x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-8099512 | |
(State of incorporation) | (I.R.S. Employer Identification No.) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.0001 par value per share | SLS | The Nasdaq Capital Market |
Large accelerated filer | o | Accelerated filer | o | |||
Non-accelerated filer | x | Smaller reporting company | x | |||
Emerging growth company | o |
Page | |||
PART I - FINANCIAL INFORMATION | |||
Item 1 | |||
Unaudited Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 | |||
Unaudited Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 | |||
Unaudited Consolidated Statement of Stockholders' Equity for the three months ended March 31, 2020 and 2019 | |||
Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 | |||
Item 2 | |||
Item 3 | |||
Item 4 | |||
PART II - OTHER INFORMATION | |||
Item 1 | Legal Proceedings | ||
Item 1A | Risk Factors | ||
Item 2 | |||
Item 3 | |||
Item 4 | |||
Item 5 | |||
Item 6 | |||
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 6,746 | $ | 7,277 | |||
Restricted cash and cash equivalents | 100 | 100 | |||||
Stock subscription receivable | — | 308 | |||||
Prepaid expenses and other current assets | 1,944 | 557 | |||||
Total current assets | 8,790 | 8,242 | |||||
Operating lease right-of-use asset | 123 | 217 | |||||
In-process research and development | 5,700 | 5,700 | |||||
Goodwill | 1,914 | 1,914 | |||||
Deposits and other assets | 499 | 536 | |||||
Total assets | $ | 17,026 | $ | 16,609 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,624 | $ | 3,902 | |||
Accrued expenses and other current liabilities | 888 | 1,171 | |||||
Operating lease liability | 123 | 217 | |||||
Total current liabilities | 3,635 | 5,290 | |||||
Deferred tax liability | 262 | 262 | |||||
Warrant liability | 17 | 52 | |||||
Contingent consideration | 5,050 | 4,912 | |||||
Total liabilities | 8,964 | 10,516 | |||||
Commitments and contingencies (Note 6) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A convertible preferred stock, 17,500 shares designated; no shares issued and outstanding at March 31, 2020 and December 31, 2019 | — | — | |||||
Common stock, $0.0001 par value; 350,000,000 shares authorized, 6,717,900 and 5,080,100 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively. | 7 | 5 | |||||
Additional paid-in capital | 113,345 | 107,235 | |||||
Accumulated deficit | (105,290 | ) | (101,147 | ) | |||
Total stockholders’ equity | 8,062 | 6,093 | |||||
Total liabilities and stockholders’ equity | $ | 17,026 | $ | 16,609 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Operating expenses: | |||||||
Research and development | $ | 1,864 | $ | 1,859 | |||
General and administrative | 2,200 | 2,500 | |||||
Total operating expenses and operating loss | (4,064 | ) | (4,359 | ) | |||
Non-operating income (expense): | |||||||
Change in fair value of warrant liability | 35 | 195 | |||||
Change in fair value of contingent consideration | (138 | ) | (387 | ) | |||
Interest income (expense), net | 24 | 14 | |||||
Total non-operating income (expense), net | (79 | ) | (178 | ) | |||
Net loss | (4,143 | ) | (4,537 | ) | |||
Deemed dividend arising from warrant modifications | (78 | ) | (439 | ) | |||
Net loss attributable to common stockholders | $ | (4,221 | ) | $ | (4,976 | ) | |
Per share information: | |||||||
Net loss per common share attributable to common stockholders, basic and diluted | $ | (0.66 | ) | $ | (11.12 | ) | |
Weighted-average common shares outstanding, basic and diluted | 6,374,979 | 447,362 |
Three Months Ended March 31, 2020 | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Balance at December 31, 2019 | — | $ | — | 5,080,100 | $ | 5 | $ | 107,235 | $ | (101,147 | ) | $ | 6,093 | ||||||||||||
Issuance of common stock and common stock warrants, net of issuance costs | — | — | 1,189,000 | 1 | 5,962 | — | 5,963 | ||||||||||||||||||
Issuance of common stock upon exercise of pre-funded warrants | — | — | 448,800 | 1 | 3 | — | 4 | ||||||||||||||||||
Stock-based compensation | — | — | — | — | 145 | — | 145 | ||||||||||||||||||
Net loss | — | — | — | — | — | (4,143 | ) | (4,143 | ) | ||||||||||||||||
Balance at March 31, 2020 | — | $ | — | 6,717,900 | $ | 7 | $ | 113,345 | $ | (105,290 | ) | $ | 8,062 |
Three Months Ended March 31, 2019 | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Balance at December 31, 2018 | — | $ | — | 440,529 | $ | 1 | $ | 87,099 | $ | (81,855 | ) | $ | 5,245 | ||||||||||||
Impact of anti-dilution protection on liability-classified warrants | — | — | — | — | (173 | ) | — | (173 | ) | ||||||||||||||||
Issuance of common stock upon exercise of warrants | — | — | 43,000 | — | 2,230 | — | 2,230 | ||||||||||||||||||
Stock-based compensation | — | — | — | — | 185 | — | 185 | ||||||||||||||||||
Net loss | — | — | — | — | — | (4,537 | ) | (4,537 | ) | ||||||||||||||||
Balance at March 31, 2019 | — | $ | — | 483,529 | $ | 1 | $ | 89,341 | $ | (86,392 | ) | $ | 2,950 |
For the three months ended March 31, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (4,143 | ) | $ | (4,537 | ) | |
Adjustment to reconcile net loss to net cash used in operating activities: | |||||||
