of the goods or services. Transaction Price We have both fixed and variable consideration. Non-refundable upfront payments are considered fixed, while milestone payments are identified as variable consideration when determining the transaction price. Funding of research and development activities is considered variable until such costs are reimbursed at which point they are considered fixed. We allocate the total transaction price to each performance obligation based on the relative estimated standalone selling prices of the promised goods or services for each performance obligation. At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within our control, such as approvals from regulators, are not considered probable of being achieved until those approvals are received. For arrangements that include sales-based royalties or earn-out payments, including milestone payments based on the level of sales, and the license or purchase agreement is deemed to be the predominant item to which the royalties or earn-out payments relate, we recognize revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty or earn-out payment has been allocated has been satisfied (or partially satisfied). Allocation of Consideration As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. Estimated selling prices for license rights are calculated using the residual approach. For all other performance obligations, we use a cost-plus margin approach. Timing of Recognition Significant management judgment is required to determine the level of effort required under an arrangement and the period over which we expect to complete our performance obligations under an arrangement. We estimate the performance period or measure of progress at the inception of the arrangement and re-evaluate it each reporting period. This re-evaluation may shorten or lengthen the period over which revenue is recognized. Changes to these estimates are recorded on a cumulative catch up basis. If we cannot reasonably estimate when our performance obligations either are completed or become inconsequential, then revenue recognition is deferred until we can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. Revenue is recognized for licenses or sales of functional intellectual property at the point in time the customer can use and benefit from the license. For performance obligations that are services, revenue is recognized over time proportionate to the costs that we have incurred to perform the services using the cost-to-cost input method. |
Research and Development Costs and Related Accrual | Research and Development Costs and Related Accrual Research and development expenses include internal and external costs. Internal costs include salaries and employment related expenses, facility costs, administrative expenses and allocations of corporate costs. External expenses consist of costs associated with outsourced contract research organization (“CRO”) activities, sponsored research studies, product registration, patent application and prosecution, and investigator sponsored trials. We also record accruals for estimated ongoing clinical trial costs. Clinical trial costs represent costs incurred by CROs and clinical sites. These costs are recorded as a component of research and development expenses. Under our agreements, progress payments are typically made to investigators, clinical sites and CROs. We analyze the progress of the clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of accrued liabilities. Significant judgments and estimates must be made and used in determining the accrued balance in any accounting period. Actual results could differ from those estimates under different assumptions. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. |
Leases | Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016‑02, Leases (Topic 842), to enhance the transparency and comparability of financial reporting related to leasing arrangements. We determine whether the arrangement is or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at the present value of the future lease payments at commencement date. The interest rate implicit in lease contracts is typically not readily determinable, and therefore, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. Lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on our condensed balance sheet as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current. We no longer recognize deferred rent on our condensed balance sheet. The following table presents obligation related to our operating lease: 2020 $ 155 2021 156 Total minimum lease payments (base rent) 311 Less: imputed interest (19) Total operating lease liabilities $ 292 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB's disclosure framework project. We adopted ASU 2018-13 effective January 1, 2020 with no material impact to our financial statements and related disclosures. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses, which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The amendments in this ASU are effective for us in our interim period ending March 31, 2023. We are currently assessing the impact of the adoption of Topic 326 on our financial statements and disclosures. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are evaluating the effects that the adoption of this guidance will have on our disclosures. |
Subsequent Events | Subsequent Events We have evaluated events that have occurred after June 30, 2020 and through the date that our condensed financial statements are issued. |
