10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File No. 001-31326

SEVION THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	84-1368850
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

10210 Campus Point Drive, Suite 150

San Diego, CA 92121
(Address of principal executive offices)

(858) 909-0749
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes:x No:¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes: x No:¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes: ¨ No:x

20,636,847 shares of the issuer’s common stock, par value $0.01 per share, were outstanding as of November 1, 2016.

SEVION THERAPEUTICS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

			Page
PART I.	FINANCIAL INFORMATION		1
Item 1.		Financial Statements (Unaudited)	1
CONDENSED CONSOLIDATED BALANCE SHEETS as of September 30, 2016 and June 30, 2016			2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Three Months Ended September 30, 2016 and 2015			3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY  For the Three Months Ended September 30, 2016			4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  For the Three Months Ended September 30, 2016 and 2015			5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL  STATEMENTS			6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Overview			13
Liquidity and Capital Resources			16
Changes to Critical Accounting Policies and Estimates			16
Results of Operations			17
Off-Balance Sheet Arrangements			18
Item 3.		Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.		Controls and Procedures	19
PART II.	OTHER INFORMATION		21
Item 1.		Legal Proceedings	21
Item 1A.		Risk Factors	21
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.		Defaults Upon Senior Securities	36
Item 4.		Mine Safety Disclosures	36
Item 5.		Other Information	36
Item 6.		Exhibits	36
SIGNATURES			37

i 

PART I. FINANCIAL INFORMATION.

Item 1. Financial Statements (Unaudited).

Certain information and footnote disclosures required under United States generally accepted accounting principles have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. However, Sevion Therapeutics, Inc., a Delaware corporation, and its wholly owned subsidiaries, Senesco, Inc., a New Jersey corporation and Fabrus, Inc., a Delaware corporation (collectively, “Sevion” or the “Company”), believe that the disclosures are adequate to assure that the information presented is not misleading in any material respect.

The results of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the entire fiscal year.

1

SEVION THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

	September 30,			June 30,
	2016			2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	287,064		$	810,808
Prepaid expenses and other current assets		88,847			171,820
Total Current Assets		375,911			982,628
Equipment, furniture and fixtures,  net		80,919			92,554
Acquired research and development		6,500,000			8,100,000
Security deposits		55,770			50,770
TOTAL ASSETS	$	7,012,600		$	9,225,952
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	144,874		$	90,305
Accrued expenses		316,290			256,376
Other current liabilities		6,106			22,310
Total Current Liabilities		467,270			368,991
Warrant and stock right liabilities		319,546			956,575
Deferred tax liability		2,600,000			3,240,000
Other liabilities		-			99,728
TOTAL LIABILITIES		3,386,816			4,665,294
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $0.01 par value, authorized 1,228,500 shares
Series C 235,837 shares issued and 235,004 shares outstanding,  (liquidation preference of $2,350 at September 30, 2016 and June 30, 2016)		2,350			2,350
Series A 10,297 shares issued and 380 shares outstanding  (liquidation preference of $399,000 and $389,500 at September 30, 2016 and June 30, 2016, respectively)		4			4
Common stock, $0.01 par value, authorized 500,000,000 shares, issued and outstanding 20,496,385  at September 30, 2016 and June 30, 2016, respectively		204,964			204,964
Capital in excess of par		119,991,604			119,983,399
Accumulated deficit		(116,573,138	)		(115,630,059	)
Total Stockholders' Equity		3,625,784			4,560,658
TOTAL LIABILITIES AND STOCKHOLDERS'  EQUITY	$	7,012,600		$	9,225,952

See Notes to Condensed Consolidated Financial Statements

2

SEVION THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

	Three Months Ended September 30,
	2016			2015
Licensing Revenue	$	-		$	37,500
Operating expenses:
General and administrative		480,020			587,273
Research and development		280,240			601,583
Impairment of acquired R&D		1,600,000			-
Gain on Sale of patents		(149,728	)		-
Total operating expenses		2,210,532			1,188,856
Loss from operations		(2,210,532	)		(1,151,356	)
Other non-operating income (expense)
Change in fair value of stock right		428,315			22,334
Change in fair value of warrant liability		208,714			948,561
Interest income (expense) - net		(74	)		(282	)
Net loss before income tax benefit		(1,573,577	)		(180,743	)
Income tax benefit		640,000			-
Net loss		(933,577	)		(180,743	)
Preferred dividends		(9,502	)		(148,369	)
Loss applicable to common shares		(943,079	)		(329,112	)
Other comprehensive loss		-			-
Comprehensive loss	$	(943,079	)	$	(329,112	)
Basic and diluted net loss per common share	$	(0.05	)	$	(0.02	)
Basic and diluted weighted-average number  of common shares outstanding		20,496,385			20,006,451

See Notes to Condensed Consolidated Financial Statements

3

SEVION THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016

(unaudited)

									Capital in Excess		Accumulated			Stockholders'
	Preferred Stock				Common Stock				of Par Value		Deficit			Equity
	Shares		Amount		Shares		Amount
Balance at June 30, 2016		235,384	$	2,354		20,496,385	$	204,964	$	119,983,399	$	(115,630,059	)	$	4,560,658
Stock-based compensation		-		-		-		-		8,205		-			8,205
Dividends accrued and unpaid at Sept 30, 2016		-		-		-		-		-		(9,502	)		(9,502	)
Net loss		-		-		-		-		-		(933,577	)		(933,577	)
Balance at Sept 30, 2016	$	235,384	$	2,354	$	20,496,385	$	204,964	$	119,991,604	$	(116,573,138	)	$	3,625,784

See Notes to Condensed Consolidated Financial Statements

4

SEVION THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Three Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(933,577	)	$	(180,743	)
Adjustments to reconcile net loss to net cash used in operating activities:
Noncash income related to change in fair value
- stock right		(428,315	)		(22,334	)
- warrant liability		(208,714	)		(948,561	)
Gain on sale of patents		(149,728	)		-
Stock-based compensation expense		8,205			23,475
Depreciation and amortization		11,635			32,093
Impairment of aquired R&D		1,600,000			-
Deferred tax liability reduction for impairment of acquired R&D		(640,000	)		-
Deferred rent		(16,204	)		(14,160	)
(Increase) decrease in operating assets:
Prepaid expenses and other current assets		82,973			95,814
Other Asset		(5,000	)		-
Increase (decrease) in operating liabilities:
Accounts payable		54,569			(57,677	)
Accrued expenses		50,412			(22,561	)
Deferred revenue		-			(37,500	)
Net cash used in operating activities		(573,744	)		(1,132,154	)
Cash flows from investing activities:
Proceeds from sale of patents		50,000			-
Net cash provided by investing activities		50,000			-
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants, net and exercise of warrants and options		-			1,152,397
Net cash provided by financing activities		-			1,152,397
Net (decrease) increase in cash and cash equivalents		(523,744	)		20,243
Cash and cash equivalents at beginning of period		810,808			3,334,626
Cash and cash equivalents at end of period	$	287,064		$	3,354,869
Supplemental disclosure of non-cash transactions:
Conversion of preferred stock into common stock	$	-		$	6,075
Allocation of equity proceeds to warrants	$	-		$	559,261
Allocation of equity proceeds to stock rights	$	-		$	142,854
Allocation of preferred stock proceeds to beneficial conversion feature	$	-		$	135,701
Dividends accrued on preferred stock	$	9,502		$	12,668

See Notes to Condensed Consolidated Financial Statements

5

SEVION THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 - Basis of Presentation:

The financial statements included herein have been prepared by Sevion Therapeutics, Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting solely of those which are of a normal recurring nature, necessary to present fairly its financial position as of September 30, 2016 and the results of its operations for the three months ended September 30, 2016 and cash flows for the three months ended September 30, 2016.

Interim results are not necessarily indicative of results for the full fiscal year.

Note 2 – Liquidity:

As shown in the accompanying condensed consolidated financial statements, the Company has a history of losses with an accumulated deficit of $116,573,138 and has generated minimal revenues by licensing its technology to companies willing to share in its development costs. In addition, the Company’s technology may not be ready for commercialization for several years. The Company expects to continue to incur losses for the next several years because it anticipates that its expenditures on research and development and administrative activities will significantly exceed its revenues during that period. The Company cannot predict when, if ever, it will become profitable.

Given the Company’s limited capital resources, management recommended to the Company’s Board of Directors that certain executive level salaries be reduced by upwards of 80%, staff reductions be effected and that there be a temporary reduction of research and development expenditures to support the Company’s goal of cutting expenses and preserving cash on hand. The Company’s Board of Directors approved this recommendation and the reductions went into effect on March 23, 2016.

As of September 30, 2016, the Company had cash and cash equivalents in the amount of $287,064, which consisted of checking accounts and money market funds. The Company estimates that its cash and cash equivalents as of September 30, 2016 and the $300,000 proceeds received from the issuance of promissory notes on November 10, 2016 to each of a related party, OPKO Health, Inc., and an existing stockholder of the Company, will cover its expenses through January 31, 2017.

The Company will need additional capital to operate and expand its research program and plans to raise additional capital possibly through the placement of debt instruments, equity instruments or any combination thereof. However, the Company may not be able to obtain adequate funds for its operations when needed or on acceptable terms. If the Company is unable to raise additional funds, it will need to do one or more of the following:

6

• license third parties to develop and commercialize products or technologies that it would otherwise seek to develop and commercialize itself;

• seek strategic alliances or business combinations;

• attempt to sell the Company;

• cease operations; or

• declare bankruptcy.

These conditions raise substantial doubt about our ability to continue as a going concern.  Consequently, the audit reports prepared by our independent registered public accounting firm relating to our consolidated financial statements for the years ended June 30, 2016, 2015 and 2014 include an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. These interim consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 3 – Intangibles:

The Company assesses the impairment in value of intangible assets whenever events or circumstances indicate that their carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include the following:

• significant negative industry trends;

• significant underutilization of the assets;

• significant changes in how the Company uses the assets or its plans for their use; and

• changes in technology and the appearance of competing technology.

If a triggering event occurs and if the Company's review determines that the future undiscounted cash flows related to the groups, including these assets, will not be sufficient to recover their carrying value, the Company will reduce the carrying values of these assets down to the Company’s estimate of fair value.

Due to the decrease in the market value of the Company at September 30, 2016, the Company determined that there was a triggering event that required the Company to review if there had been an impairment to the Acquired Research and Development in the amount of $8,100,000 as of September 30, 2016. The Company first evaluated the assumptions utilized in establishing the value allocated to the Acquired Research and Development which had been updated in the fourth quarter of fiscal 2016. Based upon the evaluation, the Company determined that an impairment existed. The Company measured the enterprise value for purposes of the Step 2 measurement of Intangibles. The Company concluded that there was an impairment based on the significant change in the Company’s market value during the period. As a result of this evaluation, the Company determined that there was an impairment to the Acquired Research and Development as of September 30, 2016 in the amount of $1,600,000.

Note 4 - Loss Per Share:

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of the Company’s Common Stock assumed to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional shares of Common Stock that would have been outstanding if the potential shares of Common Stock had been issued and if the additional shares of Common Stock were dilutive.

For all periods presented, basic and diluted loss per share are the same, as any additional Common Stock equivalents would be anti-dilutive. Potentially dilutive shares of Common Stock have been excluded from the calculation of the weighted average number of dilutive shares of Common Stock as follows:

7

	September 30,
	2016		2015
Common Stock to be issued upon conversion of convertible preferred stock - Series A		506,666		506,666
Common Stock to be issued upon conversion of convertible preferred stock - Series C		2,350,040		2,350,040
Outstanding warrants		8,660,915		8,698,634
Outstanding options		1,915,338		1,534,088
Total potentially dilutive shares of Common Stock		13,432,959		13,089,428

Note 5 – Stock-Based Compensation:

The terms and vesting schedules for share-based awards vary by type of grant and the employment status of the grantee. Generally, the awards vest based upon time-based conditions or achievement of specified goals and milestones.