Non-cash stock-based compensation | 145 | 185 | |||||
Change in fair value of common stock warrants | (35 | ) | (195 | ) | |||
Change in fair value of contingent consideration | 138 | 387 | |||||
Changes in operating assets and liabilities: | |||||||
Prepaid expenses and other assets | (1,350 | ) | (302 | ) | |||
Accounts payable | (1,303 | ) | 883 | ||||
Accrued expenses and other current liabilities | (283 | ) | (1,412 | ) | |||
Net cash used in operating activities | (6,831 | ) | (4,991 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock, net of offering costs | 5,988 | — | |||||
Collection of stock subscription receivable | 308 | — | |||||
Net proceeds from exercise of warrants | 4 | 2,230 | |||||
Net cash provided by financing activities | 6,300 | 2,230 | |||||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | (531 | ) | (2,761 | ) | |||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period | 7,377 | 5,451 | |||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period | $ | 6,846 | $ | 2,690 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash received during the periods for interest | $ | 24 | $ | 14 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Operating right of use asset and current and non-current liability | $ | 123 | $ | — | |||
Impact of anti-dilution protection on liability-classified warrants | $ | — | $ | 173 | |||
Offering expenses in accounts payable and accrued expenses and other current liabilities | $ | 25 | $ | — |
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
Common stock warrants | 1,120 | 354 | |||
Stock options | 194 | 27 | |||
RSUs | 170 | — | |||
1,484 | 381 |
Description | March 31, 2020 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 6,304 | $ | 6,304 | $ | — | $ | — | |||||||
Total assets measured and recorded at fair value | $ | 6,304 | $ | 6,304 | $ | — | $ | — | |||||||
Liabilities: | |||||||||||||||
Warrant liability | $ | 17 | $ | — | $ | — | $ | 17 | |||||||
Contingent consideration | 5,050 | — | — | 5,050 | |||||||||||
Total liabilities measured and recorded at fair value | $ | 5,067 | $ | — | $ | — | $ | 5,067 |
Description | December 31, 2019 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 7,027 | $ | 7,027 | $ | — | $ | — | |||||||
Total assets measured and recorded at fair value | $ | 7,027 | $ | 7,027 | $ | — | $ | — | |||||||
Liabilities: | |||||||||||||||
Warrant liability | $ | 52 | $ | — | $ | — | $ | 52 | |||||||
Contingent consideration | 4,912 | — | — | 4,912 | |||||||||||
Total liabilities measured and recorded at fair value | $ | 4,964 | $ | — | $ | — | $ | 4,964 |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||
Contingent consideration, December 31, 2019 | $ | 4,912 | |
Change in the estimated fair value of the contingent consideration | 138 | ||
Contingent consideration, March 31, 2020 | $ | 5,050 |
March 31, 2020 | December 31, 2019 | ||||||
Insurance | $ | 1,239 | $ | 200 | |||
Clinical development | 492 | 224 | |||||
Professional services | 129 | 49 | |||||
Other | 84 | 84 | |||||
Prepaid expenses and other current assets | $ | 1,944 | $ | 557 |
March 31, 2020 | December 31, 2019 | ||||||
Clinical trial costs | $ | 519 | $ | 371 | |||
Compensation and related benefits | 235 | 606 | |||||
Professional fees | 134 | 194 | |||||
Accrued expenses and other current liabilities | $ | 888 | $ | 1,171 |
Total minimum lease payments, all due in 2020 | $ | 128 | ||
Less: imputed interest | (5 | ) | ||
Operating lease liability | $ | 123 |
Warrants outstanding | 1,120 | |
Stock options outstanding | 194 | |
Restricted stock units outstanding | 170 | |
Shares reserved for future issuance under the Company’s 2019 Equity Incentive Plan | 115 | |
Shares reserved for future issuance under the Employee Stock Purchase Plan | 8 | |
Total common stock reserved for future issuance | 1,607 |
Warrant Issuance | Outstanding, December 31, 2019 | Granted | Exercised | Canceled/Expired | Outstanding, March 31, 2020 | Expiration | ||||||||||
January 2020 Offering | — | 819 | — | — | 819 | July 2025 | ||||||||||
Pre-funded January 2020 Offering | — | 449 | (449 | ) | — | — | July 2025 | |||||||||
June 2019 Offering | 2 | — | — | — | 2 | June 2024 | ||||||||||
March 2019 Exercise Agreement | 63 | — | — | — | 63 | March 2024 | ||||||||||
July 2018 Offering | 208 | — | — | — | 208 | July 2023 | ||||||||||
Series A Convertible Preferred | 19 | — | — | — | 19 | September 2023 | ||||||||||
2017 Equilibria | 6 | — | — | — | 6 | December 2022 | ||||||||||
Galena February 2017 | 1 | — | — | — | 1 | February 2022 | ||||||||||
Galena Other | 3 | — | — | (1 | ) | 2 | January 2022 | |||||||||
302 | 1,268 | (449 | ) | (1 | ) | 1,120 |
As of March 31, 2020 | ||||||||||||||
Warrant Issuance | Outstanding (in thousands) | Strike price (per share) | Expected term (years) | Volatility % | Risk-free rate % | |||||||||
Series A Convertible Preferred | 19 | $ | 7.50 | 3.50 | 123.37 | % | 0.31 | % | ||||||
Galena February 2017 | 1 | $ | 1,650.00 | 1.87 | 151.18 | % | 0.22 | % | ||||||
Galena Other | 2 | $ | 30,901.09 | 1.79 | 151.18 | % | 0.22 | % | ||||||
