10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2019

OR

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

For the transition period from                      to                     

Commission File No. 001-36672

EYEGATE PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	98-0443284
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

271 Waverley Oaks Road

Suite 108

Waltham, MA 02452

(Address of Principal Executive Offices, including zip code)

(781) 788-8869

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	EYEG	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   x Yes    ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit).   x Yes    ¨ No

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

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

¨ Yes   x No

At August 6, 2019, there were 45,675,737 shares of the registrant’s common stock outstanding. 

EYEGATE PHARMACEUTICALS, INC.

Table of Contents

QUARTERLY REPORT ON FORM 10-Q

For the Period Ended June 30, 2019

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	4
	Condensed Consolidated Statement of Stockholders’ Equity (Deficit) (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2019 and 2018	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	30
Item 4.	Controls and Procedures.	30
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	31
Item 1A.	Risk Factors.	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	31
Item 3.	Defaults Upon Senior Securities.	31
Item 4.	Mine Safety Disclosures.	31
Item 5.	Other Information.	31
Item 6.	Exhibits.	31
SIGNATURES		32

1

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The forward-looking statements are principally, but not exclusively, contained in “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management’s confidence or expectations, and our plans, objectives, expectations and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “goals,” “sees,” “estimates,” “projects,” “predicts,” “intends,” “think,” “potential,” “objectives,” “optimistic,” “strategy,” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in detail under the heading “Item 1A. Risk Factors” beginning on page 22 of our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or the SEC, on March 1, 2019, or the Annual Report. You should carefully review all of these factors, as well as other risks described in our public filings, and you should be aware that there may be other factors, including factors of which we are not currently aware, that could cause these differences. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information.

EyeGate Pharmaceuticals, Inc. is referred to herein as “we,” “our,” “us,” and “the Company.”

2

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements.

EYEGATE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2019 (unaudited)			December 31, 2018
ASSETS
Current Assets:
Cash and Cash Equivalents	$	4,465,086		$	8,004,237
Prepaid Expenses and Other Current Assets		551,652			455,760
Right-of-Use Assets		109,512			-
Current Portion of Refundable Tax Credit Receivable		1,639			18,436
Total Current Assets		5,127,889			8,478,433
Property and Equipment, Net		30,182			43,518
Restricted Cash		45,000			45,000
Goodwill		1,525,896			1,525,896
Intangible Assets and In-Process R&D, Net		4,143,564			4,156,064
Other Assets		23,011			31,706
Total Assets	$	10,895,542		$	14,280,617
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	96,580		$	63,654
Accrued Expenses		737,725			1,114,728
Lease Liabilities		109,512			-
Deferred Revenue		-			2,686,000
Total Current Liabilities		943,817			3,864,382
Non-Current Liabilities:
Contingent Consideration		1,210,000			1,210,000
Deferred Tax Liability		269,968			269,968
Total Non-Current Liabilities		1,479,968			1,479,968
Total Liabilities		2,423,785			5,344,350
Commitments and Contingencies (Note 10)
Stockholders’ Equity:
Preferred Stock, $0.01 Par Value: 9,994,184 shares authorized; 3,750 designated Series A, 0 shares issued and outstanding at June 30, 2019 and December 31, 2018; 10,000 designated Series B, 0 shares issued and outstanding at June 30, 2019 and December 31, 2018; 10,000 shares designated Series C, 4,092 shares issued and outstanding at June 30, 2019 and December 31, 2018		41			41
Common Stock, $0.01 Par Value: 120,000,000 shares authorized; 45,675,737 and 45,578,878 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		456,758			437,939
Additional Paid-In Capital		101,996,431			101,514,154
Accumulated Deficit		(94,116,661	)		(93,150,198	)
Accumulated Other Comprehensive Income		135,188			134,331
Total Stockholders’ Equity		8,471,757			8,936,267
Total Liabilities and Stockholders’ Equity	$	10,895,542		$	14,280,617

See Accompanying Notes to the Condensed Consolidated Financial Statements.

3

EYEGATE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Collaboration Revenue	$	-		$	242,012		$	2,686,000		$	1,338,020
Operating Expenses:
Research and Development		(763,896	)		(1,837,799	)		(1,485,373	)		(4,358,808	)
General and Administrative		(1,105,904	)		(1,202,531	)		(2,241,787	)		(2,156,579	)
Total Operating Expenses		(1,869,800	)		(3,040,330	)		(3,727,160	)		(6,515,387	)
Operating Loss Before Other Expense		(1,869,800	)		(2,798,318	)		(1,041,160	)		(5,177,367	)
Other Income, Net:
Interest Income		32,636			18,367			74,913			18,393
Interest Expense		(108	)		(304	)		(216	)		(608	)
Total Other Income, Net		32,528			18,063			74,697			17,785
Net Loss	$	(1,837,272	)	$	(2,780,255	)	$	(966,463	)	$	(5,159,582	)
Net Loss per Common Share- Basic and Diluted	$	(0.04	)	$	(0.07	)	$	(0.02	)	$	(0.19	)
Weighted Average Shares Outstanding- Basic and Diluted		43,800,288			37,484,329			43,785,475			27,426,668
Net Loss	$	(1,837,272	)	$	(2,780,255	)	$	(966,463	)	$	(5,159,582	)
Other Comprehensive Loss:
Foreign Currency Translation Adjustments		1,355			2,006			857			3,240
Comprehensive Loss	$	(1,835,917	)	$	(2,778,249	)	$	(965,606	)	$	(5,156,342	)

See Accompanying Notes to the Condensed Consolidated Financial Statements.

4

EYEGATE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited) 

									Additional		Accumulated Other					Total
	Series C Preferred Stock				Common Stock				Paid-In		Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance at March 31, 2019		4,092	$	41		45,575,737	$	455,758	$	101,729,241	$	133,833	$	(92,279,389	)	$	10,039,484
Stock-Based Compensation										236,190							236,190
Issuance of Shares of Common Stock from Warrant Exercises						100,000		1,000		31,000							32,000
Foreign Currency Translation Adjustment												1,355					1,355
Net Loss														(1,837,272	)		(1,837,272	)
Balance at June 30, 2019		4,092	$	41		45,675,737	$	456,758	$	101,996,431	$	135,188	$	(94,116,661	)	$	8,471,757

	Series B Preferred Stock						Series C Preferred Stock						Common Stock				Additional Paid			Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares			Amount			Shares			Amount			Shares		Amount		In Capital			Income		Deficit			Equity
Balance at March 31, 2018		600		$	6			-		$	-			17,257,255	$	172,573	$	89,694,834		$	128,707	$	(84,718,102	)	$	5,278,018
Stock-Based Compensation																		145,309								145,309
Issuance of Stock in Offering, Net of Offering Costs of $1,141,238								6,536			65			14,730,000		147,299		10,001,792								10,149,156
Conversion of Series B Preferred Stock into Common Stock		(600	)		(6	)								400,000		4,000		(3,994	)							-
Conversion of Series C Preferred Stock into Common Stock								(2,444	)		(24	)		7,638,750		76,388		(76,364	)							-
Issuance of Shares of Common Stock from Warrant Exercises														2,356,875		23,569		730,656								754,225
Foreign Currency Translation Adjustment																					2,006					2,006
Net Loss																							(2,780,255	)		(2,780,255	)
Balance at June 30, 2018		-		$	-			4,092		$	41			42,382,880	$	423,829	$	100,492,233		$	130,713	$	(87,498,357	)	$	13,548,459

See Accompanying Notes to the Condensed Consolidated Financial Statements.

5

EYEGATE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited) 

										Additional			Accumulated Other					Total
	Series C Preferred Stock				Common Stock					Paid-In			Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Shares			Amount		Capital			Income		Deficit			Equity
Balance at December 31, 2018		4,092	$	41		45,578,878		$	437,939	$	101,514,154		$	134,331	$	(93,150,198	)	$	8,936,267
Stock-Based Compensation											469,096								469,096
Cancellation and Correction of Restricted Stock Par Value						(3,141	)		17,819		(17,819	)							-
Issuance of Shares of Common Stock from Warrant Exercises						100,000			1,000		31,000								32,000
Foreign Currency Translation Adjustment														857					857
Net Loss																(966,463	)		(966,463	)
Balance at June 30, 2019		4,092	$	41		45,675,737		$	456,758	$	101,996,431		$	135,188	$	(94,116,661	)	$	8,471,757

	Series B Preferred Stock						Series C Preferred Stock						Common Stock				Additional  Paid			Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares			Amount			Shares			Amount			Shares		Amount		In Capital			Income		Deficit			Equity (Deficit)
Balance at December 31, 2017, as filed		600		$	6			-		$	-			17,257,255	$	172,573	$	89,589,681		$	127,473	$	(91,816,655	)	$	(1,926,922	)
Cumulative effect of change in accounting principle (note 2)																							9,477,880			9,477,880
Balance at January 1, 2018		600			6			-			-			17,257,255		172,573		89,589,681			127,473		(82,338,775	)		7,550,958
Stock-Based Compensation																		290,856								290,856
Issuance of Stock in Offering, Net of Offering Costs of $1,141,238								6,536			65			14,730,000		147,299		9,961,398								10,108,762
Conversion of Series B Preferred Stock into Common Stock		(600	)		(6	)								400,000		4,000		(3,994	)							-
Conversion of Series C Preferred Stock into Common Stock								(2,444	)		(24	)		7,638,750		76,388		(76,364	)							-
Issuance of Shares of Common Stock from Warrant Exercises														2,356,875		23,569		730,656								754,225
Foreign Currency Translation Adjustment																					3,240					3,240
Net Loss																							(5,159,582	)		(5,159,582	)
Balance at June 30, 2018		-		$	-			4,092		$	41			42,382,880	$	423,829	$	100,492,233		$	130,713	$	(87,498,357	)	$	13,548,459

See Accompanying Notes to the Condensed Consolidated Financial Statements.

6

EYEGATE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended June 30,
	2019			2018
Operating Activities:
Net Loss	$	(966,463	)	$	(5,159,582	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation and Amortization of Intangible Assets		25,836			15,932
Amortization of Right-of-Use Assets		79,641			-
Stock-Based Compensation		469,096			290,856
Changes in Operating Assets and Liabilities:
Prepaid Expenses and Other Current Assets		(95,893	)		14,746
Refundable Tax Credit Receivable		16,672			10,076
Other Assets		8,695			-
Accounts Payable		32,927			(350,064	)
Lease Liabilities		(79,641	)		-
Deferred Revenue		(2,686,000	)		577,208
Unbilled Revenue		-			(689,928	)
Accrued Expenses		(373,860	)		(768,996	)
Net Cash Used in Operating Activities		(3,568,990	)		(6,059,752	)
Financing Activities:
Proceeds from Stock Offerings, Net of Offering Costs		-			10,108,762
Exercise of Warrants		32,000			754,225
Equipment Financing Payments		(3,143	)		(6,322	)
Net Cash Provided by Financing Activities		28,857			10,856,665
Effect of Exchange Rate Changes on Cash		982			1,861
Net (Decrease) Increase in Cash		(3,539,151	)		4,798,774
Cash, Including Restricted Cash, Beginning of Period		8,049,237			7,851,029
Cash, Including Restricted Cash, End of Period	$	4,510,086		$	12,649,803
Supplemental Disclosures of Noncash Operating and Financing Activities
Creation of Right-of-Use Assets and Related Lease Liabilities	$	189,153		$	-
Conversion of Preferred Stock into Common Stock	$	-		$	36,637
Cancellation and Correction of Restricted Stock Par Value	$	17,819		$	-

See Accompanying Notes to the Condensed Consolidated Financial Statements.

7

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

1. Organization, Business

EyeGate Pharmaceuticals, Inc. (“EyeGate” or the “Company”), a Delaware corporation, began operations in December 2004 and is a clinical-stage specialty pharmaceutical company that is focused on developing and commercializing products for treating diseases and disorders of the eye. The Company accomplishes this by leveraging its two proprietary platform technologies, crosslinked thiolated carboxymethyl hyaluronic acid (“CMHA-S”) and the iontophoresis drug delivery system. The Company’s first platform is for the development of products using CMHA-S, a modified form of the natural polymer hyaluronic acid, which is a gel that possesses unique physical and chemical properties such as hydrating and healing properties when applied to the ocular surface. The ability of CMHA-S to adhere longer to the ocular surface, resist degradation and protect the ocular surface makes it well-suited for treating various ocular surface injuries. Secondly, the Company has been developing EGP-437, which incorporates a reformulated topically active corticosteroid, Dexamethasone Phosphate, that is delivered into the ocular tissues through the Company’s proprietary innovative drug delivery system, the EyeGate® II Delivery System (“EGP-437 Combination Product”).

As of June 30, 2019, there were 45,675,737 shares of Common Stock outstanding, no shares of Series A Preferred Stock outstanding, no shares of Series B Preferred Stock outstanding, and 4,092 shares of Series C Preferred Stock outstanding.

Since its inception, EyeGate has devoted substantially all of its efforts to business planning, research and development, and raising capital.

The accompanying Condensed Consolidated Financial Statements have been prepared assuming that EyeGate will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At June 30, 2019, EyeGate had Cash and Cash Equivalents of $4,465,086, and an Accumulated Deficit of $94,116,661. EyeGate has incurred losses and negative cash flows since inception, and future losses are anticipated. The Company anticipates having sufficient cash to fund planned operations through October 31, 2019, however, the acceleration or reduction of cash outflows by Company management can significantly impact the timing for raising additional capital to complete development of its products. To continue development, EyeGate will need to raise additional capital through equity financing, license agreements, and/or additional U.S. government grants. Although historically the Company has been successful at raising capital, additional capital may not be available on terms favorable to EyeGate, if at all. On May 13, 2019, the SEC declared effective EyeGate’s registration statement on Form S-3, registering a total of $50,000,000 of its securities for sale to the public from time to time in what is known as a “shelf offering”. The Company does not know if any future offerings, including offerings pursuant to its shelf registration statement, will succeed. Accordingly, no assurances can be given that Company management will succeed in these endeavors. The Company’s recurring losses from operations have caused management to determine there is substantial doubt about the Company’s ability to continue as a going concern. The Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.

8

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries, EyeGate Pharma S.A.S. and Jade Therapeutics, Inc. (“Jade”), collectively referred to as “the Company”. All inter-company balances and transactions have been eliminated in consolidation. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and disclosures normally included in Condensed Consolidated Financial Statements prepared in accordance with U.S. GAAP have been condensed or eliminated. Accordingly, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the annual financial statements of the Company as of and for the year ended December 31, 2018.

Unaudited Interim Financial Information

The accompanying interim financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. The year-end balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for an interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of expenses during the reporting periods. The Company makes significant estimates and assumptions in recording the accruals for its clinical trial and research activities, establishing the useful lives of intangible assets and property and equipment, and conducting impairment reviews of long-lived assets. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Although the Company monitors and regularly assesses these estimates, actual results could differ significantly from these estimates. The Company records changes in estimates in the period that it becomes aware of the change.

 Research and Development Expenses

The Company expenses research and development (“R&D”) expenditures as incurred. R&D expenses are comprised of costs incurred in performing R&D activities, including salaries, benefits, facilities, research-related overhead, sponsored research costs, contracted services, license fees, expenses related to generating, filing, and maintaining intellectual property, and other external costs. Because the Company believes that, under its current process for developing its products, the viability of the products is essentially concurrent with the establishment of technological feasibility, no costs have been capitalized to date.

In-process Research and Development

The Company records in-process R&D projects acquired in asset acquisitions that have not reached technological feasibility and which have no alternative future use. For in-process R&D projects acquired in business combinations, the Company capitalizes the in-process R&D project and periodically evaluates this asset for impairment until the R&D process has been completed. Once the R&D process is complete, the Company amortizes the R&D asset over its remaining useful life. At June 30, 2019 and December 31, 2018, there is $3,912,314 of in-process R&D, as part of intangible assets and in-process R&D on the Condensed Consolidated Balance Sheets.

9

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

2. Summary of Significant Accounting Policies - (continued)

Intangible Assets

The Company records intangible assets acquired in asset acquisitions of proprietary technology. The Company capitalizes intangible assets, amortizes them over the estimated useful life, and periodically evaluates the assets for impairment. At June 30, 2019 and December 31, 2018, there is $231,250 and $243,750 of net intangible assets, respectively, as part of intangible assets and in-process R&D on the Condensed Consolidated Balance Sheets.

Accrued Clinical Expenses

As part of the Company’s process of preparing the Condensed Consolidated Financial Statements, the Company is required to estimate its accrued expenses. This process includes reviewing open contracts and purchase orders, communicating with its applicable personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated costs incurred for the service when the Company has not yet been invoiced or otherwise notified of actual costs. The majority of the Company’s service providers invoice monthly in arrears for services performed. The Company makes estimates of its accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at the time. The Company periodically confirms the accuracy of these estimates with the service providers and makes adjustments if necessary.

Related Party Transactions

The Company has entered into certain related-party transactions, making payments for services to one vendor, nine consultants and two public universities for the six months ended June 30, 2019, all of whom also are stockholders of the Company. These transactions generally are ones that involve a stockholder or option holder of the Company to whom we also make payments during the year, typically as a consultant or a service provider. The amounts recorded or paid are not material to the accompanying Condensed Consolidated Financial Statements, with the exception of payments related to manufacturing services to one vendor in the amount of approximately $185,000 during the six months ended June 30, 2019.

Net Loss per Share – Basic and Diluted

Basic and diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding for the period, which, for basic net loss per share, does not include unvested restricted common stock that has been issued but is subject to forfeiture of 1,806,218 shares for the three and six months ended June 30, 2019 and 57,510 shares for the three and six months ended June 30, 2018.