The Company did not issue options during the three month period ended September 30, 2016.

Stock option activity under the Company’s 2008 Plan and 1998 Plan for the three months ended September 30, 2016 is summarized as follows:

			Weighted
	Aggregate		Average		Exercise Price
	Number		Exercise Price		Range
Outstanding, June 30, 2016		1,917,238	$	3.29		$  0.22 - $ 108.00
Granted		-	$	-		-
Exercised		-	$	-		-
Cancelled		-	$	-		-
Expired		1,900	$	25.00		$ 25.00
Outstanding, September 30, 2016		1,915,338	$	3.27		$ 0.22 - $ 108
Options exercisable at September 30, 2016		1,855,114	$	3.35

As of September 30, 2016, the aggregate intrinsic value of stock options outstanding was $0 with a weighted-average remaining term of 6.33 years. The aggregate intrinsic value of stock options exercisable at September 30, 2016 was $0, with a weighted-average remaining term of 6.28 years. As of September 30, 2016, the Company has 4,023,362 shares available for future stock option grants.

Stock-based compensation expense for the three months ended September 30, 2016 and September 30, 2015 amounted to $8,205 and $23,475, respectively.

As of September 30, 2016, total stock-based compensation expense not yet recognized related to stock option grants amounted to approximately $21,392 which will be recognized over the next 26 months.

8

Note 6 – Income Taxes:

No provision for income taxes has been made for the three months ended September 30, 2016 and 2015 given the Company’s losses in 2016 and 2015 and available net operating loss carryforwards. A benefit has not been recorded as the realization of the net operating losses is not assured and the timing in which the Company can utilize its net operating loss carryforwards in any year or in total may be limited by provisions of the Internal Revenue Code regarding changes in ownership of corporations.

The deferred tax liability in the amount of $3,240,000 remained in connection with the related Acquired Research and Development from the Company’s acquisition of Fabrus, Inc. in May 2014. Due to the impairment adjustment for the Acquired Research and Development costs, a tax benefit of $640,000 has been recognized for the three month period ended September 30, 2016. Accordingly, the deferred tax liability has been reduced by $640,000 for the quarter ended September 30, 2016, leaving a balance of $2,600,000 as of September 30, 2016.

Note 7 - Fair Value Measurements:

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2016 and June 30, 2016:

	Carrying		Fair Value Measurement at Sept 30, 2016
	Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	287,064	$	287,064	$	-	$	-
Warrant Liabilities	$	319,546	$	-	$	-	$	319,546

	Carrying		Fair Value Measurement at June 30, 2016
	Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	810,808	$	810,808	$	-	$	-
Warrant Liabilities	$	956,575	$	-	$	-	$	956,575

The following table summarizes the changes in fair value of the Company’s Level 3 financial investments:

For the Three months ended Sept 30, 2016
Beginning Balance	$	956,575
Change in fair value of warrant liabilities, net		(208,714	)
Change in fair value of stock right, net		(428,315	)
Ending Balance	$	319,546

9

Note 8 – Warrant Liabilities:

The warrant liabilities represent the fair value of Common Stock purchase warrants which have exercise price reset features estimated using a Monte Carlo valuation model. The Company performs a valuation using the Monte Carlo model for such warrants to account for the various possibilities that could occur due to changes in the inputs to the model as a result of contractually-obligated changes. These estimates of the likelihood of completing an equity raise that would meet the criteria to trigger the reset provisions are based on numerous factors, including the remaining term of the financial instruments and the Company’s overall financial condition.

Changes in the unobservable input values would have likely caused material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable input used in the fair value measurement was the estimation of the likelihood of the occurrence of a change to the strike price of the warrants. A significant increase (decrease) in this likelihood would have resulted in a higher (lower) fair value measurement. The assumptions used to value the warrants at the date of issuance and at September 30, 2016 are as follows:

	Date of Issuance			September 30, 2016
Estimated life in years		2.50			1.08
Risk-free interest rate (1)		0.91	%		0.77	%
Volatility		108.60	%		112.70	%
Dividend paid		0.00	%		0.00	%

(1) Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the warrant term.

Note 9 – Series C Preferred Stock.

During the three months ended September 30, 2016, no shares of Series C Preferred Stock were converted into shares of Common Stock.

Note 10 – Gain on Sale of Patents:

On September 8, 2015, the Company entered into an agreement to sell certain Intellectual Property consisting of patents, patent applications and license agreements related to those patents and patent applications. The Company is not actively developing any program related to the Intellectual Property included in the agreement. On July 19, 2016, the transaction closed and the Company received $50,000 cash up front and a 19.9% equity interest in the acquiring company. In addition, the reserve established by the Company in the amount of $99,728 for a potential grant liability was reversed as this was assumed by the acquiring company.

The stock received has been recorded under the cost method of accounting. It was determined that the fair value of the Intellectual Property sold and the equity received were $0. Therefore, there is no asset reflected in the consolidated balance sheet as of September 30, 2016. A gain of $149,728 was recognized as other income due to the cash received and the liability relieved exceeding the fair value of the Intellectual Property sold.

Note 11 – Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued ASU No. 2014- 09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 requires that a company recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). In July 2015, the FASB approved a proposal to defer the effective date of the guidance until annual and interim reporting periods beginning after December 15, 2017. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

10

In June 2014, the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period,” (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” (“ASU 2014-15”). ASU 2014-15 amended existing guidance related to the disclosures about an entity’s ability to continue as a going concern. These amendments are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. These amendments provide guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

In November 2014, the FASB issued ASU No. 2014-16, “Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity,” (“ASU 2014-16”). All entities are required to use what is called the “whole instrument approach” to determine the nature of a host contract in a hybrid financial instrument issued in the form of a share. The guidance requires issuers and investors to consider all of a hybrid instrument’s stated and implied substantive terms and features, including any embedded derivative features being evaluated for bifurcation. The guidance eliminates the “chameleon approach,” under which all embedded features except the feature being analyzed are considered. The guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. The Company has implemented this update and the adoption of this standard does not have a material impact on the Company’s financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes FASB ASC 840. All entities will be required to record operating leases on the balance sheet as assets and liabilities instead of recording only capital (finance) leases on the balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2017. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

11

In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share Based Payment Accounting,” which is intended to simplify several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

Note 12 – Subsequent Events

On November 10, 2016, the Company entered into unsecured promissory notes (the “Notes”) in the aggregate amount of $300,000 with a related part OPKO Health, Inc. and an existing stockholder of the Company. The Notes have customary events of default, an interest rate of 5% per annum with principal and interest due twelve months from their issuance. The Notes are to be used to fund operations.

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q. The discussion and analysis may contain forward-looking statements that are based upon current expectations and entail various risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this report.

Overview

Our Business

The primary business of Sevion Therapeutics, Inc., a Delaware corporation incorporated in 1999, and its wholly-owned subsidiaries, Senesco, Inc., a New Jersey corporation incorporated in 1998, and Fabrus, Inc., a Delaware corporation incorporated in 2011, collectively referred to as “Sevion,” “we,” “us” or “our,” is to build and develop a portfolio of innovative therapeutics, from both internal discovery and acquisition, for the treatment of cancer and immunological diseases. Our product candidates are derived from multiple key proprietary technology platforms, such as: cell-based arrayed antibody discovery, ultralong antibody scaffolds and Chimerasome nanocages.

Antibody Technology

Antibody Genes - We believe our antibody platforms have broad applicability to human health by allowing the discovery of unique monoclonal antibodies against difficult membrane targets in several therapeutic areas. Our antibody therapeutic candidates target the Kv1.3 ion channel, which is important in the pathogenesis of several autoimmune and inflammatory disorders. Other antibodies in our pipeline target important cell surface molecules involved in cancer progression.

Antibody Discovery Technology - Traditional antibody drug discovery methods, such as phage/yeast display or immunization, rely on competitive selection from a pool of antibodies to identify a lead therapeutic candidate. In these methods, a mixture of antibodies compete for binding to a purified target, and the antibody molecules that bind the strongest to the target, referred to as high affinity, are ultimately discovered. While these approaches have led to many successful antibody therapeutics, there are at least two drawbacks. First, the drug targets have been limited to only those proteins which can be easily purified. Many important target classes, including multispanning membrane proteins, cannot be easily purified in functional form. Secondly, when discovery is driven by selection based on competitive binding and affinity, the result is a significant limitation in the number of functional lead antibodies. However, the highest affinity antibody isn’t always the best therapeutic because lower affinity molecules may have unique activities or lower toxicities than the highest affinity binder. Thus, modulating a pathway more subtly to treat disease is often preferable to affecting it in a binary fashion through competition related to high-affinity binding. We believe the technology to identify (i) antibodies against unpurified targets, particularly multispanning membrane proteins like G Protein Coupled Receptors, or GPCR’s, and ion channels, and (ii) a range of antibodies with different affinities and activities will enable us to discover new antibody drug leads compared to existing technologies.

13

We have developed the world’s first “spatially addressed” antibody library with an expansive combinatorial collection of recombinant antibodies in which each well contains a single species of antibody of known concentration, composition and sequence. Our spatially addressed library allows us to evaluate the therapeutic potential of each antibody individually in a non-competitive way and allows direct discovery on the cell surface. This approach is more analogous to traditional small molecule drug discovery and allows us to screen antibodies for functional drug activity as opposed to simple binding properties. This next generation discovery system unlocks epitopes, targets, and functions that are only identifiable in the context of a living cell.

Modified Cow Antibodies - Despite the enormous diversity of the antibody repertoire, human antibodies all have a similar geometry, shape and binding mode. Our scientists have discovered and humanized a novel class of therapeutic antibodies derived from cows that have a highly unusual structure for binding targets. This unique ultralong Complementary Determining Region 3, or CDR3, structural domain found in cow antibodies is comprised of a knob on a stalk that protrudes far from the antibody surface, creating the potential for entirely new types of therapeutic functionality. Using both our humanized spatially addressed antibody library and direct engineering of the knob, we are exploring the ability of utilizing the knob and stalk structure to functionally interact with important therapeutic targets, including GPCRs, ion channels and other multispanning membrane therapeutic targets on the cell surface. Our lead antibody, SVN001, was derived from these efforts.

Antibody Drug Candidates – We have created functional antibodies that modulate GPCRs and ion channels, two classes of targets that have proven difficult to address using conventional antibody discovery approaches.

SVN001 is an ion channel blocking antibody that is potentially the first therapeutic antibody against this target class. SVN001 targets an ion channel, Kv1.3, which has been implicated in a number of different autoimmune disorders including rheumatoid arthritis, psoriasis and multiple sclerosis. By targeting a unique subset of immune cells, SVN001 is not believed to be broadly immunosuppressive, therefore potentially improving the safety profile compared to typical immunosuppressants.

SVN002 is a unique antibody against an oncology target that holds the potential to significantly impact highly metastatic tumors that are resistant to the class of drugs that target vascular endothelial growth factor, or VEGF. The target is highly expressed in clear cell renal carcinoma, where it is associated with poor prognosis.

Other Antibodies - We have discovered fully human antibodies against additional oncology targets, including ErbB2, ErbB3, CXCR4, and GLP1R which have been engineered to have activity in in vitro systems. These cell surface proteins are validated, therapeutically high value targets in the disease fields of oncology and diabetes. Additionally, we have early stage antibodies against other undisclosed targets which were derived from our addressed library platform.

Research Program

We are advancing SVN001 through preclinical development where it has demonstrated potent activity as well as advancing SVN002 through preclinical development. However, given our limited capital resources, we have temporarily reduced our research and development spending on our antibody program until we are able to consummate a strategic transaction or a financing transaction.