Fair Value Measurements | Fair Value Measurements Financial instruments, including receivables, accounts payable and accrued liabilities are carried at cost, approximate their fair values due to the short-term nature of these instruments. Our investments in money market funds are classified within Level 1 of the fair value hierarchy. Our derivative liability is classified within Level 3 of the fair value hierarchy because the fair value is calculated using significant judgment based on our own assumptions in the valuation of this liability. At June 30, 2020 and December 31, 2019, the fair value of our investments in money market funds were approximately $5.3 million and approximately $4.9 million, respectively, which are included within our cash and cash equivalents in our condensed balance sheets. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Summary of Significant Accounting Policies | |
Schedule of components of inventories | The components of inventories are as follows: As of June 30, 2020 December 31, 2019 Raw materials and supplies 532 563 Finished goods 437 435 $ 969 $ 998 |
Summary of activity with respect to our product returns, and discounts and rebates | The following table provides a summary of activity with respect to our product returns, and discounts and rebates, which are included on our condensed consolidated balance sheets within accrued sales allowances (in thousands): Accrued Sales Allowances Product Discounts and Allowance for Return Rebates Doubtful Allowance Allowance Total Accounts Balance at December 31, 2019 $ 721 $ 88 $ 809 $ 63 Provision 28 25 53 14 Payments/credits (709) (89) (798) (12) Balance at June 30, 2020 $ 40 $ 24 $ 64 $ 65 |
Schedule of maturities of operating lease | The following table presents obligation related to our operating lease: 2020 $ 155 2021 156 Total minimum lease payments (base rent) 311 Less: imputed interest (19) Total operating lease liabilities $ 292 |
Stock Plans (Tables)
Stock Plans (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stock Plans | |
Schedule of the stock-based compensation expense | The following table summarizes the stock-based compensation expense recorded for awards under our stock option plans: (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Research and development $ — $ 14 $ — $ 91 Selling, general and administrative 79 336 (5) 395 Total stock-based compensation $ 79 $ 350 $ (5) $ 486 |
Schedule of assumptions to estimate the fair value of options | Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Weighted-average risk-free interest rate 0.4 % 2.1 % 0.4 % 2.2 % Expected dividend payments — — — — Expected holding period (years) 1 5.8 5.9 5.8 5.4 Weighted-average volatility factor 2 1.04 0.93 1.04 0.94 Estimated forfeiture rates for options granted 3 28 % 21 % 28 % 21 % (1) Expected holding period is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and the expectations of future employee behavior. (2) Weighted average volatility is based on the historical volatility of our common stock. (3) Estimated forfeiture rates are based on historical data. |
Schedule of option activity | The following table summarizes option activity: Weighted Weighted Average Average Remaining Aggregate Exercise Option Intrinsic Options (in Price per Term (in Value (in (in thousands) thousands) share years) thousands) Outstanding December 31, 2019 1,192 $ 6.23 $ — Granted 50 0.28 Forfeited or expired (324) 1.88 Outstanding at June 30, 2020 918 7.44 1 Exercisable at June 30, 2020 824 8.19 — |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Net Loss Per Share | |
Schedule of antidilutive securities excluded from computation of net loss per common share | These are excluded from the calculation due to their anti-dilutive effect: Three Months Ended Six Months Ended (in thousands) June 30, June 30, 2020 2019 2020 2019 Weighted-average anti-dilutive common shares resulting from options 898 1,124 944 894 Weighted-average anti-dilutive common shares resulting from warrants 8,342 277 8,342 257 Weighted-average anti-dilutive common shares resulting from convertible loans 3,243 333 3,243 333 12,483 1,734 12,529 1,484 |
Warrant Liabilities (Tables)
Warrant Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Warrant Liabilities | |
Schedule of fair value of warrant liabilities by Level 3 inputs | The following table provides a roll forward of the fair value of our warrant liabilities, the fair value of which was determined by Level 3 inputs for the six months ended June 30, 2020 (in thousands): Fair value, December 31, 2019 $ 320 Issuance of the January 2020 Warrants 1,654 Change in fair value (1) 923 Reclassification of warrants to additional paid-in capital (2,897) Fair value, June 30, 2020 $ — (1) Recognized as non-cash loss on changes in fair value of warrants in the condensed statement of operations and comprehensive loss. |
Schedule of weighted-average key assumptions used to calculate the fair value of the warrants | The warrant liability associated with the January 2020 Warrants was classified within Level 3 of the fair value hierarchy. The following table presents the weighted-average key assumptions used to calculate the fair value of the January 2020 Warrants: As of March 3,2020 January 7, 2020 Expected volatility 124 % 121 % Risk-free interest rate 0.8 % 1.6 % Dividend yield — — Expected term (in years) 4.9 5.0 Weighted-average fair value per share warrant $ 0.26 $ 0.19 The warrant liability associated with the August 2019 Warrants was classified within Level 3 of the fair value hierarchy. The following table presents the weighted-average key assumptions used to calculate the fair value of the August 2019 Warrants: As of March 3,2020 December 31, 2019 Expected volatility 124 % 125 % Risk-free interest rate 0.8 % 1.7 % Dividend yield — — Expected term (in years) 4.5 4.6 Weighted-average fair value per share warrant $ 0.21 $ 0.11 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Components of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Organization and Summary of Significant Accounting Policies | ||