Dilutive common equivalent shares consist of stock options, warrants, and preferred stock and are calculated using the treasury stock method, which assumes the repurchase of common shares at the average market price during the period. Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options or warrants. Common equivalent shares do not qualify as participating securities. In periods where the Company records a net loss, unvested restricted common stock and potential common stock equivalents are not included in the calculation of diluted net loss per share as their effect would be anti-dilutive. 

	June 30, 2019 (unaudited)		June 30, 2018 (unaudited)
Common Stock Warrants		40,744,086		42,255,336
Employee Stock Options		2,777,416		2,106,035
Preferred Stock		12,787,500		12,787,500
Total Shares of Potential Common Stock Equivalents		56,309,002		57,148,871

Fair Value of Financial Instruments

The carrying amounts of all current assets and current liabilities approximate their fair values due to the short-term nature of these items. As of June 30, 2019 and December 31, 2018, the fair value of the Company’s contingent consideration was $1,210,000 and $1,210,000, respectively.

At June 30, 2019 and December 31, 2018, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP. 

10

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

2. Summary of Significant Accounting Policies - (continued)

Revenue Recognition

The Company’s revenues are generated primarily through arrangements which generally contain multiple elements, or deliverables, including licenses and R&D activities to be performed by the Company on behalf of the licensor or grantor. Payments to EyeGate under these arrangements typically include one or more of the following: (1) nonrefundable, upfront license fees, (2) funding of discovery research efforts on a full-time equivalent basis, (3) reimbursement of research, development and intellectual property costs, (4) milestone payments, and (5) royalties on future product sales.

On July 9, 2015, the Company entered into an exclusive, worldwide licensing agreement with a subsidiary of Bausch Health Companies, Inc. (“BHC”), through which the Company granted to BHC an exclusive, worldwide commercial and manufacturing right to the Company’s EGP-437 Combination Product in the field of anterior uveitis, as well as a right of last negotiation to license its EGP-437 Combination Product for indications other than anterior uveitis (the “BHC Agreement”). Under the BHC Agreement, BHC paid to the Company an initial upfront payment of $1.0 million and the Company was eligible to receive milestone payments totaling up to $32.5 million, upon and subject to the achievement of certain specified development and commercial progress of the EGP-437 Combination Product for the treatment of anterior uveitis. The Company received milestone payments totaling $5.4 million. The Company received payments both when it crossed certain thresholds on the way to each milestone, as well as once it achieved each milestone. The Company is entitled to retain all of these payments. Effective March 14, 2019, this license agreement was voluntarily terminated by BHC reinstating to the Company all of the rights and privileges of the EGP-437 platform. Upon termination of this agreement, all amounts remaining in deferred revenue were recognized as revenue, as the Company no longer had any remaining performance obligations.

On February 21, 2017, the Company entered into another exclusive, worldwide licensing agreement with a subsidiary of BHC (the “New BHC Agreement”), through which the Company granted BHC exclusive, worldwide commercial and manufacturing rights to its EGP-437 Combination Product in the field of ocular iontophoretic treatment for post-operative ocular inflammation and pain in ocular surgery patients (the “New Field”). Under the New BHC Agreement, BHC paid the Company an initial upfront payment of $4.0 million, and the Company was eligible to receive milestone payments totaling up to approximately $99.0 million, upon and subject to the achievement of certain specified developmental and commercial progress of the EGP-437 Combination Product for the New Field. The Company received milestone payments totaling $3.4 million. The Company received payments both when it crossed certain thresholds on the way to each milestone, as well as once it achieved each milestone. The Company is entitled to retain all of these payments. Effective March 14, 2019, this license agreement was voluntarily terminated by BHC reinstating to the Company all of the rights and privileges of the EGP-437 platform. Upon termination of this agreement, all amounts remaining in deferred revenue were recognized as revenue, as the Company no longer had any remaining performance obligations.

In May 2014, the FASB issued ASU No. 2014-09, Revenues from Contracts with Customers (“Topic 606”), as subsequently amended, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for public companies for years ending after December 15, 2017, with early adoption permitted.

The Company did not elect to early adopt and adopted the new standard on January 1, 2018, using the modified retrospective method, which resulted in a cumulative effect adjustment in the amount of $9.5 million to beginning 2018 accumulated deficit and to deferred and unbilled revenue for the BHC contracts impacted by the adoption of the new standard. The changes to the method and/or timing of the Company’s revenue recognition associated with the adoption of the new standard primarily relate to the determination that there is one performance obligation in each contract with BHC and that the license combined with the R&D services is the performance obligation.

11

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

2. Summary of Significant Accounting Policies - (continued)

The Company recognizes revenue when its customer obtains control of promised services, in an amount that reflects the consideration which the Company expects to receive in exchange for those services. To determine whether arrangements are within the scope of this guidance, the Company performs the following five steps: (i) identifies the contract with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when (or as) the Company satisfies its performance obligation. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Upon adoption of ASU No. 2014-09, the Company recognizes revenue from the transaction price applied to each single performance obligation over time as milestones are reached for each performance obligation. The Company only recognizes revenue on those milestones that are within the Company’s control and any constrained variable consideration that requires regulatory approval will only be included in the transaction price when performance is complete.

The below table represents the changes in the Company’s contract liabilities:

	June 30, 2019		December 31, 2018
Contract Liabilities:
Deferred Revenue	$	-	$	2,686,000
	Six Months Ended
	June 30, 2019
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	2,686,000

In addition, the Company may receive government grant funds for specified ocular therapeutic research activities. Revenue under these grants will be recorded when the Company performs the activities specified by the terms of each grant and is entitled to the funds.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Under ASU No. 2016-02, lessees are required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and the right-to-use assets, which are asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. The Company adopted the new standard effective January 1, 2019 using the modified retrospective method. As a result, the Company recorded right-of-use leased assets and corresponding liabilities of approximately $0.137 million on January 1, 2019.

On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other, which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for the Company on January 1, 2020. The new standard is required to be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company did not early adopt ASU No. 2017-04 prior to its December 2018 impairment evaluation and is evaluating the effect that ASU No. 2017-04 will have on its Consolidated Financial Statements and related disclosures.

12

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

3. Property and Equipment

Property and equipment at June 30, 2019 and December 31, 2018 consists of the following:

	Estimated Useful Life (Years)	June 30, 2019 (unaudited)		December 31, 2018
Laboratory Equipment	3	$	62,576	$	62,576
Office Furniture	5		14,430		14,430
Leasehold Improvements	2		22,569		22,569
Total Property and Equipment, Gross			99,575		99,575
Less: Accumulated Depreciation			69,393		56,057
Total Property and Equipment, Net		$	30,182	$	43,518

Depreciation expense was $6,668 and $7,966 for the three months ended June 30, 2019 and 2018, respectively, and $13,336 and $15,932 for the six months ended June 30, 2019 and 2018, respectively.

4. Accrued Expenses

Accrued expenses at June 30, 2019 and December 31, 2018 consist of the following:

	June 30, 2019 (unaudited)		December 31,  2018
Payroll and Benefits	$	488,245	$	722,178
Professional Fees		122,398		165,894
Clinical Trials		118,010		212,540
Consulting		7,500		9,401
Short-Term Portion of Capital Financing Obligation		1,572		4,715
Total Accrued Expenses	$	737,725	$	1,114,728

5. Debt

The Company has no indebtedness other than trade and accounts payable and capital financing obligations in the ordinary course of business at June 30, 2019 and December 31, 2018.

13

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

6. Intangible Assets and In-Process R&D

Intangible assets at June 30, 2019 consist of the rights to trade-secrets and know-how related to the manufacturing of the EyeGate Ocular Bandage Gel (“OBG”). During the third quarter of 2018, the Company entered into an intellectual property license agreement with SentrX Animal Care, Inc. (“SentrX”) with respect to certain rights relating to the manufacturing of the EyeGate OBG product. The intangible assets were recorded at $250,000, representing the upfront payment paid to SentrX. Additionally, SentrX is eligible to receive milestone payments totaling up to $4.75 million, upon and subject to the achievement of certain specified development and commercial milestones. These future milestone payments to SentrX will increase the carrying value of the intangible assets. The Company’s intangible assets are amortized on a straight-line basis over the estimated useful lives. Additionally, in-process R&D at June 30, 2019 and December 31, 2018 consists of projects acquired from the acquisition of Jade that have not reached technological feasibility and which have no alternative future use. Once the R&D process is complete, the Company will amortize the R&D asset over its remaining useful life, or if the Company determines not to continue with R&D, write such assets off. The Company periodically evaluates these assets for impairment.

Intangible assets and in-process R&D at June 30, 2019 and December 31, 2018 consists of the following:

	Estimated Useful Life (Years)	June 30, 2019 (unaudited)			December 31, 2018
Trade Secrets	10	$	250,000		$	250,000
Less: Accumulated Amortization			(18,750	)		(6,250	)
Intangible Assets, Net			231,250			243,750
In-Process R&D			3,912,314			3,912,314
Total Intangible Assets and In-Process R&D, Net		$	4,143,564		$	4,156,064

Amortization expense on intangible assets was $6,250 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $12,500 and $0 for the six months ended June 30, 2019 and 2018, respectively.

7. Capital Stock

On May 24, 2016, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent”), to create an at the market equity program under which the Company can from time to time offer and sell up to 1,319,289 shares of its Common Stock through the Sales Agent. On February 21, 2017, the Company authorized the Sales Agent to restart sales under the ATM Agreement for maximum aggregate gross proceeds of up to $3,285,798. During the first quarter of 2017, the Company sold 642,150 shares of Common Stock under this agreement for total net proceeds to the Company, after deducting the placement agent fees and offering expenses, of approximately $1.8 million. No further shares of Common Stock were sold pursuant to the ATM Agreement. The ATM Agreement terminated automatically pursuant to its terms on May 24, 2019.

On June 14, 2017, the Company completed a public offering of 5,336,667 shares of Common Stock and 1,995 shares of Series B Preferred Stock (convertible into 1,330,000 shares of Common Stock), along with warrants to purchase 6,666,667 shares of Common Stock. The total net proceeds to the Company from the offering, after deducting the placement agent fees and offering expenses, were approximately $8.8 million. Additionally, the investors received, for each share of Common Stock, or for each share of Common Stock issuable upon conversion of a share of Series B Preferred Stock purchased in the public offering, warrants to purchase one share of Common Stock at an exercise price of $1.50 per share, which totaled warrants to purchase an aggregate of 6,666,667 shares of Common Stock. The warrants issued to investors became initially exercisable immediately upon issuance and terminate on June 14, 2022, five years following the date of issuance. Concurrently with the closing of the public offering, a holder elected to convert 675 shares of Series B Preferred Stock into 450,000 shares of Common Stock. Subsequently, on June 15, 2017 and April 9, 2018, holders converted 1,320 shares of Series B Preferred stock into 880,000 shares of Common Stock.

14

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

7. Capital Stock - (continued)

On April 17, 2018, the Company completed a public offering of 14,730,000 shares of Common Stock and 6,536.4 shares of Series C Preferred Stock (convertible into 20,426,250 shares of Common Stock), along with warrants to purchase 35,156,250 shares of Common Stock. The total net proceeds to the Company from the offering, after deducting the placement agent fees and offering expenses, were approximately $10.1 million. Additionally, the investors received, for each share of Common Stock, or for each share of Common Stock issuable upon conversion of a share of Series C Preferred Stock purchased in the public offering, warrants to purchase one share of Common Stock at an exercise price of $0.32 per share, which totaled warrants to purchase an aggregate of 35,156,250 shares of Common Stock. The warrants issued to investors became initially exercisable immediately upon issuance and terminate on April 17, 2023, five years following the date of issuance. Concurrently with the closing of the public offering, a holder elected to convert 1,400 shares of Series C Preferred Stock into 4,375,000 shares of Common Stock. Subsequently, on April 18, 2018, April 23, 2018, and April 30, 2018, holders converted 1,044.4 shares of Series C Preferred stock into 3,263,750 shares of Common Stock.

At June 30, 2019, the Company had 120,000,000 authorized shares of Common Stock, $0.01 par value, of which 45,675,737 shares were outstanding. At June 30, 2019, the Company had 9,994,184 authorized shares of Preferred Stock, $0.01 par value, of which 3,750 shares were designated as Series A Preferred Stock and 0 shares are issued and outstanding, 10,000 shares were designated as Series B Preferred Stock and 0 shares are issued and outstanding, and 10,000 shares were designated as Series C Preferred Stock and 4,092 shares are issued and outstanding. At June 30, 2019, there were 0 shares of Common Stock underlying the outstanding shares of Series A Preferred Stock, 0 shares of Common Stock underlying the outstanding shares of Series B Preferred Stock, and 12,787,500 shares of Common Stock underlying the outstanding shares of Series C Preferred Stock.

8. Warrants

The following is a summary of warrant activity for the six months ended June 30, 2019 and 2018:  

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Term  in Years
Outstanding at December 31, 2018		40,844,086		$	1.00		4.05
Exercised		(100,000	)		0.32		3.80
Outstanding at June 30, 2019		40,744,086			1.00		3.55
Outstanding at December 31, 2017		9,455,961			3.26		4.23
Issued		35,156,250			0.32		4.80
Exercised		(2,356,875	)		0.32		4.80
Outstanding at June 30, 2018		42,255,336		$	0.98		4.56

All of the warrant agreements provide for a cashless exercise in the event a registration statement covering the issuance of the shares of common stock underlying the warrants is not effective, whereby the number of warrants to be issued will be reduced by the number of shares which could be purchased from the proceeds of the exercise of the respective warrant. The outstanding warrants expire from 2020 through 2025.

15

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

9. Equity Incentive Plan

In 2005, the Company approved the 2005 Equity Incentive Plan (the “2005 Plan”). The 2005 Plan provides for the granting of options, restricted stock or other stock-based awards to employees, officers, directors, consultants and advisors. During 2010, the maximum number of shares of Common Stock that may be issued pursuant to the 2005 Plan was increased to 891,222 shares. The Board of Directors (the “Board”) is responsible for administration of the 2005 Plan. The Company’s Board determines the term of each option, the option exercise price, the number of shares for which each option is granted and the rate at which each option is exercisable. Incentive stock options may be granted to any officer or employee at an exercise price per share of not less than the fair value per common share on the date of the grant (not less than 110% of fair value in the case of holders of more than 10% of the Company’s voting stock) and with a term not to exceed ten years from the date of the grant (five years for incentive stock options granted to holders of more than 10% of the Company’s voting stock). Nonqualified stock options may be granted to any officer, employee, consultant or director at an exercise price per share of not less than the par value per share. Following adoption of the 2014 Equity Incentive Plan (the “2014 Plan”), no further grants were made under the 2005 Plan. General terms of the 2014 Plan remain the same as that of the 2005 Plan.

The Company’s Board adopted the 2014 Plan and the Employee Stock Purchase Plan (the “ESPP”) and the Company’s Stockholders approved the 2014 Plan and the ESPP Plan in February 2015. As of June 30, 2019, the maximum number of shares of Common Stock that may be issued pursuant to the 2014 Plan and the ESPP was 8,390,123 and 170,567 shares, respectively.

In January 2019, the number of shares of common stock issuable under the 2014 Plan automatically increased by 350,000 shares pursuant to the terms of the 2014 Plan. These additional shares are included in the total of 8,390,123 shares issuable under the 2014 Plan.

The following is a summary of stock option activity under the Plans for the six months ended June 30, 2019 and 2018: 

	Number of  Options			Weighted- Average Exercise Price		Weighted-Average Contractual Life  (In Years)
Outstanding at December 31, 2018		2,076,153		$	2.28		6.51
Granted		750,000			0.48
Expired		(48,737	)		1.08
Outstanding at June 30, 2019		2,777,416		$	1.81		7.10
Exercisable at June 30, 2019		1,651,546		$	2.65		5.62
Vested and Expected to Vest at June 30, 2019		2,777,416		$	1.81		7.10
Outstanding at December 31, 2017		1,893,003		$	2.49		5.40
Granted		275,500			0.57
Forfeited		(1,500	)		0.83
Expired		(60,968	)		0.80
Outstanding at June 30, 2018		2,106,035		$	2.29		4.66
Exercisable at June 30, 2018		1,429,484		$	2.65		3.95
Vested and Expected to Vest at June 30, 2018		2,106,035		$	2.29		4.66

During the six months ended June 30, 2019 and June 30, 2018, the Board approved the grant of options to purchase 750,000 and 275,500 shares of its Common Stock, respectively. All option grants were pursuant to the 2014 Plan. In general, options granted under the 2014 Plan vest with respect to one-third of the underlying shares on the one-year anniversary of the grant date and the remainder ratably over a 24-month period.

16

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

9. Equity Incentive Plan - (continued)

For the six months ended June 30, 2019 and 2018, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:

	2019	2018
Risk-Free Interest Rate	1.82%	1.82%
Expected Life	5.00 years	7.00 years
Expected Volatility	152%	159%
Expected Dividend Yield	0%	0%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the six months ended June 30, 2019 and 2018 was $0.47 and $0.55, respectively.

The following is a summary of restricted stock activity for the six months ended June 30, 2019 and June 30, 2018: 

	Number of  Shares			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Recognition Period
Nonvested Outstanding at December 31, 2018		1,822,132		$	0.59
Vested		(12,773	)		1.52
Forfeited		(3,141	)		1.52
Nonvested Outstanding at June 30, 2019		1,806,218		$	0.58		1.77
Nonvested Outstanding at December 31, 2017		103,000			1.52
Vested		(45,490	)		1.52
Nonvested Outstanding at June 30, 2018		57,510		$	1.52		1.60

During the six months ended June 30, 2019, 3,141 shares of restricted stock, which had not vested, were forfeited and returned to the Company. No shares were forfeited during the three months ended June 30, 2019, or the three and six months ended June 30, 2018. The total stock-based compensation expense for employees and non-employees is included in the accompanying Condensed Consolidated Statements of Operations and as follows: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Research and Development	$	58,611	$	49,897	$	123,150	$	106,975
General and Administrative		177,579		95,412		345,946		183,881
Total Stock-Based Compensation Expense	$	236,190	$	145,309	$	469,096	$	290,856

The fair value of options granted for the six months ended June 30, 2019 and June 30, 2018 was approximately $368,200 and $151,200, respectively. As of June 30, 2019 and June 30, 2018, there was approximately $1,122,000 and $805,000 of total unrecognized compensation expense related to unvested stock-based compensation arrangements granted, which cost is expected to be recognized over a weighted-average period of 2.00 and 1.57 years, respectively. The aggregate intrinsic value of stock options outstanding and exercisable at June 30, 2019 and June 30, 2018 was approximately $0 and $0, respectively.

