☒ |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Edge Therapeutics, Inc.
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||
(Exact name of registrant as specified in its charter)
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Delaware
|
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26-4231384
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(State or other jurisdiction of incorporation or organization)
|
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(IRS Employer Identification No.)
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300 Connell Drive, Suite 4000, Berkeley Heights, NJ 07922
|
||
(Address of principal executive offices)
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(800) 208-3343
|
||
(Registrant’s telephone number)
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(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer ☐
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Accelerated filer ☒
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Non-accelerated filer ☐
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Smaller Reporting Company ☐
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Emerging growth company ☒
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Page
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3
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4
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24
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24 | |||
25
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June 30, 2018
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December 31, 2017
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||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
45,978,737
|
$
|
88,067,647
|
||||
Prepaid expenses and other current assets
|
580,279
|
986,680
|
||||||
Total current assets
|
46,559,016
|
89,054,327
|
||||||
|
||||||||
Property and equipment, net
|
510,463
|
3,423,880
|
||||||
Other assets
|
142,870
|
142,870
|
||||||
|
||||||||
Total assets
|
$
|
47,212,349
|
$
|
92,621,077
|
||||
|
||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
LIABILITIES
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
1,723,204
|
$
|
4,369,133
|
||||
Accrued expenses
|
6,024,527
|
5,422,205
|
||||||
Restructuring reserve
|
6,121,781
|
-
|
||||||
Short term debt
|
-
|
3,075,421
|
||||||
Total current liabilities
|
13,869,512
|
12,866,759
|
||||||
|
||||||||
Noncurrent liability:
|
||||||||
Long term debt
|
-
|
17,382,907
|
||||||
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Preferred stock, 5,000,000 shares authorized at June 30, 2018 and December 31, 2017, 0 outstanding
|
-
|
-
|
||||||
Common stock, $0.00033 par value, 75,000,000 shares authorized at June 30, 2018 and December 31, 2017, 31,328,128 shares and 30,869,205 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
|
10,551
|
10,400
|
||||||
Additional paid-in capital
|
218,798,380
|
214,309,370
|
||||||
Accumulated deficit
|
(185,466,094
|
)
|
(151,948,359
|
)
|
||||
Total stockholders' equity
|
33,342,837
|
62,371,411
|
||||||
|
||||||||
Total liabilities and stockholders' equity
|
$
|
47,212,349
|
$
|
92,621,077
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development expenses
|
$
|
2,523,796
|
$
|
8,975,304
|
$
|
15,265,881
|
$
|
16,564,800
|
||||||||
General and administrative expenses
|
3,335,039
|
4,173,384
|
8,016,555
|
8,375,226
|
||||||||||||
Restructuring expenses
|
6,646,242
|
-
|
6,646,242
|
-
|
||||||||||||
Impairment charges
|
-
|
-
|
2,672,581
|
-
|
||||||||||||
|
||||||||||||||||
Total operating expenses
|
12,505,077
|
13,148,688
|
32,601,259
|
24,940,026
|
||||||||||||
|
||||||||||||||||
Loss from operations
|
(12,505,077
|
)
|
(13,148,688
|
)
|
(32,601,259
|
)
|
(24,940,026
|
)
|
||||||||
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
262,140
|
168,974
|
508,779
|
265,233
|
||||||||||||
Interest expense
|
(434,695
|
)
|
(524,768
|
)
|
(1,425,255
|
)
|
(999,909
|
)
|
||||||||
|
||||||||||||||||
Net loss and comprehensive loss
|
(12,677,632
|
)
|
(13,504,482
|
)
|
(33,517,735
|
)
|
(25,674,702
|
)
|
||||||||
|
||||||||||||||||
Loss per share basic and diluted
|
$
|
(0.41
|
)
|
$
|
(0.44
|
)
|
$
|
(1.08
|
)
|
$
|
(0.86
|
)
|
||||
|
||||||||||||||||
Weighted average common shares outstanding basic and diluted
|
31,298,429
|
30,403,419
|
31,133,070
|
29,704,898
|
|
Six Months Ended June 30,
|
|||||||
|
2018
|
2017
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(33,517,735
|
)
|
$
|
(25,674,702
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Stock-based compensation expense
|
3,644,405
|
3,066,228
|
||||||
Stock-based 401K company common match
|
123,561
|
121,620
|
||||||
Depreciation expense
|
90,836
|
87,209
|
||||||
Impairment of machinery and equipment
|
2,672,581
|
-
|
||||||
Amortization of debt discount
|
1,039
|
22,012
|
||||||
Amortization of debt issuance costs
|
125,355
|
54,204
|
||||||
Non-cash interest expense
|
405,278
|
184,068
|
||||||
Changes in assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
556,401
|
317,643
|
||||||
Accounts payable
|
(2,645,929
|
)
|
824,032
|
|||||
Accrued expenses
|
602,322
|
940,303
|
||||||
Restructuring reserve
|
6,121,781
|
-
|
||||||
|
||||||||
Net cash used in operating activities
|
(21,820,105
|
)
|
(20,057,383
|
)
|
||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
-
|
(105,662
|
)
|
|||||
|
||||||||
Net cash used in investing activities
|
-
|
(105,662
|
)
|
|||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of debt
|
-
|
5,000,000
|
||||||
Proceeds from exercise of stock options
|
721,195
|
91,982
|
||||||
Proceeds from exercise of warrants
|
-
|
3,745
|
||||||
Payments for debt back-end fees
|
(990,000
|
)
|
-
|
|||||
Repayment of debt
|
(20,000,000
|
)
|
-
|
|||||
Proceeds from issuance of common stock, net of issuance costs
|
-
|
17,382,943
|
||||||
|
||||||||
Net cash (used in) provided by financing activities
|
(20,268,805
|
)
|
22,478,670
|
|||||
|
||||||||
Net (decrease) increase in cash
|
(42,088,910
|
)
|
2,315,625
|
|||||
Cash and cash equivalents at beginning of period
|
88,067,647
|
106,398,919
|
||||||
|
||||||||
Cash and cash equivalents at end of period
|
$
|
45,978,737
|
$
|
108,714,544
|
||||
|
||||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
1,051,167
|
$
|
705,313
|
||||
Supplemental cash flow information:
|
||||||||
Accrued capital expenditures included in accrued expenses and accounts payable
|
$
|
-
|
$
|
55,089
|
Restructuring reserve at December 31, 2017
|
$
|
-
|
||
Initial restructuring charge
|
6,276,563
|
|||
Incurred legal fees
|
185,583
|
|||
Retention compensation
|
184,096
|
|||
Restructuring expenses to date
|
6,646,242
|
|||
Payment of severance benefits
|
(524,461
|
)
|
||
Restructuring reserve as of June 30, 2018
|
$
|
6,121,781
|
(A) |
Unaudited interim financial statements:
|
(B) |
Use of estimates:
|
(C) |
Significant risks and uncertainties:
|
(D) |
Cash equivalents and concentration of cash balance:
|
(E) |
Research and development:
|
(F) |
Patent costs:
|
(G) |
Stock-based compensation:
|
(H) |
Net loss per common share:
|
|
As of June 30,
|
|||||||
|
2018
|
2017
|
||||||
Stock options to purchase Common Stock
|
7,392,566
|
6,320,295
|
||||||
Warrants to purchase Common Stock
|
78,596
|
403,782
|
||||||
Total
|
7,471,162
|
6,724,077
|
(I) |
Accounting standards not yet adopted:
|
(J) |
Accounting standards adopted:
|
● |
The Company recognized $84,786 of tax benefit along with a full valuation allowance as of the adoption date related to the historical excess tax benefits from historical option exercises related to employee equity award activity.
