☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934P
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Delaware
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20-1852016
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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25801 Industrial Boulevard, Suite B
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Hayward, California
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94545
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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(Do not check if a smaller reporting company)
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Emerging growth company ☐
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Page
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Part I — Financial Information
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3 | |
3 | |
4 | |
5 | |
6 | |
7 | |
16 | |
20 | |
20 | |
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Part II — Other Information
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21 | |
21 | |
36 | |
37 |
ASSETS
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March 31, 2018
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December 31, 2017
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||||||
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(1)
|
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
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8,086
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$
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2,196
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||||
Prepaid expenses and other current assets
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653
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995
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||||||
Total current assets
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8,739
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3,191
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||||||
Property and equipment — net
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72
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482
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||||||
TOTAL
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$
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8,811
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$
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3,673
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||||
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||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
Current liabilities:
|
||||||||
Accounts payable
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$
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1,845
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$
|
1,832
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||||
Accrued clinical expenses
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756
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1,785
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||||||
Accrued liabilities
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45
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28
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||||||
Accrued payroll and related costs
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—
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1,066
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||||||
Total current liabilities
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2,646
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4,711
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||||||
Warrant liability
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704
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4,457
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||||||
Total liabilities
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3,350
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9,168
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||||||
Commitments and Contingencies (Note 6)
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||||||||
Stockholders’ equity (deficit) :
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||||||||
Series X Convertible Preferred Stock, $0.001 par value, 5,000,000 shares
authorized; 0 and 430 shares issued and outstanding as of March 31, 2018 and
December 31, 2017, respectively |
—
|
333
|
||||||
Common stock, $0.001 par value, 100,000,000 shares authorized; 26,179,302
and 13,854,491 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively |
26
|
14
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||||||
Additional paid-in capital
|
447,587
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428,586
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||||||
Accumulated deficit
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(442,152
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)
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(434,428
|
)
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||||
Total stockholders’ equity (deficit)
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5,461
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(5,495
|
)
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|||||
TOTAL
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$
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8,811
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$
|
3,673
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(1) |
Derived from audited Financial Statements.
|
|
Three Months Ended
March 31,
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|||||||
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2018
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2017
|
||||||
OPERATING EXPENSES
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||||||||
Research and development
|
7,468
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7,801
|
||||||
General and administrative
|
3,503
|
2,903
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||||||
Research award
|
—
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(100
|
)
|
|||||
Total operating expenses
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10,971
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10,604
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||||||
LOSS FROM OPERATIONS
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(10,971
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)
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(10,604
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)
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||||
OTHER EXPENSE:
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||||||||
Other income (expense)
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(43
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)
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(3
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)
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||||
Fair value of warrant liability in excess of proceeds from financing
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—
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(600
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)
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|||||
Change in fair value of warrant liability
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3,290
|
—
|
||||||
Total other income (expense)
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3,247
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(603
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)
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|||||
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||||||||
NET LOSS
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$
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(7,724
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)
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$
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(11,207
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)
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||
Deemed dividends attributable to preferred stock
|
(1,540
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)
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(2,503
|
)
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||||
Net loss applicable to common stockholders
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$
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(9,264
|
)
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$
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(13,710
|
)
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||
Net loss per share applicable to common
stockholders — basic and diluted (1)
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$
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(0.42
|
)
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$
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(2.03
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)
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||
|
||||||||
Weighted-average number of shares used in
per share calculation — basic and diluted (1)
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22,166,869
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6,759,567
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(1) |
All per share amounts and shares of the Company’s common stock issued and outstanding for all periods have been retroactively adjusted to reflect the one-for-eight reverse stock split which became effective April 28, 2017.
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Series X Convertible
Preferred Stock
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Class Y Convertible
Preferred Stock
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Common Stock
|
||||||||||||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Additional
Paid-In
Capital
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Accumulated
Deficit
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Total
Stockholders'
Equity
(Deficit)
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|||||||||||||||||||||||||||
Balance at December 31, 2017
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430
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$
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333
|
-
|
$
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-
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13,854,491
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$
|
14
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$
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428,586
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$
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(434,428
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)
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$
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(5,495
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)
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|||||||||||||||||||
Issuance of common stock pursuant to employee stock purchase plan
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-
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-
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-
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-
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27,630
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-
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40
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-
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40
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|||||||||||||||||||||||||||
Share-based compensation related to equity awards
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-
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-
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-
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-
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-
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-
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3,266
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-
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3,266
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|||||||||||||||||||||||||||
Issuance of common stock pursuant to exercise of warrants
|
-
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-
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-
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-
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1,902,683
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2
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2,992
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-
|
2,994
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|||||||||||||||||||||||||||
Issuance of common stock pursuant to an equity purchase agreement,
net of issuance cost of $16 |
-
|
-
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-
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-
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673,939
|
1
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1,308
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-
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1,308
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|||||||||||||||||||||||||||
Issuance of common stock for cash at $1.25 per share in a private placement,
net of issuance cost of $450
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-
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-
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-
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-
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7,625,741
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7
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4,771
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-
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4,779
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|||||||||||||||||||||||||||
Issuance of warrants pursuant to a private placement, net of issuance cost of $471
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-
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-
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-
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-
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-
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-
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4,999
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-
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4,999
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|||||||||||||||||||||||||||
Issuance of Class Y convertible preferred stock for cash at $1.25 per share
in a private placement
|
-
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-
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2,067,522
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1,416
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-
|
-
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(122
|
)
|
-
|
1,294
|
||||||||||||||||||||||||||
Beneficial conversion feature on Class Y convertible preferred stock
|
-
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-
|
-
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(1,416
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)
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-
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-
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1,416
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-
|
-
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||||||||||||||||||||||||||
Deemed dividend attributable to beneficial conversion feature on Class Y
convertible preferred stock |
-
|
-
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-
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1,416
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-
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-
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(1,416
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)
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-
|
-
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||||||||||||||||||||||||||
Conversion of Class Y convertible preferred stock into common stock
|
-
|
-
|
(2,067,522
|
)
|
(1,416
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)
|
2,067,522
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2
|
1,414
|
-
|
-
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|||||||||||||||||||||||||
Conversion of Series X convertible preferred stock into common stock
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(430
|
)
|
(333
|
)
|
-
|
-
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27,296
|
-
|
333
|
-
|
-
|
|||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(7,724
|
)
|
(7,724
|
)
|
|||||||||||||||||||||||||||
Balance at March 31, 2018
|
-
|
$
|
-
|
-
|
$
|
-
|
26,179,302
|
$
|
26
|
$
|
447,587
|
$
|
(442,152
|
)
|
$
|
5,461
|
(1) |
All per share amounts and shares of the Company’s common stock issued and outstanding for all periods have been retroactively adjusted to reflect the one-for-eight reverse stock split which became effective April 28, 2017.
|
|
Three Months Ended March 31,
|
|||||||
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2018
|
2017
|
||||||
CASH FLOW FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(7,724
|
)
|
$
|
(11,207
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
161
|
45
|
||||||
Stock-based compensation expense
|
3,304
|
1,086
|
||||||
Fair value of warrant liability in excess of proceeds from financing
|
—
|
600
|
||||||
Change in fair value of warrant liability
|
(3,290
|
)
|
—
|
|||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
—
|
(100
|
)
|
|||||
Prepaid expenses and other assets
|
342
|
(256
|
)
|
|||||
Accounts payable
|
(97
|
)
|
(2,023
|
)
|
||||
Accrued clinical expenses
|
(1,029
|
)
|
(1,659
|
)
|
||||
Accrued liabilities
|
18
|
695
|
||||||
Accrued payroll and related costs
|
(1,066
|
)
|
(1,510
|
)
|
||||
Net cash used in operating activities
|
(9,381
|
)
|
(14,329
|
)
|
||||
INVESTING ACTIVITIES:
|
||||||||
Proceeds from disposal of property and equipment
|
358
|
—
|
||||||
Net cash provided by investing activities
|
358
|
—
|
||||||
FINANCING ACTIVITIES:
|
||||||||
Net proceeds from issuance of common stock, preferred stock and warrants
pursuant to equity offering |
11,075
|
14,100
|
||||||
Net proceeds from issuance of common stock pursuant to an equity purchase
agreement |
1,307
|
—
|
||||||
Net proceeds from issuance of common stock pursuant to exercise of warrants
|
2,531
|
—
|
||||||
Net proceeds from issuance of common stock pursuant to exercise of stock options
and employee stock purchase plan |
—
|
38
|
||||||
Net cash provided by financing activities
|
14,913
|
14,138
|
||||||
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
|
5,890
|
(191
|
)
|
|||||
CASH AND CASH EQUIVALENTS — Beginning of period
|
2,196
|
20,843
|
||||||
CASH AND CASH EQUIVALENTS — End of period
|
$
|
8,086
|
$
|
20,652
|
||||
|
||||||||
SUPPLEMENTAL CASH DISCLOSURES OF CASH FLOW
INFORMATION
|
||||||||
Non-cash financing activities:
|
||||||||
Issuance of common stock as a commitment fee pursuant to an equity
purchase agreement
|
$
|
16
|
$
|
—
|
||||
Fair value of warrants issued in connection with equity offering
|
$
|
—
|
$
|
14,700
|
|
Three Months Ended March 31
|
|
||||||
|
2018
|
|
2017
|
|
||||
Net loss per share
|
|
|
||||||
Numerator
|
|
|
||||||
Net loss
|
|
$
|
(7,724
|
)
|
|
$
|
(11,207
|
)
|
Deemed dividend attributable to preferred stock
|
|
|
(1,540
|
)
|
|
|
(2,503
|
)
|
Net loss applicable to common stockholders
|
|
$
|
(9,264
|
)
|
|
$
|
(13,710
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
22,166,869
|
|
|
|
6,759,567
|
|
Basic and diluted net loss per share
|
|
$
|
(0.42
|
)
|
|
$
|
(2.03
|
)
|
Three Months Ended March 31,
|
||||||||
|
2018
|
2017
|
||||||
Total options to purchase common stock
|
6,724,345
|
750,355
|
||||||
Total warrants to purchase common stock
|
18,725,764
|
274,801
|
||||||
Series X convertible preferred stock
|
—
|
30,930
|
||||||
Total
|
25,450,109
|
1,056,086
|
· |
Level 1 —Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by us at the reporting date. Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S. Treasuries and trading securities with quoted prices on active markets.