As of December 31, 2019 | ||||||||||||||
Warrant Issuance | Outstanding (in thousands) | Strike price (per share) | Expected term (years) | Volatility % | Risk-free rate % | |||||||||
Series A Convertible Preferred | 19 | $ | 7.50 | 3.75 | 112.84 | % | 1.64 | % | ||||||
Galena February 2017 | 1 | $ | 1,650.00 | 2.12 | 114.91 | % | 1.64 | % | ||||||
Galena Other | 3 | $ | 41,494.00 | 1.43 | 114.91 | % | 1.64 | % |
Warrant Issuance | Warrant liability, December 31, 2019 | Fair value of warrants granted | Fair value of warrants exercised | Adjustment to exercise price of warrants | Change in fair value of warrants | Warrant liability, March 31, 2020 | |||||||||||||||||
Series A Convertible Preferred | $ | 52 | $ | — | $ | — | $ | — | $ | (35 | ) | $ | 17 | ||||||||||
Galena February 2017 | — | — | — | — | — | — | |||||||||||||||||
$ | 52 | $ | — | $ | — | $ | — | $ | (35 | ) | $ | 17 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Research and development | $ | 1 | $ | 39 | |||
General and administrative | 144 | 146 | |||||
Total stock-based compensation | $ | 145 | $ | 185 |
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
Risk free interest rate | 0.63 | % | 2.49 | % | |
Volatility | 106.09 | % | 96.57 | % | |
Expected lives (years) | 6.13 | 6.15 | |||
Expected dividend yield | — | % | — | % |
Total Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (In Thousands) | |||||||||
Outstanding at December 31, 2019 | 21,520 | $ | 112.81 | 8.98 | $ | — | ||||||
Granted | 172,000 | 1.89 | $ | — | ||||||||
Canceled | — | — | $ | — | ||||||||
Outstanding at March 31, 2020 | 193,520 | $ | 14.23 | 8.90 | $ | — | ||||||
Options exercisable at March 31, 2020 | 7,642 | $ | 119.06 | 8.71 | $ | — |
Shares | Weighted Average Grant Date Fair Value | |||||
Unvested at December 31, 2019 | — | $ | — | |||
Granted | 170,000 | $ | 1.89 | |||
Vested | — | $ | — | |||
Unvested at March 31, 2020 | 170,000 | $ | 1.89 |
• | expenses incurred under agreements with CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials; |
• | manufacturing expenses; |
• | quality control and quality assurance services; |
• | outsourced professional scientific development services; |
• | employee-related expenses, which include salaries, benefits and stock-based compensation; |
• | payments made under our license agreements, under which we acquired certain intellectual property; |
• | expenses relating to certain regulatory activities, including filing fees paid to regulatory agencies; |
• | laboratory materials and supplies used to support our research activities; and |
• | allocated expenses, utilities and other facility-related costs. |
• | the number of clinical sites included in the trials; |
• | the length of time required to enroll suitable patients; |
• | the number of patients that ultimately participate in the trials; |
• | the number of doses patients receive; |
• | the duration of patient follow-up; |
• | the results of clinical trials; |
• | the expenses associated with manufacturing; |
• | the receipt of marketing approvals; |
• | the commercialization of current and future product candidates; and |
• | the impact of the COVID-19 pandemic. |
(dollars in thousands) | Three Months Ended March 31, | ||||||||||
2020 | 2019 | Change | |||||||||
Operating expenses: | |||||||||||
Research and development | $ | 1,864 | $ | 1,859 | $ | 5 | |||||
General and administrative | 2,200 | 2,500 | (300 | ) | |||||||
Total operating expenses and operating loss | (4,064 | ) | (4,359 | ) | 295 | ||||||
Non-operating income (expense), net | (79 | ) | (178 | ) | 99 | ||||||
Net loss | $ | (4,143 | ) | $ | (4,537 | ) | $ | 394 |
Three Months Ended March 31, | |||||||||||
2020 | 2019 | Change | |||||||||
Change in fair value of warrant liability | $ | 35 | $ | 195 | $ | (160 | ) | ||||
Change in fair value of contingent consideration | (138 | ) | (387 | ) | 249 | ||||||
Interest income (expense), net | 24 | 14 | 10 | ||||||||
Total non-operating income (expense), net | $ | (79 | ) | $ | (178 | ) | $ | 99 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net cash (used in) provided by: | |||||||
Operating activities | $ | (6,831 | ) | $ | (4,991 | ) | |
Financing activities | 6,300 | 2,230 | |||||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | $ | (531 | ) | $ | (2,761 | ) |
(a) | our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and |
(b) | our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Exchange Act was accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure. |
Exhibit # | Description | Form | Exhibit | Filing Date |
3.1 | 10-K | 3.1 | April 13, 2018 | |
3.2 | 8-K | 3.3 | January 5, 2018 | |
4.1 | 8-K | 4.1 | January 9, 2020 | |
4.2 | 8-K | 4.2 | January 9, 2020 | |
10.1 | 8-K | 10.1 | January 7, 2020 | |
10.2 | 8-K | 10.1 | January 9, 2020 | |
10.3 | ||||
31.1 | ||||
31.2 | ||||
32.1 | ||||
101.INS | XBRL Instance Document.* | |||
101.SCH | XBRL Taxonomy Extension Schema.* | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase.* | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase.* | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase.* | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase.* |