|
● |
The Company elected to recognize forfeitures as they occur. The cumulative effect adjustment as a result of the adoption of this amendment on a modified retrospective basis was not material.
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||
|
Total
|
Quoted Prices in
Active Markets
(Level 1)
|
Quoted Prices in
Inactive Markets
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||||
As of June 30, 2018: (unaudited)
|
||||||||||||||||
Cash and cash equivalents
|
$
|
45,978,737
|
$
|
45,978,737
|
$
|
-
|
$
|
-
|
||||||||
|
||||||||||||||||
As of December 31, 2017:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
88,067,647
|
$
|
88,067,647
|
$
|
-
|
$
|
-
|
|
As of
June 30, 2018
|
As of
December 31, 2017
|
||||||
Accrued research and development costs (1)
|
$
|
5,515,479
|
$
|
2,857,025
|
||||
Accrued professional fees
|
201,675
|
267,646
|
||||||
Accrued compensation
|
67,834
|
1,886,638
|
||||||
Accrued other
|
209,923
|
385,896
|
||||||
Deferred rent
|
29,616
|
25,000
|
||||||
Total
|
$
|
6,024,527
|
$
|
5,422,205
|
(1)
|
Balance as of June 30, 2018 includes estimated close down NEWTON 2 trial costs of $3.0 million and CMO milestone payments of $2.5 million.
|
Issue Date
|
25% Vesting Date
|
Executive
|
Number of Options
|
|||
November 16, 2015
|
October 30, 2016
|
SVP, General Counsel and Secretary
|
80,000
|
|||
March 1, 2017
|
February 28, 2018
|
SVP, Regulatory Affairs
|
80,000
|
|||
November 1, 2017
|
October 31, 2018
|
Chief Financial Officer
|
200,000
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||||
Stock-Based Compensation
|
||||||||||||||||
Research and development
|
$
|
631,511
|
$
|
779,349
|
$
|
1,428,851
|
$
|
1,387,792
|
||||||||
General and administrative
|
1,027,107
|
801,174
|
2,215,554
|
1,678,436
|
||||||||||||
Total
|
$
|
1,658,618
|
$
|
1,580,523
|
$
|
3,644,405
|
$
|
3,066,228
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
|
Weighted Average
|
Weighted Average
|
Weighted Average
|
Weighted Average
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||||
Volatility
|
87.82
|
%
|
85.71
|
%
|
89.06
|
%
|
88.93
|
%
|
||||||||
Risk-Free Interest Rate
|
2.27
|
%
|
1.84
|
%
|
2.31
|
%
|
1.89
|
%
|
||||||||
Expected Term in Years
|
2.50
|
5.56
|
4.24
|
5.99
|
||||||||||||
Dividend Rate
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
||||||||
Fair Value of Option on Grant Date
|
$
|
0.58
|
$
|
7.15
|
$
|
5.54
|
$
|
6.73
|
|
Number
of Shares
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining Contractual
Life in Years
|
Aggregate
Intrinsic Value
|
||||||||||||
Options outstanding at December 31, 2017
|
6,462,795
|
$
|
6.50
|
|||||||||||||
Granted
|
2,322,906
|
7.52
|
||||||||||||||
Exercised
|
(198,300
|
)
|
3.64
|
|||||||||||||
Forfeited
|
(1,194,835
|
)
|
10.35
|
|||||||||||||
Options outstanding at June 30, 2018
|
7,392,566
|
$
|
6.28
|
6.43
|
$
|
107,730
|
||||||||||
Vested and expected to vest at June 30, 2018
|
7,392,566
|
$
|
6.28
|
6.43
|
$
|
107,730
|
||||||||||
Exercisable at June 30, 2018
|
4,183,685
|
$
|
5.54
|
6.01
|
$
|
107,730
|
Year ended December 31,
|
||||
2018 (remaining)
|
$
|
301,868
|
||
2019
|
604,541
|
|||
2020
|
603,371
|
|||
2021
|
530,385
|
|||
2022 and after
|
-
|
|||
Total minimum payments required
|
$
|
2,040,165
|
● |
our plans to explore strategic alternatives for the Company and our ability to successfully complete a strategic transaction;
|
● |
the timing of completion of any strategic transaction, sale and/or liquidation, if any;
|
● |
our ability to reduce operating expenses and conserve cash resources;
|
● |
timing and amount of termination costs incurred in connection with our workforce reduction plan;
|
● |
the accuracy of estimates of our expenses, future revenue, capital requirements and our needs for additional financing;
|
● |
our ability to obtain funding for our operations in the event we determine to raise additional capital;
|
● |
our ability to retain key management personnel;
|
● |
the accuracy of our estimates regarding expenses, future revenues and capital requirements;
|
● |
the possibility of dissolving our Company;
|
● |
the pending class action civil litigation against the Company;
|
● |
our ability to maintain our listing on the Nasdaq Stock Market;
|
● |
regulatory developments in the United States and foreign countries;
|
● |
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”); and
|
● |
other risks and uncertainties, including those listed under Part II, Item 1A. Risk Factors.