|
· |
Level 2 —Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets. Examples of assets and liabilities utilizing Level 2 inputs are U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposit and over-the- counter derivatives
|
· |
Level 3 —Valuations based on unobservable inputs in which there are little or no market data, which require the Company to develop its own assumptions.
|
|
March 31, 2018
|
|||||||||||||||
|
Estimated
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Assets:
|
||||||||||||||||
Money market funds
|
$
|
7,989
|
7,989
|
$
|
—
|
$
|
—
|
|||||||||
Liabilities:
|
||||||||||||||||
Warrant Liability
|
$
|
704
|
$
|
—
|
$
|
—
|
$
|
704
|
|
December 31, 2017
|
|||||||||||||||
|
Estimated
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Money market funds
|
$
|
2,097
|
$
|
2,097
|
$
|
—
|
$
|
—
|
||||||||
Liabilities:
|
||||||||||||||||
Warrant liability
|
$
|
4,457
|
$
|
—
|
$
|
—
|
$
|
4,457
|
|
March 31, 2018
|
|||
Beginning balance at December 31, 2017
|
$
|
4,457
|
||
Decrease in fair value of warrant liability from January 1 to March 31, 2018
|
(3,290
|
)
|
||
Balance reclassified to additional paid-in capital upon exercise of warrants
|
(463
|
)
|
||
Ending balance
|
$
|
704
|
1. |
On the date of issuance, the warrants were not considered indexed to the Company’s own stock because the underlying instruments were not “fixed-for-fixed” due to the exercise price being subject to adjustment in a Stock Combination Event.
|
2. |
The warrants permit the holder to require the Company to settle the warrants for cash in an amount equal to the Black-Scholes value of the warrants in the event of a fundamental transaction, including a sale of the business.
|
March 31, 2018
|
||||
Common stock price
|
$
|
0.32
|
||
Exercise price
|
$
|
1.89
|
||
Expected volatility
|
132.1
|
%
|
||
Dividend yield
|
0
|
%
|
||
Risk-free interest rate
|
2.53
|
%
|
||
Expected term (years)
|
4.08
|
· |
Beneficial Conversion Feature - Because the conversion price of the shares of Class Y Preferred Stock was less than the fair value of the Company’s common stock at the date of issuance, the in-the-money conversion feature (Beneficial Conversion Feature, or BCF) requires separate financial statement recognition and is measured at the intrinsic value (i.e., the amount of the increase in value that preferred stockholders would realize upon conversion based on the value of the conversion shares on the issuance date in excess of the amount allocated to the Class Y Preferred Stock for accounting purposes). The BCF is recorded as a discount to the Class Y Convertible Preferred Stock and is immediately accreted as a deemed preferred stock dividend and, accordingly, an adjustment to net loss to arrive at net loss applicable to common stockholders. During the quarter ended March 31, 2018, the Company recorded a deemed dividend of $1.5 million.
|
Common stock options outstanding
|
6,724,345
|
|||
Common stock warrants outstanding
|
18,725,764
|
|||
Common stock options available for future grant under stock option plan
|
584,257
|
|||
Common stock available for future grant under ESPP plan
|
504,069
|
|||
Total
|
26,538,435
|
Initial Closing
|
Second Closing
|
|||||||
Common stock price
|
$
|
1.72
|
$
|
1.50
|
||||
Exercise price
|
$
|
1.55
|
$
|
1.25
|
||||
Expected volatility
|
110
|
%
|
113
|
%
|
||||
Dividend yield
|
0
|
%
|
0
|
%
|
||||
Risk-free interest rate
|
1.98
|
%
|
2.18
|
%
|
||||
Expected term (years)
|
5.5
|
5.0
|
|
Number of
Options
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Life in Years
|
Aggregate
Intrinsic
Value
|
||||||||||||
Balance at December 31, 2017
|
1,066,121
|
$
|
10.04
|
8.68
|
$
|
18
|
||||||||||
Granted
|
6,190,674
|
$
|
1.65
|
|||||||||||||
Exercised
|
—
|
—
|
||||||||||||||
Cancelled and expired
|
(4,257
|
)
|
$
|
30.43
|
||||||||||||
Forfeited
|
(528,283
|
)
|
$
|
1.65
|
||||||||||||
Balance at March 31, 2018
|
6,724,345
|
$
|
2.96
|
9.50
|
$
|
—
|
||||||||||
Exercisable at March 31, 2018
|
2,576,796
|
$
|
4.01
|
9.23
|
$
|
—
|
|
Three Months Ended March 31,
|
|||||||
|
2018
|
2017
|
||||||
Expected Volatility
|
106
|
%
|
106
|
%
|
||||
Dividend Yield
|
0
|
%
|
0
|
%
|
||||
Risk-Free Interest Rate
|
2.24
|
%
|
2.12
|
%
|
||||
Expected Term (years)
|
5.82
|
6.02
|
||||||
Weighted-average fair value per option
|
$
|
1.35
|
$
|
4.20
|
|
Three Months Ended
March 31,
|
|||||||
|
2018
|
2017
|
||||||
Research and development
|
$
|
1,168
|
$
|
396
|
||||
General and administrative
|
2,098
|
690
|
||||||
Total
|
$
|
3,266
|
$
|
1,086
|
|
Three Months
Ended March 31,
|
|||||||
|
2018
|
2017
|
||||||
Allocated costs:
|
||||||||
Sollpura
|
$
|
5,212
|
$
|
4,701
|
||||
Blisibimod
|
129
|
1,250
|
||||||
Unallocated costs
|
2,127
|
1,850
|
||||||
Total research and development expense
|
$
|
7,468
|
$
|
7,801
|
· |
fees paid to CROs in connection with clinical studies;
|
· |
fees paid to investigative sites in connection with clinical studies;
|
· |
fees paid to contract manufacturers in connection with the production of clinical study materials; and
|
· |
fees paid to vendors in connection with preclinical development activities.
|
|
Three months ended
March 31,
|
|||||||||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
||||||||||||
Research and development expenses
|
$
|
7,468
|
$
|
7,801
|
$
|
(333
|
)
|
(4
|
)%
|
|
Three Months Ended
March 31,
|
|||||||||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
||||||||||||
General and administrative expenses
|
$
|
3,503
|
$
|
2,903
|
$
|
600
|
21
|
%
|
|
Three Months Ended
March 31,
|
|||||||||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
||||||||||||
Other income (expense)
|
$
|
(43
|
)
|
$
|
(3
|
)
|
$
|
(40
|
)
|
1,333
|
%
|
|||||
Fair value of warrant liability in excess of proceeds
from financing |
—
|
(600
|
)
|
600
|
100
|
%
|
||||||||||
Change in fair value of warrant liability
|
3,290
|
—
|
3,290
|
100
|
%
|
|||||||||||
Total other income (expense)
|
$
|
3,247
|
$
|
(603
|
)
|
$
|
3,850
|
638
|
%
|
|
March 31,
|
|||||||
|
2018
|
2017
|
||||||
Net cash used in operating activities
|
$
|
(9,381
|
)
|
$
|
(14,329
|
)
|
||
Net cash provided by investing activities
|
358
|
—
|
||||||
Net cash provided by financing activities
|
14,913
|
14,138
|
||||||
Total
|
$
|
5,890
|
$
|
(191
|
)
|
|
Payment Due by Period
|
|||||||||||||||||||
Contractual Obligations
|
< 1 year
|
1-3 years
|
3-5 years
|
> 5 years
|
Total
|
|||||||||||||||
Facility Leases
|
$
|
158
|
53
|
$
|
—
|
$
|
—
|
$
|
211
|
· |
exposure to unknown liabilities;
|
· |
incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions;
|
· |
write-downs of assets or goodwill or impairment charges;
|
· |
incurrence of amortization expenses;
|
· |
impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and;
|
· |
inability to retain key employees of our company or any acquired businesses.
|
· |
obtaining regulatory approval to commence a clinical study or complying with conditions imposed by a regulatory authority regarding the scope or design of a clinical study;
|
· |
reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites;
|
· |
manufacturing, including manufacturing sufficient quantities of product candidates or other materials for use in clinical studies;
|
· |
obtaining IRB, approval or the approval of other reviewing entities to conduct a clinical study at prospective sites; and
|
· |
recruiting and enrolling patients to participate in clinical studies for a variety of reasons, including size of patient population, nature of clinical study protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical study programs for similar indications.
|
· |
regulatory authorities may withdraw their approval of or revoke the licenses for the products;
|
· |
regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;
|
· |
we may be required to change the way the products are administered, conduct additional clinical studies or change the labeling of the products;
|
· |
we could be sued and held liable for harm caused to patients; and
|
· |
our reputation may suffer.
|
· |
issue warning letters or untitled letters;
|
· |
seek an injunction or impose civil or criminal penalties or monetary fines;
|
· |
suspend or withdraw regulatory approval or revoke a license;
|
· |
suspend any ongoing clinical studies;
|
· |
refuse to approve pending applications or supplements to applications filed by us;
|
· |
suspend or impose restrictions on operations, including costly new manufacturing requirements; or
|
· |
seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.