14

On December 18, 2014, we entered into a Collaboration Agreement with CNA Development, LLC, an affiliate of Janssen Pharmaceuticals, Inc., or Janssen, to discover antibodies using our spatially addressed library platform. The collaboration, facilitated by the Johnson & Johnson Innovation Center in California, included discovery of antibodies against multiple targets in several therapeutic areas. We and Janssen jointly conducted research on antibodies discovered by us, and Janssen has an option to an exclusive license to develop, manufacture, and commercialize candidates which result from the collaboration. Under the terms of the agreement, we received an up-front payment and research support payments for activities conducted in collaboration with Janssen. The research activities concluded in the third quarter of fiscal 2016 and the final report was transferred to Janssen. For candidates licensed by Janssen, we would be eligible to receive payments upon the achievement of certain development and commercial milestones potentially totaling up to $125 million as well as low single digit royalties on product sales.

In order to pursue the above research initiatives, as well as other research initiatives that may arise, we will use our cash reserves. However, it will be necessary for us to raise a significant amount of additional working capital in the future. If we are unable to raise the necessary funds, we may be required to significantly curtail the future development of some or all of our research initiatives and we will be unable to pursue other possible research initiatives.

Intellectual Property

We continue to develop our intellectual property internally and by in-licensing certain intellectual property related to our antibody platforms and our Chimerasome technology.

15

Liquidity and Capital Resources

Overview

For the three months ended September 30, 2016, net cash of $573,744 was used in operating activities primarily due to a net loss of $933,577 which was reduced by non-cash expense of $176,879 and by changes in operating assets and liabilities in the amount of $182,954.

The $182,954 change in operating assets and liabilities was the result of a decrease in prepaid expenses in the amount of $82,973, an increase in deposits of $5,000 and an increase in accounts payable and accrued expenses in the amount of $104,981 due to the timing of expenses and payments. During the three months ended September 30, 2016, $50,000 was received from investing activities related to the sales of patents.

As of September 30, 2016, our cash balance totaled $287,064, and we had a working capital deficit of $91,359.

Our future liquidity and capital funding requirements will depend on numerous factors, including, but not limited to, the levels and costs of our research and development initiatives. We anticipate that, based upon our current cash balance at September 30, 2016, and the proceeds received from the issuance of unsecured promissory notes, or the Notes, issued on November 10, 2016 to each of a related party, OPKO Health, Inc., and an existing stockholder of the Company, in the aggregate amount of $300,000, we will be able to cover our expenses through January 31, 2017. The Notes have customary events of default and an interest rate of 5% per annum with principal and interest due twelve months from their issuance.

Over the next six months, we plan to fund our research and development and commercialization activities:

· by utilizing our current cash balance and investments,

· by raising capital through the placement of equity or debt instruments,

· by completing a strategic transaction, and / or

· by raising capital through the execution of additional licensing agreements for our technology.

We cannot assure you that we will be able to raise money through any of the foregoing transactions on favorable terms, if at all.

Changes to Critical Accounting Policies and Estimates

Prior to the fourth quarter of fiscal 2015, certain patent related costs were capitalized. We concluded, based on historical write offs of patent cost, that the future beneficial value of our patent assets were uncertain and as such made a change to our accounting policy. This change is considered a change in estimate for accounting purposes and is reflected on a prospective basis beginning in the fourth quarter of fiscal 2015.

16

There have been no changes to our critical accounting policies and estimates as set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Results of Operations

Three Months Ended September 30, 2016 andThree Months Ended September 30, 2015

The net loss from operations for the three months ended September 30, 2016 was $2,210,532. The net loss from operations for the three months ended September 30, 2015 was $1,151,356. Such a change represents an increase in net loss of $1,059,176 or 92%. This increase in net loss was the result of impairment of Acquired Research and Development costs partially offset by reduction of expenditures for general and administrative and research and development expenditures due to cost reduction efforts, and by a gain on sale of patents.

Revenue

During the three months ended September 30, 2016, we did not generate revenues.

This compares to $37,500 in revenues generated for the three months ended September 30, 2015

General and Administrative Expenses (000’s)

	Three  Months ended September 30
	2016		2015		Change			%
Payroll and benefits	$	10	$	5	$	5			100.0	%
Professional fees		297		379		(82	)		-21.6	%
Delaware Franchise Tax		74		75		(1	)		-1.3	%
Consultants		21		45		(24	)		-53.3	%
Stock-based compensation		2		12		(10	)		-83.3	%
Other general & administrative expenses		76		71		5			7.0	%
Total G&A	$	480	$	587	$	(107	)		-18.2	%

· Professional fees were lower due to a reduction in accounting fees, which were partially offset by increased legal fees.

· Consultant costs decreased as a result of salary reductions with respect to our Chief Executive Officer, who is treated as a consultant rather than an employee, along with salary reductions for other employee to preserve cash.

· Stock-based compensation was lower because options were not issued during the three months ended September 30, 2016.

17

Research and Development Expenses (000’s)

	Three Months ended September 30
	2016		2015		Change			%
Payroll		129		281		(152	)		-54.1	%
Patent Costs		32		112		(80	)		-71.4	%
Facility Rent		86		92		(6	)		-6.5	%
Research Supplies		7		36		(29	)		-80.6	%
Depreciation		12		32		(20	)		-62.5	%
Stock-based compensation		7		11		(4	)		-36.4	%
Other research and development		7		38		(31	)		-81.6	%
Total research and development	$	280	$	602	$	(322	)		-53.5	%

Payroll and benefits were lower due to a reduction in headcount and salary cuts for the Company’s Fabrus subsidiary during the three months ended September 30, 2016.

· Patent costs were lower for the three months ended September 30 in 2016 than the three months ended 2015 due to cost reduction efforts.

· Research supplies were lower because we have drastically reduced research and development efforts in an attempt to cut our expenses and preserve cash on hand.

· Depreciation was lower because certain assets were fully depreciated prior to the three months ended September 30, 2016.

· Stock-based compensation was lower primarily because options were not issued during the three months ended September 30, 2016.

· Other research and development expenses decreased because we have drastically reduced our research efforts in an attempt to cut expenses and preserve our cash on hand.

Contractual Obligations and Contingent Liabilities

During the three months ended September 30, 2016, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

Off Balance-Sheet Arrangements

We do not have any off balance-sheet arrangements.

18

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Foreign Currency Risk

Our financial statements and all of our contracts are denominated in United States dollars. Therefore, we believe that fluctuations in foreign currency exchange rates will not result in any material adverse effect on our financial condition or results of operations. In the event we derive a greater portion of our revenues from international operations or in the event a greater portion of our expenses are incurred internationally and denominated in a foreign currency, then changes in foreign currency exchange rates could affect our results of operations and financial condition.

Interest Rate Risk

Our exposure to market risks for interest rate changes is not significant. Interest rates on our short-term debt are subject to change, however, the effect of interest rate changes would not be material. We invest in high-quality financial instruments, primarily money market funds, with an effective duration of the portfolio of less than one year, which we believe are subject to limited credit risk. We currently do not hedge our interest rate exposure. Due to the short-term nature of our investments, we do not believe that we have any material exposure to interest rate risk arising from our investments.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

The principal executive officer and principal financial officer have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2016. Based on that evaluation, management has concluded that as of September 30, 2016, our disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting as noted in the Company’s Form 10-K for the year ended June 30, 2016 as filed with the SEC on October 13, 2016. The material weakness identified by management relates to the review of the accounting and calculation surrounding its equity-linked financial instruments which resulted in material adjustments to our financial statements. The material weakness has not yet been remediated. Management is committed to remediate its control deficiencies that constitute the material weaknesses by implementing changes to our internal control over financial reporting and will continue to review and make the changes necessary in order to improve the overall effectiveness of our internal controls over financial reporting. In addition, management has commenced steps to remediate the material weakness identified and to adequately and appropriately review all equity-linked accounting instruments and related accounting issues. Notwithstanding the material weaknesses that existed as of June 30, 2016 and September 30, 2016, our principal executive officer and principal financial officer have concluded that the financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material aspects, the financial position, results of operations and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America.

19

(b) Changes in internal controls.

As a result of the material weaknesses described above, there were changes (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) in internal control over financial reporting during the three month period ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. Management will continue to evaluate internal controls for effective remediation of the identified material weakness.

20

PART II. OTHER INFORMATION.

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

The more prominent risks and uncertainties inherent in our business are described below. However, additional risks and uncertainties may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations may suffer.

Risks Related to Our Business

Recurring losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and we may not be able to continue as a going concern.

Our recurring losses from operations and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and as a result, our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated financial statements for the fiscal year ended June 30, 2015. Substantial doubt about our ability to continue as a going concern may create negative reactions to the price of the common shares of our stock and we may have a more difficult time obtaining financing.

We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.

Based upon cash on hand as of September 30, 2016 and the proceeds from the issuance of the Notes, we believe we have enough cash to fund operations through January 31, 2017.

We have a limited operating history and have incurred substantial losses and expect to incur future losses.

We are a development stage biotechnology company with a limited operating history and limited assets and capital. We have incurred losses each year since inception and had an accumulated deficit of $116,573,138 at September 30, 2016. We have generated minimal revenues by licensing our technology for certain crops to companies willing to share in our development costs. In addition, our technology may not be ready for commercialization for several years. We expect to continue to incur losses for the next several years because we anticipate that our expenditures on research and development and administrative activities will significantly exceed our revenues during that period. We cannot predict when, if ever, we will become profitable.

21

We will need additional capital to fund our operations until we are able to generate a profit.

Our operations to date have required significant cash expenditures. Our future capital requirements will depend on the results of our research and development activities, preclinical and clinical studies, and competitive and technological advances.

We will need to obtain more funding in the future through collaborations or other arrangements with research institutions and corporate partners, or public and private offerings of our securities, including debt or equity financing. We may not be able to obtain adequate funds for our operations from these sources when needed or on acceptable terms. Future collaborations or similar arrangements may require us to license valuable intellectual property to, or to share substantial economic benefits with, our collaborators. If we raise additional capital by issuing additional equity or securities convertible into equity, our stockholders may experience dilution and our share price may decline. Any debt financing may result in restrictions on our spending.

If we are unable to raise additional funds, we will need to do one or more of the following:

· provide licenses to third parties to develop and commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves;

· seek strategic alliances or business combinations;

· attempt to sell our company;

· cease operations; or

· declare bankruptcy.

We believe that at the projected rate of spending and with proceeds from the Notes, we should have sufficient cash to maintain our present operations through January 31, 2017.

If we are unable to successfully remediate the material weakness in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

In connection with the audit of our fiscal year 2016 consolidated financial statements, our auditors noted a material weakness in our internal controls, principally relating to the review of the accounting and calculation surrounding our equity-linked financial instruments. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting that results in more than reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. We cannot assure that any measures that we take to correct this material weakness will fully remediate the deficiencies or material weakness described above. We also cannot assure you that we have identified all of our existing significant deficiencies and material weaknesses, or that we will not in the future have additional significant deficiencies or material weaknesses.

We may be adversely affected by the current economic environment.

Our ability to obtain financing, invest in and grow our business, and meet our financial obligations depends on our operating and financial performance, which in turn is subject to numerous factors. In addition to factors specific to our business, prevailing economic conditions and financial, business and other factors beyond our control can also affect our business and ability to raise capital. We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

22

Materials necessary to manufacture some of our compounds currently under development may not be available on commercially reasonable terms, or at all, which may delay our development and commercialization of these compounds.

Some of the materials necessary for the manufacture of our compounds under development may, from time to time, be available either in limited quantities, or from a limited number of manufacturers, or both. Our contract manufacturers need to obtain these materials for our preclinical studies and clinical trials and, potentially, for commercial distribution when and if we obtain marketing approval for these compounds. Suppliers may not sell us these materials at the time we need them or on commercially reasonable terms. If we are unable to obtain the materials needed to conduct our preclinical studies and clinical trials, product testing and potential regulatory approval could be delayed, adversely affecting our ability to develop the product candidates. Similarly, if we are unable to obtain critical manufacturing materials after regulatory approval has been obtained for a product candidate, the commercial launch of that product candidate could be delayed or there could be a shortage in supply, which could materially affect our ability to generate revenues from that product candidate. If suppliers increase the price of manufacturing materials, the price for one or more of our products may increase, which may make our products less competitive in the marketplace. If it becomes necessary to change suppliers for any of these materials or if any of our suppliers experience a shutdown or disruption at the facilities used to produce these materials, due to technical, regulatory or other reasons, it could harm our ability to manufacture our products.