* | Indicates management contract or compensatory plans or arrangements. |
** | Filed herewith |
*** | The certification attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
SELLAS Life Sciences Group, Inc. | |||
By: | /s/ Angelos M. Stergiou | ||
Angelos M. Stergiou, MD, ScD h.c. | |||
President and Chief Executive Officer | |||
Date: May 14, 2020 | |||
1. | EMPLOYMENT. |
10. | NO PRIOR RESTRICTIONS. |
11. | SECTION 409A. |
15. | LIKENESS. |
16. | INDEMNIFICATION; LIABILITY INSURANCE. |
17. | GENERAL PROVISIONS. |
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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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. |
/s/ Angelos M. Stergiou | |
Angelos M. Stergiou, MD, ScD h.c. | |
President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) |
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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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. |
/s/ Angelos M. Stergiou | |
Angelos M. Stergiou, MD, ScD h.c. | |
President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) |
By: | /s/ Angelos M. Stergiou | ||
Angelos M. Stergiou, MD, ScD h.c. | |||
President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) | |||
Date: May 14, 2020 |
5G?X/\ @UW
Warrants to Acquire Shares of Common Stock - Warrants Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jan. 02, 2020 |
Mar. 31, 2020 |
Jan. 09, 2020 |
Mar. 06, 2019 |
|
Class of Warrant or Right [Line Items] | ||||
Common stock to be called by warrants (in shares) | 818,900 | |||
Number of warrants exercised (in shares) | 449,000 | |||
Series A Convertible Preferred | ||||
Class of Warrant or Right [Line Items] | ||||
Common stock to be called by warrants (in shares) | 76,000 | |||
Warrant exercise price (in dollars per share) | $ 7.50 | $ 70.00 | ||
Number of warrants exercised (in shares) | 0 | |||
Warrants 2019 | ||||
Class of Warrant or Right [Line Items] | ||||
Number of warrants exercised (in shares) | 63,000 | |||
Warrants 2020 | ||||
Class of Warrant or Right [Line Items] | ||||
Decrease (increase) in warrant fair value | $ 0.1 |
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
Mar. 31, 2020 |
|
Total Number of Shares | |||
Options outstanding, beginning balance (in shares) | 193,520 | 21,520 | 193,520 |
Granted (in shares) | 172,000 | ||
Canceled (in shares) | 0 | ||
Options outstanding, ending balance (in shares) | 193,520 | 21,520 | |
Exercisable (in shares) | 7,642 | ||
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 112.81 | ||
Granted (in dollars per share) | 1.89 | ||
Canceled (in dollars per share) | 0.00 | ||
Ending balance (in dollars per share) | $ 14.23 | $ 112.81 | |
Exercisable (in dollars per share) | $ 119.06 | ||
Weighted average remaining contractual term, outstanding | 8 years 10 months 25 days | 8 years 11 months 22 days | |
Weighted average remaining contractual term, options exercisable | 8 years 8 months 14 days | ||
Aggregate Intrinsic Value | |||
Beginning balance | $ 0 | ||
Granted | 0 | ||
Canceled | 0 | ||
Ending balance | $ 0 | $ 0 | |
Exercisable | $ 0 |
Liquidity |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | Liquidity The Company has not generated any revenues, including from product sales, and has funded operations primarily from the proceeds of sales of its equity interests and convertible notes. Additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed or that the Company’s research and development efforts will be successful and the Company cannot be certain at this time of the impact of the COVID-19 pandemic on its ability to raise additional capital. On January 9, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors named therein (the “Investors”), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investors (the “January 2020 Registered Offering”), (i) an aggregate of 1,189,000 shares of common stock at an offering price of $3.9825 per share and (ii) an aggregate of 448,800 pre-funded warrants exercisable for shares of common stock (the “Pre-Funded Warrants”) at an offering price of $3.9725 per Pre-Funded Warrant, for gross proceeds of approximately $6.5 million before deducting the placement agent fee and related offering expenses. In a concurrent private placement, the Company issued to the Investors who participated in the January 2020 Registered Offering warrants exercisable for an aggregate of 818,900 shares of common stock at an exercise price of $3.93 per share. Each warrant is immediately exercisable and will expire five and one-half years from the issuance date. The net proceeds to the Company from the January 2020 Registered Offering, after deducting underwriting discounts and commissions and other estimated offering expenses, and excluding the exercise of any warrants, were approximately $6.0 million. The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. The Company currently does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently, consider various other strategic alternatives, including a merger or sale of the Company, or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the