At June 30, 2019, there were 4,033,056 shares available under the 2014 Plan and 117,090 shares available under the Company’s ESPP.

17

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

10. Commitments and Contingencies

Leases

The Company is a party to a real property operating lease for the rental of office space in Waltham, Massachusetts of up to 4,516 square feet, that is used for its corporate headquarters. This lease terminates in December 2019. On July 6, 2016, the Company entered into a real property operating lease for office and laboratory space of approximately 2,300 square feet in Salt Lake City, Utah. This lease was amended during the second quarter of 2019 to extend its termination until June 2020.

Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments. To determine the present value of lease payments not yet paid, the Company estimated incremental secured borrowing rates corresponding to the maturities of the leases. The Company estimated a rate of 10% based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. The Company recognizes expense for its leases on a straight-line basis over the lease term.

Maturities of lease liabilities were as follows as of June 30, 2019:

	Operating Leases
Remainder of 2019	$	86,390
2020		27,682
Less: Imputed Interest		(4,560	)
Present Value of Lease Liabilities	$	109,512

License Agreements

The Company is a party to five license agreements as described below. These license agreements require the Company to pay royalties or fees to the licensor based on revenue or milestones related to the licensed technology.

On February 15, 1999, the Company entered in to an exclusive worldwide license agreement with the University of Miami School of Medicine to license technology relating to the Company’s EyeGate® II Delivery System. This agreement, which was amended in December 2005, requires the Company to pay to the University of Miami an annual license fee of $12,500. This license also requires payments to the University of Miami upon the Company’s achievement of certain milestones. Unless terminated pursuant to the license agreement, this license will expire 12 years after the date of the first commercial sale of a product containing the licensed technology.

On July 23, 1999, the Company entered into a perpetual Transaction Protocol agreement with Francine Behar-Cohen to acknowledge the Company’s right to use certain patents that Ms. Behar-Cohen had certain ownership rights with respect to and which are used in the Company’s EGP-437 Combination Product. The agreement also provides for the Company to pay Ms. Behar-Cohen a fee based on a percentage of the pre-tax turnover generated from sales of the Company’s EGP-437 Combination Product relating to its inclusion of the EyeGate® II Delivery System. The fees due under the agreement expired in January 2018, but the Company continues to maintain its rights under the agreement.

On September 12, 2013, Jade entered into an agreement with BioTime, Inc. granting to it the exclusive worldwide right to commercialize cross-linked thiolated carboxymethyl hyaluronic acid (“CMHA-S”) for ophthalmic treatments in humans.  The agreement calls for a license issue fee paid to BioTime of $50,000 and requires the Company (through its Jade subsidiary) to pay an annual fee of $30,000 and royalties to BioTime based on revenue relating to any product incorporating the CMHA-S technology. The agreement expires when patent protection for the CMHA-S technology lapses, which is expected to occur in the U.S. in 2028.

18

EYEGATE PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

10. Commitments and Contingencies - (continued)

On June 17, 2016, the Company entered into an exclusive worldwide license agreement with the University of Utah Research Foundation to further the commercial development of the NASH technology, together with alkylated HA. The agreement calls for payments due to the University of Utah, consisting of a license grant fee of $15,000 due within 30 days of signing, and an annual licensing fee, initially $5,000, and escalating ratably up to $20,000 in 2021.

On September 26, 2018, the Company entered into an intellectual property licensing agreement (the “SentrX Agreement”) with SentrX, a veterinary medical device company that develops and manufactures veterinary wound care products. Under the SentrX Agreement, the Company will in-license the rights to trade-secrets and know-how related to the manufacturing of its EyeGate OBG. The SentrX Agreement will enable the Company to pursue a different vendor with a larger capacity for manufacturing and an FDA-inspected facility for commercialization of a product for human use. Under the SentrX Agreement, the Company paid SentrX an upfront payment of $250,000 recorded as intangible assets on the Condensed Consolidated Balance Sheet. SentrX is eligible to receive milestone payments totaling up to $4.75 million, upon and subject to the achievement of certain specified developmental and commercial milestones. These future milestone payments to SentrX will increase the carrying value of the intangible assets.

11. Employee Benefit Plans

The Company has an employee benefit plan for its United States-based employees under Section 401(k) of the Internal Revenue Code. The Plan allows all eligible employees to make contributions up to a specified percentage of their compensation. Under the Plan, the Company may, but is not obligated to, match a portion of the employee contribution up to a defined maximum. As a result of the 401(k) plan compliance review for the year ended December 31, 2018, the Company will contribute approximately $29,700 to eligible employees. The Company has accrued an estimate for contributions likely due as a result of the 401(k) plan compliance review for the year ended December 31, 2019. The Company made no matching contribution for the six months ended June 30, 2019 and 2018.

19

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

The following section of this Quarterly Report on Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains statements that are not statements of historical fact and are forward-looking statements within the meaning of federal securities laws. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Factors that may cause our actual results to differ materially from those in the forward-looking statements include those factors described in “Item 1A. Risk Factors” beginning on page 22 of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 1, 2019. You should carefully review all of these factors, as well as the comprehensive discussion of forward-looking statements on page 1 of this Quarterly Report on Form 10-Q.

EyeGate Pharmaceuticals, Inc. is referred to herein as “we,” “our,” “us,” and “the Company”. Jade Therapeutics, Inc., a wholly owned subsidiary of the Company, is referred to herein as “Jade”.

Business Overview

We are a clinical-stage specialty pharmaceutical company focused on developing and commercializing products for treating diseases and disorders of the eye. We accomplish this by leveraging our two proprietary platform technologies, crosslinked thiolated carboxymethyl hyaluronic acid (“CMHA-S”) and iontophoresis drug delivery system. Our CMHA-S platform is based on a modified form of the natural polymer hyaluronic acid (“HA”), which is a gel that possesses unique physical and chemical properties such as hydrating and promoting wound healing when applied to the ocular surface. We believe that the ability of CMHA-S to adhere longer to the ocular surface, while hydrating and promoting wound healing, makes it well-suited for treating various ocular surface injuries from dry eye to corneal wounds.

HA is a naturally occurring polymer that is important in many physiological processes, including wound healing, tissue homeostasis, and joint lubrication. To create this hydrogel, the HA is modified to create CMHA that is then crosslinked together through the thiol groups to CMHA-S. Crosslinking slows degradation of the HA backbone and provides a matrix for incorporating therapeutic agents. Variations in the number of thiols per molecule, the molecular weight of the polymer, the concentration of the polymer, the type of crosslinking, and incorporation of active ingredients, provides a highly versatile platform that can be tailored to a specific application and formulated as eye drops, gels, or films.

Our first CMHA-S-based product candidate, EyeGate Ocular Bandage Gel (“OBG”), is a topically applied 0.75% CMHA-S eye drop formulation that has completed three in-man clinical trials. We announced positive topline data from the initial trial and follow-on trial evaluating the ability of OBG to manage ocular surface re-epithelialization following photorefractive keratectomy (“PRK”) surgery. We also announced positive topline data from our first clinical trial focused on treating patients with punctate epitheliopathies (“PE”). We initiated a pivotal study for the indication of PRK in the second quarter of 2019 with topline data expected by year end 2019. Assuming positive data from this study, we plan to file for commercialization for this indication shortly thereafter. Additionally, the FDA approved the initiation of a follow-on trial for the indication of PE in the third quarter of 2019, with topline data expected by year end 2019. OBG eye drops create a thin, durable and protective coating to the damaged surface of the eye, serving to facilitate and manage corneal re-epithelization. OBG is intended for the protection of the ocular surface and the management of corneal epithelial wounds, defects, and epitheliopathies.

Preclinical studies suggest that the specific CMHA-S chemical modification comprising OBG creates a favorable set of attributes, including prolonged retention time on the ocular surface, and a smooth continuous clear barrier without blur that can minimize mechanical lid friction, reduce repeat injury, and mechanically protect the ocular surface, allowing for the management of corneal re-epithelization. The gel is presently available commercially as a veterinary device indicated for use in the management of superficial corneal ulcers. Manufactured by SentrX Animal Care and sold in the U.S. by Bayer Animal Health as Remend® Corneal Repair, the product has been used successfully for more than five years in dogs, cats and horses, without adverse effects. The composition of the veterinary product is identical to that of the OBG. We have obtained a license from BioTime, Inc. for the exclusive worldwide right to commercialize CMHA-S for ophthalmic treatments in humans. We paid BioTime $50,000 and are required to pay an annual fee of $30,000 and royalties to BioTime based on revenue relating to any product incorporating the CMHA-S technology. Our license agreement expires when patent protection for the CMHA-S technology lapses, which is expected to occur in the U.S. in 2028. We do not have the rights to the CMHA-S platform for animal health or veterinary medicine. 

OBG is being developed pursuant to a de novo 510(k) regulatory pathway for devices submitted for marketing clearance to the U.S. Food and Drug Administration (“FDA”). We plan to develop OBG for two indications, management of corneal re-epithelization post PRK surgery and for evaluating the potential to help clinicians better manage patients with PE due to pathologies such as dry eye. We believe that OBG is the first and only eye drop being developed in the U.S. to target the management of corneal re-epithelization.

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In addition, we have been developing EGP-437, which incorporates a reformulated topically active corticosteroid, Dexamethasone Phosphate, that is delivered into the ocular tissues through our proprietary innovative drug delivery system, the EyeGate® II Delivery System (“EGP-437 Combination Product”). EGP-437 is being developed under the 505(b)(2) New Drug Application (“NDA”) regulatory pathway for drugs submitted for approval to the U.S. Food and Drug Administration, or FDA, which enables an applicant to rely, in part, on the FDA’s findings of safety and efficacy for an existing product, or published literature, in support of its NDA.

We have been developing EGP-437 for the treatment of various inflammatory conditions of the eye, including the treatment of ocular inflammation and pain in post-surgical cataract patients and anterior uveitis, a debilitating form of intraocular inflammation of the anterior portion of the uvea, such as the iris and/or ciliary body. We announced topline data for the Phase 2b cataract surgery trial in the first quarter of 2018 and although EGP-437 demonstrated a higher rate of success compared to vehicle at all time points, the co-primary endpoints of proportion of subjects with an anterior chamber cell (“ACC”) count of zero at Day 7 and the proportion of subjects with a pain score of zero at Day 1 did not show statistical significance. Additionally, we announced topline data for the confirmatory Phase 3 uveitis trial in the third quarter of 2018 and although EGP-437 showed clinical efficacy, defined as a reduction in ACC score throughout the study, it did not demonstrate non-inferiority to the prednisolone acetate ophthalmic solution control group. We will continue to review the data and will be assessing our strategic options for EGP-437 going forward.

We entered into two exclusive global license agreements with a subsidiary of Bausch Health Companies, Inc. (“BHC”) for our EGP-437 Combination Product in the fields of anterior uveitis and for the treatment of post-operative ocular inflammation and pain in ocular surgery patients. Effective March 14, 2019, BHC voluntarily terminated these license agreements reinstating to us all of the rights and privileges of the EGP-437 platform.

On March 20, 2018, we received a written notification (the “Notice Letter”) from Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), as the closing bid price for our Common Stock was below the $1.00 per share requirement for the last 30 consecutive business days. The Notice Letter stated that we have 180 calendar days, or until September 17, 2018 (the “Initial Compliance Period”), to regain compliance with the minimum bid price requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we can regain compliance if the closing bid price of our Common Stock is at least $1.00 for a minimum of 10 consecutive business days. We did not achieve compliance with the minimum bid price requirement by the end of the Initial Compliance Period, however, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), on the last day of the Initial Compliance Period we filed for extension and were granted a second 180-day compliance period, or until March 18, 2019, to regain compliance.

On March 19, 2019, we received written notification from Nasdaq indicating that based upon our continued non-compliance with the bid price rule as of March 18, 2019, our common stock would be subject to delisting from The Nasdaq Capital Market on March 28, 2019, unless we timely request a hearing before the Nasdaq Hearings Panel (the “Panel”). We timely requested a hearing and presented our plan to evidence future compliance with the bid price rule before the Panel on May 2, 2019. The Panel granted our request for continued listing of our common stock on The Nasdaq Capital Market pursuant to an extension through September 16, 2019, subject to the condition that we regain compliance with the Bid Price Rule by such date. If we do not regain compliance with the Bid Price Rule by September 16, 2019 or, based on any significant events that occur during the extension period, the Panel reconsiders the extension, Nasdaq would delist our common stock from The Nasdaq Capital Market.

Throughout our history, we have not generated significant revenue. We have generally not been profitable and from inception through June 30, 2019, our net losses from operations have aggregated $94.1 million. Our net loss was approximately $0.966 million and $5.2 million for the six months ended June 30, 2019 and June 30, 2018. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue the development and clinical trials of and seek regulatory approval for our EyeGate OBG, our lead product candidate for corneal epithelial defects, and any other product candidates we advance to clinical development. If we obtain regulatory approval for EyeGate OBG, we expect to incur significant expenses in order to create an infrastructure to support the commercialization of EyeGate OBG including sales, marketing and distribution functions.

We will need additional financing to support our continuing operations. We will seek to fund our operations through public or private equity, debt financings, license and development agreements, or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. These conditions raise substantial doubt about our ability to continue as a going concern. We will need to generate significant revenue to achieve profitability, and we may never do so.

EyeGate Pharmaceuticals, Inc. was formed in Delaware on December 26, 2004. We were originally incorporated in 1998 under the name of Optis France S.A. in Paris, France. At that time, the name of the French corporation was changed to EyeGate Pharma S.A.S. and became a subsidiary of EyeGate Pharmaceuticals, Inc. Jade was formed in Delaware on December 31, 2012. EyeGate Pharma S.A.S. and Jade are wholly-owned subsidiaries of EyeGate Pharmaceuticals, Inc.

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Financial Overview

Revenues

To date, we have recognized collaboration revenue from several U.S. government grants made to Jade for ocular therapeutic research (collectively, the “U.S. Government Grants”), as well as from BHC as performance obligations toward milestones are met. See Note 2, “Summary of Significant Accounting Policies”. We expect to continue to incur significant operating losses as we fund research and clinical trial activities relating to our ocular therapeutic assets, consisting of our CMHA-S-based products, or any other product candidate that we may develop. There can be no guarantee that the losses incurred to fund these activities will succeed in generating revenue.

Research and Development Expenses

We expense all research and development expenses as they are incurred. Research and development expenses primarily include: 

· non-clinical development, preclinical research, and clinical trial and regulatory-related costs;

· expenses incurred under agreements with sites and consultants that conduct our clinical trials;

· expenses related to generating, filing, and maintaining intellectual property; and

· employee-related expenses, including salaries, bonuses, benefits, travel and stock-based compensation expense.

Substantially all of our research and development expenses to date have been incurred in connection with our EyeGate OBG and EGP-437 Combination Product. We expect our research and development expenses to remain consistent for the near future as we advance EyeGate OBG and any other product candidate through clinical development, including the conduct of our planned clinical trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We are unable to estimate with any certainty the costs we will incur in the continued development of our EyeGate OBG and any other product candidate that we may develop. Clinical development timelines, the probability of success and development costs can differ materially from expectations.

We may never succeed in achieving marketing approval for our product candidates.

The costs of clinical trials may vary significantly over the life of a project including, but not limited to, the following:

· per patient trial costs;

· the number of sites included in the trials;

· the countries in which the trials are conducted;

· the length of time required to enroll eligible patients;

· the number of patients that participate in the trials;

· the number of doses that patients receive;

· the cost of comparative agents used in trials;

· the drop-out or discontinuation rates of patients;

· potential additional safety monitoring or other studies requested by regulatory agencies;

· the duration of patient follow-up; and

· the efficacy and safety profile of the product candidate.

We do not expect our product candidates to be commercially available, if at all, for the next several years.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation. Our general and administrative expenses consisted primarily of payroll expenses for our full-time employees. Other general and administrative expenses include professional fees for auditing, tax, patent costs and legal services.

We expect that general and administrative expenses will remain consistent for the near future until commercialization of our CMHA-S based products, which could lead to an increase in these expenses.

Total Other Income (Expense)

Total other income (expense) consists primarily of interest income we earn on interest-bearing accounts, and interest expense incurred on our outstanding financing arrangements. 

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Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates under different assumptions or conditions.

While our significant accounting policies are discussed in more detail in Note 2 to our financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations. 

Accrued Research and Development Expenses

As part of the process of preparing financial statements, we are required to estimate and accrue research and development expenses. This process involves the following:

· communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost;

· estimating and accruing expenses in our financial statements as of each balance sheet date based on facts and circumstances known to us at the time; and

· periodically confirming the accuracy of our estimates with selected service providers and making adjustments, if necessary.

Examples of estimated research and development expenses that we accrue include:

· fees paid to contract research organizations and investigative sites in connection with clinical studies;

· fees paid to contract manufacturing organizations in connection with non-clinical development, preclinical research, and the production of clinical study materials; and

· professional service fees for consulting and related services.