  We depend on a limited number of technologies and, if our technologies are not commercially successful, we will have no alternative source of revenue.

Our primary business is the development and licensing of technology to discover and engineer monoclonal antibodies. Our future revenue and profitability critically depend upon our ability, or our licensees’ ability, to successfully develop apoptosis and senescence gene technology and later license or market such technology. We have conducted certain preliminary cell-line and animal experiments, which have provided us with data upon which we have designed additional research programs. However, we cannot give any assurance that our technology will be commercially successful or economically viable for any therapeutic application.

In addition, no assurance can be given that adverse consequences might not result from the use of our technology such as the development of negative effects on patients that receive our product candidates. Our failure to obtain market acceptance of our technology or the failure of our current or potential licensees to successfully commercialize such technology would have a material adverse effect on our business.

  We outsource much of our research and development activities and, if we are unsuccessful in maintaining our alliances with these third parties, our research and development efforts may be delayed or curtailed.

We rely on third parties to perform much of our research and development activities. At this time, we have limited internal capabilities to perform our own research and development activities. Accordingly, the failure of third party research partners to perform under agreements entered into with us, or our failure to renew important research agreements with these third parties, may delay or curtail our research and development efforts.

23

We have significant future capital needs and may be unable to raise capital when needed, which could force us to delay or reduce our research and development efforts.

As of September 30, 2016, we had a cash balance of $287,064 and working capital deficit of $91,359. Using our available reserves as of September 30, 2016 and proceeds from the Notes, we believe that we can operate according to our current business plan through January 31, 2017.

To date, we have generated minimal revenues and anticipate that our operating costs will exceed any revenues generated over the next several years. Therefore, we will be required to raise additional capital in the future in order to operate in accordance with our current business plan, and this funding may not be available on favorable terms, if at all. If we are unable to raise additional funds, we will need to do one or more of the following:

· provide a license to third parties to develop and commercialize our technology that we would otherwise seek to develop and commercialize ourselves;

· seek strategic alliances or business combinations;

· attempt to sell our company;

· cease operations; or

· declare bankruptcy.

Investors may experience dilution in their investment from future offerings of our common stock. For example, if we raise additional capital by issuing equity securities, such an issuance would reduce the percentage ownership of existing stockholders. In addition, assuming the exercise of all options and warrants outstanding and the conversion of the preferred stock into common stock, as of September 30, 2016, we had 457,195,214 shares of common stock authorized but unissued and unreserved, which may be issued from time to time by our board of directors. Furthermore, we may need to issue securities that have rights, preferences and privileges senior to our common stock. Failure to obtain financing on acceptable terms would have a material adverse effect on our liquidity.

Since our inception, we have financed all of our operations through equity and debt financings. Our future capital requirements depend on numerous factors, including:

· the scope of our research and development;

· our ability to attract business partners willing to share in our development costs;

· our ability to successfully commercialize our technology;

· competing technological and market developments;

· our ability to enter into collaborative arrangements for the development, regulatory approval and commercialization of other products; and

· the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights.

  Our business depends upon our patents and proprietary rights and the enforcement of these rights. Our failure to obtain and maintain patent protection may increase competition and reduce demand for our technology.

As a result of the substantial length of time and expense associated with developing products and bringing them to the marketplace in the biotechnology industry, obtaining and maintaining patent and trade secret protection for technologies, products and processes is of vital importance. Our success will depend in part on several factors, including, without limitation:

24

· our ability to obtain patent protection for our technologies and processes;

· our ability to preserve our trade secrets; and

· our ability to operate without infringing the proprietary rights of other parties both in the United States and in foreign countries.

Our success depends in part upon the grant of patents from our pending patent applications. In addition, we have licensed certain antibody technology from The Scripps Research Institute, or Scripps, pursuant to a license agreement dated August 8, 2014. If we are in breach of this license agreement, and Scripps elects to terminate the agreement, this termination could have a material adverse effect to our business in the future.

Although we believe that our technology is unique and that it will not violate or infringe upon the proprietary rights of any third party, we cannot assure you that these claims will not be made or if made, could be successfully defended against. If we do not obtain and maintain patent protection, we may face increased competition in the United States and internationally, which would have a material adverse effect on our business.

Since patent applications in the United States are maintained in secrecy until patents are issued, and since publication of discoveries in the scientific and patent literature tend to lag behind actual discoveries by several months, we cannot be certain that we were the first creator of the inventions covered by our pending patent applications or that we were the first to file patent applications for these inventions.

In addition, among other things, we cannot assure you that:

· our patent applications will result in the issuance of patents;

· any patents issued or licensed to us will be free from challenge and if challenged, would be held to be valid;

· any patents issued or licensed to us will provide commercially significant protection for our technology, products and processes;

· other companies will not independently develop substantially equivalent proprietary information which is not covered by our patent rights;

· other companies will not obtain access to our know-how;

· other companies will not be granted patents that may prevent the commercialization of our technology; or

· we will not incur licensing fees and the payment of significant other fees or royalties to third parties for the use of their intellectual property in order to enable us to conduct our business.

  Our competitors may allege that we are infringing upon their intellectual property rights, forcing us to incur substantial costs and expenses in resulting litigation, the outcome of which would be uncertain.

Patent law is still evolving relative to the scope and enforceability of claims in the fields in which we operate. We are like most biotechnology companies in that our patent protection is highly uncertain and involves complex legal and technical questions for which legal principles are not yet firmly established. In addition, if issued, our patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products, or provide us with any competitive advantage.

25

The PTO and the courts have not established a consistent policy regarding the breadth of claims allowed in biotechnology patents. The allowance of broader claims may increase the incidence and cost of patent interference proceedings and the risk of infringement litigation. On the other hand, the allowance of narrower claims may limit the scope and value of our proprietary rights.

The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered significant problems and costs in protecting their proprietary rights in these foreign countries.

We could become involved in infringement actions to enforce and/or protect our patents. Regardless of the outcome, patent litigation is expensive and time consuming and would distract our management from other activities. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we could because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any patent litigation could limit our ability to continue our operations.

  If our technology infringes the intellectual property of our competitors or other third parties, we may be required to pay license fees or damages.

If any relevant claims of third party patents that are adverse to us are upheld as valid and enforceable, we could be prevented from commercializing our technology or could be required to obtain licenses from the owners of such patents. We cannot assure you that such licenses would be available or, if available, would be on acceptable terms. Some licenses may be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. In addition, if any parties successfully claim that the creation or use of our technology infringes upon their intellectual property rights, we may be forced to pay damages, including treble damages.

  Our security measures may not adequately protect our unpatented technology and, if we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology may be adversely affected.

Our success depends upon know-how, unpatentable trade secrets, and the skills, knowledge and experience of our scientific and technical personnel. We require all employees to disclose and assign to us the rights to their ideas, developments, discoveries and inventions. All of the current employees have also entered into Non-disclosure, Non-competition and Invention Assignment Agreements. We also attempt to enter into similar agreements with our consultants, advisors and research collaborators. We cannot assure you that adequate protection for our trade secrets, know-how or other proprietary information against unauthorized use or disclosure will be available.

We occasionally provide information to research collaborators in academic institutions and request that the collaborators conduct certain tests. We cannot assure you that the academic institutions will not assert intellectual property rights in the results of the tests conducted by the research collaborators, or that the academic institutions will grant licenses under such intellectual property rights to us on acceptable terms, if at all. If the assertion of intellectual property rights by an academic institution is substantiated, and the academic institution does not grant intellectual property rights to us, these events could limit our ability to commercialize our technology.

26

  As we evolve from a company primarily involved in the research and development of our technology into one that is also involved in the commercialization of our technology, we may have difficulty managing our growth and expanding our operations.

As our business grows, we may need to add employees and enhance our management, systems and procedures. We may need to successfully integrate our internal operations with the operations of our marketing partners, manufacturers, distributors and suppliers to produce and market commercially viable products. We may also need to manage additional relationships with various collaborative partners, suppliers and other organizations. Expanding our business may place a significant burden on our management and operations. We may not be able to implement improvements to our management information and control systems in an efficient and timely manner and we may discover deficiencies in our existing systems and controls. Our failure to effectively respond to such changes may make it difficult for us to manage our growth and expand our operations.

  We have no marketing or sales history and depend on third party marketing partners. Any failure of these parties to perform would delay or limit our commercialization efforts.

We have no history of marketing, distributing or selling biotechnology products, and we are relying on our ability to successfully establish marketing partners or other arrangements with third parties to market, distribute and sell a commercially viable product both here and abroad. Our business plan envisions creating strategic alliances to access needed commercialization and marketing expertise. We may not be able to attract qualified sub-licensees, distributors or marketing partners, and even if qualified, these marketing partners may not be able to successfully market human therapeutic applications developed with our technology. If our current or potential future marketing partners fail to provide adequate levels of sales, our commercialization efforts will be delayed or limited and we may not be able to generate revenue.

27

  We will depend on joint ventures and strategic alliances to develop and market our technology and, if these arrangements are not successful, our technology may not be developed and the expenses to commercialize our technology will increase.

In its current state of development, our technology is not ready to be marketed to consumers. We intend to follow a multi-faceted commercialization strategy that involves the licensing of our technology to business partners for the purpose of further technological development, marketing and distribution. We have and are seeking business partners who will share the burden of our development costs while our technology is still being developed, and who will pay us royalties when they market and distribute products incorporating our technology upon commercialization. The establishment of joint ventures and strategic alliances may create future competitors, especially in certain regions abroad where we do not pursue patent protection. If we fail to establish beneficial business partners and strategic alliances, our growth will suffer and the continued development of our technology may be harmed.

  Competition in the human therapeutic industry is intense and technology is changing rapidly. If our competitors market their technology faster than we do, we may not be able to generate revenues from the commercialization of our technology.

There are many large companies working in the therapeutic antibody field and similarly may develop technologies related to antibody discovery. These companies include Genentech, Inc., Amgen, Inc., Biogen Idec, Inc., Novartis AG, Janssen Biotech, Inc., Sanofi-aventis U.S. LLC, Regeneron Pharmaceuticals, Inc., Bristol-Myers Squibb Company, Teva Pharmaceutical Industries Ltd, Pfizer, Inc., Takeda Pharmaceutical Company Limited, Kyawa Hokko Kirin Pharma, Inc., Daiichi Sankyo Company Limited, Astellas Pharma, Inc., Merck & Co. Inc., AbbVie, Inc., Seattle Genetics, Inc., and Immunogen, Inc. Similarly, there are several small companies developing technologies for antibody discovery, including Adimab LLC, X-body Biosciences, Inc., Innovative Targeting Solutions, Inc., Heptares Therapeutics Ltd, Kymab Ltd., and Novimmune SA. Other companies are working on unique scaffolds, including Ablynx NV and ArGen-X N.V.

We may be unable to compete successfully against our current and future competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance for products containing our technology. Many of these competitors have substantially greater financial, marketing, sales, distribution and technical resources than us and have more experience in research and development, clinical trials, regulatory matters, manufacturing and marketing. We anticipate increased competition in the future as new companies enter the market and new technologies become available. Our technology may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors, which will prevent or limit our ability to generate revenues from the commercialization of our technology.

  Our business is subject to various government regulations and, if we or our licensees are unable to obtain regulatory approval, we may not be able to continue our operations.

Use of our technology, if developed for human therapeutic applications, is subject to FDA regulation. The FDA must approve any drug or biologic product before it can be marketed in the United States. In addition, prior to being sold outside of the United States, any of our product candidates must be approved by the regulatory agencies of foreign governments. Prior to filing a new drug application or biologics license application with the FDA, we would have to perform extensive clinical trials, and prior to beginning any clinical trial, we would need to perform extensive preclinical testing which could take several years and may require substantial expenditures.