product development process. The Company has evaluated the guidance of Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern, in order to determine whether there is substantial doubt about its ability to continue as a going concern for one year from the date its financial statements are available to be issued. The Company has prepared its consolidated financial statements assuming that it will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses and negative cash flows from operations since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its product candidates, which raises substantial doubt about the Company’s ability to continue as a going concern. Various internal and external factors will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control. The length of time and cost of developing and commercializing these product candidates and/or the failure of any of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. As of March 31, 2020, the Company had cash and cash equivalents of approximately $6.7 million, and restricted cash and cash equivalents of $0.1 million. The Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $105.3 million as of March 31, 2020. In addition, the Company had current liabilities of $3.6 million as of March 31, 2020. The Company expects its cash and cash equivalents as of March 31, 2020 will enable the Company to fund its operating expenses and capital expenditure requirements through the end of 2020. |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Operating expenses: | ||
Research and development | $ 1,864 | $ 1,859 |
General and administrative | 2,200 | 2,500 |
Total operating expenses and operating loss | (4,064) | (4,359) |
Non-operating income (expense): | ||
Change in fair value of warrant liability | 35 | 195 |
Change in fair value of contingent consideration | (138) | (387) |
Interest income (expense), net | 24 | 14 |
Total non-operating income (expense), net | (79) | (178) |
Net loss | (4,143) | (4,537) |
Deemed dividend arising from warrant modifications | (78) | (439) |
Net loss attributable to common stockholders | $ (4,221) | $ (4,976) |
Per share information: | ||
Net loss per common share attributable to common stockholders, basic and diluted (in dollars per share) | $ (0.66) | $ (11.12) |
Weighted-average common shares outstanding, basic and diluted (in shares) | 6,374,979 | 447,362 |
Fair Value Measurements - Reconciliation of Level 3 Liabilities (Details) - Unobservable Inputs (Level 3) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Contingent consideration, beginning balance | $ 4,912 |
Change in the estimated fair value of the contingent consideration | 138 |
Contingent consideration, ending balance | $ 5,050 |
Commitments and Contingencies (Tables) |
3 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2020 | ||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||
Future Minimum Lease Payments | Future minimum rental payments under the Company's non-cancelable operating lease are as follows as of March 31, 2020 (in thousands):
|
Basis of Presentation and Significant Accounting Policies (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. Unless the context otherwise indicates, reference in these notes to the "Company" refer to SELLAS Life Sciences Group, Inc., and its wholly owned subsidiaries, Private SELLAS, SLSG Limited, LLC, Sellas Life Sciences Limited, and Apthera, Inc. The functional currency of the Company's non-U.S. operations is the U.S. dollar. |
Restricted Stock Units with Performance and Service Conditions | Restricted Stock Units with Performance and Service Conditions During the three months ended March 31, 2020, the Board of Directors granted restricted stock units ("RSUs") to certain employees that vest based on performance and service conditions. The fair values of the RSUs are measured on the date of grant and are based on the Company's closing stock price on such date. Compensation expense is recognized for the number of RSUs expected to be earned, provided the requisite service period has been rendered, after assessing the probability that certain performance criteria will be met. Cumulative adjustments are recorded each quarter to reflect the estimated outcome of the performance-related conditions until the date results are determined and settled. If performance criteria are not met or are not expected to be met, any compensation expense previously recognized to date associated with the RSUs will be reversed. |