Raw materials and supplies | $ 532 | $ 563 |
Finished goods | 437 | 435 |
Total inventories | $ 969 | $ 998 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Summary of Activity Product Returns and Discounts and Rebates (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Balance at December 31, 2019 | $ 809 |
Provision | 53 |
Payments/credits | (798) |
Balance at June 30, 2020 | 64 |
Product Returns Allowance [Member] | |
Balance at December 31, 2019 | 721 |
Provision | 28 |
Payments/credits | (709) |
Balance at June 30, 2020 | 40 |
Discounts and Rebates Allowance [Member] | |
Balance at December 31, 2019 | 88 |
Provision | 25 |
Payments/credits | (89) |
Balance at June 30, 2020 | 24 |
Allowance for Doubtful Accounts [Member] | |
Balance at December 31, 2019 | 63 |
Provision | 14 |
Payments/credits | (12) |
Balance at June 30, 2020 | $ 65 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Summary of Maturities of Operating Lease (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Organization and Summary of Significant Accounting Policies | |
2020 | $ 155 |
2021 | 156 |
Total minimum lease payments (base rent) | 311 |
Less: imputed interest | (19) |
Total operating lease liabilities | $ 292 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020USD ($)segment | Dec. 31, 2019USD ($) | |
Schedule of Organization and Summary of Significant Accounting Policies | ||
Number of Operating Segments | segment | 1 | |
Substantial Doubt about Going Concern, Management's Evaluation | Going concern assessmentWe assess going concern uncertainty in our condensed financial statements to determine if we have sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued or available to be issued, which is referred to as the "look-forward period" as defined by Accounting Standard Update ("ASU") No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to us, we will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, we make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent we deem probable those implementations can be achieved and we have the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15.Based upon the above assessment, we concluded that, at the date of filing the financial statements in this Quarterly Report on Form 10-Q for the six months ended June 30, 2020, we did not have sufficient cash to fund our operations for the next 12 months without additional funds and, therefore, there is substantial doubt about our ability to continue as a going concern within 12 months after the date the financial statements were issued. | |
Cash and Cash Equivalents, at Carrying Value | $ 5,498 | $ 5,223 |
Fair Value, Recurring [Member] | Money Market Funds [Member] | ||
Schedule of Organization and Summary of Significant Accounting Policies | ||
Cash and Cash Equivalents, at Carrying Value | $ 5,300 | $ 4,900 |
Stock Plans - Stock-based compe
Stock Plans - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | $ 79 | $ 350 | $ (5) | $ 486 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | 0 | 14 | 0 | 91 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | $ 79 | $ 336 | $ (5) | $ 395 |
Stock Plans - Fair value of sto
Stock Plans - Fair value of stock options (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Plans | ||||
Weighted-average risk-free interest rate | 0.40% | 2.10% | 0.40% | 2.20% |
Expected dividend payments | $ 0 | $ 0 | $ 0 | $ 0 |
Expected holding period (years) | 5 years 9 months 18 days | 5 years 10 months 24 days | 5 years 9 months 18 days | 5 years 4 months 24 days |
Weighted-average volatility factor | 1.04% | 0.93% | 1.04% | 0.94% |
Estimated forfeiture rates for options granted | 28.00% | 21.00% | 28.00% | 21.00% |
Stock Plans - Option activity (
Stock Plans - Option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Stock Plans | ||
Number of options outstanding at Beginning of year | 1,192,000 | |
Shares, Granted | 50,000 | |
Shares, Forfeited or expired | (324,000) | |
Number of Options and Awards outstanding at end of year | 918,000 | 1,192,000 |
Shares, Exercisable at end of year | 824,000 | |
Weighted Average Exercise Price, Outstanding at Beginning of year | $ 6.23 | |
Weighted Average Exercise Price, Granted | 0.28 | |
Weighted Average Exercise Price,Forfeited or expired | 1.88 | |
Weighted Average Exercise Price, Outstanding at End of year | 7.44 | $ 6.23 |
Weighted Average Exercise Price, Exercisable at end of year | $ 8.19 | |
Weighted Average Remaining Contractual Term, Outstanding (Years) | 7 years | 7 years 10 months 24 days |
Weighted Average Remaining Contractual Term, Exercisable at end of year | 6 years 9 months 18 days | |
Aggregate Intrinsic Value, Outstanding at End of year | $ 1 |
Stock Plans - Additional Inform
Stock Plans - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Weighted-average period for recognizing non-vested stock option | 1 year 9 months 18 days |
Employee Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 39,000 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Amount of weighted-average anti-dilutive common shares | 12,483 | 1,734 | 12,529 | 1,484 |
Employee Stock Option | ||||
Amount of weighted-average anti-dilutive common shares | 898 | 1,124 | 944 | 894 |