|
· |
demonstration of clinical safety and efficacy compared to other products;
|
· |
the relative convenience, ease of administration and acceptance by physicians and payors of our product candidates;
|
· |
the prevalence and severity of any adverse effects;
|
· |
limitations or warnings contained in a product’s FDA-approved labeling;
|
· |
availability of alternative treatments;
|
· |
pricing and cost-effectiveness;
|
· |
the effectiveness of our or any future collaborators’ sales and marketing strategies;
|
· |
our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid; and
|
· |
the willingness of patients to pay out-of-pocket in the absence of third-party coverage.
|
· |
impairment of our business reputation;
|
· |
withdrawal of clinical study participants;
|
· |
costs of related litigation;
|
· |
distraction of management’s attention from our primary business;
|
· |
substantial monetary awards to patients or other claimants;
|
· |
the inability to commercialize product candidates; and
|
· |
decreased demand for product candidates, if approved for commercial sale.
|
· |
an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, which is apportioned among these entities according to their market share in certain government healthcare programs;
|
· |
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for branded and generic drugs, respectively;
|
· |
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts to negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;
|
· |
extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations, unless the drug is subject to discounts under the 340B drug discount program;
|
· |
a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
|
· |
expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability;
|
· |
expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;
|
· |
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
|
· |
new requirements under the federal Physician Payments Sunshine Act for drug manufacturers to report information related to payments and other transfers of value made to physicians and teaching hospitals as well as ownership or investment interests held by physicians and their immediate family members;
|
· |
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;
|
· |
creation of the Independent Payment Advisory Board, which, if and when impaneled, will have authority to recommend certain changes to the Medicare program that could result in reduced payments for prescription drugs; and
|
· |
establishment of a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
|
· |
In 2012, the U.S. Supreme Court heard challenges to the constitutionality of the individual mandate and the viability of certain provisions of the Healthcare Reform Act. The Supreme Court’s decision upheld most of the Healthcare Reform Act and determined that requiring individuals to maintain “minimum essential” health insurance coverage or pay a penalty to the Internal Revenue Service was within Congress’s constitutional taxing authority. However, as a result of tax reform legislation passed in late December 2017, the individual mandate has been eliminated. The long ranging effects of the elimination of the individual mandate on the viability of the ACA are unknown at this time.
|
· |
On January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.
|
· |
On October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017.
|
· |
CMS has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces.
|
· |
The federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid.
|
· |
The federal false claims laws impose criminal and civil penalties, including those from civil whistleblower or qui tam actions pursuant to the federal False Claims Act, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government.
|
· |
The federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information.
|
· |
The federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services.
|
· |
The federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act, require manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests.
|
· |
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information.
|
· |
Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.
|
· |
Analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing.
|
· |
make a special written suitability determination for the purchaser;
|
· |
receive the purchaser’s written agreement to the transaction prior to sale;
|
· |
provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and
|
· |
obtain a signed and dated acknowledgement from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed
|
· |
plans for, progress in and results from clinical studies for our product candidates;
|
· |
announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;
|
· |
developments concerning proprietary rights, including those pertaining to patents patent applications held by our licensors;
|
· |
failure of any of our product candidates, if approved, to achieve commercial success;
|
· |
general market conditions and overall fluctuations in U.S. equity markets;
|
· |
variations in our operating results, or the operating results of our competitors;
|
· |
changes in our financial guidance or securities analysts’ estimates of our financial performance;
|
· |
changes in accounting principles;
|
· |
sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
|
· |
publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;
|
· |
additions or departures of any of our key personnel;
|
· |
announcements related to litigation;
|
· |
changing legal or regulatory developments in the United States and other countries; and
|
· |
discussion of us or our stock price by the financial press and in online investor communities.
|
· |
a classified and staggered board of directors whose members can only be dismissed for cause;
|
· |
the prohibition on actions by written consent of our stockholders;
|
· |
the limitation on who may call a special meeting of stockholders;
|
· |
the establishment of advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon at stockholder meetings;
|
· |
the ability of our board of directors to issue preferred stock without stockholder approval, which would increase the number of outstanding shares and could thwart a takeover attempt; and
|
· |
the requirement of at least 75% of the outstanding common stock to amend any of the foregoing provisions.
|
· |
we or our licensors were the first to make the inventions covered by each of our pending patent applications;
|
· |
we or our licensors were the first to file patent applications for these inventions;
|
· |
others will not independently develop similar or alternative technologies or duplicate any of our technologies;
|
· |
any of our or our licensors’ pending patent applications will result in issued patents;
|
· |
any of our or our licensors’ patents will be valid or enforceable;
|
· |
any patents issued to us or our licensors and collaborators will provide a basis for commercially viable products, will provide us with any competitive advantages or will not be challenged by third-parties;
|
· |
we will develop additional proprietary technologies or product candidates that are patentable; or
|
· |
the patents of others will not have an adverse effect on our business.
|
Number
|
|
Description
|
|
|
|
3.1
|
||
|
|
|
3.2
|
||
4.1
|
||
#10.1
|
|
|
|
|
|
#10.2
|
|
|
|
|
|
#10.3
|
|
|
#10.4
|
|
|
|
|
|
#10.5
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
ANTHERA PHARMACEUTICALS, INC.
|
|
|
|
|
May 15, 2018
|
By:
|
/s/ J. Craig Thompson
|
|
|
J. Craig Thompson
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
May 15, 2018
|
By:
|
/s/ May Liu
|
|
|
May Liu
|
|
|
Senior Vice President, Finance and Administration
|
|
|
(Principal Accounting Officer)
|
|
1.
|
I have reviewed this quarterly report on Form10-Q of Anthera Pharmaceuticals, 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 Rules13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-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: May 15, 2018
|
/s/ J. Craig Thompson
|
|
J. Craig Thompson
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
1.
|
I have reviewed this quarterly report on Form10-Q of Anthera Pharmaceuticals, 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 Rules13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-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: May 15, 2018
|
/s/ May Liu
|
|
May Liu
|
|
Senior Vice President, Finance and Administration
(Principal Accounting Officer)
|
May 15, 2018
|
By:
|
/s/ J. Craig Thompson
|
|
|
|
J. Craig Thompson
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
May 15, 2018
|
By:
|
/s/ May Liu
|
|
|
|
May Liu
|
|
|
|
Senior Vice President, Finance & Administration
|
|
|
|
(Principal Financial Officer)
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 30, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Anthera Pharmaceuticals Inc | |
Entity Central Index Key | 0001316175 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 26,179,302 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Contingently redeemable convertible preferred stock, par value per share | $ 0.001 | |
Contingently redeemable convertible preferred stock, shares authorized | 5,000,000 | |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 26,179,302 | 13,854,491 |
Common stock, shares outstanding | 26,179,302 | 13,854,491 |
Series X Convertible Preferred Stock | ||
Contingently redeemable convertible preferred stock, par value per share | $ 0.001 | $ 0.001 |
Contingently redeemable convertible preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Contingently redeemable convertible preferred stock, shares issued | 0 | 430 |
Contingently redeemable convertible preferred stock, shares outstanding | 0 | 430 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
||||
OPERATING EXPENSES | |||||
Research and development | $ 7,468 | $ 7,801 | |||
General and administrative | 3,503 | 2,903 | |||
Research award | (100) | ||||
Total operating expenses | 10,971 | 10,604 | |||
LOSS FROM OPERATIONS | (10,971) | (10,604) | |||
OTHER EXPENSE: | |||||
Other income (expense) | (43) | (3) | |||
Fair value of warrant liability in excess of proceeds from financing | (600) | ||||
Change in fair value of warrant liability | 3,290 | ||||
Total other income (expense) | 3,247 | (603) | |||
NET LOSS | (7,724) | (11,207) | |||
Deemed dividends attributable to preferred stock | (1,540) | (2,503) | |||
Net loss applicable to common stockholders | $ (9,264) | $ (13,710) | |||
Net loss per share applicable to common stockholders - basic and diluted | [1] | $ (0.42) | $ (2.03) | ||
Weighted-average number of shares used in per share calculation - basic and diluted | [1] | 22,166,869 | 6,759,567 | ||
|
CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands |
Series X Convertible Preferred Stock |
Class Y Convertible Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
BALANCE at Dec. 31, 2017 | $ 333 | $ 14 | [1] | $ 428,586 | $ (434,428) | $ (5,495) | [2] | |||||
BALANCE, shares at Dec. 31, 2017 | 430 | 13,854,491 | [1] | |||||||||
Issuance of common stock pursuant to employee stock purchase plan | 40 | 40 | ||||||||||
Issuance of common stock pursuant to employee stock purchase plan, shares | 27,630 | |||||||||||
Share-based compensation related to equity awards | 3,266 | 3,266 | ||||||||||
Issuance of common stock pursuant to exercise of warrants | $ 2 | 2,992 | 2,994 | |||||||||
Issuance of common stock pursuant to exercise of warrants, shares | 1,902,683 | |||||||||||
Issuance of common stock pursuant to an equity purchase agreement, net of issuance cost of $16 | $ 1 | 1,308 | 1,308 | |||||||||
Issuance of common stock pursuant to an equity purchase agreement, net of issuance cost of $16, shares | 673,939 | |||||||||||
Issuance of common stock for cash at $1.25 per share in a private placement, net of issuance cost of $450 | $ 7 | 4,771 | 4,779 | |||||||||
Issuance of common stock for cash at $1.25 per share in a private placement, net of issuance cost of $450, shares | 7,625,741 | |||||||||||
Issuance of warrants pursuant to a private placement, net of issuance cost of $471 | 4,999 | 4,999 | ||||||||||
Issuance of warrants pursuant to a private placement, net of issuance cost of $471, shares | ||||||||||||
Issuance of Class Y convertible preferred stock for cash at $1.25 per share in a private placement | $ 1,416 | (122) | 1,294 | |||||||||