Net Loss Per Share | Net Loss Per Share Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In August 2018, FASB issued No. ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement ("ASU No. 2018-13"). ASU No. 2018-13 modifies, adds and removes certain specific disclosure requirements on fair value measurements in Topic 820. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. This standard became effective for the Company on January 1, 2020 and did not have a material impact on the Company's disclosures. For the new disclosure regarding our Level 3 instruments, please read Note 4 to these consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Accounting ("ASU No. 2018-07"), which simplifies the accounting for share-based payments granted to nonemployees for goods and services. ASU No. 2018-07 supersedes ASC 505-50 and expands the scope of ASC 718, Compensation - Stock Compensation (Topic 718) ("ASC 718"), to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. As a result, most of the guidance in ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee share-based payment arrangements. ASU No. 2018-07 generally requires an entity to use a modified retrospective transition approach, with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year, for all (1) liability-classified nonemployee awards that have not been settled as of the adoption date and (2) equity-classified nonemployee awards for which a measurement date has not been established. This standard became effective for the Company on January 1, 2020 and did not have a material impact on the Company's consolidated financial statements and related disclosure. |
Stockholders' Equity |
3 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2020 | |||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Preferred Stock The Company has authorized up to 5,000,000 shares of preferred stock, $0.0001 par value per share, for issuance. Common Stock The Company has authorized up to 350,000,000 shares of common stock, $0.0001 par value per share, for issuance. On October 29, 2019, the Company entered into an Equity Distribution Agreement (the "Distribution Agreement") with Maxim Group LLC (the "Agent"), pursuant to which the Company was permitted to offer and sell shares of common stock through the Agent having an aggregate offering price up to $5.0 million in gross proceeds. In connection with such sales, the Agent collected fees equal to 3% of the gross sales price of all shares of common stock sold. Sales of the shares under the Distribution Agreement were made in transactions deemed to be "at the market offering" as defined in Rule 415 under the Securities Act of 1933. Shares sold under the Distribution Agreement were offered and sold pursuant to the Company's effective registration statement on Form S-3. During the year ended December 31, 2019, the Company sold 524,097 shares of common stock pursuant to the Distribution Agreement for net proceeds of $2.7 million. The Distribution Agreement was terminated on January 9, 2020. There were no shares of common stock sold pursuant to the Distribution Agreement in 2020. On January 9, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors named therein (the “Investors”), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investors (the “January 2020 Registered Offering”), (i) an aggregate of 1,189,000 shares of common stock, par value $0.0001 per share, of the Company, at an offering price of $3.9825 per share and (ii) an aggregate of 448,800 pre-funded warrants exercisable for shares of common stock (the “Pre-Funded Warrants”) at an offering price of $3.9725 per pre-funded warrant, for gross proceeds of approximately $6.5 million before deducting the placement agent fee and related offering expenses. In a concurrent private placement, the Company issued to the Investors who participated in the January 2020 Registered Offering warrants exercisable for an aggregate of 818,900 shares of common stock at an exercise price of $3.93 per share. Each warrant is immediately exercisable and will expire five and one-half years from the issuance date. The net proceeds to the Company from the January 2020 Registered Offering, after deducting the placement agent fee and other estimated offering expenses, and excluding the exercise of any warrants, was approximately $6.0 million. As of March 31, 2020, the Company has shares of common stock reserved for future issuance as follows (in thousands):
Stock Subscription Receivable Prior to December 31, 2019, the Company sold 75,000 shares of common stock for gross proceeds of $0.3 million. As the gross cash proceeds of $0.3 million were not received until January 2, 2020, the Company recorded a stock subscription receivable of $0.3 million as of December 31, 2019. |
Commitments and Contingencies - Maturities of Lease Liabilities - 842 (Details) $ in Thousands |
Mar. 31, 2020
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Total minimum lease payments, all due in 2020 | $ 128 |
Less: imputed interest | (5) |
Operating lease liability | $ 123 |
Subsequent Events |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluated all events or transactions that occurred after March 31, 2020 up through the date these financial statements were issued. Other than as disclosed elsewhere in the notes to the consolidated financial statements, the Company did not have any material subsequent events. |
Commitments and Contingencies |