Warrant | ||||
Amount of weighted-average anti-dilutive common shares | 8,342 | 277 | 8,342 | 257 |
Convertible loans | ||||
Amount of weighted-average anti-dilutive common shares | 3,243 | 333 | 3,243 | 333 |
Molteni Purchase Agreement (Det
Molteni Purchase Agreement (Details) $ in Millions | Mar. 21, 2018EUR (€) | Mar. 21, 2018USD ($) | Aug. 31, 2018EUR (€) | Aug. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2020USD ($) | Aug. 31, 2018USD ($) |
Purchase Agreement | |||||||
Proceeds from Sale of Productive Assets | € 2,000,000 | $ 2.4 | |||||
Estimated Selling Price | $ 1.4 | ||||||
Amount Received Under Amendment To Purchase Agreement | € 950,000 | $ 1.1 | |||||
Convertible Debt | 550,000 | $ 0.6 | |||||
Revenue recognized | € 2,000,000 | $ 2.3 | $ 0.3 | ||||
Intellectual Property [Member] | |||||||
Purchase Agreement | |||||||
Finite-Lived Intangible Assets, Translation and Purchase Accounting Adjustments | $ 1 |
Debt Agreements (Details)
Debt Agreements (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 20, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Mar. 31, 2018 |
Loan proceeds | $ 654 | $ 0 | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 31,144,386 | 31,144,386 | ||||||||
Gain on debt extinguishment | $ 0 | $ (65) | $ (65) | |||||||
Molteni Loan | ||||||||||
Conversion Price, (in dollars per share) | $ 0.225 | $ 0.225 | ||||||||
Gain on debt extinguishment | $ 300 | |||||||||
Increase in repayment of long term debt | $ 300 | |||||||||
Long-term Debt | $ 4,000 | |||||||||
Debt Conversion, Converted Instrument, Shares Issued | 3,422,777 | |||||||||
Horizon Loan | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.20 | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 6,667 | |||||||||
Conversion Price, (in dollars per share) | $ 7.20 | |||||||||
Long-term Debt | $ 2,400 | |||||||||
Horizon and Molteni Loan | ||||||||||
Debt Instrument, Term | 46 months | |||||||||
Debt Instrument, Description of Variable Rate Basis | one-month LIBOR (floor of 1.10%) plus 8.40% | |||||||||
Debt Instrument Final Payment On Each Loan Tranche Percentage | 5.00% | |||||||||
Amortization of Debt Discount (Premium) | $ 300 | $ 300 | ||||||||
Molteni Purchase Agreement | ||||||||||
Conversion Price, (in dollars per share) | $ 1.50 | $ 1.50 | $ 1.50 | |||||||
Gain on debt extinguishment | $ 100 | |||||||||
Debt Conversion, Converted Instrument, Shares Issued | 448,287 | |||||||||
PPP loans | ||||||||||
Loan proceeds | $ 700 | |||||||||
Loan annual interest rate | 1.00% | |||||||||
Debt Instrument, Term | 6 months |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Equity Offering | |||||
Common Stock shares, Outstanding | 97,223,180 | 97,223,180 | 57,378,794 | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 31,144,386 | 31,144,386 | |||
Proceeds from Issuance of Common Stock | $ 0 | $ 466 | |||
Net proceeds from the exercises of common stock warrants | 7,008 | 710 | |||
Finance costs attributable to issuance of warrants | $ 211 | $ 0 | |||
January 2020 Offering | |||||
Equity Offering | |||||
Stock Issued During Period, Shares, New Issues | 8,700,000 | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 8,700,000 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.25 | ||||
Proceeds from Issuance of Common Stock | $ 1,900 | ||||
Finance costs attributable to issuance of warrants | $ 211,000 |
Warrant Liabilities - Fair valu
Warrant Liabilities - Fair value of warrant liabilities by Level 3 inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 03, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Warrants to purchase shares of common stock | 31,144,386 | 31,144,386 | |||
Fair value of warrant liabilities by Level 3 inputs | |||||
Beginning balance | $ 320 | ||||
Issuance of the January 2020 Warrants | 1,654 | ||||
Change in fair value | $ 0 | $ 0 | 923 | $ 0 | |
Reclassification of warrants to additional paid-in capital | (2,897) | ||||
Ending balance | $ 0 | $ 0 | |||
Warrant | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Warrants to purchase shares of common stock | 11,552,314 |
Warrant Liabilities - Weighted-
Warrant Liabilities - Weighted-average key assumptions (Details) | Jun. 03, 2020 | Mar. 03, 2020 | Jan. 07, 2020 | Dec. 31, 2019 |
January 2020 Private Placement Warrant | Expected volatility | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 124 | 121 | ||
January 2020 Private Placement Warrant | Risk-free interest rate | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 0.8 | 1.6 | ||
January 2020 Private Placement Warrant | Dividend yield | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 0 | 0 | ||
January 2020 Private Placement Warrant | Expected term (in years) | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 4.9 | 5 | ||
January 2020 Private Placement Warrant | Weighted-average fair value per share warrant | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 0.26 | 0.19 | ||
August 2019 Placement Warrants | Expected volatility | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 124 | 125 | ||
August 2019 Placement Warrants | Risk-free interest rate | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 0.8 | 1.7 | ||
August 2019 Placement Warrants | Dividend yield | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 0 | 0 | ||
August 2019 Placement Warrants | Expected term (in years) | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 4.5 | 4.6 | ||
August 2019 Placement Warrants | Weighted-average fair value per share warrant | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding | 0.21 | 0.11 |