28

We expect to perform clinical trials in connection with our product candidates, which are subject to FDA approval. Additionally, federal, state and foreign regulations relating to human therapeutic applications developed through biotechnology are subject to public concerns and political circumstances, and, as a result, regulations have changed and may change substantially in the future. Accordingly, we may become subject to governmental regulations or approvals or become subject to licensing requirements in connection with our research and development efforts. We may also be required to obtain such licensing or approval from the governmental regulatory agencies described above, or from state agencies, prior to the commercialization of our human therapeutic technology. If unfavorable governmental regulations are imposed on our technology or if we fail to obtain licenses or approvals in a timely manner, we may not be able to continue our operations.

  Preclinical studies of our product candidates may be unsuccessful, which could delay or prevent regulatory approval.

Preclinical studies may reveal that one or more of our product candidates is ineffective or harmful, and/or may be unsuccessful in demonstrating efficacy and safety of our human therapeutic technology, which would significantly limit the possibility of obtaining regulatory approval for any drug or biologic product manufactured with our technology. The FDA requires submission of extensive preclinical, clinical and manufacturing data to assess the efficacy and safety of potential products. Any delay in receiving approval for any applicable IND from the FDA would result in a delay in the commencement of the related clinical trial. Additionally, we could be required to perform additional preclinical studies prior to the FDA approving any applicable IND. Furthermore, the success of preliminary studies does not ensure commercial success, and later-stage clinical trials may fail to confirm the results of the preliminary studies.

  Our success will depend on the success of our clinical trials of our product candidates.

It may take several years to complete the clinical trials of a product candidate, and failure of one or more of our clinical trials can occur at any stage of testing. We believe that the development of our product candidate involves significant risks at each stage of testing. If clinical trial difficulties and failures arise, our product candidate may never be approved for sale or become commercially viable.

There are a number of difficulties and risks associated with clinical trials. These difficulties and risks may result in the failure to receive regulatory approval to sell our product candidate or the inability to commercialize our product candidate. The possibility exists that:

· we may discover that the product candidate does not exhibit the expected therapeutic results in humans, may cause harmful side effects or have other unexpected characteristics that may delay or preclude regulatory approval or limit commercial use if approved;

· the results from early clinical trials may not be statistically significant or predictive of results that will be obtained from expanded advanced clinical trials;

29

· institutional review boards or regulators, including the FDA, may hold, suspend or terminate our clinical research or the clinical trials of our product candidate for various reasons, including noncompliance with regulatory requirements or if, in their opinion, the participating subjects are being exposed to unacceptable health risks;

· subjects may drop out of our clinical trials;

· our preclinical studies or clinical trials may produce negative, inconsistent or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials; and

· the cost of our clinical trials may be greater than we currently anticipate.

  Clinical trials for our product candidates will be lengthy and expensive and their outcome is uncertain.

Before obtaining regulatory approval for the commercial sales of any product containing our technology, we must demonstrate through clinical testing that our technology and any product containing our technology is safe and effective for use in humans. Conducting clinical trials is a time-consuming, expensive and uncertain process and typically requires years to complete. In our industry, the results from preclinical studies and early clinical trials often are not predictive of results obtained in later-stage clinical trials. Some products and technologies that have shown promising results in preclinical studies or early clinical trials subsequently fail to establish sufficient safety and efficacy data necessary to obtain regulatory approval. At any time during clinical trials, we or the FDA might delay or halt any clinical trial for various reasons, including:

· occurrence of unacceptable toxicities or side effects;

· ineffectiveness of the product candidate;

· negative or inconclusive results from the clinical trials, or results that necessitate additional studies or clinical trials;

· delays in obtaining or maintaining required approvals from institutions, review boards or other reviewing entities at clinical sites;

· delays in patient enrollment; or

· insufficient funding or a reprioritization of financial or other resources.

Any failure or substantial delay in successfully completing clinical trials and obtaining regulatory approval for our product candidates could severely harm our business.

  If our clinical trials for our product candidates are delayed, we would be unable to commercialize our product candidates on a timely basis, which would materially harm our business.

Planned clinical trials may not begin on time or may need to be restructured after they have begun. Clinical trials can be delayed for a variety of reasons, including delays related to:

· obtaining an effective IND or regulatory approval to commence a clinical trial;

· negotiating acceptable clinical trial agreement terms with prospective trial sites;

· obtaining institutional review board approval to conduct a clinical trial at a prospective site;

30

· recruiting qualified subjects to participate in clinical trials;

· competition in recruiting clinical investigators;

· shortage or lack of availability of supplies of drugs for clinical trials;

· the need to repeat clinical trials as a result of inconclusive results or poorly executed testing;

· the placement of a clinical hold on a study;

· the failure of third parties conducting and overseeing the operations of our clinical trials to perform their contractual or regulatory obligations in a timely fashion; and

· exposure of clinical trial subjects to unexpected and unacceptable health risks or noncompliance with regulatory requirements, which may result in suspension of the trial.

We believe that our product candidates have significant milestones to reach, including the successful completion of clinical trials, before commercialization. If we have significant delays in or termination of clinical trials, our financial results and the commercial prospects for our product candidates or any other products that we may develop will be adversely impacted. In addition, our product development costs would increase and our ability to generate revenue could be impaired.

  Any inability to license from third parties their proprietary technologies or processes which we use in connection with the development of our technology may impair our business.

Other companies, universities and research institutions have or may obtain patents that could limit our ability to use our technology in a product candidate or impair our competitive position. As a result, we would have to obtain licenses from other parties before we could continue using our technology in a product candidate. Any necessary licenses may not be available on commercially acceptable terms, if at all. If we do not obtain required licenses, we may not be able to develop our technology into a product candidate or we may encounter significant delays in development while we redesign methods that are found to infringe on the patents held by others.

  We face potential product liability exposure far in excess of our limited insurance coverage.

We may be held liable if any product we or our collaborators develop causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing or sale. Regardless of merit or eventual outcome, product liability claims could result in decreased demand for our product candidates, injury to our reputation, withdrawal of patients from our clinical trials, substantial monetary awards to trial participants and the inability to commercialize any products that we may develop. These claims might be made directly by consumers, health care providers, pharmaceutical companies or others selling or testing our products. We have obtained limited product liability insurance coverage for our clinical trials; however, our insurance may not reimburse us or may not be sufficient to reimburse us for expenses or losses we may suffer. Moreover, if insurance coverage becomes more expensive, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain marketing approval for any of our product candidates, we intend to expand our insurance coverage to include the sale of commercial products, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. On occasion, juries have awarded large judgments in class action lawsuits for claims based on drugs that had unanticipated side effects. In addition, the pharmaceutical and biotechnology industries, in general, have been subject to significant medical malpractice litigation. A successful product liability claim or series of claims brought against us could harm our reputation and business and would decrease our cash reserves.

31

  We depend on our key personnel and, if we are not able to attract and retain qualified scientific and business personnel, we may not be able to grow our business or develop and commercialize our technology.

We are highly dependent on our scientific advisors, consultants and third-party research partners. Our success will also depend in part on the continued service of our key employees and our ability to identify, hire and retain additional qualified personnel in an intensely competitive market. Additionally, we do not have employment agreements with our key employees. We do not maintain key person life insurance on any member of management. The failure to attract and retain key personnel could limit our growth and hinder our research and development efforts.

  Certain provisions of our charter, by-laws, Delaware law and stock plans could make a takeover difficult.

Certain provisions of our certificate of incorporation and by-laws could make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders. Our certificate of incorporation authorizes our board of directors to issue, without stockholder approval, 5,000,000 shares of preferred stock with voting, conversion and other rights and preferences that could adversely affect the voting power or other rights of the holders of our common stock.

In addition, we are subject to the Business Combination Act of the Delaware General Corporation Law which, subject to certain exceptions, restricts certain transactions and business combinations between a corporation and a stockholder owning 15% or more of the corporation’s outstanding voting stock for a period of three years from the date such stockholder becomes a 15% owner. These provisions may have the effect of delaying or preventing a change of control of us without action by our stockholders and, therefore, could adversely affect the value of our common stock.

Furthermore, in the event of our merger or consolidation with or into another corporation, or the sale of all or substantially all of our assets in which the successor corporation does not assume our outstanding equity awards or issue equivalent equity awards, our current equity plans require the accelerated vesting of such outstanding equity awards.

32

Risks Related to Our Common Stock

Penny stock regulations may impose certain restrictions on marketability of our securities.

The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by such rules, the broker dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker dealer must also disclose the commission payable to both the broker dealer and the registered representative, current quotations for the securities and, if the broker dealer is the sole market maker, the broker dealer must disclose this fact and the broker dealer’s presumed control over the market.

Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Broker-dealers must wait two business days after providing buyers with disclosure materials regarding a security before effecting a transaction in such security. Consequently, the “penny stock” rules restrict the ability of broker dealers to sell our securities and affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities, thereby affecting the liquidity of the market for our common stock.

Stockholders should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

· control of the market for the security by one or more broker-dealers that are often related to the promoter or issuer;

· manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

· “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

· excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

· the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market.

33

  Our management and other affiliates have significant control of our common stock and could significantly influence our actions in a manner that conflicts with our interests and the interests of other stockholders.

As of September 30, 2016, our executive officers and directors together beneficially own approximately 17.4% of the outstanding shares of our common stock, assuming the exercise of options and warrants which are currently exercisable or will become exercisable within 60 days of September 30, 2016, held by these stockholders. Additionally, there are five shareholders that each beneficially own more than 5% of the outstanding shares of our common stock. As a result, these stockholders, acting together, will be able to exercise significant influence over matters requiring approval by our stockholders, including the election of directors, and may not always act in the best interests of other stockholders. Such a concentration of ownership may have the effect of delaying or preventing a change in control of us, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.

  A significant portion of our total outstanding shares of common stock may be sold in the market in the near future, which could cause the market price of our common stock to drop significantly.

As of September 30, 2016, we had 20,496,385 shares of our common stock issued and outstanding, 380 shares of Series A convertible preferred stock outstanding which can convert into 506,666 shares of common stock and 235,004 shares of Series C convertible preferred stock outstanding which can convert into 2,350,040 shares of common stock. All of our outstanding shares of common stock are registered pursuant to registration statements on Forms S-1 or S-3 or are either eligible to be sold under Rule 144 of the Securities Act of 1933, as amended, or are in the public float.  In addition, we have registered 4,917,670 shares of our common stock underlying options granted or to be granted under our stock option plans. Consequently, sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, may have a material adverse effect on our stock price.

  Our common stock has a limited trading market, which could limit your ability to resell your shares of common stock at or above your purchase price.

Our common stock is currently quoted on the OTCQB Marketplace, operated by the OTC Markets Group, or OTCQB, and our common stock currently has a limited trading market. We cannot assure you that an active trading market will develop or, if developed, will be maintained. As a result, our stockholders may find it difficult to dispose of shares of our common stock and, as a result, may suffer a loss of all or a substantial portion of their investment.

34

  The market price of our common stock may fluctuate and may drop below the price you paid.

We cannot assure you that you will be able to resell the shares of our common stock at or above your purchase price. The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control. These factors include:

· quarterly variations in operating results;

· the progress or perceived progress of our research and development efforts;

· changes in accounting treatments or principles;

· announcements by us or our competitors of new technology, product and service offerings, significant contracts, acquisitions or strategic relationships;

· additions or departures of key personnel;

· future offerings or resales of our common stock or other securities;

· stock market price and volume fluctuations of publicly-traded companies in general and development companies in particular; and

· general political, economic and market conditions.

For example, during the three months ended September 30, 2016, our common stock traded between $0.08 and $0.22 per share.

  Because we do not intend to pay, and have not paid, any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless the value of our common stock appreciates and they sell their shares.

We have never paid or declared any cash dividends on our common stock, and we intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Therefore, our stockholders will not be able to receive a return on their investment unless the value of our common stock appreciates and they sell their shares.