|
|
Three Months Ended June 30,
|
Increase (Decrease)
|
||||||||||||||
|
2018
|
2017
|
$
|
%
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development expenses
|
$
|
2,524
|
$
|
8,975
|
$
|
(6,451
|
)
|
-72
|
%
|
|||||||
General and administrative expenses
|
3,335
|
4,173
|
(838
|
)
|
-20
|
%
|
||||||||||
Restructuring expenses
|
6,646
|
-
|
6,646
|
100
|
%
|
|||||||||||
Total operating expenses
|
12,505
|
13,148
|
(643
|
)
|
-5
|
%
|
||||||||||
Loss from operations
|
(12,505
|
)
|
(13,148
|
)
|
643
|
-5
|
%
|
|||||||||
Interest (expense), net
|
(173
|
)
|
(356
|
)
|
183
|
-51
|
%
|
|||||||||
Net loss and comprehensive loss
|
$
|
(12,678
|
)
|
$
|
(13,504
|
)
|
$
|
826
|
-6
|
%
|
|
Six Months Ended June 30,
|
Increase (Decrease)
|
||||||||||||||
|
2018
|
2017
|
$
|
%
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development expenses
|
$
|
15,266
|
$
|
16,565
|
$
|
(1,299
|
)
|
-8
|
%
|
|||||||
General and administrative expenses
|
8,017
|
8,375
|
(358
|
)
|
-4
|
%
|
||||||||||
Restructuring expenses
|
6,646
|
-
|
6,646
|
100
|
%
|
|||||||||||
Impairment charges
|
2,673
|
-
|
2,673
|
100
|
%
|
|||||||||||
Total operating expenses
|
32,602
|
24,940
|
7,662
|
31
|
%
|
|||||||||||
Loss from operations
|
(32,602
|
)
|
(24,940
|
)
|
(7,662
|
)
|
31
|
%
|
||||||||
Interest (expense), net
|
(916
|
)
|
(735
|
)
|
(181
|
)
|
25
|
%
|
||||||||
Net loss and comprehensive loss
|
$
|
(33,518
|
)
|
$
|
(25,675
|
)
|
$
|
(7,843
|
)
|
31
|
%
|
|
Six Months Ended June 30,
|
|||||||
|
2018
|
2017
|
||||||
Net cash used in operating activities
|
$
|
(21,820
|
)
|
$
|
(20,057
|
)
|
||
Net cash used in investing activities
|
-
|
(106
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(20,269
|
)
|
22,479
|
|||||
Net (decrease) increase in cash
|
$
|
(42,089
|
)
|
$
|
2,316
|
● |
our plans to explore strategic alternatives for the Company and our ability to execute on those plans;
|
● |
our ability to manage costs associated with winding down our current research and development activities and restructuring our organization;
|
● |
the timing and nature of any strategic transactions that we undertake;
|
● |
personnel-related expenses, including salaries, benefits, severance, stock-based compensation expense and other compensation costs related to implementing our restructuring plan;
|
● |
the scope and nature of activities we may pursue to advance clinical development for our product candidates, if any;
|
● |
the number and characteristics of product candidates that we develop or may acquire or in-license;
|
● |
the costs incurred in defending the class action civil litigation; and
|
● |
the costs incurred in responding to disruptive actions by activist stockholders.
|
As of June 30, 2018
|
Total
|
Less than
one year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
|||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
Operating lease obligations
|
$
|
2,040
|
$
|
608
|
$
|
1,208
|
$
|
224
|
$
|
-
|
||||||||||
Milestone payments
|
2,500
|
2,500
|
-
|
-
|
-
|
|||||||||||||||
Total contractual obligations
|
$
|
4,540
|
$
|
3,108
|
$
|
1,208
|
$
|
224
|
$
|
-
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
3.1
|
|
Eighth Amended and Restated Certificate of Incorporation of Edge Therapeutics, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 6, 2015, and incorporated by reference herein).
|
|
|
|
3.2
|
Second Amended and Restated Bylaws of Edge Therapeutics, Inc. (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on October 6, 2015, and incorporated by reference herein).
|
|
|
Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
|
Principal Financial Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
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 Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1) |
This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
|
Edge Therapeutics, Inc.
|
|
|
|
|
August 1, 2018
|
By:
|
/s/ Brian A. Leuthner
|
|
Brian A. Leuthner
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
August 1, 2018
|
By:
|
/s/ Andrew Saik
|
|
Andrew Saik
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Edge Therapeutics, Inc. for the period ended June 30, 2018;
|
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 condensed 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 condensed 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
|
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.
|
Dated: August 1, 2018
|
/s/ Brian A. Leuthner
|
|
Brian A. Leuthner
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Edge Therapeutics, Inc. for the period ended June 30, 2018;
|
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 condensed 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 condensed 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
|
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.