Issuance of Class Y convertible preferred stock for cash at $1.25 per share in a private placement, shares | 2,067,522 | |||||||||||
Beneficial conversion feature on Class Y convertible preferred stock | $ (1,416) | 1,416 | ||||||||||
Deemed dividend attributable to beneficial conversion feature on Class Y convertible preferred stock | 1,416 | (1,416) | ||||||||||
Conversion of Class Y convertible preferred stock into common stock | $ (1,416) | $ 2 | 1,414 | |||||||||
Conversion of Class Y convertible preferred stock into common stock, shares | (2,067,522) | 2,067,522 | ||||||||||
Conversion of Series X convertible preferred stock into common stock | $ (333) | 333 | ||||||||||
Conversion of Series X convertible preferred stock into common stock, shares | (430) | 27,296 | ||||||||||
Net loss | [1] | (7,724) | (7,724) | |||||||||
BALANCE at Mar. 31, 2018 | $ 26 | [1] | $ 447,587 | $ (442,152) | $ 5,461 | |||||||
BALANCE, shares at Mar. 31, 2018 | 26,179,302 | |||||||||||
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CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) $ in Thousands |
3 Months Ended |
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Mar. 31, 2018
USD ($)
$ / shares
| |
Private Placement [Member] | |
Issuance costs | $ 450 |
Price per share | $ / shares | $ 1.25 |
Private Placement [Member] | Class Y Convertible Preferred Stock [Member] | |
Price per share | $ / shares | $ 1.25 |
Issuance of Warrants and Private Placement [Member] | |
Issuance costs | $ 471 |
Equity Purchase Agreement [Member] | |
Issuance costs | $ 16 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
3 Months Ended | ||||
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Mar. 31, 2018 |
Mar. 31, 2017 |
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CASH FLOW FROM OPERATING ACTIVITIES: | |||||
Net loss | $ (7,724) | $ (11,207) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation | 161 | 45 | |||
Stock-based compensation expense | 3,304 | 1,086 | |||
Fair value of warrant liability in excess of proceeds from financing | 600 | ||||
Change in fair value of warrant liability | (3,290) | ||||
Changes in assets and liabilities: | |||||
Accounts receivable | (100) | ||||
Prepaid expenses and other assets | 342 | (256) | |||
Accounts payable | (97) | (2,023) | |||
Accrued clinical expenses | (1,029) | (1,659) | |||
Accrued liabilities | 18 | 695 | |||
Accrued payroll and related costs | (1,066) | (1,510) | |||
Net cash used in operating activities | (9,381) | (14,329) | |||
INVESTING ACTIVITIES: | |||||
Proceeds from disposal of property and equipment | 358 | ||||
Net cash provided by investing activities | 358 | ||||
FINANCING ACTIVITIES: | |||||
Net proceeds from issuance of common stock, preferred stock and warrants pursuant to equity offering | 11,075 | 14,100 | |||
Net proceeds from issuance of common stock pursuant to an equity purchase agreement | 1,307 | ||||
Net proceeds from issuance of common stock pursuant to exercise of warrants | 2,531 | ||||
Net proceeds from issuance of common stock pursuant to exercise of stock options and employee stock purchase plan | 38 | ||||
Net cash provided by financing activities | 14,913 | 14,138 | |||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,890 | (191) | |||
CASH AND CASH EQUIVALENTS - Beginning of period | 2,196 | [1] | 20,843 | ||
CASH AND CASH EQUIVALENTS - End of period | 8,086 | 20,652 | |||
Non-cash financing activities: | |||||
Issuance of common stock as a commitment fee pursuant to an equity purchase agreement | 16 | ||||
Fair value of warrants issued in connection with equity offering | $ 14,700 | ||||
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BUSINESS OF THE COMPANY |
3 Months Ended |
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Mar. 31, 2018 | |
Business Of Company | |
BUSINESS OF THE COMPANY | 1. BUSINESS OF THE COMPANY
Description of Business
Anthera Pharmaceuticals, Inc. (“the Company”) is a biopharmaceutical company headquartered in Hayward, California. The Company currently licenses two compounds, Sollpura and blisibimod. The Company licensed Sollpura from Eli Lilly & Co (“Eli Lilly”) in July 2014. Sollpura is a novel, non-porcine investigational Pancreatic Enzyme Replacement Therapy (“PERT”) intended for the treatment of patients with Exocrine Pancreatic Insufficiency (“EPI”), often seen in patients with cystic fibrosis and other conditions. The Company licensed blisibimod from Amgen, Inc. (“Amgen”) in December 2007. Blisibimod targets B-cell activating factor or (“BAFF”) which has been shown to be elevated in a variety of B-cell mediated autoimmune diseases, including Immunoglobulin A nephropathy, or IgA nephropathy.
Since incorporation, the Company has been primarily performing research and development activities, including clinical trials, manufacturing of clinical drugs, filing patent applications, hiring personnel, and raising capital to support and expand these activities.
On March 12, 2018, the Company announced that the RESULT Phase 3 clinical trial of Sollpura for the treatment of patients with EPI did not meet its primary endpoint of non-inferiority to porcine PERT. All ongoing clinical trials of Sollpura were concluded by the end of April 2018. The Company has also discontinued the development of blisibimod.
Liquidity and Need for Additional Capital
The Company has never generated net income from operations, and, at March 31, 2018, had an accumulated deficit of $442.2 million, primarily as a result of research and development and general and administrative expenses. Due to the RESULT clinical trial not meeting its primary endpoint, in April 2018, the Company began a formal process of evaluating strategic alternatives and implemented a number of cost reduction measures, including a 90% reduction in its workforce and termination of major vendor contracts, which substantially reduced the Company’s capital needs in the foreseeable future.
As of March 31, 2018, the Company had cash and cash equivalents of approximately $8.1 million. The Company’s current cash balance is not expected to fund its operations through the next twelve months. As such, in April 2018, the Company began to wind down its activities. The Company also decided to discontinue further development of Sollpura and blisibimod and devote its time and resources to identifying and evaluating strategic alternatives. The process is aimed at identifying opportunities to diversify the Company’s pipeline, including through potential strategic combinations. If a strategic transaction is not consummated, the Company may be required to dissolve or liquidate. The Company cannot be certain if any future financing will be available on terms favorable to the Company, if at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If adequate funds are not available, the Company will terminate all strategic transaction efforts and eliminate all remaining personnel. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and do not contain all the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited Condensed Consolidated financial statements and notes thereto 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 year ended December 31, 2017, filed with the SEC on March 5, 2018. In the opinion of management, the accompanying unaudited Condensed Consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary to present fairly the Company’s interim consolidated financial information. The results for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other period. The consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements as of that date but it does not include all the information and notes required by U.S. GAAP.
The Company has evaluated events and transactions subsequent to the balance sheet date and has disclosed all events or transactions that occurred subsequent to the balance sheet date but prior to filing this Quarterly Report on Form 10-Q that would require recognition or disclosure in the unaudited Condensed Consolidated Financial Statements.
Use of Estimates
The preparation of these consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to clinical trial accruals, tax provision, stock-based compensation, warrant liabilities, and computation of beneficial conversion features. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates.
Financial Instruments with Characteristics of Both Equity and Liabilities
The Company has issued certain financial instruments, including warrants to purchase common stock, which have characteristics of both liabilities and equity. Financial instruments such as warrants that are classified as liabilities are fair valued upon issuance and are re-measured at fair value at subsequent reporting periods with the resulting change in fair value recorded in other income/(expense). The fair value of warrants is estimated using valuation models that require the input of subjective assumptions including stock price volatility, expected life, and the probability of future equity issuances.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, (ASU 2017-11). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures, but does not expect it to have a significant impact.
In
May 2017, the FASB issued, ASU-2017-09, Compensation—Stock Compensation (Topic 718). This guidance clarifies
when changes to the terms and conditions of share-based awards must be accounted for as modifications. The guidance does not
change the accounting treatment for modifications. The Company adopted this guidance from January 1, 2018 and it did not have
a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU is a comprehensive new leases standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows.
In May 2014,
the FASB issued Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers (ASC Topic 606). The standards update outlines a single comprehensive
model for entities to utilize to recognize revenue when it transfers goods or services to customers in an amount that
reflects the consideration that will be received in exchange for the goods and services. Additional disclosures will
also be required to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. In 2016, the FASB issued accounting standards updates to address implementation issues and to
clarify the guidance for identifying performance obligations, licenses and determining if a company is the principal or agent
in a revenue arrangement. In August 2015, the FASB issued ASU 2015-14,
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date
of ASU 2014-09. The mandatory adoption date of ASC 606 for the Company is now January 1, 2018. There are two methods of
adoption allowed, either a “full” retrospective adoption or a “modified” retrospective
adoption. The Company adopted the standard from January 1, 2018, however, given that the Company is not generating
revenue and has no revenue contracts, the adoption of this guidance did not impact its consolidated financial
statements. |
NET LOSS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE | 3. NET LOSS PER SHARE
Basic net loss attributable to common stockholders per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. The computation of diluted Earnings Per Share, or EPS, is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred dividends. Diluted EPS is identical to basic EPS since common equivalent shares are excluded from the calculation, as their effect is anti-dilutive.
The following table summarizes the Company’s calculation of net loss per common share (in thousands except share and per share amounts):
The following outstanding options, warrants, and Series X convertible preferred stock that are potentially dilutive securities were excluded from the computation of diluted net loss per share, as the effect of including them would have been antidilutive.
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 4. FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to the accounting guidance for fair value measurement and its subsequent updates, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a hierarchy for inputs used in measuring fair value that minimizes the use of unobservable inputs by requiring the use of observable market data when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on active market data. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances.