  Our stockholders may experience substantial dilution as a result of the conversion of convertible preferred stock, the exercise of options and warrants to purchase our common stock, or due to anti-dilution provisions relating to any on the foregoing.

As of September 30, 2016, we have outstanding 380 shares of Series A convertible preferred stock which may convert into 506,666 shares of common stock, 235,004 shares of Series C convertible preferred stock outstanding which can convert into 2,350,040 shares of common stock and warrants to purchase 8,660,915 shares of our common stock. In addition, as of September 30, 2016, we have reserved 5,938,700 shares of our common stock for issuance upon the exercise of options granted or available to be granted pursuant to our stock option plan, all of which may be granted in the future. Furthermore, in connection with the preferred stock agreements, we are required to reserve an additional 4,852,080 shares of common stock. The conversion of the convertible preferred stock and the exercise of these options and warrants will result in dilution to our existing stockholders and could have a material adverse effect on our stock price. The conversion price of the convertible preferred stock is also subject to certain anti-dilution adjustments.

35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

On November 10, 2016, we entered into unsecured promissory notes, or the Notes, in the aggregate amount of $300,000 with each of a related party, OPKO Health, Inc., and an existing stockholder of the Company. The Notes have customary events of default and an interest rate of 5% per annum with principal and interest due twelve months from their issuance. The Notes are to be used to fund operations.

Item 6. Exhibits.

Exhibits.

Exhibit No.	Description
10.01	Form or Promissory Note, dated as of November 10, 2016. (filed herewith).
31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith).
31.2	Certification of principal financial and accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith).
32.1	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350. (furnished herewith).
32.2	Certification of principal financial and accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350. (furnished herewith).
101.1	Financial Statements from the Quarterly Report on Form 10-Q of Sevion Therapeutics, Inc. for the quarter ended September 30, 2016, filed on November 14, 2016, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Stockholder’s Equity; (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements. (filed herewith).

36

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SEVION THERAPEUTICS, INC.
DATE:  November 14, 2016	By:	/s/ David Rector
		David Rector
		Chief Executive Officer
		(Principal Executive Officer)
DATE:  November 14, 2016	By:	/s/ James Schmidt
		James Schmidt
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

37

EX-10.01

Exhibit 10.01

SEVION THERAPEUTICS, INC.

PROMISSORY NOTE

Issuance Date:	November 10, 2016
Maturity Date:	November 10, 2017

For value received, Sevion Therapeutics, Inc., a Delaware corporation (the “Company”) hereby promises to pay the Lender the Principal Amount (each as set forth on the signature page hereto), plus any accrued but unpaid Interest (as defined below). This Note is one of a series of Notes issued to certain investors (this Note, together with such other Notes, shall be collectively referenced herein as the “Notes”) by the Company in an aggregate principal amount of Three Hundred Thousand Dollars ($300,000).

1.       Interest; Payments.

1.1       Simple interest on the unpaid Principal Amount shall accrue at the rate of 5% per annum (“Interest”) and will begin to accrue upon the Issuance Date. Interest shall be calculated based on a 365-day year and charged for the actual number of days elapsed.

1.2       All payments of the Principal Amount and Interest shall be in lawful money of the United States of America. All payments shall be applied first to accrued Interest, and thereafter to the Principal Amount. If any payments on this Note become due on a Saturday, Sunday or a federal public holiday, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing Interest in connection with such payment.

1.3       This Note shall be registered on the books of the Company, which shall be kept by it at its principal office for that purpose and shall be transferable only on said books by the registered Lender hereof in person or by the registered Lender’s duly authorized attorney upon surrender of this Note properly endorsed, and only in compliance with the provisions of the preceding paragraph.

2.       Representations and Warranties of the Company

2.1       Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted.

2.2       Corporate Power. The Company has all requisite corporate power to execute, deliver and to carry out and perform its obligations under the terms of this Note. The Company represents and warrants that, upon the execution and delivery of this Note, this Note will be a valid and binding obligation of the Company, enforceable in accordance with its terms.

3.       Representations And Warranties Of The Lender.

3.1       Authority of Lender. The Lender represents and warrants that it has all necessary right and authority under all applicable provisions of law to execute and deliver this Note.

3.2       No “Bad Actor”. No “bad actor” disqualifying event described in Rule 506(d)(1) of the Act (a “Disqualification Event”) is applicable to the Lender.

4.       Default; Remedies.

4.1       Each of the following shall constitute an event of default (each, an “Event of Default”) under this Note:

(a)       The Company shall fail to pay (i) when due any Principal Amount or Interest payment on the due date hereunder or (ii) any other payment required under the terms of this Note on the date due and such payment shall not have been made within five days of the Company’s receipt of the Lender’s written notice to the Company of such failure to pay;

(b)       The Company shall fail to observe or perform any other covenant, obligation, condition or agreement contained this Note and (i) such failure shall continue for 15 days, or (ii) if such failure is not curable within such 15-day period, but is reasonably capable of cure within 30 days, either (A) such failure shall continue for 30 days or (B) the Company shall not have commenced a cure in a manner reasonably satisfactory to Lender within the initial 15-day period;

(c)       The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any general assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing;

(d)       An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within thirty (30) days) under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company;

(e)       The disposition or encumbrance of the Company’s assets, including, but not limited to, the grant of a license with regard to the Company’s intellectual property; or

(f)       The Company’s stockholders or board of directors affirmatively vote to liquidate, dissolve, or wind up the Company or the Company otherwise ceases to carry on its ongoing business operations.

4.2       Upon the occurrence and during the continuance of any Event of Default, all unpaid Principal Amount on this Note, accrued and unpaid Interest thereon and all other amounts owing hereunder shall, at the option of the Lender, and, upon the occurrence of any Event of Default pursuant to Sections 4.1 (c), (d) or (e) of this Note, automatically, be immediately due, payable and collectible by Lender pursuant to applicable law. Lender shall have all rights and may exercise all remedies available to it under law, successively or concurrently.

5.       Ranking; Covenants. The Notes shall be unsecured and rank on parity with all unsecured indebtedness of the Company existing as of the Issuance Date. At all times while this Note remains outstanding, the Company shall not incur any indebtedness for borrowed money which is either (a) not subordinated to this Note or (b) secured by the assets of the Company.

6.       Prepayment. The Company may prepay the outstanding Principal Amount and any accrued by unpaid Interest under this Note prior to the Maturity Date without the consent of the Lender.

7.       Waiver; Payment Of Fees And Expenses. The Company waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note, and shall pay all costs of collection when incurred, including, without limitation, reasonable attorneys’ fees, costs and other expenses. The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the full extent permitted by law. No delay by Lender shall constitute a waiver, election or acquiescence by it.

8.       Transaction Fees and Expenses. The Company and the Lender shall pay their own costs and expenses in connection with the preparation, execution and delivery of this Note and the other transaction documents.

9.       Cumulative Remedies. Lender’s rights and remedies under this Note shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the UCC, by law or in equity. No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default shall be deemed a continuing waiver of such Event of Default or the waiver of any other Event of Default.

10.       Miscellaneous.

10.1       Governing Law. The terms of this Note shall be construed in accordance with the laws of the State of Delaware, as applied to contracts entered into by Delaware residents within the State of Delaware, and to be performed entirely within the State of Delaware.

10.2       Successors and Assigns; Assignment. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Neither party may assign this Note or delegate any of its rights or obligations hereunder without the written consent of the other party.

10.3       Titles and Subtitles. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting the Note.

10.4       Notices. All notices or other communications required or permitted hereunder shall be in writing and faxed, e-mailed, mailed or delivered to each party at the respective addresses of the parties as set forth in this Section 10.4. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile or electronic mail (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being sent by registered or certified mail, return receipt requested. All communications shall be sent to the Lender at the address, facsimile number, or e-mail address set forth on the signature page hereto, or if to the Company, to it at 10210 Campus Point Drive, Suite 150, San Diego, California 92121, Attn: David Rector (or to such other address or e-mail address as the Lender or the Company by notice to the other party) with a copy (which shall not constitute notice) to Morgan, Lewis & Bockius LLP, 502 Carnegie Center, Princeton, NJ 08540, Attn: Emilio Ragosa, Esq.

10.5       Amendment; Modification; Waiver. This Note (and the other Notes) may be amended, modified or waived with the written consent of the Company and the holders of a majority of the outstanding principal amount of the Notes. Notwithstanding the foregoing, no amendment or waiver of any provision of any Notes (i) shall be affected unless all Notes are treated similarly and not disproportionately, and (ii) shall not be binding on the Company (unless consented to in writing by the Company) if such amendment or waiver would increase the financial obligations of the Company under this Note (regardless of whether such amendment or waiver applies identically to all other Notes).

10.6       Usury. In the event any Interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the Interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of the Principal Amount and applied against the Principal Amount of this Note.

10.7       Counterparts. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[SIGNATURE PAGE TO FOLLOW]

IN WITNESS WHEREOF, the parties hereto have executed this Promissory Note as of the day and year first written above.

LENDER	SEVION THERAPEUTICS, INC.
Signature	Signature
	David Rector
Printed Name	Printed Name
	Chief Executive Officer
Address Line 1	Title
Address line 2
Address line 3 $
Principal Amount

[Signature Page to November 2016 Promissory Note]

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, David Rector, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sevion Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2016	/s/ David Rector
	David Rector
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, James Schmidt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sevion Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2016	/s/ James Schmidt
	James Schmidt
	Chief Financial
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Sevion Therapeutics, Inc. for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof, the undersigned, David Rector, President and Chief Executive Officer, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1)          The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)          The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Sevion Therapeutics, Inc.

Dated: November 14, 2016	/s/ David Rector *
	David Rector
	Chief Executive Officer
	(Principal Executive Officer)

*   A signed original of this written statement required by Section 906 has been provided to us and will be retained by us and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Sevion Therapeutics, Inc. for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof, the undersigned, James Schmidt, Chief Financial Officer, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1)         The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)         The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Sevion Therapeutics, Inc.

Dated: November 14, 2016	/s/ James Schmidt  *
	James Schmidt
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

*   A signed original of this written statement required by Section 906 has been provided to us and will be retained by us and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Sep. 30, 2016	Nov. 01, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Entity Registrant Name	Sevion Therapeutics, Inc.
Entity Central Index Key	0001035354
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	SVON
Entity Common Stock, Shares Outstanding		20,636,847

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Jun. 30, 2016
CURRENT ASSETS:
Cash and cash equivalents	$ 287,064	$ 810,808
Prepaid expenses and other current assets	88,847	171,820
Total Current Assets	375,911	982,628
Equipment, furniture and fixtures, net	80,919	92,554
Acquired research and development	6,500,000	8,100,000
Security deposits	55,770	50,770
TOTAL ASSETS	7,012,600	9,225,952
CURRENT LIABILITIES:
Accounts payable	144,874	90,305
Accrued expenses	316,290	256,376
Other current liabilities	6,106	22,310
Total Current Liabilities	467,270	368,991
Warrant and stock right liabilities	319,546	956,575
Deferred tax liability	2,600,000	3,240,000
Other liabilities	0	99,728
TOTAL LIABILITIES	3,386,816	4,665,294
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, authorized 500,000,000 shares, issued and outstanding 20,496,385 at September 30, 2016 and June 30, 2016, respectively	204,964	204,964
Capital in excess of par	119,991,604	119,983,399
Accumulated deficit	(116,573,138)	(115,630,059)
Total Stockholders' Equity	3,625,784	4,560,658
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	7,012,600	9,225,952
Series A Convertible Preferred stock
STOCKHOLDERS' EQUITY:
Convertible preferred stock	4	4
Series C Convertible Preferred stock
STOCKHOLDERS' EQUITY:
Convertible preferred stock	$ 2,350	$ 2,350