|
Dated: August 1, 2018
|
/s/ Andrew Saik
|
|
Andrew Saik
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
(1) |
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: August 1, 2018
|
/s/ Brian A. Leuthner
|
|
Brian A. Leuthner
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
(1) |
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: August 1, 2018
|
/s/ Andrew Saik
|
|
Andrew Saik
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 25, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Edge Therapeutics, Inc. | |
Entity Central Index Key | 0001472091 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,328,128 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 |
Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
STOCKHOLDERS' EQUITY | ||
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00033 | $ 0.00033 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 31,328,128 | 30,869,205 |
Common stock, shares outstanding (in shares) | 31,328,128 | 30,869,205 |
Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Operating expenses: | ||||
Research and development expenses | $ 2,523,796 | $ 8,975,304 | $ 15,265,881 | $ 16,564,800 |
General and administrative expenses | 3,335,039 | 4,173,384 | 8,016,555 | 8,375,226 |
Restructuring expenses | 6,646,242 | 0 | 6,646,242 | 0 |
Impairment charges | 0 | 0 | 2,672,581 | 0 |
Total operating expenses | 12,505,077 | 13,148,688 | 32,601,259 | 24,940,026 |
Loss from operations | (12,505,077) | (13,148,688) | (32,601,259) | (24,940,026) |
Other income (expense): | ||||
Interest income | 262,140 | 168,974 | 508,779 | 265,233 |
Interest expense | (434,695) | (524,768) | (1,425,255) | (999,909) |
Net loss | $ (12,677,632) | $ (13,504,482) | $ (33,517,735) | $ (25,674,702) |
Loss per share basic and diluted (in dollars per share) | $ (0.41) | $ (0.44) | $ (1.08) | $ (0.86) |
Weighted average common shares outstanding basic and diluted (in shares) | 31,298,429 | 30,403,419 | 31,133,070 | 29,704,898 |
Nature of Operations |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Nature of Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Nature of Operations | Note 1 – Nature of Operations Edge Therapeutics, Inc. (the "Company") is a clinical-stage biotechnology company that seeks to discover, develop and commercialize novel therapies capable of transforming treatment paradigms in the management of medical conditions. On March 28, 2018, the Company announced that a pre-specified interim analysis performed on data from the Day 90 visit of the first 210 subjects randomized and treated in the Phase 3 multi-center, randomized, double-blind, placebo-controlled NEWTON 2 study of EG-1962 in adults with aneurysmal subarachnoid hemorrhage demonstrated a low probability of achieving a statistically significant difference compared to the standard of care in the study’s primary endpoint, if the study were to be fully enrolled. The independent Data Monitoring Committee (“DMC”) for the NEWTON 2 study recommended that the study be stopped based on this demonstration. The DMC also reported that there were no safety concerns attributed to EG-1962. Based on the DMC recommendation, the Company decided to discontinue the NEWTON 2 study and took steps to notify health authorities and clinical investigators participating in the study. On April 30, 2018, the Company announced that it is exploring strategic alternatives, which may include, without limitation, an acquisition of another company, acquisitions or in-licensing of products or product candidates, technologies or other assets, the sale of all or substantially all of the assets of the Company, a sale of stock, a strategic merger or other business combination transaction or other transaction between the Company and a third party. The Company has retained Piper Jaffray & Co, to serve as the financial advisor to its Board of Directors in the process. The Company does not have a defined timeline for the exploration of strategic alternatives and there can be no assurance that the process will result in any strategic alternative being announced or consummated. The Company does not intend to discuss or disclose further developments during this process unless and until its Board of Directors has approved a specific action or otherwise determined that further disclosure is appropriate. The Company has reduced the scope of its operations, including the size of its workforce, in order to preserve its cash resources. In the second quarter of 2018, the Company recorded an initial restructuring charge of $6.3 million. The components of the restructuring charge included expenses of $4.0 million for severance benefits and $2.3 million for financial advisor fees, as well as ongoing legal fees expensed as incurred, and accrued retention compensation related to the restructuring of the organization. The restructuring activity is as follows:
From the Company's inception, it has devoted substantially all of its efforts to business planning, engaging regulatory, manufacturing and other technical consultants, acquiring operating assets, planning and executing clinical trials and raising capital. The Company's future operations are highly dependent on the success of its strategic alternatives review and any transactions and operations resulting from that process. |
Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies
The interim balance sheet at June 30, 2018, the statements of operations and comprehensive loss for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), and following the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments that are necessary for a fair statement of its financial information. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other future annual or interim period. The balance sheet as of December 31, 2017 included herein was derived from the audited condensed financial statements as of that date. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2017.
The preparation of financial statements in conformity with U.S. GAAP requires management to make 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company's operations are subject to a number of factors that may affect its operating results and financial condition. Such factors include, but are not limited to: the Company’s review of strategic alternatives, the Company’s ability to preserve its cash resources, the Company’s ability to add product candidates to its pipeline, the Company's intellectual property, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products if approved for sale, the Company's ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company's ability to raise capital. The Company currently has no commercially approved products and has ceased all research and development activities related to EG-1962 and suspended research for its other product candidates. As such, there can be no assurance that the Company's future research and development programs will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants and obtaining and protecting its intellectual property.
The Company considers all highly liquid securities with a maturity weighted average of less than three months to be cash equivalents. The Company's cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits.
Costs incurred in connection with research and development activities are expensed as incurred. These costs include licensing fees to use certain technology in the Company's research and development projects as well as fees paid to consultants and various entities that perform certain research and testing on behalf of the Company. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data, such as patient enrollment, clinical site activations or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred. Following the DMC’s recommendation that the NEWTON 2 Trial for EG-1962 be stopped, the Company decided to discontinue the NEWTON 2 study and took steps to notify health authorities and clinical investigators participating in the study. The Company has ceased all further research and development activities for EG-1962 and suspended research for its other product candidates and implemented operating cost reductions and organizational restructurings while it seeks a strategic alternative, including a reduction in the Company’s workforce, to preserve its cash resources and better align the organization with its current operating plan. The estimated costs associated with the study discontinuance have been accrued as of June 30, 2018.
The Company expenses patent costs as incurred and classifies such costs as general and administrative expenses in the accompanying statements of operations and comprehensive loss. In light of the Company’s cessation of all further research and development activities for EG-1962 and suspension of research for its other product candidates, the Company has substantially scaled back its patent prosecution activities.
The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including, for stock options, the expected life of the option, and expected stock price volatility. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options was estimated using the "simplified method," as the Company has limited historical information to develop reasonable expectations about future exercise patterns and employment duration for its stock options grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option.
Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted average common shares outstanding during the period. For all periods presented, the common shares underlying the preferred stock, common stock options and warrants have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted average shares outstanding used to calculate both basic and diluted loss per common share are the same. The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be anti-dilutive:
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)." The new standard requires organizations that lease assets—referred to as "lessees"—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases (see Note 9). This standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of adoption.