We base our expense accruals related to non-clinical development, preclinical studies, and clinical trials on our estimates of the services received and efforts expended pursuant to contracts with organizations/consultants that conduct and manage clinical studies on our behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts may depend on many factors, such as the successful enrollment of patients, site initiation and the completion of clinical study milestones. Our service providers invoice us as milestones are achieved and monthly in arrears for services performed. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. To date, we have not experienced significant changes in our estimates of accrued research and development expenses after a reporting period.

However, due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities.

Stock-Based Compensation

We have issued options to purchase our common stock and restricted stock. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service/vesting period. Determining the appropriate fair value model and calculating the fair value of stock-based payment awards require the use of highly subjective assumptions, including the expected life of the stock-based payment awards and stock price volatility.

We estimate the grant date fair value of stock options and the related compensation expense, using the Black-Scholes option valuation model. This option valuation model requires the input of subjective assumptions including: (1) expected life (estimated period of time outstanding) of the options granted, (2) volatility, (3) risk-free rate and (4) dividends. In general, the assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates, but the estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

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Revenue Recognition

Our revenues are generated primarily through arrangements which generally contain multiple elements, or deliverables, including licenses and R&D activities to be performed by us on behalf of the licensor or grantor. Payments to us under these arrangements typically include one or more of the following: (1) nonrefundable, upfront license fees, (2) funding of discovery research efforts on a full-time equivalent basis, (3) reimbursement of research, development and intellectual property costs, (4) milestone payments, and (5) royalties on future product sales.

In May 2014, the FASB issued ASU No. 2014-09, Revenues from Contracts with Customers (“Topic 606”), as subsequently amended, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for public companies for years ending after December 15, 2017, with early adoption permitted.

We did not elect to early adopt and adopted the new standard on January 1, 2018, using the modified retrospective method, which resulted in a cumulative effect adjustment in the amount of $9.5 million to beginning 2018 accumulated deficit and to deferred and unbilled revenue for the BHC contracts impacted by the adoption of the new standard. The changes to the method and/or timing of our revenue recognition associated with the adoption of the new standard primarily relate to the determination that there is one performance obligation in each contract with BHC and that the license combined with the R&D services is the performance obligation.

Under this new guidance, we recognize revenue when our customer obtains control of promised services, in an amount that reflects the consideration which we expect to receive in exchange for those services. To determine whether arrangements are within the scope of this new guidance, we perform the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy our performance obligation. We apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Upon adoption of ASU No. 2014-09, we recognize revenue from the transaction price applied to each single performance obligation over time as milestones are reached for each performance obligation. We only recognize revenue on those milestones that are within our control and any constrained variable consideration that requires regulatory approval will only be included in the transaction price when performance is complete.

In addition, we may receive government grant funds for specified ocular therapeutic research activities. Revenue under these grants will be recorded when we perform the activities specified by the terms of each grant and are entitled to the funds.

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Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Under ASU No. 2016-02, lessees are required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and the right-to-use assets, which are asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. We did not early adopt this standard and have leases (see Note 10) in place at the effective date. We evaluated the effect of the new guidance and adopted the new standard effective January 1, 2019 using the modified retrospective method. As a result, we recorded right-of-use leased assets and corresponding liabilities of approximately $0.137 million on January 1, 2019.

On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other, which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for us on January 1, 2020. The new standard is required to be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. We did not early adopt ASU No. 2017-04 prior to our December 2017 impairment evaluation and are evaluating the effect that ASU No. 2017-04 will have on our Consolidated Financial Statements and related disclosures.

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Other Information

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We have evaluated the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (a) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more, (b) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering, or December 31, 2020, (c) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. 

Results of Operations

Comparison of Three Months ended June 30, 2019 and 2018

The following table summarizes the results of our operations for the three months ended June 30, 2019 and 2018: 

	Three Months Ended June 30,
	2019			2018			Change
Collaboration Revenue	$	-		$	242,012		$	(242,012	)
Operating Expenses:
Research and Development		763,896			1,837,799			(1,073,903	)
General and Administrative		1,105,904			1,202,531			(96,627	)
Total Operating Expenses		1,869,800			3,040,330			(1,170,530	)
Other Income, Net		32,528			18,063			14,465
Net Loss	$	(1,837,272	)	$	(2,780,255	)	$	942,983

Collaboration Revenue. Collaboration Revenue was $0 million for the three months ended June 30, 2019, compared to $0.242 million for the three months ended June 30, 2018. The revenue generated in the second quarter of 2018 related to BHC milestone payments earned.

Research and Development Expenses.  Research and Development Expenses were $0.764 million for the three months ended June 30, 2019, compared to $1.838 million for the three months ended June 30, 2018. The decrease of $1.074 million was primarily due to decreases in clinical and other activity related to EGP-437, personnel related costs, as well as OBG manufacturing work and market research costs. These decreases were partially offset by an increase in costs related to the initiation of the PRK pivotal study during the second quarter of 2019.

General and Administrative Expenses.  General and Administrative Expenses were $1.106 million for the three months ended June 30, 2019, compared to $1.203 million for the three months ended June 30, 2018. The decrease of $0.097 million was primarily due to decreases in professional fees and corporate costs, partially offset by an increase in personnel related costs.

Other Income, Net. Other Income, Net was $0.033 million for the three months ended June 30, 2019, compared to $0.018 million for the three months ended June 30, 2018 due to more favorable interest rates on our cash balances.

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Comparison of Six Months ended June 30, 2019 and 2018

The following table summarizes the results of our operations for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019			2018			Change
Collaboration Revenue	$	2,686,000		$	1,338,020		$	1,347,980
Operating Expenses:
Research and Development		1,485,373			4,358,808			(2,873,435	)
General and Administrative		2,241,787			2,156,579			85,208
Total Operating Expenses		3,727,160			6,515,387			(2,788,227	)
Other Income, Net:		74,697			17,785			56,912
Net Loss	$	(966,463	)	$	(5,159,582	)	$	4,193,119

Collaboration Revenue. Collaboration Revenue was $2.686 million for the six months ended June 30, 2019, compared to $1.338 million for the six months ended June 30, 2018. The revenue recognized in the first six months of 2019 was a result of the termination of the license agreements with BHC and no further revenue will be recognized related to these agreements. The revenue generated in the first six months of 2018 related to the BHC milestone payments earned.

Research and Development Expenses.  Research and Development Expenses were $1.485 million for the six months ended June 30, 2019, compared to $4.359 million for the six months ended June 30, 2018. The decrease of $2.873 million was primarily due to decreases in clinical and other activity related to EGP-437, personnel related costs, as well as OBG manufacturing work and market research costs. These decreases were partially offset by an increase in costs related to the initiation of the PRK pivotal study during the second quarter of 2019.

General and Administrative Expenses.  General and Administrative Expenses were $2.242 million for the six months ended June 30, 2019, compared to $2.157 million for the six months ended June 30, 2018. The increase of $0.085 million was primarily due to an increase in personnel related costs, partially offset by a decrease in professional fees.

Other Income, Net. Other Income, Net was $0.075 million for the six months ended June 30, 2019, compared to $0.018 million for the six months ended June 30, 2018 due to more favorable interest rates on our cash balances.

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Liquidity and Capital Resources

Since becoming a public company in 2015, we have financed our operations from four registered offerings of our Common Stock and Convertible Preferred Stock, payments from the BHC License Agreements and the U.S. Government Grants, and sales through our At The Market Offering Agreement. From inception through June 30, 2019, we have raised a total of approximately $94.6 million from such sales of our equity and debt securities, both as a public company and prior to our IPO, as well as approximately $14.9 million in payments received under our license agreements and U.S. Government Grants.

Through June 30, 2019, we have received cash payments of $13.8 million under the BHC Agreements, which are presented as Collaboration Revenue on our Condensed Consolidated Statement of Operations and Comprehensive Loss, or Deferred or Unbilled Revenue on our Condensed Consolidated Balance Sheets. Additionally, on January 1, 2018, $9.5 million was recorded as a reduction to our opening accumulated deficit balance on our Condensed Consolidated Balance Sheets upon the adoption of ASU No. 2014-09.

On May 24, 2016, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent”), to create an at the market equity program under which we can from time to time offer and sell up to 1,319,289 shares of its Common Stock through the Sales Agent. On February 21, 2017, we authorized the Sales Agent to restart sales under the ATM Agreement for maximum aggregate proceeds of up to $3,285,798. During the first quarter of 2017, we sold 642,150 shares of Common Stock under this agreement for total net proceeds to us, after deducting the placement agent fees and offering expenses, of approximately $1.8 million. No further shares of Common Stock were sold pursuant to the ATM Agreement. The ATM Agreement terminated automatically pursuant to its terms on May 24, 2019.

On June 14, 2017, we completed a public offering of 5,336,667 shares of Common Stock and 1,995 shares of Series B Preferred Stock (convertible into 1,330,000 shares of Common Stock), along with warrants to purchase 6,666,667 shares of Common Stock. The offering was priced at $1.50 per share of Common Stock (or share of Common Stock issuable upon conversion of a share of Series B Convertible Preferred Stock) and warrant. The total net proceeds to us from this offering, after deducting the placement agent fees and offering expenses, were approximately $8.8 million. Additionally, the investors received, for each share of Common Stock, or for each share of Common Stock issuable upon conversion of a share of Series B Preferred Stock purchased in the public offering, warrants to purchase one share of Common Stock at an exercise price of $1.50 per share, which totaled warrants to purchase an aggregate of 6,666,667 shares of Common Stock. The warrants issued to investors became initially exercisable immediately upon issuance and terminate on June 14, 2022, five years following the date of issuance. As of June 30, 2019, holders of the Series B Preferred Stock had converted all 1,995 shares of Series B Preferred Stock into an aggregate of 1,330,000 shares of Common Stock.

On April 17, 2018, we completed a public offering of 14,730,000 shares of Common Stock and 6,536.4 shares of Series C Convertible Preferred Stock (convertible into 20,426,250 shares of Common Stock), along with warrants to purchase 35,156,250 shares of Common Stock. The offering was priced at $0.32 per share of Common Stock (or share of Common Stock issuable upon conversion of a share of Series C Convertible Preferred Stock) and warrant. The total net proceeds to us from the offering, after deducting the placement agent fees and offering expenses, were approximately $10.1 million. Additionally, the investors received, for each share of Common Stock, or for each share of Common Stock issuable upon conversion of a share of Series C Convertible Preferred Stock purchased in the public offering, warrants to purchase one share of Common Stock at an exercise price of $0.32 per share, which totaled warrants to purchase an aggregate 35,156,250 shares of Common Stock. The warrants issued to investors became initially exercisable immediately upon issuance and terminate on April 17, 2023, five years following the date of issuance. Concurrently with the closing of the public offering, a holder elected to convert 1,400 shares of Series C Convertible Preferred Stock into 4,375,000 shares of Common Stock. Subsequently, on April 18, 2018, April 23, 2018, and April 30, 2018, holders converted 1,044.4 shares of Series C Convertible Preferred stock into 3,263,750 shares of Common Stock.

At June 30, 2019, we had unrestricted cash and cash equivalents totaling $4,465,086.

The following table sets forth the primary uses of cash for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019			2018
Net Cash Used in Operating Activities	$	(3,568,990	)	$	(6,059,752	)
Net Cash Provided by Financing Activities	$	28,857		$	10,856,665

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Comparison of Six Months Ended June 30, 2019 and 2018

Operating Activities. Net cash used in operating activities was $3.569 million for the six months ended June 30, 2019, compared to $6.060 million for the six months ended June 30, 2018. During the first six months of 2019, we recorded a net loss of $0.966 million, decreases in deferred revenue of $2.686 million and accrued expenses of $0.374 million; partially offset by stock-based compensation expense of $0.469 million. During the first six months of 2018, we recorded a net loss of $5.160 million, as well as decreases in accounts payable and accrued expenses of $1.119 million, and unbilled revenue of $0.690 million; partially offset by an increase in deferred revenue of $0.577 million and stock-based compensation expense of $0.291 million.

Financing Activities. Net cash provided by financing activities was $0.029 million for the six months ended June 30, 2019, compared to $10.857 million for the six months ended June 30, 2018. During the six months ended June 30, 2019, we received $0.032 million from the exercise of warrants. During the six months ended June 30, 2018, we received net proceeds of $10.109 million from a stock offering and $0.754 million from the exercise of warrants.  

Funding Requirements and Other Liquidity Matters

Our CMHA-S-based product pipeline and our EGP-437 Combination Product are still in various stages of clinical development. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we: 

• seek marketing approval for our CMHA-S-based products or any other products that we successfully develop;

• establish a sales and marketing infrastructure to commercialize our CMHA-S-based products in the United States, if approved; and

• add operational, financial and management information systems and personnel, including personnel to support our product development and future commercialization efforts.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our Stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a Common Stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, including our CMHA-S-based products and our EGP-437 Combination Product, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our CMHA-S-based products or any other products that we would otherwise prefer to develop and market ourselves.

Based on our cash on hand at June 30, 2019, we believe we will have sufficient cash to fund planned operations through October 31, 2019. However, the acceleration or reduction of cash outflows by management can significantly impact the timing for raising additional capital to complete development of its products. To continue development, we will need to raise additional capital through debt and/or equity financing, or access additional funding through grants. Although we successfully completed several public offerings, additional capital may not be available on terms favorable to us, if at all. On May 13, 2019, the SEC declared effective our registration statement on Form S-3, registering a total of $50,000,000 of our securities for sale to the public from time to time in what is known as a “shelf offering”. We do not know if our future offerings, including offerings pursuant to any shelf registration statement, will succeed. Accordingly, no assurances can be given that management will be successful in these endeavors. Our recurring losses from operations have caused management to determine there is substantial doubt about our ability to continue as a going concern. Our Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements 

We do not have any material off-balance sheet arrangements as of June 30, 2019. 

29

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of June 30, 2019:

	Total		Less than 1 year		1-3 years		More than 3 years
Leases (1)	$	114,073	$	114,073	$	-	$	-
Licensing Agreement (2)		342,500		47,500		90,000		205,000
Total (3)	$	456,573	$	161,573	$	90,000	$	205,000

(1)	Lease obligations reflect our obligation to make payments in connection with operating leases for our office space.
(2)	Licensing Agreement obligations represent our commitments under license agreements, including those made by us under our license agreements with the University of Miami School of Medicine, the University of Utah Research Foundation and BioTime.
(3)	This table does not include (a) anticipated expenditures under supply agreements for periods for which we are not yet bound under binding purchase orders, and (b) contracts that are entered into in the ordinary course of business that are not material in the aggregate in any period presented above.

In addition, in the course of normal business operations, we have agreements with contract service providers to assist in the performance of our research and development and manufacturing activities. Expenditures to contract research organizations vary based on the study and phases during the clinical development stages. Subject to required notice periods and our obligations under binding purchase orders, we can elect to discontinue the work under these agreements at any time. We could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and even long-term commitments of cash.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

This Report includes the certifications of our President and Chief Executive Officer (who is our principal executive officer) and our Chief Financial Officer (who is our principal financial and accounting officer) required by Rule 13a-14 of the Exchange Act. See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the President and Chief Executive Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this Quarterly Report on the Form 10-Q, the Company’s Management, under the supervision of, and with the participation of, our President and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2019. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and our management necessarily was required to apply its judgment in evaluating and implementing our disclosure controls and procedures. Based upon the evaluation described above, our President and Chief Executive Officer and our Chief Financial Officer have concluded that they believe that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Accounting and Reporting

Our management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated whether any change in our internal control over financial accounting and reporting occurred during the quarter ended June 30, 2019. Management concluded that no changes to our internal control over financial accounting and reporting occurred during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial accounting and reporting.

30

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

While we are not currently a party to any legal proceedings, from time to time we may be a party to a variety of legal proceedings that arise in the normal course of our business.

Item 1A.    Risk Factors.

Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 1, 2019 contains risk factors identified by the Company. There have been no material changes to the risk factors we previously disclosed. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.

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

Unregistered Sales of Equity Securities

None.

Purchase of Equity Securities

We did not purchase any of our registered equity securities during the period covered by this Quarterly Report on Form 10-Q.

Item 3. Defaults Upon Senior Securities.  

Not applicable.

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index immediately preceding such exhibits and are incorporated herein by reference.

31

SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 8, 2019	By:	/s/ Stephen From
		President and Chief Executive Officer (Principal executive officer)

Date: August 8, 2019	By:	/s/ Sarah Romano
		Chief Financial Officer (Principal financial and accounting officer)

32

EXHIBIT INDEX

The following exhibits are filed as part of this Quarterly Report on Form 10-Q. Where such filing is made by incorporation by reference to a previously filed document, such document is identified.