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Jun. 30, 2016
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	500,000,000	500,000,000
Common stock, issued	20,496,385	20,496,385
Common stock, outstanding	20,496,385	20,496,385
Series A Convertible Preferred Stock
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	1,228,500	1,228,500
Preferred stock, shares issued	10,297	10,297
Preferred stock, shares outstanding	380	380
Preferred stock, liquidation preference	$ 399,000	$ 389,500
Series C Convertible Preferred stock
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	1,228,500	1,228,500
Preferred stock, shares issued	235,837	235,837
Preferred stock, shares outstanding	235,004	235,004
Preferred stock, liquidation preference	$ 2,350	$ 2,350

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Licensing Revenue	$ 0	$ 37,500
Operating expenses:
General and administrative	480,020	587,273
Research and development	280,240	601,583
Impairment of acquired R&D	1,600,000	0
Gain on Sale of patents	(149,728)	0
Total operating expenses	2,210,532	1,188,856
Loss from operations	(2,210,532)	(1,151,356)
Other non-operating income (expense)
Change in fair value of stock right	428,315	22,334
Change in fair value of warrant liability	208,714	948,561
Interest income (expense) - net	(74)	(282)
Net loss before income tax benefit	(1,573,577)	(180,743)
Income tax benefit	640,000	0
Net loss	(933,577)	(180,743)
Preferred dividends	(9,502)	(148,369)
Loss applicable to common shares	(943,079)	(329,112)
Other comprehensive loss	0	0
Comprehensive loss	$ (943,079)	$ (329,112)
Basic and diluted net loss per common share	$ (0.05)	$ (0.02)
Basic and diluted weighted-average number of common shares outstanding	20,496,385	20,006,451

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Sep. 30, 2016 - USD ($)	Total	Preferred stock	Common Stock	Capital in Excess of Par Value	Accumulated Deficit
Beginning Balance at Jun. 30, 2016	$ 4,560,658	$ 2,354	$ 204,964	$ 119,983,399	$ (115,630,059)
Beginning Balance (in shares) at Jun. 30, 2016		235,384	20,496,385
Stock-based compensation	8,205	$ 0	$ 0	8,205	0
Stock-based compensation (in shares)		0	0
Dividends accrued and unpaid at Sept 30, 2016	(9,502)	$ 0	$ 0	0	(9,502)
Net loss	(933,577)	0	0	0	(933,577)
Ending Balance at Sep. 30, 2016	$ 3,625,784	$ 2,354	$ 204,964	$ 119,991,604	$ (116,573,138)
Ending Balance (in shares) at Sep. 30, 2016		235,384	20,496,385

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net loss	$ (933,577)	$ (180,743)
Noncash income related to change in fair value
- stock right	(428,315)	(22,334)
- warrant liability	(208,714)	(948,561)
Gain on sale of patents	(149,728)	0
Stock-based compensation expense	8,205	23,475
Depreciation and amortization	11,635	32,093
Impairment of aquired R&D	1,600,000	0
Deferred tax liability reduction for impairment of acquired R&D	(640,000)	0
Deferred rent	(16,204)	(14,160)
(Increase) decrease in operating assets:
Prepaid expenses and other current assets	82,973	95,814
Other Asset	(5,000)	0
Increase (decrease) in operating liabilities:
Accounts payable	54,569	(57,677)
Accrued expenses	50,412	(22,561)
Deferred revenue	0	(37,500)
Net cash used in operating activities	(573,744)	(1,132,154)
Cash flows from investing activities:
Proceeds from sale of patents	50,000	0
Net cash provided by investing activities	50,000	0
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants, net and exercise of warrants and options	0	1,152,397
Net cash provided by financing activities	0	1,152,397
Net (decrease) increase in cash and cash equivalents	(523,744)	20,243
Cash and cash equivalents at beginning of period	810,808	3,334,626
Cash and cash equivalents at end of period	287,064	3,354,869
Supplemental disclosure of non-cash transactions:
Conversion of preferred stock into common stock	0	6,075
Allocation of equity proceeds to warrants	0	559,261
Allocation of equity proceeds to stock rights	0	142,854
Allocation of preferred stock proceeds to beneficial conversion feature	0	135,701
Dividends accrued on preferred stock	$ 9,502	$ 12,668

XML

Basis of Presentation

3 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1 - Basis of Presentation:

The financial statements included herein have been prepared by Sevion Therapeutics, Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting solely of those which are of a normal recurring nature, necessary to present fairly its financial position as of September 30, 2016 and the results of its operations for the three months ended September 30, 2016 and cash flows for the three months ended September 30, 2016.

Interim results are not necessarily indicative of results for the full fiscal year.

XML

Liquidity

3 Months Ended

Sep. 30, 2016

Liquidity [Abstract]

Liquidity

Note 2 – Liquidity:

As shown in the accompanying condensed consolidated financial statements, the Company has a history of losses with an accumulated deficit of $116,573,138 and has generated minimal revenues by licensing its technology to companies willing to share in its development costs. In addition, the Company’s technology may not be ready for commercialization for several years. The Company expects to continue to incur losses for the next several years because it anticipates that its expenditures on research and development and administrative activities will significantly exceed its revenues during that period. The Company cannot predict when, if ever, it will become profitable.

Given the Company’s limited capital resources, management recommended to the Company’s Board of Directors that certain executive level salaries be reduced by upwards of 80%, staff reductions be effected and that there be a temporary reduction of research and development expenditures to support the Company’s goal of cutting expenses and preserving cash on hand. The Company’s Board of Directors approved this recommendation and the reductions went into effect on March 23, 2016.

As of September 30, 2016, the Company had cash and cash equivalents in the amount of $287,064, which consisted of checking accounts and money market funds. The Company estimates that its cash and cash equivalents as of September 30, 2016 and the $300,000 proceeds received from the issuance of promissory notes on November 10, 2016 to each of a related party, OPKO Health, Inc., and an existing stockholder of the Company, will cover its expenses through January 31, 2017.

The Company will need additional capital to operate and expand its research program and plans to raise additional capital possibly through the placement of debt instruments, equity instruments or any combination thereof. However, the Company may not be able to obtain adequate funds for its operations when needed or on acceptable terms. If the Company is unable to raise additional funds, it will need to do one or more of the following:

• license third parties to develop and commercialize products or technologies that it would otherwise seek to develop and commercialize itself;

• seek strategic alliances or business combinations;

• attempt to sell the Company;

• cease operations; or

• declare bankruptcy.

These conditions raise substantial doubt about our ability to continue as a going concern.  Consequently, the audit reports prepared by our independent registered public accounting firm relating to our consolidated financial statements for the years ended June 30, 2016, 2015 and 2014 include an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. These interim consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML

Intangibles

3 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Patent Costs

Note 3 – Intangibles:

The Company assesses the impairment in value of intangible assets whenever events or circumstances indicate that their carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include the following:

• significant negative industry trends;

• significant underutilization of the assets;

• significant changes in how the Company uses the assets or its plans for their use; and

• changes in technology and the appearance of competing technology.

If a triggering event occurs and if the Company's review determines that the future undiscounted cash flows related to the groups, including these assets, will not be sufficient to recover their carrying value, the Company will reduce the carrying values of these assets down to the Company’s estimate of fair value.

Due to the decrease in the market value of the Company at September 30, 2016, the Company determined that there was a triggering event that required the Company to review if there had been an impairment to the Acquired Research and Development in the amount of $8,100,000 as of September 30, 2016. The Company first evaluated the assumptions utilized in establishing the value allocated to the Acquired Research and Development which had been updated in the fourth quarter of fiscal 2016. Based upon the evaluation, the Company determined that an impairment existed. The Company measured the enterprise value for purposes of the Step 2 measurement of Intangibles. The Company concluded that there was an impairment based on the significant change in the Company’s market value during the period. As a result of this evaluation, the Company determined that there was an impairment to the Acquired Research and Development as of September 30, 2016 in the amount of $1,600,000.

XML

Loss Per Share

3 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Loss Per Share

Note 4 - Loss Per Share:

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of the Company’s Common Stock assumed to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional shares of Common Stock that would have been outstanding if the potential shares of Common Stock had been issued and if the additional shares of Common Stock were dilutive.

For all periods presented, basic and diluted loss per share are the same, as any additional Common Stock equivalents would be anti-dilutive. Potentially dilutive shares of Common Stock have been excluded from the calculation of the weighted average number of dilutive shares of Common Stock as follows:

	September 30,
	2016		2015
Common Stock to be issued upon conversion of convertible preferred stock - Series A		506,666		506,666
Common Stock to be issued upon conversion of convertible preferred stock - Series C		2,350,040		2,350,040
Outstanding warrants		8,660,915		8,698,634
Outstanding options		1,915,338		1,534,088
Total potentially dilutive shares of Common Stock		13,432,959		13,089,428

XML

Stock-Based Compensation

3 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 5 – Stock-Based Compensation:

The terms and vesting schedules for share-based awards vary by type of grant and the employment status of the grantee. Generally, the awards vest based upon time-based conditions or achievement of specified goals and milestones.

The Company did not issue options during the three month period ended September 30, 2016.

Stock option activity under the Company’s 2008 Plan and 1998 Plan for the three months ended September 30, 2016 is summarized as follows:

			Weighted
	Aggregate		Average		Exercise Price
	Number		Exercise Price		Range
Outstanding, June 30, 2016		1,917,238	$	3.29		$ 0.22 - $ 108.00
Granted		-	$	-		-
Exercised		-	$	-		-
Cancelled		-	$	-		-
Expired		1,900	$	25.00		$ 25.00
Outstanding, September 30, 2016		1,915,338	$	3.27		$ 0.22 - $ 108
Options exercisable at September 30, 2016		1,855,114	$	3.35

As of September 30, 2016, the aggregate intrinsic value of stock options outstanding was $0 with a weighted-average remaining term of 6.33 years. The aggregate intrinsic value of stock options exercisable at September 30, 2016 was $0, with a weighted-average remaining term of 6.28 years. As of September 30, 2016, the Company has 4,023,362 shares available for future stock option grants.

Stock-based compensation expense for the three months ended September 30, 2016 and September 30, 2015 amounted to $8,205 and $23,475, respectively.

As of September 30, 2016, total stock-based compensation expense not yet recognized related to stock option grants amounted to approximately $21,392 which will be recognized over the next 26 months.

XML

Income Taxes

3 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 6 – Income Taxes:

No provision for income taxes has been made for the three months ended September 30, 2016 and 2015 given the Company’s losses in 2016 and 2015 and available net operating loss carryforwards. A benefit has not been recorded as the realization of the net operating losses is not assured and the timing in which the Company can utilize its net operating loss carryforwards in any year or in total may be limited by provisions of the Internal Revenue Code regarding changes in ownership of corporations.

The deferred tax liability in the amount of $3,240,000 remained in connection with the related Acquired Research and Development from the Company’s acquisition of Fabrus, Inc. in May 2014. Due to the impairment adjustment for the Acquired Research and Development costs, a tax benefit of $640,000 has been recognized for the three month period ended September 30, 2016. Accordingly, the deferred tax liability has been reduced by $640,000 for the quarter ended September 30, 2016, leaving a balance of $2,600,000 as of September 30, 2016.

XML

Fair Value Measurements

3 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 7 - Fair Value Measurements:

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2016 and June 30, 2016:

	Carrying		Fair Value Measurement at Sept 30, 2016
	Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	287,064	$	287,064	$	-	$	-
Warrant Liabilities	$	319,546	$	-	$	-	$	319,546

	Carrying		Fair Value Measurement at June 30, 2016
	Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	810,808	$	810,808	$	-	$	-
Warrant Liabilities	$	956,575	$	-	$	-	$	956,575

The following table summarizes the changes in fair value of the Company’s Level 3 financial investments:

For the Three months ended Sept 30, 2016
Beginning Balance	$	956,575
Change in fair value of warrant liabilities, net		(208,714)
Change in fair value of stock right, net		(428,315)
Ending Balance	$	319,546

XML

Warrant Liabilities

3 Months Ended

Sep. 30, 2016

Warrant Liabilities [Abstract]

Warrant Liabilities

Note 8 – Warrant Liabilities:

The warrant liabilities represent the fair value of Common Stock purchase warrants which have exercise price reset features estimated using a Monte Carlo valuation model. The Company performs a valuation using the Monte Carlo model for such warrants to account for the various possibilities that could occur due to changes in the inputs to the model as a result of contractually-obligated changes. These estimates of the likelihood of completing an equity raise that would meet the criteria to trigger the reset provisions are based on numerous factors, including the remaining term of the financial instruments and the Company’s overall financial condition.