The fair value hierarchy is broken down into the three input levels summarized below:
The following tables present the Company’s fair value hierarchy for all its financial assets and liabilities (including those in cash and cash equivalents), in thousands, by major security type measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 (in thousands):
The Company used quoted market prices to determine the fair value of cash equivalents, which consist of money market funds and therefore these are classified in Level 1 of the fair value hierarchy.
Warrants containing price protection rights are accounted for as liabilities, with changes in the fair values included in net loss for the respective periods. Because some of the inputs to the valuation model are either not observable or are not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability is classified as Level 3 in the fair value hierarchy.
The following table summarizes the changes in the Company’s Level 3 warrant liability (in thousands):
There were no transfers between Level 1, Level 2 or Level 3 for the three months ended March 31, 2018 and year ended December 31, 2017.
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WARRANT LIABILITY |
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WARRANT LIABILITY | 5. WARRANT LIABILITY
Pursuant to an underwriting agreement entered into in March 2017, the Company issued warrants to purchase 30,000,000 shares of common stock at an initial exercise price of $0.55 per share (“Tranche 1 Warrants”) and warrants to purchase 30,000,000 shares of common stock at an initial exercise price of $0.50 per share (“Tranche 2 Warrants”) to the investors. On April 28, 2017, the Company implemented a one-for-eight reverse split of its outstanding common stock. The Reverse Stock Split did not change the number of authorized shares of common stock, which remained at 100,000,000, but did increase the number of authorized but unissued shares of common stock, resulting in sufficient authorized shares of common stock to settle the warrants. After giving effect to the Reverse Stock Split, the number of shares issuable upon exercise and the exercise price of the Tranche 1 Warrants were 3,750,007 and $4.40, respectively, and the number of shares issuable upon exercise and the exercise price of the Tranche 2 Warrants were 3,750,007 and $4.00, respectively. The Tranche 1 Warrants will expire on April 28, 2022 and the Tranche 2 Warrants expired on October 27, 2017.
The exercise price of the Tranche
1 Warrants is subject to adjustment in the event of a stock combination, reverse split, or similar transaction involving common
stock (each, a “Stock Combination Event”) if the average volume weighted average price (“VWAP") of the common
stock for the five lowest trading days during the 15 consecutive trading day period ending and including the trading day immediately
preceding the 16th trading day after such Stock Combination Event is less than the exercise price of the warrant.
In such an event, the exercise price of the warrants is adjusted to the average VWAP. As a result of the Reverse Stock
Split, the exercise price for the Tranche 1 Warrants was adjusted to $1.8918.
The Company accounted for the warrants under ASC Topic 815, Derivatives and Hedging (“ASC 815”) pursuant to the following features:
At the end of each reporting period, the changes in fair value during the period are recorded as a component of non-operating income (expense) in the consolidated statement of operations. The initial fair value of the liability associated with these warrants was $14.7 million. The Tranche 2 warrants, which expired in October 2017 were out of the money and had a fair value of zero upon expiration. As of March 31, 2018, the fair value of the liability associated with the Tranche 1 Warrants decreased to $0.7 million from $4.5 million as of December 31, 2017 due to a decrease in the fair value of the common stock underlying the warrant shares, as well as reduction in the number of outstanding warrants pursuant to exercises by the warrant holders. The decrease in fair value of the warrant liability was recorded as non-operating income during the three months ended March 31, 2018. The Company estimated the fair value of the warrants using the Black-Scholes model with the following valuation assumptions
For the fair value determination, the Company computed the historical volatility based on daily pricing observations for a period that corresponds to the expected term of the warrants. The expected term for all valuation dates were based on the remaining contractual terms of the warrants. The risk-free interest rates were the U.S. Treasury bond rate as of the valuation months and years. |
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES
Leases
The Company
subleases its main operating facility in Hayward, California. The lease is for approximately 8,000 square feet and the
sublease agreement will expire on August 31, 2019. In April 2016, the Company leased its second operating facility in
Pleasanton, California for approximately 1,200 square feet, which was subsequently terminated early by the Company in
February 2018.
Other Commitments
In December 2007, the Company and Amgen entered into a worldwide, exclusive license agreement (the “Amgen Agreement”) to develop and commercialize blisibimod in any indication, including for the treatment of systemic lupus erythematosus (“lupus”). Under the terms of the Amgen Agreement, the Company paid a nonrefundable, upfront license fee of $6.0 million. As there was no future alternative use for the technology, the Company expensed the license fee in research and development expenses during 2007. Under the terms of the Amgen Agreement, the Company is obligated to make additional milestone payments to Amgen of up to $33.0 million upon the achievement of certain development and regulatory milestones. The Company is also obligated to pay tiered royalties on future net sales of products, ranging from the high single digits to the low double digits, which are developed and approved as defined by this collaboration. The Company’s royalty obligations as to a particular licensed product will be payable, on a country-by-country and licensed product-by-licensed product basis, for the longer of (a) the date of expiration of the last to expire valid claim within the licensed patents that covers the manufacture, use or sale, offer to sell, or import of such licensed product by the Company or a sublicense in such country or (b) 10 years after the first commercial sale of the applicable licensed product in the applicable country.
On July 11, 2014, the Company and Eli Lilly and Company (“Eli Lilly”) entered into a worldwide, exclusive license agreement (the “Lilly Agreement”), to develop and commercialize Sollpura, a Phase 3 novel investigational Pancreatic Enzyme Replacement Therapy (“PERT”), for the treatment of patients with Exocrine Pancreatic Insufficiency, or EPI, often seen in patients with cystic fibrosis and other conditions. Under the terms of the Lilly Agreement, the Company was not required to make any up-front payment but is obligated to make milestone payments of up to up to $33.5 million for capsule products and $9.5 million for reformulated products upon the achievement of certain regulatory and commercial sales milestones, none of which have been achieved as of March 31, 2018. In addition, after sales of the licensed products exceed an aggregate of $100.0 million in the United States, the Company is obligated to pay tiered royalties on future net sales of products, ranging from the single digits to the mid-teens, that are developed and approved as defined in the Lilly Agreement. The Company’s royalty obligations as to a particular licensed product will be payable, on a licensed product-by-licensed product basis, for the longer of (a) the date of expiration of the last to expire valid claim within the licensed patents that covers the manufacture, use or sale, offer to sell, or import of such licensed product by the Company or a sublicense in such country, or (b) 12 years after the first commercial sale of the applicable licensed product in the applicable country. |
STOCKHOLDERS' EQUITY |
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STOCKHOLDERS' EQUITY | 7. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has authorized 5,000,000 shares of $0.001 par value preferred stock. The Company’s Board of Directors is authorized to designate the terms and conditions of any preferred stock issued by the Company without further action by the common stockholders. The Company designated 17,000 and 2,067,522 shares of its authorized and unissued preferred stock as Series X Convertible Preferred stock and Class Y Convertible Preferred stock, respectively.
In September 2016, the Company entered into a subscription agreement with certain institutional investors pursuant to which it sold 17,000 Series X units for a purchase price of $1,000 per unit in a registered direct offering (the “Subscription Agreement”). Each unit consists of one share of Series X Convertible Preferred Stock and a warrant to purchase 15.87 shares of common stock. As of March 31, 2018, all 17,000 shares of Series X convertible preferred stock have been converted into shares of common stock.
On October 23, 2017, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) with a select group of investors (the “Purchasers”). The Private Placement was structured with two closings. Pursuant to the Securities Purchase Agreement, at the second closing on January 9, 2018, (the “Second Closing”), the Purchasers purchased 7,625,741 shares of the Company’s common stock at $1.25 per share and 2,067,522 shares of the Company’s non-voting Class Y Convertible Preferred Stock (“Class Y Convertible Preferred Stock”) at $1.25 per share, convertible into 2,067,522 shares of Company common stock upon certain conditions. In the event of the Company’s liquidation, dissolution or winding up, holders of Class Y Preferred Stock will participate pari passu with the holders of the Company’s common stock in any distribution of proceeds, pro rata based on the number of shares held by each such holder. The Preferred Shares will generally have no voting rights. As of March 31, 2018, all 2,067,522 shares of Class Y Convertible Preferred Stock have been converted into shares of common stock.
Accounting Treatment
The Company has allocated the proceeds from the Private Placement amongst the Class Y Preferred Stock, common stock, and the warrants to purchase shares of common stock based on the relative fair values, as all the instruments are equity classified.
Common Stock
In March 2018, the Company filed a universal shelf registration statement with the SEC on Form S-3 for the proposed offering from time to time of up to $100.0 million of its securities, including common stock, preferred stock, warrants and/or units. As of March 31, 2018, the balance of $100.0 million is available for future issuance under the registration statement.
The S-3 registration statement is subject to Instruction I.B.6. of Form S-3, which imposes a limitation on the maximum amount of securities that the Company may sell pursuant to the registration statement during any twelve-month period. When the Company sells securities pursuant to the registration statement, the amount of securities to be sold plus the amount of any securities the Company has sold during the prior twelve months in reliance on Instruction I.B.6. may not exceed one-third of the aggregate market value of its outstanding common stock held by non-affiliates as of a day during the 60 days immediately preceding such sale, as computed in accordance with Instruction I.B.6. Based on this calculation, the Company expects it will be significantly limited to sell securities pursuant to its effective registration statement on Form S-3 for a period of twelve months from March 5, 2018, unless and until the market value of the Company’s outstanding common stock held by non-affiliates increases to above $75 million. If the Company cannot sell securities under its shelf registration statement, the Company may be required to utilize more costly and time-consuming means of accessing the capital markets, which could materially adversely affect its liquidity and cash position.