Exhibit
Number	Description of Exhibit
31.1**	Certification of principal executive officer pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of principal financial and accounting officer pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of principal financial and accounting officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

** This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act.

33

EX-31.1

EXHIBIT 31.1

Certification

I, Stephen From, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of EyeGate 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 Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date: August 8, 2019

/s/ Stephen From

Stephen From

President and Chief Executive Officer

(Principal executive officer)

EX-31.2

EXHIBIT 31.2

Certification

I, Sarah Romano, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of EyeGate 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 Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date: August 8, 2019

/s/ Sarah Romano

Sarah Romano

Chief Financial Officer

(Principal financial and accounting officer)

EX-32.1

EXHIBIT 32.1 

CERTIFICATION OF PERIODIC FINANCIAL REPORT

PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned officer of EyeGate Pharmaceuticals, Inc. (the “Company”) hereby certifies to his knowledge that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 (the “Report”) to which this certification is being furnished as an exhibit, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350 and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (A) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and (B) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Date: August 8, 2019

/s/ Stephen From

Stephen From

President and Chief Executive Officer

(Principal executive officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PERIODIC FINANCIAL REPORT

PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned officer of EyeGate Pharmaceuticals, Inc. (the “Company”) hereby certifies to her knowledge that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 (the “Report”) to which this certification is being furnished as an exhibit, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350 and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (A) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and (B) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Date: August 8, 2019

/s/ Sarah Romano

Sarah Romano

Chief Financial Officer

(Principal financial and accounting officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 06, 2019
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	EYEGATE PHARMACEUTICALS INC
Entity Current Reporting Status	Yes
Entity Central Index Key	0001372514
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Trading Symbol	EYEG
Entity Common Stock, Shares Outstanding		45,675,737
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Ex Transition Period	true
Entity Small Business	true

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current Assets:
Cash and Cash Equivalents	$ 4,465,086	$ 8,004,237
Prepaid Expenses and Other Current Assets	551,652	455,760
Right-of-Use Assets	109,512	0
Current Portion of Refundable Tax Credit Receivable	1,639	18,436
Total Current Assets	5,127,889	8,478,433
Property and Equipment, Net	30,182	43,518
Restricted Cash	45,000	45,000
Goodwill	1,525,896	1,525,896
Intangible Assets and In-Process R&D, Net	4,143,564	4,156,064
Other Assets	23,011	31,706
Total Assets	10,895,542	14,280,617
Current Liabilities:
Accounts Payable	96,580	63,654
Accrued Expenses	737,725	1,114,728
Lease Liabilities	109,512	0
Deferred Revenue		2,686,000
Total Current Liabilities	943,817	3,864,382
Non-Current Liabilities:
Contingent Consideration	1,210,000	1,210,000
Deferred Tax Liability	269,968	269,968
Total Non-Current Liabilities	1,479,968	1,479,968
Total Liabilities	2,423,785	5,344,350
Commitments and Contingencies (Note 10)
Stockholders' Equity:
Preferred Stock, $0.01 Par Value: 9,994,184 shares authorized; 3,750 designated Series A, 0 shares issued and outstanding at June 30, 2019 and December 31, 2018; 10,000 designated Series B, 0 shares issued and outstanding at June 30, 2019 and December 31, 2018; 10,000 shares designated Series C, 4,092 shares issued and outstanding at June 30, 2019 and December 31, 2018	41	41
Common Stock, $0.01 Par Value: 120,000,000 shares authorized; 45,675,737 and 45,578,878 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	456,758	437,939
Additional Paid-In Capital	101,996,431	101,514,154
Accumulated Deficit	(94,116,661)	(93,150,198)
Accumulated Other Comprehensive Income	135,188	134,331
Total Stockholders' Equity	8,471,757	8,936,267
Total Liabilities and Stockholders' Equity	$ 10,895,542	$ 14,280,617

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	120,000,000	120,000,000
Common Stock, Shares, Issued	45,675,737	45,578,878
Common Stock, Shares, Outstanding	45,675,737	45,578,878
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	9,994,184	9,994,184
Series A Preferred Stock
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Preferred Stock Designated Shares	3,750	3,750
Series B Preferred Stock
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Preferred Stock Designated Shares	10,000	10,000
Series C Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Issued	4,092	4,092
Preferred Stock, Shares Outstanding	4,092	4,092
Preferred Stock Designated Shares	10,000	10,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Collaboration Revenue	$ 0	$ 242,012	$ 2,686,000	$ 1,338,020
Operating Expenses:
Research and Development	(763,896)	(1,837,799)	(1,485,373)	(4,358,808)
General and Administrative	(1,105,904)	(1,202,531)	(2,241,787)	(2,156,579)
Total Operating Expenses	(1,869,800)	(3,040,330)	(3,727,160)	(6,515,387)
Operating Loss Before Other Expense	(1,869,800)	(2,798,318)	(1,041,160)	(5,177,367)
Other Income, Net:
Interest Income	32,636	18,367	74,913	18,393
Interest Expense	(108)	(304)	(216)	(608)
Total Other Income, Net	32,528	18,063	74,697	17,785
Net Loss	$ (1,837,272)	$ (2,780,255)	$ (966,463)	$ (5,159,582)
Net Loss per Common Share- Basic and Diluted	$ (0.04)	$ (0.07)	$ (0.02)	$ (0.19)
Weighted Average Shares Outstanding- Basic and Diluted	43,800,288.00	37,484,329.00	43,785,475.00	27,426,668.00
Net Loss	$ (1,837,272)	$ (2,780,255)	$ (966,463)	$ (5,159,582)
Other Comprehensive Loss:
Foreign Currency Translation Adjustments	1,355	2,006	857	3,240
Comprehensive Loss	$ (1,835,917)	$ (2,778,249)	$ (965,606)	$ (5,156,342)

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)	Series B Preferred Stock Common Stock	Series B Preferred Stock Additional Paid-in Capital	Series B Preferred Stock Previously Reported	Series B Preferred Stock	Series C Preferred Stock Common Stock Previously Reported	Series C Preferred Stock Common Stock	Series C Preferred Stock Additional Paid-in Capital	Series C Preferred Stock Previously Reported	Series C Preferred Stock	Common Stock Previously Reported	Common Stock	Additional Paid-in Capital Previously Reported	Additional Paid-in Capital	Accumulated Other Comprehensive Income Previously Reported	Accumulated Other Comprehensive Income	Accumulated Deficit Previously Reported	Accumulated Deficit Restatement Adjustment	Accumulated Deficit	Previously Reported	Restatement Adjustment	Total
Cumulative Effect of Change in Accounting Principle (Note 2)																	$ 9,477,880			$ 9,477,880
Balance at Dec. 31, 2017			$ 6	$ 6				$ 0	$ 0	$ 172,573	$ 172,573	$ 89,589,681	$ 89,589,681	$ 127,473	$ 127,473	$ (91,816,655)		$ (82,338,775)	$ (1,926,922)		$ 7,550,958
Balance (in shares) at Dec. 31, 2017			600	600	17,257,255	17,257,255		0
Stock-Based Compensation													290,856								290,856
Issuance of Stock in Offering, Net of Offering Costs of $1,141,238									$ 65		147,299		9,961,398								10,108,762
Issuance of Stock in Offering, Net of Offering Costs of $1,141,238 (in shares)						14,730,000			6,536
Conversion of Stock into Common Stock	$ 4,000	$ (3,994)		$ (6)		$ 76,388	$ (76,364)		$ (24)
Conversion of Stock into Common Stock(in shares)	400,000			(600)		7,638,750			(2,444)
Issuance of Shares of Common Stock from Warrant Exercises											23,569		730,656								754,225
Issuance of Shares of Common Stock from Warrant Exercises (in shares)						2,356,875
Foreign Currency Translation Adjustment															3,240						3,240
Net Income (Loss)																		(5,159,582)			(5,159,582)
Balance at Jun. 30, 2018				$ 0		$ 42,382,880			$ 41		$ 423,829		100,492,233		130,713			(87,498,357)			13,548,459
Balance (in shares) at Jun. 30, 2018				0					4,092		42,382,880
Balance at Mar. 31, 2018				$ 6					$ 0		$ 172,573		89,694,834		128,707			(84,718,102)			5,278,018
Balance (in shares) at Mar. 31, 2018				600					0		17,257,255
Stock-Based Compensation													145,309								145,309
Issuance of Stock in Offering, Net of Offering Costs of $1,141,238									$ 65		$ 147,299		10,001,792								10,149,156
Issuance of Stock in Offering, Net of Offering Costs of $1,141,238 (in shares)									6,536		14,730,000
Conversion of Stock into Common Stock	$ 4,000	$ (3,994)		$ (6)		$ 76,388	$ (76,364)		$ (24)
Conversion of Stock into Common Stock(in shares)	400,000			(600)		7,638,750			(2,444)
Issuance of Shares of Common Stock from Warrant Exercises											$ 23,569		730,656								754,225
Issuance of Shares of Common Stock from Warrant Exercises (in shares)											2,356,875
Foreign Currency Translation Adjustment															2,006						2,006
Net Income (Loss)																		(2,780,255)			(2,780,255)
Balance at Jun. 30, 2018				$ 0		$ 42,382,880			$ 41		$ 423,829		100,492,233		130,713			(87,498,357)			13,548,459
Balance (in shares) at Jun. 30, 2018				0					4,092		42,382,880
Balance at Dec. 31, 2018									$ 41		$ 437,939		101,514,154		134,331			(93,150,198)			8,936,267
Balance (in shares) at Dec. 31, 2018									4,092		45,578,878
Stock-Based Compensation													469,096								32,000
Issuance of Shares of Common Stock from Warrant Exercises											$ 1,000		31,000
Issuance of Shares of Common Stock from Warrant Exercises (in shares)											100,000
Cancellation and Correction of Restricted Stock Par Value											$ 17,819		(17,819)
Cancellation and Correction of Restricted Stock Par Value (in shares)											(3,141)
Foreign Currency Translation Adjustment															857						857
Net Income (Loss)																		(966,463)			(966,463)
Balance at Jun. 30, 2019									$ 41		$ 456,758		101,996,431		135,188			(94,116,661)			8,471,757
Balance (in shares) at Jun. 30, 2019									4,092		45,675,737
Balance at Mar. 31, 2019									$ 41		$ 455,758		101,729,241		133,833			(92,279,389)			10,039,484
Balance (in shares) at Mar. 31, 2019									4,092		45,575,737
Stock-Based Compensation													236,190								236,190
Issuance of Shares of Common Stock from Warrant Exercises											$ 1,000		31,000
Issuance of Shares of Common Stock from Warrant Exercises (in shares)											100,000
Cancellation and Correction of Restricted Stock Par Value																					(32,000)
Foreign Currency Translation Adjustment															1,355						(1,355)
Net Income (Loss)																		(1,837,272)			(1,837,272)
Balance at Jun. 30, 2019									$ 41		$ 456,758		$ 101,996,431		$ 135,188			$ (94,116,661)			8,471,757
Balance (in shares) at Jun. 30, 2019									4,092		45,675,737
Cumulative Effect of Change in Accounting Principle (Note 2)																					$ 469,096

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Offering Costs	$ 1,141,238	$ 1,141,238

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating Activities:
Net Loss	$ (966,463)	$ (5,159,582)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation and Amortization of Intangible Assets	25,836	15,932
Amortization of Right-of-Use Assets	79,641	0
Stock-Based Compensation	469,096	290,856
Changes in Operating Assets and Liabilities:
Prepaid Expenses and Other Current Assets	(95,893)	14,746
Refundable Tax Credit Receivable	16,672	10,076
Other Assets	8,695	0
Accounts Payable	32,927	(350,064)
Lease Liabilities	(79,641)	0
Deferred Revenue	(2,686,000)	577,208
Unbilled Revenue	0	(689,928)
Accrued Expenses	(373,860)	(768,996)
Net Cash Used in Operating Activities	(3,568,990)	(6,059,752)
Financing Activities:
Proceeds from Stock Offerings, Net of Offering Costs	0	10,108,762
Exercise of Warrants	32,000	754,225
Equipment Financing Payments	(3,143)	(6,322)
Net Cash Provided by Financing Activities	28,857	10,856,665
Effect of Exchange Rate Changes on Cash	982	1,861
Net (Decrease) Increase in Cash	(3,539,151)	4,798,774
Cash, Including Restricted Cash, Beginning of Period	8,049,237	7,851,029
Cash, Including Restricted Cash, End of Period	4,510,086	12,649,803
Supplemental Disclosures of Noncash Operating and Financing Activities
Creation of Right-of-Use Assets and Related Lease Liabilities	189,153	0
Conversion of Preferred Stock into Common Stock	$ 0	$ 36,637
Cancellation and Correction of Restricted Stock Par Value	17,819	0

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Organization, Business

6 Months Ended

Jun. 30, 2019

Organization, Business

Organization, Business

1.     Organization, Business

EyeGate Pharmaceuticals, Inc. (“EyeGate” or the “Company”), a Delaware corporation, began operations in December 2004 and is a clinical-stage specialty pharmaceutical company that is focused on developing and commercializing products for treating diseases and disorders of the eye. The Company accomplishes this by leveraging its two proprietary platform technologies, crosslinked thiolated carboxymethyl hyaluronic acid (“CMHA-S”) and the iontophoresis drug delivery system. The Company’s first platform is for the development of products using CMHA-S, a modified form of the natural polymer hyaluronic acid, which is a gel that possesses unique physical and chemical properties such as hydrating and healing properties when applied to the ocular surface. The ability of CMHA-S to adhere longer to the ocular surface, resist degradation and protect the ocular surface makes it well-suited for treating various ocular surface injuries. Secondly, the Company has been developing EGP‑437, which incorporates a reformulated topically active corticosteroid, Dexamethasone Phosphate, that is delivered into the ocular tissues through the Company’s proprietary innovative drug delivery system, the EyeGate® II Delivery System (“EGP‑437 Combination Product”).

As of June 30, 2019, there were 45,675,737 shares of Common Stock outstanding, no shares of Series A Preferred Stock outstanding, no shares of Series B Preferred Stock outstanding, and 4,092 shares of Series C Preferred Stock outstanding.

Since its inception, EyeGate has devoted substantially all of its efforts to business planning, research and development, and raising capital.

The accompanying Condensed Consolidated Financial Statements have been prepared assuming that EyeGate will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At June 30, 2019, EyeGate had Cash and Cash Equivalents of $4,465,086, and an Accumulated Deficit of $94,116,661. EyeGate has incurred losses and negative cash flows since inception, and future losses are anticipated. The Company anticipates having sufficient cash to fund planned operations through October 31, 2019, however, the acceleration or reduction of cash outflows by Company management can significantly impact the timing for raising additional capital to complete development of its products. To continue development, EyeGate will need to raise additional capital through equity financing, license agreements, and/or additional U.S. government grants. Although historically the Company has been successful at raising capital, additional capital may not be available on terms favorable to EyeGate, if at all. On May 13, 2019, the SEC declared effective EyeGate's registration statement on Form S‑3, registering a total of $50,000,000 of its securities for sale to the public from time to time in what is known as a “shelf offering”. The Company does not know if any future offerings, including offerings pursuant to its shelf registration statement, will succeed. Accordingly, no assurances can be given that Company management will succeed in these endeavors. The Company’s recurring losses from operations have caused management to determine there is substantial doubt about the Company’s ability to continue as a going concern. The Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.     Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries, EyeGate Pharma S.A.S. and Jade Therapeutics, Inc. (“Jade”), collectively referred to as “the Company”. All inter-company balances and transactions have been eliminated in consolidation. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and disclosures normally included in Condensed Consolidated Financial Statements prepared in accordance with U.S. GAAP have been condensed or eliminated. Accordingly, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the annual financial statements of the Company as of and for the year ended December 31, 2018.

Unaudited Interim Financial Information

The accompanying interim financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. The year-end balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for an interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of expenses during the reporting periods. The Company makes significant estimates and assumptions in recording the accruals for its clinical trial and research activities, establishing the useful lives of intangible assets and property and equipment, and conducting impairment reviews of long-lived assets. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Although the Company monitors and regularly assesses these estimates, actual results could differ significantly from these estimates. The Company records changes in estimates in the period that it becomes aware of the change.

Research and Development Expenses

The Company expenses research and development (“R&D”) expenditures as incurred. R&D expenses are comprised of costs incurred in performing R&D activities, including salaries, benefits, facilities, research-related overhead, sponsored research costs, contracted services, license fees, expenses related to generating, filing, and maintaining intellectual property, and other external costs. Because the Company believes that, under its current process for developing its products, the viability of the products is essentially concurrent with the establishment of technological feasibility, no costs have been capitalized to date.

In-process Research and Development

The Company records in-process R&D projects acquired in asset acquisitions that have not reached technological feasibility and which have no alternative future use. For in-process R&D projects acquired in business combinations, the Company capitalizes the in-process R&D project and periodically evaluates this asset for impairment until the R&D process has been completed. Once the R&D process is complete, the Company amortizes the R&D asset over its remaining useful life. At June 30, 2019 and December 31, 2018, there is $3,912,314 of in-process R&D, as part of intangible assets and in-process R&D on the Condensed Consolidated Balance Sheets.

Intangible Assets

The Company records intangible assets acquired in asset acquisitions of proprietary technology. The Company capitalizes intangible assets, amortizes them over the estimated useful life, and periodically evaluates the assets for impairment. At June 30, 2019 and December 31, 2018, there is $231,250 and $243,750 of net intangible assets, respectively, as part of intangible assets and in-process R&D on the Condensed Consolidated Balance Sheets.

Accrued Clinical Expenses

As part of the Company’s process of preparing the Condensed Consolidated Financial Statements, the Company is required to estimate its accrued expenses. This process includes reviewing open contracts and purchase orders, communicating with its applicable personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated costs incurred for the service when the Company has not yet been invoiced or otherwise notified of actual costs. The majority of the Company’s service providers invoice monthly in arrears for services performed. The Company makes estimates of its accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at the time. The Company periodically confirms the accuracy of these estimates with the service providers and makes adjustments if necessary.

Related Party Transactions

The Company has entered into certain related-party transactions, making payments for services to one vendor, nine consultants and two public universities for the six months ended June 30, 2019, all of whom also are stockholders of the Company. These transactions generally are ones that involve a stockholder or option holder of the Company to whom we also make payments during the year, typically as a consultant or a service provider. The amounts recorded or paid are not material to the accompanying Condensed Consolidated Financial Statements, with the exception of payments related to manufacturing services to one vendor in the amount of approximately $185,000 during the six months ended June 30, 2019.

Net Loss per Share – Basic and Diluted

Basic and diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding for the period, which, for basic net loss per share, does not include unvested restricted common stock that has been issued but is subject to forfeiture of 1,806,218 shares for the three and six months ended June 30, 2019 and 57,510 shares for the three and six months ended June 30, 2018.

Dilutive common equivalent shares consist of stock options, warrants, and preferred stock and are calculated using the treasury stock method, which assumes the repurchase of common shares at the average market price during the period. Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options or warrants. Common equivalent shares do not qualify as participating securities. In periods where the Company records a net loss, unvested restricted common stock and potential common stock equivalents are not included in the calculation of diluted net loss per share as their effect would be anti-dilutive.