Changes in the unobservable input values would have likely caused material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable input used in the fair value measurement was the estimation of the likelihood of the occurrence of a change to the strike price of the warrants. A significant increase (decrease) in this likelihood would have resulted in a higher (lower) fair value measurement. The assumptions used to value the warrants at the date of issuance and at September 30, 2016 are as follows:

	Date of Issuance			September 30, 2016
Estimated life in years		2.50			1.08
Risk-free interest rate (1)		0.91	%		0.77	%
Volatility		108.60	%		112.70	%
Dividend paid		0.00	%		0.00	%

(1) Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the warrant term.

XML

Series C Preferred Stock

3 Months Ended

Sep. 30, 2016

Equity [Abstract]

Preferred Stock

Note 9 – Series C Preferred Stock.

During the three months ended September 30, 2016, no shares of Series C Preferred Stock were converted into shares of Common Stock.

XML

Gain on Sale of Patents

3 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Gain on Sale of Patents

Note 10 – Gain on Sale of Patents:

On September 8, 2015, the Company entered into an agreement to sell certain Intellectual Property consisting of patents, patent applications and license agreements related to those patents and patent applications. The Company is not actively developing any program related to the Intellectual Property included in the agreement. On July 19, 2016, the transaction closed and the Company received $50,000 cash up front and a 19.9% equity interest in the acquiring company. In addition, the reserve established by the Company in the amount of $99,728 for a potential grant liability was reversed as this was assumed by the acquiring company.

The stock received has been recorded under the cost method of accounting. It was determined that the fair value of the Intellectual Property sold and the equity received were $0. Therefore, there is no asset reflected in the consolidated balance sheet as of September 30, 2016. A gain of $149,728 was recognized as other income due to the cash received and the liability relieved exceeding the fair value of the Intellectual Property sold.

XML

Recent Accounting Pronouncements

3 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 11 – Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued ASU No. 2014- 09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 requires that a company recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). In July 2015, the FASB approved a proposal to defer the effective date of the guidance until annual and interim reporting periods beginning after December 15, 2017. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

In June 2014, the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period,” (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” (“ASU 2014-15”). ASU 2014-15 amended existing guidance related to the disclosures about an entity’s ability to continue as a going concern. These amendments are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. These amendments provide guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

In November 2014, the FASB issued ASU No. 2014-16, “Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity,” (“ASU 2014-16”). All entities are required to use what is called the “whole instrument approach” to determine the nature of a host contract in a hybrid financial instrument issued in the form of a share. The guidance requires issuers and investors to consider all of a hybrid instrument’s stated and implied substantive terms and features, including any embedded derivative features being evaluated for bifurcation. The guidance eliminates the “chameleon approach,” under which all embedded features except the feature being analyzed are considered. The guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. The Company has implemented this update and the adoption of this standard does not have a material impact on the Company’s financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes FASB ASC 840. All entities will be required to record operating leases on the balance sheet as assets and liabilities instead of recording only capital (finance) leases on the balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2017. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share Based Payment Accounting,” which is intended to simplify several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s financial statements.

XML

Subsequent Events

3 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Event

Note 12 – Subsequent Events

On November 10, 2016, the Company entered into unsecured promissory notes (the “Notes”) in the aggregate amount of $300,000 with a related part OPKO Health, Inc. and an existing stockholder of the Company. The Notes have customary events of default, an interest rate of 5% per annum with principal and interest due twelve months from their issuance. The Notes are to be used to fund operations.

XML

Loss Per Share (Tables)

3 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Weighted Average of Dilutive Shares of Common Stock

Potentially dilutive shares of Common Stock have been excluded from the calculation of the weighted average number of dilutive shares of Common Stock as follows:

	September 30,
	2016		2015
Common Stock to be issued upon conversion of convertible preferred stock - Series A		506,666		506,666
Common Stock to be issued upon conversion of convertible preferred stock - Series C		2,350,040		2,350,040
Outstanding warrants		8,660,915		8,698,634
Outstanding options		1,915,338		1,534,088
Total potentially dilutive shares of Common Stock		13,432,959		13,089,428

XML

Stock-Based Compensation (Tables)

3 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award Of Warrants

Stock option activity under the Company’s 2008 Plan and 1998 Plan for the three months ended September 30, 2016 is summarized as follows:

			Weighted
	Aggregate		Average		Exercise Price
	Number		Exercise Price		Range
Outstanding, June 30, 2016		1,917,238	$	3.29		$ 0.22 - $ 108.00
Granted		-	$	-		-
Exercised		-	$	-		-
Cancelled		-	$	-		-
Expired		1,900	$	25.00		$ 25.00
Outstanding, September 30, 2016		1,915,338	$	3.27		$ 0.22 - $ 108
Options exercisable at September 30, 2016		1,855,114	$	3.35

XML

Fair Value Measurements (Tables)

3 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Assets and Liabilities Carried at Fair Value Measured on Recurring Basis

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2016 and June 30, 2016:

	Carrying		Fair Value Measurement at Sept 30, 2016
	Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	287,064	$	287,064	$	-	$	-
Warrant Liabilities	$	319,546	$	-	$	-	$	319,546

	Carrying		Fair Value Measurement at June 30, 2016
	Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	810,808	$	810,808	$	-	$	-
Warrant Liabilities	$	956,575	$	-	$	-	$	956,575

Changes in Fair Value of the Company's Level 3 Financial Instruments

The following table summarizes the changes in fair value of the Company’s Level 3 financial investments:

For the Three months ended Sept 30, 2016
Beginning Balance	$	956,575
Change in fair value of warrant liabilities, net		(208,714)
Change in fair value of stock right, net		(428,315)
Ending Balance	$	319,546

XML

Warrant Liabilities (Tables)

3 Months Ended

Sep. 30, 2016

Warrant Liabilities [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The assumptions used to value the warrants at the date of issuance and at September 30, 2016 are as follows:

	Date of Issuance			September 30, 2016
Estimated life in years		2.50			1.08
Risk-free interest rate (1)		0.91	%		0.77	%
Volatility		108.60	%		112.70	%
Dividend paid		0.00	%		0.00	%

(1) Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the warrant term.

XML

Liquidity - Additional Information (Detail) - USD ($)	Nov. 10, 2016	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents		$ 287,064	$ 810,808	$ 3,354,869	$ 3,334,626
Development Stage Enterprise Deficit Accumulated During Development Stages		$ 116,573,138
Proceeds from Issuance of Debt	$ 300,000

XML

Intangibles - Additional Information (Detail) - USD ($)	3 Months Ended
	Sep. 30, 2016	Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Acquired research and development	$ 6,500,000	$ 8,100,000
Asset Impairment Charges	$ 1,600,000

XML

Calculation of Weighted Average Number of Dilutive Shares of Common Stock (Detail) - shares	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Summary Of Significant Accounting Policies [Line Items]
Common Stock to be issued upon conversion of convertible preferred stock	13,432,959	13,089,428
Series A Preferred stock
Summary Of Significant Accounting Policies [Line Items]
Common Stock to be issued upon conversion of convertible preferred stock	506,666	506,666
Series C Preferred Stock
Summary Of Significant Accounting Policies [Line Items]
Common Stock to be issued upon conversion of convertible preferred stock	2,350,040	2,350,040
Outstanding options
Summary Of Significant Accounting Policies [Line Items]
Common Stock to be issued upon conversion of convertible preferred stock	1,915,338	1,534,088
Outstanding warrants
Summary Of Significant Accounting Policies [Line Items]
Common Stock to be issued upon conversion of convertible preferred stock	8,660,915	8,698,634

XML

Stock-Based Compensation - Additional Information (Detail) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option outstanding intrinsic value	$ 0
Option outstanding weighted average remaining term	6 years 3 months 29 days
Exercisable aggregate intrinsic value	$ 0
Weighted average option exercisable remaining life	6 years 3 months 11 days
Shares available for future stock option grant	4,023,362
Stock based compensation	$ 8,205	$ 23,475
Stock based compensation expense related to stock options, not yet recognized, period of recognition	26 months
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 21,392

XML

Stock-Based Compensation Stock Option Activity (Detail)	3 Months Ended
	Sep. 30, 2016 $ / shares shares
Aggregate Number
Beginning Balance | shares	1,917,238
Granted | shares	0
Exercised | shares	0
Cancelled | shares	0
Expired | shares	1,900
Ending Balance | shares	1,915,338
Options exercisable at end of Period | shares	1,855,114
Weighted Average Exercise Price
Beginning Balance	$ 3.29
Granted	0
Exercised	0
Cancelled	0
Expired	25.00
Ending Balance	3.27
Options exercisable at end of Period	3.35
Exercise Price Range
Granted	0
Exercised	0
Cancelled	0
Expired	25.00
Maximum [Member]
Exercise Price Range
Beginning Balance	108.00
Ending Balance	108.00
Minimum [Member]
Exercise Price Range
Beginning Balance	0.22
Ending Balance	$ 0.22

XML

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Income Tax [Line Items]
Deferred Tax Liabilities, Net	$ 2,600,000		$ 3,240,000
Deferred Income Tax Expense (Benefit)	(640,000)	$ 0
Increase (Decrease) in Deferred Liabilities	$ 640,000

XML

Assets and Liabilities at Fair Value Measured on Recurring Basis (Detail) - USD ($)	Sep. 30, 2016	Jun. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant Liabilities	$ 319,546	$ 956,575
Fair Value Measurements Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	287,064	810,808
Warrant Liabilities	319,546	956,575
Level 1 | Fair Value Measurements Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Fair Value	287,064	810,808
Warrant Liabilities	0	0
Level 2 | Fair Value Measurements Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Fair Value	0	0
Warrant Liabilities	0	0
Level 3 | Fair Value Measurements Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Fair Value	0	0
Warrant Liabilities	$ 319,546	$ 956,575

XML

Changes in Fair Value of the Company's Financial Instruments (Detail) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Beginning Balance	$ 956,575
Change in fair value of warrant liabilities, net	(208,714)	$ (948,561)
Change in fair value of stock right, net	(428,315)	$ (22,334)
Ending Balance	$ 319,546

XML

Warrant Liabilities (Detail)	3 Months Ended
	Sep. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (in years)	1 year 29 days
Risk-free interest rate	0.77%	[1]
Volatility	112.70%
Dividend paid	0.00%
Warrant [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (in years)	2 years 6 months
Risk-free interest rate	0.91%	[1]
Volatility	108.60%
Dividend paid	0.00%

[1] Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the warrant term.

XML

Gain on Sale of Patents - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended
	Jul. 19, 2016	Sep. 30, 2016	Sep. 30, 2015
Proceeds from Sale of Intangible Assets		$ 50,000	$ 0
Business Acquisition, Percentage of Voting Interests Acquired	19.90%
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other	$ 99,728
Gain (Loss) on Disposition of Intangible Assets		149,728	$ 0
Intellectual Property [Member]
Proceeds from Sale of Intangible Assets	$ 50,000
Finite-lived Intangible Assets, Fair Value Disclosure		0
Gain (Loss) on Disposition of Intangible Assets		$ 149,728

XML

Subsequent Event - Additional Information (Detail) - Subsequent Event [Member] - Unsecured Promissory Notes [Member]	Nov. 10, 2016 USD ($)
Subsequent Event [Line Items]
Debt Instrument, Face Amount	$ 300,000
Debt Instrument, Interest Rate, Stated Percentage	5.00%