In June 2017, the Company executed an equity purchase agreement with Lincoln Park Capital, LLP. (“LPC”) (the “2017 Equity Purchase Agreement”) to sell to LPC up to an aggregate of $10.0 million in shares of common stock and issue up to 181,708 shares of our common stock valued at $0.3 million as a commitment fee to LPC over a period of thirty months. As of March 31, 2018, the Company has sold an aggregate of 1,870,411 shares of common stock for net proceeds of $3.1 million and issued an aggregate of 139,848 shares of common stock as commitment fee to LPC and maximized the number of shares of common stock it can sell to LPC pursuant to Nasdaq Rule 5635(d)(2).
On October 23, 2017, the Company entered into a Securities Purchase Agreement (“SPA”) for a private placement of equity securities (the “Private Placement”) with a select group of accredited investors (the “Purchasers”). The Private Placement was structured with two closings. The first closing occurred on October 27, 2017 (“Initial Closing”) and resulted in net proceeds of approximately $2.7 million. The second closing (“Second Closing”) was conditioned upon and subject to the Company receiving the requisite shareholder approval pursuant to Nasdaq Rule 5635(d), which was obtained on January 5, 2018. The Second Closing subsequently occurred on January 9, 2018 and resulted in incremental allocated proceeds of $11.1 million. Pursuant to the SPA, at the Initial Closing, the Purchasers purchased 2,306,737 shares of the Company’s common stock at $1.25 per share. Each share of common stock was issued with a warrant to purchase 3.0 additional shares of the Company’s common stock at an exercise price of $1.55 per share. At the Second Closing, the Purchasers purchased 7,625,741 shares of the Company’s common stock at $1.25 per share and 2,067,522 shares of the Company’s non-voting Class Y Convertible Preferred Stock (the “Class Y Preferred Stock”) at $1.25 per share, convertible into 2,067,522 shares of Company common stock upon certain conditions. Each share of common stock or Class Y Preferred Stock was issued with a warrant that was immediately exercisable to purchase 1.0 additional share of the Company’s common stock at an exercise price of $1.25 per share. The financial instrument represented by the obligation to issue Class Y Preferred Stock and warrants upon shareholder approval is equity classified. The Company accounted for the Initial Closing in October 2017 and the Second Closing in January 2018. For both closings, the Company allocated the net proceeds based on the relative fair value method. As of March 31, 2018, all of the 2,067,522 shares of Class Y Convertible Preferred Stock were converted into 2,067,522 shares of common stock.
At March 31, 2018, the Company had reserved the following shares for future issuance:
Warrants
In connection with the issuance of Series X convertible preferred stock in September 2016, the Company issued warrants to certain institutional investors to purchase shares of the Company’s common stock. On November 16, 2016, the exercise price and number of shares of common stock underlying the warrants became fixed at $18.90 and 269,779, respectively. The warrants are exercisable at any time and from time to time after March 13, 2017 and will expire on September 13, 2019. As of March 31, 2018, the warrants remained outstanding. These warrants are classified in permanent equity on the Company’s consolidated Balance Sheet.
Pursuant to the underwriting agreement for the sale of common stock and warrants in March 2017, the Company issued 30,000,000 Tranche 1 Warrants at an initial exercise price of $0.55 per share and 30,000,000 Tranche 2 Warrants at an initial exercise price of $0.50 per share to the investors to purchase shares of the Company’s common stock. On April 28, 2017, with shareholders’ approval, the Company effectuated a one-for-eight reverse split of its outstanding common stock. Subsequent to the Reverse Stock Split, the Tranche 1 Warrant shares and exercise prices were adjusted to 3,750,007 and $4.40, respectively, and the Tranche 2 Warrant shares and exercise price were adjusted to 3,750,007 and $4.00, respectively. Effective as of May 22, 2017, the Tranche 1 and Tranche 2 Warrants’ exercise price were further adjusted to $1.8918 pursuant to the terms of the warrant agreements. A total of 96,021 Tranche 2 Warrants were exercised on October 5, 2017 and the remaining 3,653,986 Tranche 2 Warrants expired on October 27, 2017. During the three months ended March 31, 2018, a total of 236,318 Tranche 1 Warrants were exercised at $1.8918 per share, leaving a balance of 3,507,626 Tranche 1 Warrants outstanding and exercisable as of March 31, 2018 with an expiry date of April 28, 2022. These warrants are classified as liabilities on the Company’s consolidated Balance Sheet until the warrants are exercised or expired, (see Note 5).
Pursuant to the Private Placement for the sale of common stock and warrants in October 2017, the Company issued warrants to certain institutional investors to purchase shares of the Company’s common stock. The Private Placement was structured with two closings. The Initial Closing occurred in October 2017, which resulted in the Company issuing 6,920,211 warrants (“Initial Closing Warrants”) to the investors at an exercise price of $1.55 per share and a term of five years and six months. As of March 31, 2018, the Initial Closing Warrants remained outstanding. The Second Closing occurred in January 2018 and resulted in the Company issuing 9,693,263 warrants (“Second Closing Warrants”) to the investors at an exercise price of $1.25 per share and a term of five years. During the three-month period ended March 31, 2018, a total of 1,665,115 Second Closing Warrants were exercised at an exercise price of $1.25, leaving a balance of 8,028,148 outstanding. Warrants from both closings are classified in equity pursuant to the accounting guidance prescribed under ASC Topic 815, ASC Topic 480 Distinguishing Liabilities from Equity and ASC 825 Financial Instruments – Registration Payment Arrangements. The Company measured the fair value of the warrants from the Initial and Second Closing using the Black-Scholes option pricing model on issuance date based on the following assumptions:
For the fair value determination, the Company computed the historical volatility based on daily pricing observations for a period that corresponds to the expected terms of the warrants, which were based on the contractual terms of the warrants. The risk-free interest rates were the U.S. Treasury bond rate as of the valuation month and year. |
SHARE-BASED COMPENSATION PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION PLANS | 8. SHARE-BASED COMPENSATION PLANS
2018 Plan
In December 2017, the Company’s Board of Directors adopted the 2018 Stock Option and Incentive Plan (the “2018 Plan”), which was also approved by the Company’s stockholders at a special meeting of the shareholders on January 5, 2018. The Company initially reserved 6,000,000 shares of its common stock for the issuance of awards under the 2018 Plan, plus all shares remaining available for grant under the Company’s 2013 Stock Option and Incentive Plan (the “2013 Plan”), plus any additional shares returned under the 2010 Plan and 2013 Plan as a result of the cancellation, forfeiture or other termination (other than by exercise) of awards issued pursuant to the 2010 Plan and 2013 Plan, subject in all cases to adjustment including reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock. Of the shares of common stock reserved for issuance under the 2018 Plan, no more than 2,000,000 shares can be issued to any individual participant as incentive options, non-qualified options or stock appreciation rights during any calendar year. The 2018 Plan permits the granting of incentive and non-statutory stock options, restricted and unrestricted stock awards, restricted stock units, stock appreciation rights, performance share awards, cash-based awards and dividend equivalent rights to eligible employees, directors and consultants. The option exercise price of an option granted under the 2018 Plan may not be less than 100% of the fair market value of a share of the Company’s common stock on the date the stock option is granted. Options granted under the 2018 Plan have a maximum term of 10 years and generally vest over four years. In addition, in the case of certain large stockholders, the minimum exercise price of incentive options must equal 110% of fair market value on the date of grant and the maximum term is limited to five years. Subject to overall Plan limitations, the maximum aggregate number of shares of common stock that may be issued in the form of incentive options shall not exceed 6,000,000 shares of common stock. The 2018 Plan does not allow the option holders to exercise their options prior to vesting.
The terms of awards granted during the three months ended March 31, 2018 and the method for determining the grant date fair value of the awards were consistent with those described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
The following table summarizes stock option activity for the three months ended March 31, 2018 (in thousands except share and per share information):
The intrinsic value of stock options represents the difference between the exercise price of stock options and the market price of our stock on that day for all in-the-money options. As of March 31, 2018, there was $7.42 million of total unrecognized compensation expense related to stock options and is expected to be amortized on a straight-line basis over a weighted-average remaining period of 2.28 years.
The assumptions used in the Black-Scholes option-pricing model to value stock options are as follows:
2010 Employee Stock Purchase Plan (“ESPP”)
Effective July 2010, under the terms of the ESPP, eligible employees of the Company may authorize the Company to deduct amounts from their compensation, which amounts are used to enable the employees to purchase shares of the Company’s common stock. On each January 1, the number of shares of stock reserved and available for issuance under the Plan is increased by the lesser of (i) one percent (1%) of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or (ii) 31,250 shares of common stock.
Under the ESPP, eligible employees of the Company may authorize the Company to deduct amounts from their compensation, which amounts are used to enable the employees to purchase shares of the Company’s common stock. The purchase price per share is 85% of the fair market value of the common stock as of the first date or the ending date of the applicable semi-annual purchase period, whichever is less (the “Look-Back Provision”). The 15% discount and the Look-Back Provision make the ESPP compensatory. The Black-Scholes option pricing model was used to value the employee stock purchase rights. There were no participants in the ESPP as at March 31, 2018.
Stock-Based Compensation Expense
Total stock-based compensation expense, including expense recorded for the ESPP, was as follows (in thousands):
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SUBSEQUENT EVENTS |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 10. SUBSEQUENT EVENTS
On April 12, 2018, the Board of Directors of the Company approved and commenced a management and administrative personnel reorganization plan furthering its on-going efforts to effectively align Company resources. In connection with this plan, the Company eliminated all non-essential salaried positions by April 30, 2018. The Company expects to record exit charges, in the form of termination benefits of approximately $1.2 million in connection therewith.