In March 2016, the FASB issued ASU No. 2016-09 which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Public companies were required to adopt this standard in annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this ASU on January 1, 2017. The impact of adopting ASU 2016-09 resulted in the following:
There were no other material impacts to the Company's condensed financial statements as a result of adopting this updated standard. |
Fair Value of Financial Instruments |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Note 3 – Fair Value of Financial Instruments There were no transfers among Levels 1, 2, or 3 during 2018 or 2017.
|
Property and Equipment |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Property and Equipment [Abstract] | |
Property and Equipment | Note 4 – Property and Equipment In March 2018, following the recommendation of the Data Monitoring Committee, the Company made the decision to close down the EG-1962 NEWTON 2 study. The Company believes that it would be highly unlikely that the Company would be able to use the manufacturing equipment for future use. As a result, the Company has taken an equipment impairment charge of $2,672,581. The write-down would bring down the value of the equipment to the Company’s best estimate of its future value based on a range of estimates from a third-party seller. The equipment is being classified as Other Current Assets on the condensed balance sheet. |
Accrued Expenses |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Note 5 – Accrued Expenses Accrued expenses and other liabilities consist of the following:
|
Stock Options |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stock Options [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | Note 6 – Stock Options The Company has three equity compensation plans: the 2010 Equity Incentive Plan, the 2012 Equity Incentive Plan and the 2014 Equity Incentive Plan (the "Plans"). Originally, the Company was able to grant up to 548,206 and 1,096,411 shares of Common Stock as both incentive stock options ("ISOs") and nonqualified stock options ("NQs") under the 2010 Equity Incentive Plan and the 2012 Equity Incentive Plan, respectively. In 2013, the Company's stockholders approved an increase to 1,279,146 shares authorized for issuance under the 2010 Equity Incentive Plan. In 2014, the Board of Directors of the Company (the "Board") approved an increase to 1,350,412 shares authorized for issuance under the 2010 Equity Incentive Plan. In 2014, the Company's stockholders approved the 2014 Equity Incentive Plan pursuant to which the Company may grant up to 1,827,351 shares as both ISOs and NQs, subject to increases as hereafter described (the "Plan Limit"). In addition, on January 1, 2015 and each January 1 thereafter prior to the termination of the 2014 Equity Incentive Plan, pursuant to the terms of the 2014 Equity Incentive Plan, the Plan Limit was and shall be increased by the lesser of (x) 4% of the number of shares of Common Stock outstanding as of the immediately preceding December 31 and (y) such lesser number as the Board of Directors may determine in its discretion. On January 1, 2016, 2017 and 2018 the Plan Limit was increased to 3,047,323 shares, 4,204,063 shares and 5,438,831 shares, respectively. Pursuant to the terms of the Plans, ISOs have a term of ten years from the date of grant or such shorter term as may be provided in the option agreement. Unless specified otherwise in an individual option agreement, ISOs generally vest over a four year term and NQs generally vest over a one, three or four year term. Unless terminated by the Board, the Plans shall continue to remain effective for a term of ten years or until such time as no further awards may be granted and all awards granted under the Plans are no longer outstanding. The Company issued the following non-qualified options to purchase shares of common stock to its newly appointed executives who are still employed by the Company. The awards were granted outside of the Company's 2014 Equity Incentive Plan and vest over four years with 25% vesting one year following the date of hire, and the remaining 75% vesting in 36 equal monthly installments thereafter, subject to continued service to the Company through each vesting date and subject to acceleration or forfeiture upon the occurrence of certain events as set forth in the applicable option agreement and employment agreement. The grant awards were made pursuant to the NASDAQ inducement grant exception as a material component of employment compensation.
The Company’s stock-based compensation expense was recognized in operating expense as follows:
The fair value of options and warrants granted during the three months ended June 30, 2018 and 2017 was estimated using the Black-Scholes option valuation model utilizing the following assumptions:
The following table summarizes the number of options outstanding and the weighted average exercise price:
At June 30, 2018 there was approximately $15,319,731 of unamortized stock compensation expense, which is expected to be recognized over a remaining average vesting period of 1.97 years. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | Note 7 – Income Taxes In assessing the realizability of the net deferred tax assets, the Company considers all relevant positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. There was a full valuation allowance against the net deferred tax assets as of June 30, 2018 and December 31, 2017. At December 31, 2017, the Company had federal net operating loss ("NOL") carryforwards of approximately $101.5 million which expire between 2029 and 2037. At December 31, 2017, the Company had federal research and development credits carryforwards of approximately $1.9 million and an orphan drug credit carryover of approximately $22.1 million. The Company may be subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code. The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company's capital during a specified period prior to the change, and the federal published interest rate. Although the Company has not completed an analysis under Section 382 of the Code, it is likely that the utilization of the NOLs will be limited. At December 31, 2017, the Company had approximately $31.9 million of State of New Jersey NOL's which expire between 2030 and 2037. At December 31, 2017, the Company had approximately $0.4 million of the State of New Jersey research development credits carryforwards. The State of New Jersey has enacted legislation permitting certain corporations located in New Jersey to sell state tax loss carryforwards and state research and development credits, or net loss carryforwards. The Technology Business Tax Certificate Transfer Program enables qualified, unprofitable NJ-based technology or biotechnology companies with fewer than 225 US employees (including parent company and all subsidiaries) to sell a percentage of net operating losses (NOL) and research and development (R&D) tax credits to unrelated profitable corporations. In 2017, the Company sold $26,097,607 of State of New Jersey NOL's and $424,466 of State of New Jersey R&D Credits for $2,586,057. In 2016, the Company sold $19,196,765 of State of New Jersey NOL's and $257,222 of State of New Jersey R&D Credits for $1,845,986. Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2017, there were no uncertain positions. The Company's U.S. federal and state net operating losses have occurred since its inception in 2009 and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. In September 2017, the IRS concluded auditing the Company's 2015 tax year resulting in a no change letter. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the six months ended June 30, 2018 and 2017. On December 22, 2017, H.R. 1 (also, known as the Tax Cuts and Jobs Act (the “Act”)) was signed into law. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. federal corporate tax rate to 21%. As a result, the most significant impact on its condensed financial statements was the reduction of approximately $13.6 million for the deferred tax assets related to net operating losses and other assets. Such reduction is offset by changes to the Company’s valuation allowance. The Company is also in the process of considering the impact under the Act of the disallowance of certain incentive based compensation tax deductibility under Internal Revenue Code Section 162(m). If an adjustment to the deferred tax asset is required, the impact will be offset by a corresponding adjustment to the valuation allowance. On July 1, 2018, the New Jersey governor signed into law a bill which included significant changes to the New Jersey taxation of corporations. Chiefly, this legislation imposes a 2.5% surtax on taxpayers with allocated net income over $1 million for 2018 and 2019, and a 1.5% surtax for taxpayers with allocated net income over $1 million for 2020 and 2021. In addition, the state is changing its filing requirements from separate entity reporting to combined reporting on a water’s edge basis. Further, there are changes to the state’s computation of its dividend received deduction and application of IRC section 163(j). The Company has considered these changes and does not believe this law change will have a material impact on its tax provision going forward due to the full valuation allowance, significant NJ NOLs and current year losses. |
Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Note 8 – Commitments and Contingencies Evonik The Company entered into an agreement with SurModics Pharmaceuticals, Inc. ("SurModics") in October 2010 for the exclusive worldwide licensing of certain technology, patent rights and know-how rights related to the production of EG-1962, (the "Evonik Agreement"). This agreement was later transferred to Evonik Industries AG ("Evonik") when it purchased substantially all the assets of SurModics. Pursuant to the Evonik Agreement, in exchange for the license, the Company agreed to make milestone payments totaling up to $14.75 million upon the achievement of certain development, regulatory and sales milestones detailed in the Evonik Agreement. The Company paid $0.25 million upon execution of the Evonik Agreement. In August 2016, the Company paid a milestone of $1.0 million after the first patient in the Phase 3 clinical trial of EG-1962 was dosed. In addition, the Evonik Agreement calls for the Company to pay royalties on sales of certain products based on a mid-single digit percentage of net sales. The Evonik Agreement provides for the reduction of royalties in certain limited circumstances. The term of the Evonik Agreement will continue until the expiration of the Company’s obligation to pay royalties to Evonik. Either party may terminate the Evonik Agreement due to material breach by the other party. Evonik may terminate the Evonik Agreement or convert it to a non-exclusive license, in either case upon giving the Company written notice, if the Company fails to use commercially reasonable efforts to hit certain specified development, regulatory and commercial milestones. Following the discontinuation of the NEWTON 2 trial for EG-1962, the Company has ceased all research and development efforts related to EG-1962 and suspended efforts on its other product candidates as it pursues strategic alternatives. As such, unless the Company resumes such development activities, it is unlikely that the Company will have any additional milestone or royalty obligations to Evonik in the future. Oakwood Amended and Restated Master Formulation Development Agreement In June 2017, the Company entered into an Amended and Restated Master Formulation Development Agreement (the “Restated Development Agreement”) with Oakwood Laboratories, L.L.C. (“Oakwood”), pursuant to which Oakwood agreed to continue to provide the Company with certain drug formulation development and non-commercial manufacturing services for EG-1962, in accordance with project plans that may be entered into from time to time. Under the Restated Development Agreement, the Company agreed to pay Oakwood to perform services under agreed upon project plans and to pay Oakwood up to an aggregate of $4.5 million. In July 2017 and April 2018, the Company paid $1.5 million and $0.5 million, respectively, of such aggregate amount in connection with entering into the Restated Development Agreement. The remaining $2.5 million is payable no later than April 1, 2019. The remaining payment may be accelerated if: (i) the Company achieves various regulatory milestones, (ii) the Company closes an equity or similar financing in excess of a predetermined amount, or (iii) there is an early termination, under certain circumstances, of the Restated Development Agreement or the Supply Agreement with Oakwood. The earned milestone has been accrued as of June 30, 2018. As additional consideration for performance under the Restated Development Agreement and the Supply Agreement (as defined below), the Company agreed to pay Oakwood a royalty, during the Royalty Term, in an amount equal to a low single digit percentage of net sales of EG-1962, regardless of the manufacturer or supplier thereof. The “Royalty Term” is the period commencing upon the commercial launch of EG-1962 by the Company and continuing until twelve (12) years following such launch. The term of the Restated Development Agreement continues until the expiration or termination of the Supply Agreement, unless earlier terminated (the “Term”). The Company has the right to terminate project plans upon the occurrence of various circumstances described in the Restated Development Agreement. In the event that the Company terminates the most recent project plan prior to completion (which would include the Company’s recent decision to discontinue the development or commercialization of EG-1962), the Company must pay to Oakwood a termination fee for work completed which has been accrued as of June 30, 2018. Oakwood Manufacturing and Supply Agreement Concurrent with its entry into the Restated Development Agreement, on June 30, 2017, the Company entered into a Manufacturing and Supply Agreement with Oakwood (the “Supply Agreement”), pursuant to which Oakwood agreed to manufacture and supply, and the Company agreed to purchase from Oakwood, EG-1962 in commercial quantities following the commercial launch of the product. Pursuant to the Supply Agreement, the Company agreed to pay Oakwood milestone payments that could total up to an aggregate of $2.25 million upon the achievement of certain development and regulatory milestones. The term of the Supply Agreement will terminate automatically upon the termination of the Restated Development Agreement for any reason. Additionally, either party may terminate the Supply Agreement upon a material breach by the other party that fails to be cured in the applicable cure period. Following the discontinuation of the NEWTON 2 trial for EG-1962, the Company has ceased all research and development efforts related to EG-1962 and suspended efforts on its other product candidates. As such the Company may terminate the Supply Agreement immediately upon notice to Oakwood (which will also result in the automatic termination of the Restated Development Agreement); provided, that if it chooses to do so prior to completion of the most recent project plan attached to the Restated Development Agreement, the Company must pay to Oakwood a termination fee. While certain of the Company’s milestone payments to Oakwood will remain outstanding (including the termination fee in the event the Restated Development Agreement is terminated), unless the Company resumes such development activities, it is unlikely that the Company will be required to pay additional milestone or royalty payments to Oakwood in the future pursuant to the Restated Development Agreement or the Supply Agreement. Class Action Civil Litigation On April 23, 2018, a purported securities class action complaint was filed against the Company, Brian Leuthner (the Company's President and Chief Executive Officer) and Andrew Saik (the Company's Chief Financial Officer) in the United States District Court for the District of New Jersey, captioned Sanfilippo v. Edge Therapeutics, Inc., Case No. 2:18-cv-8236. The complaint alleges that the Company, Mr. Leuthner and Mr. Saik violated Section 10(b) of the Securities Exchange Act of 1934 by making false and misleading statements concerning the Company’s business, operations and prospects by failing to disclose that EG-1962 would likely fail a futility analysis. The complaint is brought on behalf of all purchasers of the Company’s common stock between December 27, 2017 and March 27, 2018, and seeks unspecified damages. None of the Company, Mr. Leuthner, or Mr. Saik has been served with the complaint and their time to respond has not yet expired. Various individuals have moved to be appointed lead plaintiff to act on behalf of the putative class. After the court appoints that party (or parties), it is expected that the lead plaintiff will file an amended complaint. The Company and its executives intend to defend themselves vigorously in the action. There can be no guarantee as to the outcome or timing of any resolution. Employment Matters The Company