	June 30,	June 30,
	2019	2018
	(unaudited)	(unaudited)
Common Stock Warrants	40,744,086	42,255,336
Employee Stock Options	2,777,416	2,106,035
Preferred Stock	12,787,500	12,787,500
Total Shares of Potential Common Stock Equivalents	56,309,002	57,148,871

Fair Value of Financial Instruments

The carrying amounts of all current assets and current liabilities approximate their fair values due to the short-term nature of these items. As of June 30, 2019 and December 31, 2018, the fair value of the Company’s contingent consideration was $1,210,000 and $1,210,000, respectively.

At June 30, 2019 and December 31, 2018, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP.

Revenue Recognition

The Company’s revenues are generated primarily through arrangements which generally contain multiple elements, or deliverables, including licenses and R&D activities to be performed by the Company on behalf of the licensor or grantor. Payments to EyeGate under these arrangements typically include one or more of the following: (1) nonrefundable, upfront license fees, (2) funding of discovery research efforts on a full-time equivalent basis, (3) reimbursement of research, development and intellectual property costs, (4) milestone payments, and (5) royalties on future product sales.

On July 9, 2015, the Company entered into an exclusive, worldwide licensing agreement with a subsidiary of Bausch Health Companies, Inc. (“BHC”), through which the Company granted to BHC an exclusive, worldwide commercial and manufacturing right to the Company’s EGP‑437 Combination Product in the field of anterior uveitis, as well as a right of last negotiation to license its EGP‑437 Combination Product for indications other than anterior uveitis (the “BHC Agreement”). Under the BHC Agreement, BHC paid to the Company an initial upfront payment of $1.0 million and the Company was eligible to receive milestone payments totaling up to $32.5 million, upon and subject to the achievement of certain specified development and commercial progress of the EGP‑437 Combination Product for the treatment of anterior uveitis. The Company received milestone payments totaling $5.4 million. The Company received payments both when it crossed certain thresholds on the way to each milestone, as well as once it achieved each milestone. The Company is entitled to retain all of these payments. Effective March 14, 2019, this license agreement was voluntarily terminated by BHC reinstating to the Company all of the rights and privileges of the EGP‑437 platform. Upon termination of this agreement, all amounts remaining in deferred revenue were recognized as revenue, as the Company no longer had any remaining performance obligations.

On February 21, 2017, the Company entered into another exclusive, worldwide licensing agreement with a subsidiary of BHC (the “New BHC Agreement”), through which the Company granted BHC exclusive, worldwide commercial and manufacturing rights to its EGP‑437 Combination Product in the field of ocular iontophoretic treatment for post-operative ocular inflammation and pain in ocular surgery patients (the “New Field”). Under the New BHC Agreement, BHC paid the Company an initial upfront payment of $4.0 million, and the Company was eligible to receive milestone payments totaling up to approximately $99.0 million, upon and subject to the achievement of certain specified developmental and commercial progress of the EGP‑437 Combination Product for the New Field. The Company received milestone payments totaling $3.4 million. The Company received payments both when it crossed certain thresholds on the way to each milestone, as well as once it achieved each milestone. The Company is entitled to retain all of these payments. Effective March 14, 2019, this license agreement was voluntarily terminated by BHC reinstating to the Company all of the rights and privileges of the EGP‑437 platform. Upon termination of this agreement, all amounts remaining in deferred revenue were recognized as revenue, as the Company no longer had any remaining performance obligations.

In May 2014, the FASB issued ASU No. 2014‑09, Revenues from Contracts with Customers (“Topic 606”), as subsequently amended, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for public companies for years ending after December 15, 2017, with early adoption permitted.

The Company did not elect to early adopt and adopted the new standard on January 1, 2018, using the modified retrospective method, which resulted in a cumulative effect adjustment in the amount of $9.5 million to beginning 2018 accumulated deficit and to deferred and unbilled revenue for the BHC contracts impacted by the adoption of the new standard. The changes to the method and/or timing of the Company’s revenue recognition associated with the adoption of the new standard primarily relate to the determination that there is one performance obligation in each contract with BHC and that the license combined with the R&D services is the performance obligation.

The Company recognizes revenue when its customer obtains control of promised services, in an amount that reflects the consideration which the Company expects to receive in exchange for those services. To determine whether arrangements are within the scope of this guidance, the Company performs the following five steps: (i) identifies the contract with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when (or as) the Company satisfies its performance obligation. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Upon adoption of ASU No. 2014‑09, the Company recognizes revenue from the transaction price applied to each single performance obligation over time as milestones are reached for each performance obligation. The Company only recognizes revenue on those milestones that are within the Company’s control and any constrained variable consideration that requires regulatory approval will only be included in the transaction price when performance is complete.

The below table represents the changes in the Company’s contract liabilities:

	June 30,		December 31,
	2019		2018
Contract Liabilities:
Deferred Revenue	$	—	$	2,686,000

	Six Months
	Ended
	June 30, 2019
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	2,686,000

In addition, the Company may receive government grant funds for specified ocular therapeutic research activities. Revenue under these grants will be recorded when the Company performs the activities specified by the terms of each grant and is entitled to the funds.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Under ASU No. 2016‑02, lessees are required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and the right-to-use assets, which are asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. The Company adopted the new standard effective January 1, 2019 using the modified retrospective method. As a result, the Company recorded right-of-use leased assets and corresponding liabilities of approximately $0.137 million on January 1, 2019.

On January 26, 2017, the FASB issued ASU No. 2017‑04, Intangibles—Goodwill and Other, which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for the Company on January 1, 2020. The new standard is required to be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company did not early adopt ASU No. 2017‑04 prior to its December 2018 impairment evaluation and is evaluating the effect that ASU No. 2017‑04 will have on its Consolidated Financial Statements and related disclosures.

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Property and Equipment

6 Months Ended

Jun. 30, 2019

Property and Equipment

Property and Equipment

3.    Property and Equipment

Property and equipment at June 30, 2019 and December 31, 2018 consists of the following:

	Estimated	June 30,
	Useful Life	2019		December 31,
	(Years)	(unaudited)		2018
Laboratory Equipment	3	$	62,576	$	62,576
Office Furniture	5		14,430		14,430
Leasehold Improvements	2		22,569		22,569
Total Property and Equipment, Gross			99,575		99,575
Less: Accumulated Depreciation			69,393		56,057
Total Property and Equipment, Net		$	30,182	$	43,518

Depreciation expense was $6,668 and $7,966 for the three months ended June 30, 2019 and 2018, respectively, and $13,336 and $15,932 for the six months ended June 30, 2019 and 2018, respectively.

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Accrued Expenses

6 Months Ended

Jun. 30, 2019

Accrued Expenses

Accrued Expenses

4.    Accrued Expenses

Accrued expenses at June 30, 2019 and December 31, 2018 consist of the following:

	June 30,
	2019		December 31,
	(unaudited)		2018
Payroll and Benefits	$	488,245	$	722,178
Professional Fees		122,398		165,894
Clinical Trials		118,010		212,540
Consulting		7,500		9,401
Short-Term Portion of Capital Financing Obligation		1,572		4,715
Total Accrued Expenses	$	737,725	$	1,114,728

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Debt

6 Months Ended

Jun. 30, 2019

Debt

Debt

5.    Debt

The Company has no indebtedness other than trade and accounts payable and capital financing obligations in the ordinary course of business at June 30, 2019 and December 31, 2018.

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Intangible Assets and In-Process R&D

6 Months Ended

Jun. 30, 2019

Intangible Assets and In-Process R&D

Intangible Assets and In-Process R&D

6.    Intangible Assets and In-Process R&D

Intangible assets at June 30, 2019 consist of the rights to trade-secrets and know-how related to the manufacturing of the EyeGate Ocular Bandage Gel (“OBG”). During the third quarter of 2018, the Company entered into an intellectual property license agreement with SentrX Animal Care, Inc. (“SentrX”) with respect to certain rights relating to the manufacturing of the EyeGate OBG product. The intangible assets were recorded at $250,000, representing the upfront payment paid to SentrX. Additionally, SentrX is eligible to receive milestone payments totaling up to $4.75 million, upon and subject to the achievement of certain specified development and commercial milestones. These future milestone payments to SentrX will increase the carrying value of the intangible assets. The Company’s intangible assets are amortized on a straight-line basis over the estimated useful lives. Additionally, in-process R&D at June 30, 2019 and December 31, 2018 consists of projects acquired from the acquisition of Jade that have not reached technological feasibility and which have no alternative future use. Once the R&D process is complete, the Company will amortize the R&D asset over its remaining useful life , or if the Company determines not to continue with R&D, write such assets off. The Company periodically evaluates these assets for impairment.

Intangible assets and in-process R&D at June 30, 2019 and December 31, 2018 consists of the following:

	Estimated Useful	June 30, 2019		December 31,
	Life (Years)	(unaudited)		2018
Trade Secrets	10	$	250,000	$	250,000
Less: Accumulated Amortization			(18,750)		(6,250)
Intangible Assets, Net			231,250		243,750
In-Process R&D			3,912,314		3,912,314
Total Intangible Assets and In-Process R&D, Net		$	4,143,564	$	4,156,064

Amortization expense on intangible assets was $6,250 and $0 for the three months ended June 30, 2019 and 2018, respectively, and $12,500 and $0 for the six months ended June 30, 2019 and 2018, respectively.

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Capital Stock

6 Months Ended

Jun. 30, 2019

Capital Stock

Capital Stock

7.    Capital Stock

On May 24, 2016, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent”), to create an at the market equity program under which the Company can from time to time offer and sell up to 1,319,289 shares of its Common Stock through the Sales Agent. On February 21, 2017, the Company authorized the Sales Agent to restart sales under the ATM Agreement for maximum aggregate gross proceeds of up to $3,285,798. During the first quarter of 2017, the Company sold 642,150 shares of Common Stock under this agreement for total net proceeds to the Company, after deducting the placement agent fees and offering expenses, of approximately $1.8 million. No further shares of Common Stock were sold pursuant to the ATM Agreement. The ATM Agreement terminated automatically pursuant to its terms on May 24, 2019.

On June 14, 2017, the Company completed a public offering of 5,336,667 shares of Common Stock and 1,995 shares of Series B Preferred Stock (convertible into 1,330,000 shares of Common Stock), along with warrants to purchase 6,666,667 shares of Common Stock. The total net proceeds to the Company from the offering, after deducting the placement agent fees and offering expenses, were approximately $8.8 million. Additionally, the investors received, for each share of Common Stock, or for each share of Common Stock issuable upon conversion of a share of Series B Preferred Stock purchased in the public offering, warrants to purchase one share of Common Stock at an exercise price of $1.50 per share, which totaled warrants to purchase an aggregate of 6,666,667 shares of Common Stock. The warrants issued to investors became initially exercisable immediately upon issuance and terminate on June 14, 2022, five years following the date of issuance. Concurrently with the closing of the public offering, a holder elected to convert 675 shares of Series B Preferred Stock into 450,000 shares of Common Stock. Subsequently, on June 15, 2017 and April 9, 2018, holders converted 1,320 shares of Series B Preferred stock into 880,000 shares of Common Stock.

On April 17, 2018, the Company completed a public offering of 14,730,000 shares of Common Stock and 6,536.4 shares of Series C Preferred Stock (convertible into 20,426,250 shares of Common Stock), along with warrants to purchase 35,156,250 shares of Common Stock. The total net proceeds to the Company from the offering, after deducting the placement agent fees and offering expenses, were approximately $10.1 million. Additionally, the investors received, for each share of Common Stock, or for each share of Common Stock issuable upon conversion of a share of Series C Preferred Stock purchased in the public offering, warrants to purchase one share of Common Stock at an exercise price of $0.32 per share, which totaled warrants to purchase an aggregate of 35,156,250 shares of Common Stock. The warrants issued to investors became initially exercisable immediately upon issuance and terminate on April 17, 2023, five years following the date of issuance. Concurrently with the closing of the public offering, a holder elected to convert 1,400 shares of Series C Preferred Stock into 4,375,000 shares of Common Stock. Subsequently, on April 18, 2018, April 23, 2018, and April 30, 2018, holders converted 1,044.4 shares of Series C Preferred stock into 3,263,750 shares of Common Stock.

At June 30, 2019, the Company had 120,000,000 authorized shares of Common Stock, $0.01 par value, of which 45,675,737 shares were outstanding. At June 30, 2019, the Company had 9,994,184 authorized shares of Preferred Stock, $0.01 par value, of which 3,750 shares were designated as Series A Preferred Stock and 0 shares are issued and outstanding, 10,000 shares were designated as Series B Preferred Stock and 0 shares are issued and outstanding, and 10,000 shares were designated as Series C Preferred Stock and 4,092 shares are issued and outstanding. At June 30, 2019, there were 0 shares of Common Stock underlying the outstanding shares of Series A Preferred Stock, 0 shares of Common Stock underlying the outstanding shares of Series B Preferred Stock, and 12,787,500 shares of Common Stock underlying the outstanding shares of Series C Preferred Stock.

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Warrants

6 Months Ended

Jun. 30, 2019

Warrants

Warrants

8.    Warrants

The following is a summary of warrant activity for the six months ended June 30, 2019 and 2018:

		Weighted Average		Weighted Average
	Number of	Exercise		Remaining
	Warrants	Price		Term in Years
Outstanding at December 31, 2018	40,844,086	$	1.00	4.05
Exercised	(100,000)		0.32	3.80
Outstanding at June 30, 2019	40,744,086		1.00	3.55
Outstanding at December 31, 2017	9,455,961		3.26	4.23
Issued	35,156,250		0.32	4.80
Exercised	(2,356,875)		0.32	4.80
Outstanding at June 30, 2018	42,255,336	$	0.98	4.56

All of the warrant agreements provide for a cashless exercise in the event a registration statement covering the issuance of the shares of common stock underlying the warrants is not effective, whereby the number of warrants to be issued will be reduced by the number of shares which could be purchased from the proceeds of the exercise of the respective warrant. The outstanding warrants expire from 2020 through 2025.

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Equity Incentive Plan

6 Months Ended

Jun. 30, 2019

Equity Incentive Plan

Equity Incentive Plan

9.    Equity Incentive Plan

In 2005, the Company approved the 2005 Equity Incentive Plan (the “2005 Plan”). The 2005 Plan provides for the granting of options, restricted stock or other stock-based awards to employees, officers, directors, consultants and advisors. During 2010, the maximum number of shares of Common Stock that may be issued pursuant to the 2005 Plan was increased to 891,222 shares. The Board of Directors (the “Board”) is responsible for administration of the 2005 Plan. The Company’s Board determines the term of each option, the option exercise price, the number of shares for which each option is granted and the rate at which each option is exercisable. Incentive stock options may be granted to any officer or employee at an exercise price per share of not less than the fair value per common share on the date of the grant (not less than 110% of fair value in the case of holders of more than 10% of the Company’s voting stock) and with a term not to exceed ten years from the date of the grant (five years for incentive stock options granted to holders of more than 10% of the Company’s voting stock). Nonqualified stock options may be granted to any officer, employee, consultant or director at an exercise price per share of not less than the par value per share. Following adoption of the 2014 Equity Incentive Plan (the “2014 Plan”), no further grants were made under the 2005 Plan. General terms of the 2014 Plan remain the same as that of the 2005 Plan.

The Company’s Board adopted the 2014 Plan and the Employee Stock Purchase Plan (the “ESPP”) and the Company’s Stockholders approved the 2014 Plan and the ESPP Plan in February 2015. As of June 30, 2019, the maximum number of shares of Common Stock that may be issued pursuant to the 2014 Plan and the ESPP was 8,390,123 and 170,567 shares, respectively.

In January 2019, the number of shares of common stock issuable under the 2014 Plan automatically increased by 350,000 shares pursuant to the terms of the 2014 Plan. These additional shares are included in the total of 8,390,123 shares issuable under the 2014 Plan.

The following is a summary of stock option activity under the Plans for the six months ended June 30, 2019 and 2018:

				Weighted-Average
	Number of	Weighted- Average		Contractual Life
	Options	Exercise Price		(In Years)
Outstanding at December 31, 2018	2,076,153	$	2.28	6.51
Granted	750,000		0.48
Expired	(48,737)		1.08
Outstanding at June 30, 2019	2,777,416	$	1.81	7.10
Exercisable at June 30, 2019	1,651,546	$	2.65	5.62
Vested and Expected to Vest at June 30, 2019	2,777,416	$	1.81	7.10
Outstanding at December 31, 2017	1,893,003	$	2.49	5.40
Granted	275,500		0.57
Forfeited	(1,500)		0.83
Expired	(60,968)		0.80
Outstanding at June 30, 2018	2,106,035	$	2.29	4.66
Exercisable at June 30, 2018	1,429,484	$	2.65	3.95
Vested and Expected to Vest at June 30, 2018	2,106,035	$	2.29	4.66

During the six months ended June 30, 2019 and June 30, 2018, the Board approved the grant of options to purchase 750,000 and 275,500 shares of its Common Stock, respectively. All option grants were pursuant to the 2014 Plan. In general, options granted under the 2014 Plan vest with respect to one-third of the underlying shares on the one-year anniversary of the grant date and the remainder ratably over a 24‑month period.

For the six months ended June 30, 2019 and 2018, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:

	2019		2018
Risk-Free Interest Rate	1.82	%	1.82	%
Expected Life	5.00	years	7.00	years
Expected Volatility	152	%	159	%
Expected Dividend Yield	0	%	0	%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the six months ended June 30, 2019 and 2018 was $0.47 and $0.55, respectively.