The Company has decided to discontinue further development of Sollpura and blisibimod and devote its time and resources to identifying and evaluating strategic alternatives. The process is aimed at identifying opportunities to diversify the Company’s pipeline, including through potential strategic combinations. If a strategic transaction is not consummated, the Company may be required to dissolve or liquidate. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and do not contain all the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited Condensed Consolidated financial statements and notes thereto 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 year ended December 31, 2017, filed with the SEC on March 5, 2018. In the opinion of management, the accompanying unaudited Condensed Consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary to present fairly the Company’s interim consolidated financial information. The results for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other period. The consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements as of that date but it does not include all the information and notes required by U.S. GAAP.
The Company has evaluated events and transactions subsequent to the balance sheet date and has disclosed all events or transactions that occurred subsequent to the balance sheet date but prior to filing this Quarterly Report on Form 10-Q that would require recognition or disclosure in the unaudited Condensed Consolidated Financial Statements. |
Use of Estimates | Use of Estimates
The preparation of these consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to clinical trial accruals, tax provision, stock-based compensation, warrant liabilities, and computation of beneficial conversion features. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. |
Financial Instruments with Characteristics of Both Equity and Liabilities | Financial Instruments with Characteristics of Both Equity and Liabilities
The Company has issued certain financial instruments, including warrants to purchase common stock, which have characteristics of both liabilities and equity. Financial instruments such as warrants that are classified as liabilities are fair valued upon issuance and are re-measured at fair value at subsequent reporting periods with the resulting change in fair value recorded in other income/(expense). The fair value of warrants is estimated using valuation models that require the input of subjective assumptions including stock price volatility, expected life, and the probability of future equity issuances. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, (ASU 2017-11). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures, but does not expect it to have a significant impact.
In
May 2017, the FASB issued, ASU-2017-09, Compensation—Stock Compensation (Topic 718). This guidance clarifies
when changes to the terms and conditions of share-based awards must be accounted for as modifications. The guidance does not
change the accounting treatment for modifications. The Company adopted this guidance from January 1, 2018 and it did not have
a material impact on the its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU is a comprehensive new leases standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows.
In May 2014,
the FASB issued Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers (ASC Topic 606). The standards update outlines a single comprehensive
model for entities to utilize to recognize revenue when it transfers goods or services to customers in an amount that
reflects the consideration that will be received in exchange for the goods and services. Additional disclosures will
also be required to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. In 2016, the FASB issued accounting standards updates to address implementation issues and to
clarify the guidance for identifying performance obligations, licenses and determining if a company is the principal or agent
in a revenue arrangement. In August 2015, the FASB issued ASU 2015-14,
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date
of ASU 2014-09. The mandatory adoption date of ASC 606 for the Company is now January 1, 2018. There are two methods of
adoption allowed, either a “full” retrospective adoption or a “modified” retrospective
adoption. The Company adopted the standard from January 1, 2018, however, given that the Company is not generating
revenue and has no revenue contracts, the adoption of this guidance did not impact its consolidated financial
statements. |
NET LOSS PER SHARE (Tables) |
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Schedule of Calculation of Net Income (Loss) Per Common Share | The following table summarizes the Company’s calculation of net loss per common share (in thousands except share and per share amounts):
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Schedule of Antidilutive Securities | The following outstanding options, warrants, and Series X convertible preferred stock that are potentially dilutive securities were excluded from the computation of diluted net loss per share, as the effect of including them would have been antidilutive.
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present the Company’s fair value hierarchy for all its financial assets and liabilities (including those in cash and cash equivalents), in thousands, by major security type measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 (in thousands):
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Schedule of Changes in Level 3 Warrant Liability | The following table summarizes the changes in the Company’s Level 3 warrant liability (in thousands):
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WARRANT LIABILITY (Tables) |
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Summary of Fair Value Assumptions | The decrease in fair value of the warrant liability was recorded as non-operating income during the three months ended March 31, 2018. The Company estimated the fair value of the warrants using the Black-Scholes model with the following valuation assumptions
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STOCKHOLDERS' EQUITY (Tables) |
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Schedule of Shares Reserved for Issuance | At March 31, 2018, the Company had reserved the following shares for future issuance:
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Schedule of Fair Value Assumptions | The Company measured the fair value of the warrants from the Initial and Second Closing using the Black-Scholes option pricing model on issuance date based on the following assumptions:
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SHARE-BASED COMPENSATION PLANS (Tables) |
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Summary of Option Activity | The following table summarizes stock option activity for the three months ended March 31, 2018 (in thousands except share and per share information):
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Schedule of Stock-Based Compensation Expense | Total stock-based compensation expense, including expense recorded for the ESPP, was as follows (in thousands):
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Summary of Fair Value Assumptions for Stock Options and Stock Purchase Rights | The assumptions used in the Black-Scholes option-pricing model to value stock options are as follows:
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BUSINESS OF THE COMPANY (Details) - USD ($) $ in Thousands |
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[1] | Mar. 31, 2017 |
Dec. 31, 2016 |
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Business Of Company | |||||||
Accumulated Deficit | $ 442,152 | $ 434,428 | |||||
Reduction in workforce | 90.00% | ||||||
Cash and cash equivalents | $ 8,086 | $ 2,196 | $ 20,652 | $ 20,843 | |||
|
NET LOSS PER SHARE (Schedule of Calculation of Net Loss Per Common Share) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|||
Numerator | ||||
Net loss | $ (7,724) | $ (11,207) | ||
Deemed dividend attributable to preferred stock | (1,540) | (2,503) | ||
Net loss applicable to common stockholders | $ (9,264) | $ (13,710) | ||
Denominator | ||||
Weighted average common shares oustanding | 22,166,869 | 6,759,567 | ||
Basic and diluted net loss per share | [1] | $ (0.42) | $ (2.03) | |
|
NET LOSS PER SHARE (Schedule of Antidilutive Securities) (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 25,450,109 | 1,056,086 |
Options To Purchase Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 6,724,345 | 750,355 |
Warrants to purchase common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 18,725,764 | 274,801 |
Series X Convertible Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 30,930 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Recurring [Member] - Money Market Funds [Member] - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | $ 7,989 | $ 2,097 |
Liabilities measured on a recurring basis | ||
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | ||
Liabilities measured on a recurring basis | ||
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | ||
Liabilities measured on a recurring basis | 704 | 4,457 |
Estimated Fair Value [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured on a recurring basis | 7,989 | 2,097 |
Liabilities measured on a recurring basis | $ 704 | $ 4,457 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Changes in Level 3 Warrant Liability) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Fair Value Of Financial Instruments Schedule Of Changes In Level 3 Warrant Liability Details | |
Beginning balance | $ 4,457 |
Decrease in fair value of warrant liability from January 1 to March 31, 2018 | (3,290) |
Balance reclassified to additional paid-in capital upon exercise of warrants | (63) |
Ending balance | $ 704 |
WARRANT LIABILITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 28, 2017 |
Mar. 31, 2018 |
Jan. 31, 2018 |
Dec. 31, 2017 |
Oct. 31, 2017 |
May 22, 2017 |
|
Exercise price of warrant | $ 1.89 | |||||
Reverse split stock | one-for-eight | |||||
Remain unchange Common stock authorized shares | 100,000,000 | 100,000,000 | ||||
Increase decrease in to warrant liability | $ 3,200 | |||||
Fair value of warrant liability | 704 | $ 4,457 | ||||
Warrant [Member] | ||||||
Exercise price of warrant | $ 1.8918 | |||||
Increase decrease in to warrant liability | $ 14,700 | |||||
Warrant [Member] | Tranche One [Member] | ||||||
Number of shares per warrants | 3,750,007 | 30,000,000 | ||||
Exercise price of warrant | $ 4.40 | $ 0.55 | $ 1.55 | $ 1.8918 | ||
Increase decrease in to warrant liability | $ 10,200 | |||||
Fair value of warrant liability | $ 700 | $ 4,500 | ||||
Warrant [Member] | Tranche Two [Member] | ||||||
Number of shares per warrants | 3,750,007 | 30,000,000 | ||||
Exercise price of warrant | $ 4.00 | $ 0.50 | $ 1.25 |
WARRANT LIABILITY (Summary of Fair Value Assumptions) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
| |
Warrant Liability Summary Of Fair Value Assumptions Details | |
Common stock price | $ 0.32 |
Exercise price | $ 1.89 |
Expected Volatility | 132.10% |
Dividend Yield | 0.00% |