3 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2020 | ||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Office Space Rental The Company has a non-cancelable operating lease for office space in New York, New York, which began August 1, 2018 with a term through July 31, 2020. The Company adopted ASC 842 in the first quarter of 2019 and as a result of the adoption, the Company recognized a current operating lease liability of $0.4 million and a non-current operating lease liability of $0.2 million with a corresponding right of use asset ("ROU") of $0.6 million, which is based on the present value of the minimum rental payments of the lease. The discount rate used to account for the Company's operating lease under ASC 842 is the Company’s estimated incremental borrowing rate of 13%. As of March 31, 2020, the lease has a remaining term of less than 1.0 year. Rent expense related to the Company's operating lease was approximately $0.1 million for the three months ended March 31, 2020 and 2019. Future minimum rental payments under the Company's non-cancelable operating lease are as follows as of March 31, 2020 (in thousands):
Operating lease amortization of the ROU asset was $0.1 million for the three months ended March 31, 2020 and 2019, respectively. Legal Proceedings From time to time, the Company is subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business, which may include employment matters, breach of contract disputes and stockholder litigation. Such actions and proceedings are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, when the Company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. In the opinion of management, as of the date hereof, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Company’s consolidated results of operations, financial position or cash flows. The Company’s predecessor company, Galena, was involved in multiple legal proceedings and administrative actions, including stockholder class actions, both state and federal, and to which the Company is now subject, as follows: On February 13, 2017, certain putative shareholder securities class action complaints were filed in federal court alleging, among other things, that Galena and certain of Galena's former officers and directors failed to disclose that Galena’s promotional practices for Abstral® (fentanyl sublingual tablets) were allegedly improper and that Galena may be subject to civil and criminal liability, and that these alleged failures rendered Galena’s statements about its business misleading. The actions were consolidated, lead plaintiffs were named by the U.S. District Court for the District of New Jersey and a consolidated complaint was filed. The Company filed a motion to dismiss the consolidated complaint. On August 21, 2018, the Company's motion to dismiss the consolidated complaint was granted without prejudice to file an amended complaint. On September 20, 2018, the plaintiffs filed an amended complaint. On October 22, 2018, the Company filed a motion to dismiss the amended complaint. On November 13, 2019, the U.S. District Court for the District of New Jersey granted the Company's motion to dismiss. On December 20, 2019, the lead plaintiffs filed a Second Amended Consolidated Class Action Complaint. On January 29, 2020, the Company filed a motion to dismiss the amended complaint. In March 2017, a derivative complaint was filed in the U.S. District Court for the District of New Jersey against the Company’s former directors and Galena, as a nominal defendant. In July 2017, a derivative complaint was filed in California state court against the Company’s former directors and Galena, as a nominal defendant. In January 2018, a derivative complaint was filed in the U.S. District Court for the District of New Jersey against the Company’s former directors, officers and employees, and the Company as a nominal defendant. These complaints purport to assert derivative claims for breach of fiduciary duty on the Company’s behalf against the Company’s former directors and, in certain of the complaints, certain of the Company’s former officers and former employees, based on substantially similar facts as alleged in the putative shareholder securities class action complaints mentioned above. These lawsuits are currently stayed pending resolution of motions to dismiss in the referenced securities class action. |
Balance Sheet Accounts - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Insurance | $ 1,239 | $ 200 |
Clinical development | 492 | 224 |
Professional services | 129 | 49 |
Other | 84 | 84 |
Prepaid expenses and other current assets | $ 1,944 | $ 557 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
May 14, 2020 |
|
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Entity Registrant Name | SELLAS Life Sciences Group, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,717,900 | |
Entity Central Index Key | 0001390478 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Stock-Based Compensation - Summary of RSU Activity (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Weighted Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 1.54 | $ 54.00 |
RSUs | ||
Total Number of Shares | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 170,000 | |
Vested (in shares) | 0 | |
Ending balance (in shares) | 170,000 | |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 0.00 | |
Granted (in dollars per share) | 1.89 | |