has entered into employment agreements with each of its executive officers. The agreements generally provide for, among other things, salary, bonus and severance payments. The employment agreements generally provide for between 12 months and 18 months of severance benefits to be paid to an executive (as well as certain potential bonus, COBRA and equity award benefits), subject to the effectiveness of a general release of claims, if the executive terminates his or her employment for good reason or if the Company terminates the executive's employment without cause. Such severance payments may be provided for as long as 24 months in connection with a termination following a change of control. The continued provision of severance benefits is conditioned on each executive's compliance with the terms of the Company's confidentiality and invention and assignment agreement as well as his or her release of claims. On April 30, 2018, the Company initiated a corporate realignment to focus its efforts and resources on its ongoing operations and future plans that include a reduction in its workforce. This realignment was initiated following the Company’s recent announcement that it is discontinuing the Phase 3 NEWTON 2 study, based on the recommendation of an independent Data Monitoring Committee (the “DMC”) that the Company stop its Phase 3 NEWTON 2 study. The DMC recommendation was based on its conclusion that the study had a low probability of meeting its primary endpoint. During the second quarter, the Company reduced its workforce from 37 employees to 15 employees. The Company anticipates a further reduction of its workforce as the Company completes NEWTON 2 closedown activities and completes the analysis of the related NEWTON 2 data. In addition, the Company anticipates completing the payment of certain employee severance and benefits and certain retention compensation, as approved by the Compensation Committee of the Board of Directors, by the fourth quarter of fiscal year 2019. Leases Effective December 13, 2013, the Company entered into a 63 month lease for approximately 8,000 square feet of office space in Berkeley Heights, New Jersey. On February 18, 2016, the Company entered into a new 63 month lease for approximately 20,410 square feet of office space within the same office complex in Berkeley Heights, New Jersey. The terms of the new lease were structured so that the termination date of the December 13, 2013 lease coincided with the commencement date of the new lease on August 13, 2016. As a result of the lease termination, the Company wrote off $67,118 of leasehold improvements. Rent expense is recognized on a straight line basis where there are escalating payments, and was approximately $149,743 and $150,614 for the three months ended June 30, 2018 and 2017, respectively and $301,769 and $298,674 for the six months ended June 30, 2018 and 2017, respectively. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2018:
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Debt |
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Jun. 30, 2018 | |
Debt [Abstract] | |
Debt | Note 9 – Debt On August 1, 2016, the Company entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”) with Hercules Capital, Inc., formerly known as Hercules Technology Growth Capital, Inc. (“Hercules”). Pursuant to the Amended Loan Agreement, the Company was able to borrow up to $20,000,000. At closing, the Company borrowed $15,000,000 of the amount available for draw under the Amended Loan Agreement (and received proceeds net of the amount then outstanding under the Original Loan Agreement, fees and expenses). On May 23, 2017, the Company elected to draw down the second tranche of $5 million. Pursuant to the Amended Loan Agreement, in March 2018, the Company made a payment of $90,000, which is equal to 1.5% of the total amounts funded under the Original Loan Agreement. In June 2018, the Company agreed with Hercules Capital, Inc. to pay off its entire outstanding debt under the Amended Loan Agreement. The payment consisted of $20.0 million for the principal amount, an additional $0.9 million in back-end fees and $0.1 million in accrued and unpaid interest. As of June 30, 2018, there are no future principal payments due under the Amended Loan Agreement. |
Retirement Plan |
6 Months Ended |
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Jun. 30, 2018 | |
Retirement Plan [Abstract] | |
Retirement Plan | Note 10 – Retirement Plan The Company has a 401(k) defined contribution plan for the benefit for all employees and permits voluntary contributions by employees subject to IRS-imposed limitations. The 401K employer contributions were $47,834 and $48,999 for the three months ended June 30, 2018 and 2017, respectively and $130,550 and $170,619 for the six months ended June 30, 2018 and 2017, respectively. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events Subsequent events have been evaluated through the date these financial statements were issued. |
Summary of Significant Accounting Policies (Policies) |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Interim Financial Statements |
The interim balance sheet at June 30, 2018, the statements of operations and comprehensive loss for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), and following the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments that are necessary for a fair statement of its financial information. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other future annual or interim period. The balance sheet as of December 31, 2017 included herein was derived from the audited condensed financial statements as of that date. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2017. |
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Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Significant Risks and Uncertainties |
The Company's operations are subject to a number of factors that may affect its operating results and financial condition. Such factors include, but are not limited to: the Company’s review of strategic alternatives, the Company’s ability to preserve its cash resources, the Company’s ability to add product candidates to its pipeline, the Company's intellectual property, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products if approved for sale, the Company's ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company's ability to raise capital. The Company currently has no commercially approved products and has ceased all research and development activities related to EG-1962 and suspended research for its other product candidates. As such, there can be no assurance that the Company's future research and development programs will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants and obtaining and protecting its intellectual property. |
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Cash Equivalents and Concentration of Cash Balance |
The Company considers all highly liquid securities with a maturity weighted average of less than three months to be cash equivalents. The Company's cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. |
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Research and Development |
Costs incurred in connection with research and development activities are expensed as incurred. These costs include licensing fees to use certain technology in the Company's research and development projects as well as fees paid to consultants and various entities that perform certain research and testing on behalf of the Company. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data, such as patient enrollment, clinical site activations or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred. Following the DMC’s recommendation that the NEWTON 2 Trial for EG-1962 be stopped, the Company decided to discontinue the NEWTON 2 study and took steps to notify health authorities and clinical investigators participating in the study. The Company has ceased all further research and development activities for EG-1962 and suspended research for its other product candidates and implemented operating cost reductions and organizational restructurings while it seeks a strategic alternative, including a reduction in the Company’s workforce, to preserve its cash resources and better align the organization with its current operating plan. The estimated costs associated with the study discontinuance have been accrued as of June 30, 2018. |
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Patent Costs |