Risk-Free Interest Rate | 2.53% |
Expected Term (years) | 4 years 29 days |
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018
USD ($)
ft²
|
Dec. 31, 2007
USD ($)
|
|
Loss Contingencies [Line Items] | ||
Square footage of operating facility, in square feet | ft² | 8,000 | |
Amgen Inc [Member] | Collaborative Arrangement [Member] | ||
Loss Contingencies [Line Items] | ||
License initiation fees | $ 6,000 | |
Amgen Inc [Member] | Maximum [Member] | ||
Loss Contingencies [Line Items] | ||
Additional milestone payments upon the achievement of certain development and regulatory milestones | $ 33,000 | |
Eli Lilly [Member] | Maximum [Member] | ||
Loss Contingencies [Line Items] | ||
Additional milestone payments upon the achievement of certain development and regulatory milestones for capsule products | 33,500 | |
Additional milestone payments upon the achievement of certain development and regulatory milestones for reformulated products | 9,500 | |
Royalty obligation, sales amount | $ 100,000 |
STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 |
Jan. 31, 2018 |
Oct. 31, 2017 |
Oct. 27, 2017 |
Oct. 23, 2017 |
Jun. 30, 2017 |
Apr. 28, 2017 |
Sep. 30, 2016 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Oct. 28, 2017 |
Oct. 05, 2017 |
May 22, 2017 |
Nov. 16, 2016 |
|
Class of Stock [Line Items] | ||||||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||||||||||
Preferred stock, par value per share | $ 0.001 | $ 0.001 | ||||||||||||
Common stock, par value per share | 0.001 | 0.001 | $ 0.001 | |||||||||||
Exercise price of warrants | $ 1.89 | $ 1.89 | ||||||||||||
Stock available for future issuance | $ 100,000 | $ 100,000 | ||||||||||||
Common stock, shares issued | 26,179,302 | 26,179,302 | 13,854,491 | |||||||||||
Tranche 1 Warrants [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Number of shares called by warrant(s) | 30,000,000 | 30,000,000 | ||||||||||||
Exercise price of warrants | $ 0.55 | $ 4.40 | $ 0.55 | |||||||||||
Maturity date | Apr. 28, 2022 | |||||||||||||
Shares adjusted | 3,750,007 | |||||||||||||
Tranche 2 Warrants [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Number of shares called by warrant(s) | 30,000,000 | 30,000,000 | ||||||||||||
Exercise price of warrants | $ 0.50 | $ 4.00 | $ 0.50 | |||||||||||
Maturity date | Oct. 27, 2017 | |||||||||||||
Shares adjusted | 3,750,007 | |||||||||||||
Warrant [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Exercise price of warrants | $ 1.8918 | |||||||||||||
Shelf Registration [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Maximum amount of shares of common stock, preferred stock, debt securities and/or warrants that may be issued under a shelf registration statement | $ 100,000 | |||||||||||||
Common Stock [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Outstanding common stock held by non-affiliates increases | $ 75,000 | $ 75,000 | ||||||||||||
Class Y Convertible Preferred Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Preferred stock, shares authorized | 2,067,522 | 2,067,522 | ||||||||||||
Deemed dividend | $ 1,500 | $ 1,500 | ||||||||||||
Series X Convertible Preferred Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||||||||||
Preferred stock, par value per share | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||
Preferred units sold, price per unit | $ 1,000 | |||||||||||||
Shares per warrant | 15.87 | |||||||||||||
Shares issued | 17,000 | |||||||||||||
Number of shares called by warrant(s) | 269,779 | |||||||||||||
Number of shares converted | 17,000 | |||||||||||||
Exercise price of warrants | $ 18.90 | |||||||||||||
Tranche Two [Member] | Warrant [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares per warrant | 1,665,115 | 9,693,263 | 1,665,115 | 3,653,986 | 96,021 | |||||||||
Number of shares called by warrant(s) | 30,000,000 | 3,750,007 | 30,000,000 | |||||||||||
Exercise price of warrants | $ 0.50 | $ 1.25 | $ 4.00 | $ 0.50 | ||||||||||
Warrants outstanding and exercisable | 8,028,148 | 8,028,148 | ||||||||||||
Warrants term | 5 years | |||||||||||||
Tranche One [Member] | Warrant [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares per warrant | 236,318 | 6,920,211 | 236,318 | |||||||||||
Number of shares called by warrant(s) | 30,000,000 | 3,750,007 | 30,000,000 | |||||||||||
Exercise price of warrants | $ 0.55 | $ 1.55 | $ 4.40 | $ 0.55 | $ 1.8918 | |||||||||
Warrants outstanding and exercisable | 3,507,626 | 3,507,626 | ||||||||||||
Warrants term | 5 years 6 months | |||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Proceeds from issuance of private placement | $ 2,700 | $ 11,100 | ||||||||||||
Securities Purchase Agreement [Member] | Common Stock [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued | 7,625,741 | |||||||||||||
Common stock, par value per share | $ 1.25 | |||||||||||||
Securities Purchase Agreement [Member] | Class Y Convertible Preferred Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued | 2,067,522 | |||||||||||||
Number of shares converted | 2,067,522 | 2,067,522 | ||||||||||||
Common stock, par value per share | $ 1.25 | |||||||||||||
Securities Purchase Agreement [Member] | Issuance Date Tranche Two [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued | 7,625,741 | |||||||||||||
Common stock, par value per share | $ 1.25 | |||||||||||||
Securities Purchase Agreement [Member] | Issuance Date Tranche Two [Member] | Class Y Convertible Preferred Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued | 2,067,522 | |||||||||||||
Number of shares called by warrant(s) | 1 | |||||||||||||
Number of shares converted | 2,067,522 | 2,067,522 | ||||||||||||
Common stock, par value per share | $ 1.25 | |||||||||||||
Exercise price of warrants | $ 1.25 | |||||||||||||
Securities Purchase Agreement [Member] | Issuance Date Tranche One [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued | 2,306,737 | |||||||||||||
Number of shares called by warrant(s) | 3 | |||||||||||||
Common stock, par value per share | $ 1.25 | |||||||||||||
Exercise price of warrants | $ 1.55 | |||||||||||||
Lincoln Park Capital Fund [Member] | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Equity purchase agreement, authorized amount of equity authorized for sale | $ 10,000 | |||||||||||||
Commitment fee | $ 300 | |||||||||||||
Stock issued for sell | 181,708 | 1,870,411 | ||||||||||||
Proceeds from sale of stock | $ 3,100 | |||||||||||||
Common stock, shares issued | 139,848 | 139,848 |
STOCKHOLDERS' EQUITY (Schedule of Shares Reserved for Future Issuance) (Details) |
Mar. 31, 2018
shares
|
---|---|
Shares reserved for future issuance | 26,538,435 |
Stock Options [Member] | |
Shares reserved for future issuance | 6,724,345 |
Warrant [Member] | |
Shares reserved for future issuance | 18,725,764 |
Stock Option Plan [Member] | |
Shares reserved for future issuance | 584,257 |
ESPP [Member] | |
Shares reserved for future issuance | 504,069 |
STOCKHOLDERS' EQUITY (Schedule of Fair Value of the Warrants) (Details) - $ / shares |
1 Months Ended | 3 Months Ended |
---|---|---|
Oct. 31, 2017 |
Mar. 31, 2018 |
|
Subsidiary, Sale of Stock [Line Items] | ||
Common stock price | $ 0.32 | |
Exercise price | $ 1.89 | |
Expected volatility | 132.10% | |
Dividend yield | 0.00% | |
Risk-free interest rate | 2.53% | |
Expected term (years) | 4 years 29 days | |
Private Placement [Member] | Initial Closing [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Common stock price | $ 1.72 | |
Exercise price | $ 1.55 | |
Expected volatility | 110.00% | |
Dividend yield | 0.00% | |
Risk-free interest rate | 1.98% | |
Expected term (years) | 5 years 6 months | |
Private Placement [Member] | Second closing [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Common stock price | $ 1.50 | |
Exercise price | $ 1.25 | |
Expected volatility | 113.00% | |
Dividend yield | 0.00% | |
Risk-free interest rate | 2.18% | |
Expected term (years) | 5 years |
SHARE-BASED COMPENSATION PLANS (Narrative) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
shares
| |
2018 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based compensation, shares authorized under plan | 6,000,000 |
Purchase price as percentage of fair market value of common stock | 100.00% |
Maximum term for options granted under the plan | 10 years |
Maximum shares allowed to be issued per individual | 2,000,000 |
Vesting period | 4 years |
Maximum shares allowed to be issued as incentive options | 6,000,000 |
2018 Plan [Member] | Stockholder Group One [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Purchase price as percentage of fair market value of common stock | 110.00% |
Maximum term for options granted under the plan | 5 years |
Employee Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional shares authorized | 31,250 |
Purchase price as percentage of fair market value of common stock | 85.00% |
Discount percentage on issuance of stock | 15.00% |
Percentage of the number of shares of common stock by which the number of shares available for sale shall be increased | 1.00% |
Employee Stock [Member] | 2018 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ | $ 7,420 |
Unrecognized compensation cost, period of recognition | 2 years 3 months 11 days |
SHARE-BASED COMPENSATION PLANS (Summary of Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Number of Options | ||
Balance at December 31, 2017 | 1,066,121 | |
Granted | 6,190,674 | |
Exercised | ||
Cancelled and expired | (4,257) | |
Forfeited | (528,283) | |
Balance at March 31, 2018 | 6,724,345 | 1,066,121 |
Exercisable at March 31, 2018 | 2,576,796 | |
Weighted-Average Exercise Price | ||
Balance at December 31, 2017 | $ 10.04 | |
Granted | 1.65 | |
Exercised | ||
Cancelled and expired | 30.43 | |
Forfeited | 1.65 | |
Balance at March 31, 2018 | 2.96 | $ 10.04 |
Exercisable at March 31, 2018 | $ 4.01 | |
Weighted-Average Remaining Contractual Life in Years | ||
Outstanding | 9 years 6 months | 8 years 8 months 5 days |
Exercisable at March 31, 2018 | 9 years 2 months 23 days | |
Aggregate Intrinsic Value | ||
Balance at December 31, 2017 | $ 18 | |
Balance at March 31, 2018 | $ 18 | |
Exercisable at March 31, 2018 |
SHARE-BASED COMPENSATION PLANS (Summary of Fair Value Assumptions) (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected Volatility | 132.10% | |
Dividend Yield | 0.00% | |
Risk-Free Interest Rate | 2.53% | |
Expected Term (years) | 4 years 29 days | |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected Volatility | 106.00% | 106.00% |
Dividend Yield | 0.00% | 0.00% |
Risk-Free Interest Rate | 2.24% | 2.12% |
Expected Term (years) | 5 years 9 months 25 days | 6 years 7 days |
Weighted-average fair value per option | $ 1.35 | $ 4.20 |
SHARE-BASED COMPENSATION PLANS (Schedule of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total | $ 3,266 | $ 1,086 |
Research and Development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total | 1,168 | 396 |
General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total | $ 2,098 | $ 690 |
SUBSEQUENT EVENTS (Details) $ in Thousands |
1 Months Ended |
---|---|
Apr. 30, 2018
USD ($)
| |
Subsequent Event [Member] | One-time Termination Benefits [Member] | |
Restructuring Charges | $ 1,200 |
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