The following is a summary of restricted stock activity for the six months ended June 30, 2019 and June 30, 2018:

				Weighted- Average
	Number of	Weighted- Average		Remaining
	Shares	Grant Date Fair Value		Recognition Period
Nonvested Outstanding at December 31, 2018	1,822,132	$	0.59
Vested	(12,773)		1.52
Forfeited	(3,141)	$	1.52
Nonvested Outstanding at June 30, 2019	1,806,218	$	0.58	1.77
Nonvested Outstanding at December 31, 2017	103,000		1.52
Vested	(45,490)		1.52
Nonvested Outstanding at June 30, 2018	57,510	$	1.52	1.60

During the six months ended June 30, 2019, 3,141 shares of restricted stock, which had not vested, were forfeited and returned to the Company. No shares were forfeited during the three months ended June 30, 2019, or the three and six months ended June 30, 2018. The total stock-based compensation expense for employees and non-employees is included in the accompanying Condensed Consolidated Statements of Operations and as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Research and Development	$	58,611	$	49,897	$	123,150	$	106,975
General and Administrative		177,579		95,412		345,946		183,881
Total Stock-Based Compensation Expense	$	236,190	$	145,309	$	469,096	$	290,856

The fair value of options granted for the six months ended June 30, 2019 and June 30, 2018 was approximately $368,200 and $151,200, respectively. As of June 30, 2019 and June 30, 2018, there was approximately $1,122,000 and $805,000 of total unrecognized compensation expense related to unvested stock-based compensation arrangements granted, which cost is expected to be recognized over a weighted-average period of 2.00 and 1.57 years, respectively. The aggregate intrinsic value of stock options outstanding and exercisable at June 30, 2019 and June 30, 2018 was approximately $0 and $0, respectively.

At June 30, 2019, there were 4,033,056 shares available under the 2014 Plan and 117,090 shares available under the Company’s ESPP.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies

Commitments and Contingencies

10.   Commitments and Contingencies

Leases

The Company is a party to a real property operating lease for the rental of office space in Waltham, Massachusetts of up to 4,516 square feet, that is used for its corporate headquarters. This lease terminates in December 2019. On July 6, 2016, the Company entered into a real property operating lease for office and laboratory space of approximately 2,300 square feet in Salt Lake City, Utah. This lease was amended during the second quarter of 2019 to extend its termination until June 2020.

Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments. To determine the present value of lease payments not yet paid, the Company estimated incremental secured borrowing rates corresponding to the maturities of the leases. The Company estimated a rate of 10% based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. The Company recognizes expense for its leases on a straight-line basis over the lease term.

Maturities of lease liabilities were as follows as of June 30, 2019:

	Operating Leases
Remainder of 2019	$	86,390
2020		27,682
Less: Imputed Interest		(4,560)
Present Value of Lease Liabilities	$	109,512

License Agreements

The Company is a party to five license agreements as described below. These license agreements require the Company to pay royalties or fees to the licensor based on revenue or milestones related to the licensed technology.

On February 15, 1999, the Company entered in to an exclusive worldwide license agreement with the University of Miami School of Medicine to license technology relating to the Company’s EyeGate® II Delivery System. This agreement, which was amended in December 2005, requires the Company to pay to the University of Miami an annual license fee of $12,500. This license also requires payments to the University of Miami upon the Company’s achievement of certain milestones. Unless terminated pursuant to the license agreement, this license will expire 12 years after the date of the first commercial sale of a product containing the licensed technology.

On July 23, 1999, the Company entered into a perpetual Transaction Protocol agreement with Francine Behar-Cohen to acknowledge the Company’s right to use certain patents that Ms. Behar-Cohen had certain ownership rights with respect to and which are used in the Company’s EGP‑437 Combination Product. The agreement also provides for the Company to pay Ms. Behar-Cohen a fee based on a percentage of the pre-tax turnover generated from sales of the Company’s EGP‑437 Combination Product relating to its inclusion of the EyeGate® II Delivery System. The fees due under the agreement expired in January 2018, but the Company continues to maintain its rights under the agreement.

On September 12, 2013, Jade entered into an agreement with BioTime, Inc. granting to it the exclusive worldwide right to commercialize cross-linked thiolated carboxymethyl hyaluronic acid (“CMHA-S”) for ophthalmic treatments in humans. The agreement calls for a license issue fee paid to BioTime of $50,000 and requires the Company (through its Jade subsidiary) to pay an annual fee of $30,000 and royalties to BioTime based on revenue relating to any product incorporating the CMHA-S technology. The agreement expires when patent protection for the CMHA-S technology lapses, which is expected to occur in the U.S. in 2028.

On June 17, 2016, the Company entered into an exclusive worldwide license agreement with the University of Utah Research Foundation to further the commercial development of the NASH technology, together with alkylated HA. The agreement calls for payments due to the University of Utah, consisting of a license grant fee of $15,000 due within 30 days of signing, and an annual licensing fee, initially $5,000, and escalating ratably up to $20,000 in 2021.

On September 26, 2018, the Company entered into an intellectual property licensing agreement (the “SentrX Agreement”) with SentrX, a veterinary medical device company that develops and manufactures veterinary wound care products. Under the SentrX Agreement, the Company will in-license the rights to trade-secrets and know-how related to the manufacturing of its EyeGate OBG. The SentrX Agreement will enable the Company to pursue a different vendor with a larger capacity for manufacturing and an FDA-inspected facility for commercialization of a product for human use. Under the SentrX Agreement, the Company paid SentrX an upfront payment of $250,000 recorded as intangible assets on the Condensed Consolidated Balance Sheet. SentrX is eligible to receive milestone payments totaling up to $4.75 million, upon and subject to the achievement of certain specified developmental and commercial milestones. These future milestone payments to SentrX will increase the carrying value of the intangible assets.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2019

Employee Benefit Plans

Employee Benefit Plans

11.   Employee Benefit Plans

The Company has an employee benefit plan for its United States-based employees under Section 401(k) of the Internal Revenue Code. The Plan allows all eligible employees to make contributions up to a specified percentage of their compensation. Under the Plan, the Company may, but is not obligated to, match a portion of the employee contribution up to a defined maximum. As a result of the 401(k) plan compliance review for the year ended December 31, 2018, the Company will contribute approximately $29,700 to eligible employees. The Company has accrued an estimate for contributions likely due as a result of the 401(k) plan compliance review for the year ended December 31, 2019. The Company made no  matching contribution for the six months ended June 30, 2019 and 2018.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries, EyeGate Pharma S.A.S. and Jade Therapeutics, Inc. (“Jade”), collectively referred to as “the Company”. All inter-company balances and transactions have been eliminated in consolidation. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and disclosures normally included in Condensed Consolidated Financial Statements prepared in accordance with U.S. GAAP have been condensed or eliminated. Accordingly, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the annual financial statements of the Company as of and for the year ended December 31, 2018.

Unaudited Interim Financial Information

Unaudited Interim Financial Information

The accompanying interim financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. The year-end balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for an interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of expenses during the reporting periods. The Company makes significant estimates and assumptions in recording the accruals for its clinical trial and research activities, establishing the useful lives of intangible assets and property and equipment, and conducting impairment reviews of long-lived assets. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Although the Company monitors and regularly assesses these estimates, actual results could differ significantly from these estimates. The Company records changes in estimates in the period that it becomes aware of the change.

Research and Development Expenses

Research and Development Expenses

The Company expenses research and development (“R&D”) expenditures as incurred. R&D expenses are comprised of costs incurred in performing R&D activities, including salaries, benefits, facilities, research-related overhead, sponsored research costs, contracted services, license fees, expenses related to generating, filing, and maintaining intellectual property, and other external costs. Because the Company believes that, under its current process for developing its products, the viability of the products is essentially concurrent with the establishment of technological feasibility, no costs have been capitalized to date.

In-process Research and Development

In-process Research and Development

The Company records in-process R&D projects acquired in asset acquisitions that have not reached technological feasibility and which have no alternative future use. For in-process R&D projects acquired in business combinations, the Company capitalizes the in-process R&D project and periodically evaluates this asset for impairment until the R&D process has been completed. Once the R&D process is complete, the Company amortizes the R&D asset over its remaining useful life. At June 30, 2019 and December 31, 2018, there is $3,912,314 of in-process R&D, as part of intangible assets and in-process R&D on the Condensed Consolidated Balance Sheets.

Intangible Assets

Intangible Assets

The Company records intangible assets acquired in asset acquisitions of proprietary technology. The Company capitalizes intangible assets, amortizes them over the estimated useful life, and periodically evaluates the assets for impairment. At June 30, 2019 and December 31, 2018, there is $231,250 and $243,750 of net intangible assets, respectively, as part of intangible assets and in-process R&D on the Condensed Consolidated Balance Sheets.

Accrued Clinical Expenses

Accrued Clinical Expenses

As part of the Company’s process of preparing the Condensed Consolidated Financial Statements, the Company is required to estimate its accrued expenses. This process includes reviewing open contracts and purchase orders, communicating with its applicable personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated costs incurred for the service when the Company has not yet been invoiced or otherwise notified of actual costs. The majority of the Company’s service providers invoice monthly in arrears for services performed. The Company makes estimates of its accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at the time. The Company periodically confirms the accuracy of these estimates with the service providers and makes adjustments if necessary.

Related Party Transactions

Related Party Transactions

The Company has entered into certain related-party transactions, making payments for services to one vendor, nine consultants and two public universities for the six months ended June 30, 2019, all of whom also are stockholders of the Company. These transactions generally are ones that involve a stockholder or option holder of the Company to whom we also make payments during the year, typically as a consultant or a service provider. The amounts recorded or paid are not material to the accompanying Condensed Consolidated Financial Statements, with the exception of payments related to manufacturing services to one vendor in the amount of approximately $185,000 during the six months ended June 30, 2019.

Net Loss per Share - Basic and Diluted

Net Loss per Share – Basic and Diluted

Basic and diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding for the period, which, for basic net loss per share, does not include unvested restricted common stock that has been issued but is subject to forfeiture of 1,806,218 shares for the three and six months ended June 30, 2019 and 57,510 shares for the three and six months ended June 30, 2018.

Dilutive common equivalent shares consist of stock options, warrants, and preferred stock and are calculated using the treasury stock method, which assumes the repurchase of common shares at the average market price during the period. Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options or warrants. Common equivalent shares do not qualify as participating securities. In periods where the Company records a net loss, unvested restricted common stock and potential common stock equivalents are not included in the calculation of diluted net loss per share as their effect would be anti-dilutive.

	June 30,	June 30,
	2019	2018
	(unaudited)	(unaudited)
Common Stock Warrants	40,744,086	42,255,336
Employee Stock Options	2,777,416	2,106,035
Preferred Stock	12,787,500	12,787,500
Total Shares of Potential Common Stock Equivalents	56,309,002	57,148,871

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of all current assets and current liabilities approximate their fair values due to the short-term nature of these items. As of June 30, 2019 and December 31, 2018, the fair value of the Company’s contingent consideration was $1,210,000 and $1,210,000, respectively.

At June 30, 2019 and December 31, 2018, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP.

Revenue Recognition

Revenue Recognition

The Company’s revenues are generated primarily through arrangements which generally contain multiple elements, or deliverables, including licenses and R&D activities to be performed by the Company on behalf of the licensor or grantor. Payments to EyeGate under these arrangements typically include one or more of the following: (1) nonrefundable, upfront license fees, (2) funding of discovery research efforts on a full-time equivalent basis, (3) reimbursement of research, development and intellectual property costs, (4) milestone payments, and (5) royalties on future product sales.

On July 9, 2015, the Company entered into an exclusive, worldwide licensing agreement with a subsidiary of Bausch Health Companies, Inc. (“BHC”), through which the Company granted to BHC an exclusive, worldwide commercial and manufacturing right to the Company’s EGP‑437 Combination Product in the field of anterior uveitis, as well as a right of last negotiation to license its EGP‑437 Combination Product for indications other than anterior uveitis (the “BHC Agreement”). Under the BHC Agreement, BHC paid to the Company an initial upfront payment of $1.0 million and the Company was eligible to receive milestone payments totaling up to $32.5 million, upon and subject to the achievement of certain specified development and commercial progress of the EGP‑437 Combination Product for the treatment of anterior uveitis. The Company received milestone payments totaling $5.4 million. The Company received payments both when it crossed certain thresholds on the way to each milestone, as well as once it achieved each milestone. The Company is entitled to retain all of these payments. Effective March 14, 2019, this license agreement was voluntarily terminated by BHC reinstating to the Company all of the rights and privileges of the EGP‑437 platform. Upon termination of this agreement, all amounts remaining in deferred revenue were recognized as revenue, as the Company no longer had any remaining performance obligations.

On February 21, 2017, the Company entered into another exclusive, worldwide licensing agreement with a subsidiary of BHC (the “New BHC Agreement”), through which the Company granted BHC exclusive, worldwide commercial and manufacturing rights to its EGP‑437 Combination Product in the field of ocular iontophoretic treatment for post-operative ocular inflammation and pain in ocular surgery patients (the “New Field”). Under the New BHC Agreement, BHC paid the Company an initial upfront payment of $4.0 million, and the Company was eligible to receive milestone payments totaling up to approximately $99.0 million, upon and subject to the achievement of certain specified developmental and commercial progress of the EGP‑437 Combination Product for the New Field. The Company received milestone payments totaling $3.4 million. The Company received payments both when it crossed certain thresholds on the way to each milestone, as well as once it achieved each milestone. The Company is entitled to retain all of these payments. Effective March 14, 2019, this license agreement was voluntarily terminated by BHC reinstating to the Company all of the rights and privileges of the EGP‑437 platform. Upon termination of this agreement, all amounts remaining in deferred revenue were recognized as revenue, as the Company no longer had any remaining performance obligations.

In May 2014, the FASB issued ASU No. 2014‑09, Revenues from Contracts with Customers (“Topic 606”), as subsequently amended, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for public companies for years ending after December 15, 2017, with early adoption permitted.

The Company did not elect to early adopt and adopted the new standard on January 1, 2018, using the modified retrospective method, which resulted in a cumulative effect adjustment in the amount of $9.5 million to beginning 2018 accumulated deficit and to deferred and unbilled revenue for the BHC contracts impacted by the adoption of the new standard. The changes to the method and/or timing of the Company’s revenue recognition associated with the adoption of the new standard primarily relate to the determination that there is one performance obligation in each contract with BHC and that the license combined with the R&D services is the performance obligation.

The Company recognizes revenue when its customer obtains control of promised services, in an amount that reflects the consideration which the Company expects to receive in exchange for those services. To determine whether arrangements are within the scope of this guidance, the Company performs the following five steps: (i) identifies the contract with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when (or as) the Company satisfies its performance obligation. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Upon adoption of ASU No. 2014‑09, the Company recognizes revenue from the transaction price applied to each single performance obligation over time as milestones are reached for each performance obligation. The Company only recognizes revenue on those milestones that are within the Company’s control and any constrained variable consideration that requires regulatory approval will only be included in the transaction price when performance is complete.

The below table represents the changes in the Company’s contract liabilities:

	June 30,		December 31,
	2019		2018
Contract Liabilities:
Deferred Revenue	$	—	$	2,686,000

	Six Months
	Ended
	June 30, 2019
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	2,686,000

In addition, the Company may receive government grant funds for specified ocular therapeutic research activities. Revenue under these grants will be recorded when the Company performs the activities specified by the terms of each grant and is entitled to the funds.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Under ASU No. 2016‑02, lessees are required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and the right-to-use assets, which are asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. The Company adopted the new standard effective January 1, 2019 using the modified retrospective method. As a result, the Company recorded right-of-use leased assets and corresponding liabilities of approximately $0.137 million on January 1, 2019.

On January 26, 2017, the FASB issued ASU No. 2017‑04, Intangibles—Goodwill and Other, which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for the Company on January 1, 2020. The new standard is required to be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company did not early adopt ASU No. 2017‑04 prior to its December 2018 impairment evaluation and is evaluating the effect that ASU No. 2017‑04 will have on its Consolidated Financial Statements and related disclosures.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Summary of Significant Accounting Policies

Schedule of unvested restricted common stock and potential common stock equivalents are not included in the calculation of diluted net loss per share

In periods where the Company records a net loss, unvested restricted common stock and potential common stock equivalents are not included in the calculation of diluted net loss per share as their effect would be anti-dilutive.