Vested (in dollars per share) | 0.00 | |
Ending balance (in dollars per share) | $ 1.89 |
Basis of Presentation and Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies The Summary of Significant Accounting Policies included in the Company's 2019 Annual Report have not materially changed, except as set forth below. Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. Unless the context otherwise indicates, reference in these notes to the "Company" refer to SELLAS Life Sciences Group, Inc., and its wholly owned subsidiaries, Private SELLAS, SLSG Limited, LLC, Sellas Life Sciences Limited, and Apthera, Inc. The functional currency of the Company's non-U.S. operations is the U.S. dollar. Unaudited Interim Results These consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in the 2019 Annual Report. The accompanying consolidated financial statements at March 31, 2020 and for the three months ended March 31, 2020 and 2019, are unaudited, but include all adjustments, consisting of normal recurring entries, that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2019 have been derived from the audited financial statements as of that date. Reverse Stock Split On November 6, 2019, the Company filed a certificate of amendment to its amended and restated Certificate of Incorporation to effect a 1 - for - 50 reverse stock split of the Company's outstanding shares of common stock, which became effective on November 7, 2019. The shares of common stock underlying the Company's outstanding options and warrants were also proportionately adjusted for the reverse stock split. In addition, the number of shares of common stock available for issuance under the Company’s equity incentive plans and employee stock purchase plan were proportionately adjusted for the reverse stock split. Further, the per share exercise prices for options granted under such plans were proportionately adjusted for the reverse stock split. The reverse stock split reduced the number of shares of the Company’s common stock that were outstanding at November 8, 2019 from 227,800,147 to 4,549,208, after the cancellation of fractional shares. No fractional shares were issued in connection with the reverse stock split. Stockholders who otherwise held fractional shares of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional shares. These consolidated financial statements give retroactive effect to such reverse stock split and all share and per share amounts have been adjusted accordingly. Restricted Stock Units with Performance and Service Conditions During the three months ended March 31, 2020, the Board of Directors granted restricted stock units ("RSUs") to certain employees that vest based on performance and service conditions. The fair values of the RSUs are measured on the date of grant and are based on the Company's closing stock price on such date. Compensation expense is recognized for the number of RSUs expected to be earned, provided the requisite service period has been rendered, after assessing the probability that certain performance criteria will be met. Cumulative adjustments are recorded each quarter to reflect the estimated outcome of the performance-related conditions until the date results are determined and settled. If performance criteria are not met or are not expected to be met, any compensation expense previously recognized to date associated with the RSUs will be reversed. Net Loss Per Share Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive (in thousands):
Recent Accounting Pronouncements Adopted In August 2018, FASB issued No. ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement ("ASU No. 2018-13"). ASU No. 2018-13 modifies, adds and removes certain specific disclosure requirements on fair value measurements in Topic 820. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. This standard became effective for the Company on January 1, 2020 and did not have a material impact on the Company's disclosures. For the new disclosure regarding our Level 3 instruments, please read Note 4 to these consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Accounting ("ASU No. 2018-07"), which simplifies the accounting for share-based payments granted to nonemployees for goods and services. ASU No. 2018-07 supersedes ASC 505-50 and expands the scope of ASC 718, Compensation - Stock Compensation (Topic 718) ("ASC 718"), to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. As a result, most of the guidance in ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee share-based payment arrangements. ASU No. 2018-07 generally requires an entity to use a modified retrospective transition approach, with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year, for all (1) liability-classified nonemployee awards that have not been settled as of the adoption date and (2) equity-classified nonemployee awards for which a measurement date has not been established. This standard became effective for the Company on January 1, 2020 and did not have a material impact on the Company's consolidated financial statements and related disclosure. |
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