	June 30,	June 30,
	2019	2018
	(unaudited)	(unaudited)
Common Stock Warrants	40,744,086	42,255,336
Employee Stock Options	2,777,416	2,106,035
Preferred Stock	12,787,500	12,787,500
Total Shares of Potential Common Stock Equivalents	56,309,002	57,148,871

Schedule of changes in the contract liabilities

The below table represents the changes in the Company’s contract liabilities:

	June 30,		December 31,
	2019		2018
Contract Liabilities:
Deferred Revenue	$	—	$	2,686,000

	Six Months
	Ended
	June 30, 2019
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	2,686,000

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Property and Equipment

Schedule of property and equipment

Property and equipment at June 30, 2019 and December 31, 2018 consists of the following:

	Estimated	June 30,
	Useful Life	2019		December 31,
	(Years)	(unaudited)		2018
Laboratory Equipment	3	$	62,576	$	62,576
Office Furniture	5		14,430		14,430
Leasehold Improvements	2		22,569		22,569
Total Property and Equipment, Gross			99,575		99,575
Less: Accumulated Depreciation			69,393		56,057
Total Property and Equipment, Net		$	30,182	$	43,518

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2019

Accrued Expenses

Schedule of accrued expenses

Accrued expenses at June 30, 2019 and December 31, 2018 consist of the following:

	June 30,
	2019		December 31,
	(unaudited)		2018
Payroll and Benefits	$	488,245	$	722,178
Professional Fees		122,398		165,894
Clinical Trials		118,010		212,540
Consulting		7,500		9,401
Short-Term Portion of Capital Financing Obligation		1,572		4,715
Total Accrued Expenses	$	737,725	$	1,114,728

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Intangible Assets and In-Process R&D (Tables)

6 Months Ended

Jun. 30, 2019

Intangible Assets and In-Process R&D

Schedule of intangible assets and in-process R&D

Intangible assets and in-process R&D at June 30, 2019 and December 31, 2018 consists of the following:

	Estimated Useful	June 30, 2019		December 31,
	Life (Years)	(unaudited)		2018
Trade Secrets	10	$	250,000	$	250,000
Less: Accumulated Amortization			(18,750)		(6,250)
Intangible Assets, Net			231,250		243,750
In-Process R&D			3,912,314		3,912,314
Total Intangible Assets and In-Process R&D, Net		$	4,143,564	$	4,156,064

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Warrants (Tables)

6 Months Ended

Jun. 30, 2019

Warrants

Schedule of warrant activity

The following is a summary of warrant activity for the six months ended June 30, 2019 and 2018:

		Weighted Average		Weighted Average
	Number of	Exercise		Remaining
	Warrants	Price		Term in Years
Outstanding at December 31, 2018	40,844,086	$	1.00	4.05
Exercised	(100,000)		0.32	3.80
Outstanding at June 30, 2019	40,744,086		1.00	3.55
Outstanding at December 31, 2017	9,455,961		3.26	4.23
Issued	35,156,250		0.32	4.80
Exercised	(2,356,875)		0.32	4.80
Outstanding at June 30, 2018	42,255,336	$	0.98	4.56

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Equity Incentive Plan (Tables)

6 Months Ended

Jun. 30, 2019

Equity Incentive Plan

Schedule of stock option activity

The following is a summary of stock option activity under the Plans for the six months ended June 30, 2019 and 2018:

				Weighted-Average
	Number of	Weighted- Average		Contractual Life
	Options	Exercise Price		(In Years)
Outstanding at December 31, 2018	2,076,153	$	2.28	6.51
Granted	750,000		0.48
Expired	(48,737)		1.08
Outstanding at June 30, 2019	2,777,416	$	1.81	7.10
Exercisable at June 30, 2019	1,651,546	$	2.65	5.62
Vested and Expected to Vest at June 30, 2019	2,777,416	$	1.81	7.10
Outstanding at December 31, 2017	1,893,003	$	2.49	5.40
Granted	275,500		0.57
Forfeited	(1,500)		0.83
Expired	(60,968)		0.80
Outstanding at June 30, 2018	2,106,035	$	2.29	4.66
Exercisable at June 30, 2018	1,429,484	$	2.65	3.95
Vested and Expected to Vest at June 30, 2018	2,106,035	$	2.29	4.66

Schedule of weighted average assumptions

For the six months ended June 30, 2019 and 2018, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:

	2019		2018
Risk-Free Interest Rate	1.82	%	1.82	%
Expected Life	5.00	years	7.00	years
Expected Volatility	152	%	159	%
Expected Dividend Yield	0	%	0	%

Schedule of restricted stock activity

The following is a summary of restricted stock activity for the six months ended June 30, 2019 and June 30, 2018:

				Weighted- Average
	Number of	Weighted- Average		Remaining
	Shares	Grant Date Fair Value		Recognition Period
Nonvested Outstanding at December 31, 2018	1,822,132	$	0.59
Vested	(12,773)		1.52
Forfeited	(3,141)	$	1.52
Nonvested Outstanding at June 30, 2019	1,806,218	$	0.58	1.77
Nonvested Outstanding at December 31, 2017	103,000		1.52
Vested	(45,490)		1.52
Nonvested Outstanding at June 30, 2018	57,510	$	1.52	1.60

Schedule of stock based compensation expense

The total stock-based compensation expense for employees and non-employees is included in the accompanying Condensed Consolidated Statements of Operations and as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Research and Development	$	58,611	$	49,897	$	123,150	$	106,975
General and Administrative		177,579		95,412		345,946		183,881
Total Stock-Based Compensation Expense	$	236,190	$	145,309	$	469,096	$	290,856

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies

Schedule of maturities of lease Liabilities

Maturities of lease liabilities were as follows as of June 30, 2019:

	Operating Leases
Remainder of 2019	$	86,390
2020		27,682
Less: Imputed Interest		(4,560)
Present Value of Lease Liabilities	$	109,512

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Organization, Business (Details) - USD ($)	Jun. 30, 2019	May 13, 2019	Dec. 31, 2018
Subsidiary, Sale of Stock [Line Items]
Common Stock, Shares, Outstanding	45,675,737		45,578,878
Cash and Cash Equivalents, at Carrying Value	$ 4,465,086		$ 8,004,237
Retained Earnings (Accumulated Deficit)	$ (94,116,661)		$ (93,150,198)
Capital Units, Authorized		50,000,000
Series A Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred Stock, Shares Outstanding	0		0
Series B Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred Stock, Shares Outstanding	0		0
Series C Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred Stock, Shares Outstanding	4,092

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Summary of Significant Accounting Policies - Net Loss per Share - Basic and Diluted (Details) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Shares of Potential Common Stock Equivalents	56,309,002	57,148,871
Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Shares of Potential Common Stock Equivalents	40,744,086	42,255,336
Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Shares of Potential Common Stock Equivalents	12,787,500	12,787,500
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Shares of Potential Common Stock Equivalents	2,777,416	2,106,035

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Summary of Significant Accounting Policies - Contract Liabilities (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Contract with Customer, Liability [Abstract]
Amounts included in contract liability at the beginning of the period	$ 2,686,000
Deferred Revenue
Contract with Customer, Liability [Abstract]
Deferred Revenue		$ 2,686,000

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)		1 Months Ended	6 Months Ended
	Jul. 09, 2015	Feb. 21, 2017	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018	Jun. 30, 2018	Jan. 01, 2018
Money Market Funds Fair Value			$ 1,210,000
Contingent Consideration Funds Fair Value					$ 1,210,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			3,912,314		3,912,314
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets							$ 9,500,000
Contract with Customer, Liability, Revenue Recognized			2,686,000
Intangible Assets and Inprocess Research And Development			231,250		243,750
Payments to Related Parties			$ 185,000
New Accounting Pronouncements Corresponding Liabilities Balance				$ 137,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number			1,806,218			57,510
Operating Lease, Right-of-Use Asset			$ 109,512		$ 0
New Valeant Agreement
Proceeds From Upfront Payment	$ 1,000,000	$ 4,000,000
Contract with Customer, Liability, Revenue Recognized	32,500,000	99,000,000
Revenue Recognition Milestone Payment	$ 5,400,000	$ 3,400,000

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Property and Equipment (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Total Property and Equipment, Gross	$ 99,575	$ 99,575
Less: Accumulated Depreciation	69,393	56,057
Total Property and Equipment, Net	30,182	43,518
Laboratory Equipment
Property, Plant and Equipment [Line Items]
Total Property and Equipment, Gross	$ 62,576	62,576
Property, Plant and Equipment, Useful Life	3 years
Office Furniture
Property, Plant and Equipment [Line Items]
Total Property and Equipment, Gross	$ 14,430	14,430
Property, Plant and Equipment, Useful Life	5 years
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Total Property and Equipment, Gross	$ 22,569	$ 22,569
Property, Plant and Equipment, Useful Life	2 years

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Property and Equipment - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Property and Equipment
Depreciation	$ 6,668	$ 7,966	$ 13,336	$ 15,932

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Accrued Expenses (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Accrued Expenses
Payroll and Benefits	$ 488,245	$ 722,178
Professional Fees	122,398	165,894
Clinical Trials	118,010	212,540
Consulting	7,500	9,401
Short-Term Portion of Capital Financing Obligation	1,572	4,715
Total Accrued Expenses	$ 737,725	$ 1,114,728

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Intangible Assets and In-Process R&D (Details) - Trade Secrets - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Trade Secrets	$ 250,000	$ 250,000
Less: Accumulated Amortization	(18,750)	(6,250)
Intangible Assets, Net	231,250	243,750
In-Process R&D	3,912,314	3,912,314
Total Intangible Assets and In-Process R&D, Net	$ 4,143,564	$ 4,156,064
Estimated Useful Life (Years)	10 years

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Intangible Assets and In-Process R&D - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Sep. 26, 2018
Intangible Assets, Net (Excluding Goodwill)	$ 4,143,564		$ 4,143,564		$ 4,156,064
Amortization of Intangible Assets	6,250	$ 0	12,500	$ 0
SentrX Animal Care Inc
Intangible Assets, Net (Excluding Goodwill)	250,000		250,000			$ 250,000
Intangible Assets Expected Milestone Payable	$ 4,750,000		$ 4,750,000			$ 4,750,000

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Capital Stock (Details) - USD ($)							3 Months Ended		6 Months Ended
	Apr. 18, 2018	Apr. 17, 2018	Jun. 15, 2017	Jun. 14, 2017	Feb. 21, 2017	May 24, 2016	Jun. 30, 2018	Mar. 31, 2017	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Class of Stock [Line Items]
Common Stock, Shares Authorized									120,000,000		120,000,000
Common Stock, Par or Stated Value Per Share									$ 0.01		$ 0.01
Common Stock, Shares, Outstanding									45,675,737		45,578,878
Preferred Stock, Shares Authorized									9,994,184		9,994,184
Preferred Stock, Par or Stated Value Per Share									$ 0.01		$ 0.01
Convertible Preferred Stock, Shares Issued upon Conversion		20,426,250		1,330,000
Proceeds from Issuance or Sale of Equity		$ 10,100,000		$ 8,800,000
Sale of Stock, Number of Shares Issued in Transaction						1,319,289
Sale of Stock, Consideration Received on Transaction					$ 3,285,798
Proceeds from Issuance of Common Stock								$ 1,800,000	$ 0	$ 10,108,762
Warrant
Class of Stock [Line Items]
Warrant Term		5 years		5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.32		$ 1.50
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		35,156,250		6,666,667
Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues		14,730,000		5,336,667				642,150
Convertible Preferred Stock, Shares Issued upon Conversion	3,263,750	4,375,000	880,000	450,000
Series A Preferred Stock
Class of Stock [Line Items]
Preferred Stock, Par or Stated Value Per Share									$ 0.01		$ 0.01
Preferred Stock, Shares Issued									0		0
Preferred Stock, Shares Outstanding									0		0
Common Stock, Other Shares, Outstanding									0
Preferred Stock Designated Shares									3,750		3,750
Series B Preferred Stock
Class of Stock [Line Items]
Preferred Stock, Par or Stated Value Per Share									$ 0.01		$ 0.01
Stock Issued During Period, Shares, New Issues				1,995
Preferred Stock, Shares Issued									0		0
Preferred Stock, Shares Outstanding									0		0
Conversion of Stock, Shares Converted			1,320	675
Common Stock, Other Shares, Outstanding									0
Preferred Stock Designated Shares									10,000		10,000
Series C Preferred Stock
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues		6,536.4					6,536			6,536
Preferred Stock, Shares Issued									4,092
Preferred Stock, Shares Outstanding									4,092
Conversion of Stock, Shares Converted	1,044.4	1,400
Common Stock, Other Shares, Outstanding									12,787,500
Preferred Stock Designated Shares									10,000

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Warrants (Details) - $ / shares	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at end the of year	1,806,218	57,510
Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at Beginning	40,844,086	9,455,961	9,455,961
Issued		35,156,250
Exercised	(100,000)	(2,356,875)
Outstanding at end the of year	40,744,086	42,255,336	40,844,086	9,455,961
Weighted Average Exercise Price, Outstanding at Beginning of the year	$ 1.00	$ 3.26	$ 3.26
Weighted Average Exercise Price, Exercised	0.32	0.32
Weighted Average Exercise Price, Outstanding at end the of year	$ 1.00	$ 0.98	$ 1.00	$ 3.26
Weighted Average Remaining Term in Years, Outstanding	3 years 6 months 18 days	4 years 6 months 22 days	4 years 18 days	4 years 2 months 23 days
Weighted Average Remaining Term in Years, Issued		4 years 9 months 18 days
Weighted Average Remaining Term in Years, Exercised	3 years 9 months 18 days	4 years 9 months 18 days

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Equity Incentive Plan - Stock Option Activity (Details) - $ / shares	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Equity Incentive Plan
Number of Options, Outstanding beginning of year	2,076,153	1,893,003	1,893,003
Number of Options, Granted	750,000	275,500
Number of Options, Forfeited		(1,500)
Number of Options, Expired	(48,737)	(60,968)
Number of Options, Outstanding at end of period	2,777,416	2,106,035	2,076,153	1,893,003
Number of Options, Exercisable at end of period	1,651,546	1,429,484
Number of Options, Vested and expected to vest at end of period	2,777,416	2,106,035
Weighted- Average Exercise Price, Outstanding at beginning of year	$ 2.28	$ 2.49	$ 2.49
Weighted- Average Exercise Price, Granted	0.48	0.57
Weighted- Average Exercise Price, Forfeited		0.83
Weighted- Average Exercise Price, Expired	1.08	0.80
Weighted- Average Exercise Price, Outstanding at end of period	1.81	2.29	$ 2.28	$ 2.49
Weighted- Average Exercise Price, Exercisable at end of period	2.65	2.65
Weighted- Average Exercise Price, Vested and expected to vest at end of period	$ 1.81	$ 2.29
Weighted-Average Contractual Life (In Years), Outstanding	7 years 1 month 6 days	4 years 7 months 28 days	6 years 6 months 4 days	5 years 4 months 24 days
Weighted-Average Contractual Life (In Years), Exercisable at end of period	5 years 7 months 13 days	3 years 11 months 12 days
Weighted-Average Contractual Life (In Years), Vested and expected to vest at end of period	7 years 1 month 6 days	4 years 7 months 28 days

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Equity Incentive Plan - Weighted-Average Assumptions (Details)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Equity Incentive Plan
Risk-Free Interest Rate	1.82%	1.82%
Expected Life	5 years	7 years
Expected Volatility	152.00%	159.00%
Expected Dividend Yield	0.00%	0.00%

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Equity Incentive Plan - Restricted Stock Activity (Details) - $ / shares	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Number of Shares Forfeited	(17,819)	0
Outstanding at end the of year	1,806,218	57,510
Restricted Stock
Outstanding at Beginning	1,822,132	103,000	103,000
Number of Shares Vested	(12,773)	(45,490)
Number of Shares Forfeited	(3,141)
Outstanding at end the of year	1,806,218	57,510	1,822,132
Weighted- Average Grant Date Fair Value Outstanding at Beginning	$ 0.59	$ 1.52	$ 1.52
Weighted- Average Grant Date Fair Value Vested	1.52	1.52
Weighted- Average Grant Date Fair Value Forfeited	1.52
Weighted- Average Grant Date Fair Value Outstanding at end	$ 0.58	$ 1.52	$ 0.59
Weighted- Average Remaining Recognition Period Outstanding	1 year 9 months 7 days	1 year 7 months 6 days

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Equity Incentive Plan - Stock-based Compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Stock-Based Compensation Expense	$ 236,190	$ 145,309	$ 469,096	$ 290,856
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Stock-Based Compensation Expense	58,611	49,897	123,150	106,975
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Stock-Based Compensation Expense	$ 177,579	$ 95,412	$ 345,946	$ 183,881

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Equity Incentive Plan - Additional Information (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2010	Jul. 10, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 1,122,000	$ 805,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years	1 year 6 months 26 days
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding And Exercisable Intrinsic Value	$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	750,000	275,500
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			891,222
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	$ 368,200	$ 151,200
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 0.47	$ 0.55
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	17,819	0
One-year anniversary [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	0.33%
24-month period [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	0.67%
Holders Owing More Than Ten Percentage Voting Rights [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			5 years
Holders Owing More Than Ten Percentage Voting Rights [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Percentage of Exercise Price			110.00%
Equity Incentive Plan 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	8,390,123
Equity Incentive Plan 2014 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant				8,390,123
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	117,090
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	170,567
2014 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	4,033,056
Excess Stock, Shares Authorized				350,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	3,141

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Commitments and Contingencies - Maturities of Lease Liabilities (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Commitments and Contingencies
Remainder of 2019	$ 86,390
2020	27,682
Less: Imputed Interest	(4,560)
Present Value of Lease Liabilities	$ 109,512	$ 0

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Commitments and Contingencies - Additional Information (Details)		1 Months Ended		6 Months Ended
	Sep. 12, 2013 USD ($)	Jun. 17, 2016 USD ($)	Feb. 15, 1999 USD ($)	Jun. 30, 2019 USD ($) ft²	Dec. 31, 2018 USD ($)	Sep. 26, 2018 USD ($)	Jul. 06, 2016 ft²
Commitments and Contingencies [Line Items]
Area of Land | ft²							2,300
Lease Expiration Period			12 years
Payment of annual fee	$ 30,000
Intangible Assets, Net (Excluding Goodwill)				$ 4,143,564	$ 4,156,064
Cease Payments Not Yet Paid Based On Prevailing Financial Market Conditions				10.00%
License [Member]
Commitments and Contingencies [Line Items]
Cost of Goods and Services Sold	$ 50,000	$ 15,000	$ 12,500
Minimum [Member] | License [Member]
Commitments and Contingencies [Line Items]
Cost of Goods and Services Sold		5,000
Maximum [Member] | License [Member]
Commitments and Contingencies [Line Items]
Cost of Goods and Services Sold		$ 20,000
Licensor [Member]
Commitments and Contingencies [Line Items]
Area of Land | ft²				4,516
SentrX Animal Care Inc
Commitments and Contingencies [Line Items]
Intangible Assets, Net (Excluding Goodwill)				$ 250,000		$ 250,000
Intangible Assets Expected Milestone Payable				$ 4,750,000		$ 4,750,000

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Employee Benefit Plans (Details) - USD ($)		6 Months Ended
	Dec. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Employee Benefit Plans
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 29,700	$ 0	$ 0