The Company expenses patent costs as incurred and classifies such costs as general and administrative expenses in the accompanying statements of operations and comprehensive loss. In light of the Company’s cessation of all further research and development activities for EG-1962 and suspension of research for its other product candidates, the Company has substantially scaled back its patent prosecution activities. |
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Stock-Based Compensation |
The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including, for stock options, the expected life of the option, and expected stock price volatility. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options was estimated using the "simplified method," as the Company has limited historical information to develop reasonable expectations about future exercise patterns and employment duration for its stock options grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. |
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Net Loss per Common Share |
Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted average common shares outstanding during the period. For all periods presented, the common shares underlying the preferred stock, common stock options and warrants have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted average shares outstanding used to calculate both basic and diluted loss per common share are the same. The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be anti-dilutive:
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Accounting Standards Not Yet Adopted |
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)." The new standard requires organizations that lease assets—referred to as "lessees"—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases (see Note 9). This standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of adoption. |
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Accounting Standards Adopted |
In March 2016, the FASB issued ASU No. 2016-09 which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Public companies were required to adopt this standard in annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this ASU on January 1, 2017. The impact of adopting ASU 2016-09 resulted in the following:
There were no other material impacts to the Company's condensed financial statements as a result of adopting this updated standard. |
Nature of Operations (Tables) |
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Restructuring Activity | The restructuring activity is as follows:
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Summary of Significant Accounting Policies (Tables) |
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Potentially Dilutive Securities Excluded from Computations of Diluted Weighted Average Shares Outstanding | The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be anti-dilutive:
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Fair Value of Financial Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
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Accrued Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consist of the following:
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Stock Options (Tables) |
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Qualified Stock Options | The Company issued the following non-qualified options to purchase shares of common stock to its newly appointed executives who are still employed by the Company. The awards were granted outside of the Company's 2014 Equity Incentive Plan and vest over four years with 25% vesting one year following the date of hire, and the remaining 75% vesting in 36 equal monthly installments thereafter, subject to continued service to the Company through each vesting date and subject to acceleration or forfeiture upon the occurrence of certain events as set forth in the applicable option agreement and employment agreement. The grant awards were made pursuant to the NASDAQ inducement grant exception as a material component of employment compensation.
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Stock-Based Compensation Expense | The Company’s stock-based compensation expense was recognized in operating expense as follows:
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Assumptions Used to Value Stock Options and Warrants Granted | The fair value of options and warrants granted during the three months ended June 30, 2018 and 2017 was estimated using the Black-Scholes option valuation model utilizing the following assumptions:
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Stock Option Activity | The following table summarizes the number of options outstanding and the weighted average exercise price:
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||
Future Minimum Rental Payments Required under Operating Leases | The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2018:
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Nature of Operations (Details) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
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Jun. 30, 2017
USD ($)
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Jun. 30, 2018
USD ($)
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Jun. 30, 2017
USD ($)
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Mar. 28, 2018
Subject
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Nature of Operations [Abstract] | |||||
Number of days of treatment received by subjects prior to pre-specified interim analysis | 90 days | ||||
Number of subjects randomized and treated first in Phase 3 NEWTON 2 study of EG-1962 | Subject | 210 | ||||
Severance costs | $ 4,000,000 | ||||
Financial advisor fees | 2,300,000 | ||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring reserve at beginning of period | $ 0 | ||||
Initial restructuring charge | 6,276,563 | 6,276,563 | |||
Incurred legal fees | 185,583 | ||||
Retention compensation | 184,096 | ||||
Restructuring expenses to date | 6,646,242 | $ 0 | 6,646,242 | $ 0 | |
Payment of severance benefits | (524,461) | ||||
Restructuring reserve at end of period | $ 6,121,781 | $ 6,121,781 |
Summary of Significant Accounting Policies (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
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Net Loss per Common Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,471,162 | 6,724,077 |
Stock Options to Purchase Common Stock [Member] | ||
Net Loss per Common Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,392,566 | 6,320,295 |
Warrants to Purchase Common Stock [Member] | ||
Net Loss per Common Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 78,596 | 403,782 |
ASU 2016 - 09 [Member] | ||
Accounting Standards Adopted [Abstract] | ||
Tax benefit | $ (84,786) |
Fair Value of Financial Instruments (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
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Fair Value Transfers Between Levels [Abstract] | ||
Transfers from Level 1 to Level 2 | $ 0 | $ 0 |
Transfers from Level 2 to Level 1 | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Fair Value of Financial Instruments [Abstract] | ||
Cash and cash equivalents | 45,978,737 | 88,067,647 |
Quoted Prices in Active Markets (Level 1) [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Cash and cash equivalents | 45,978,737 | 88,067,647 |
Quoted Prices in Inactive Markets (Level 2) [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Cash and cash equivalents | $ 0 | $ 0 |
Property and Equipment (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Property and Equipment [Abstract] | ||||
Equipment impairment charge | $ 0 | $ 0 | $ 2,672,581 | $ 0 |
Accrued Expenses (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Accrued Expenses [Abstract] | |||||
Accrued research and development costs | $ 5,515,479 | [1] | $ 2,857,025 | ||
Accrued professional fees | 201,675 | 267,646 | |||
Accrued compensation | 67,834 | 1,886,638 | |||
Accrued other | 209,923 | 385,896 | |||
Deferred rent | 29,616 | 25,000 | |||
Total | 6,024,527 | $ 5,422,205 | |||
Accrued close down NEWTON 2 trial costs | 3,000,000 | ||||
Accrued CMO milestone payments | $ 2,500,000 | ||||
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Stock Options, Stock-Based Compensation Expense (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Stock-Based Compensation [Abstract] | ||||
Stock-based compensation expense | $ 1,658,618 | $ 1,580,523 | $ 3,644,405 | $ 3,066,228 |
Research and Development [Member] | ||||
Stock-Based Compensation [Abstract] | ||||
Stock-based compensation expense | 631,511 | 779,349 | 1,428,851 | 1,387,792 |
General and Administrative [Member] | ||||
Stock-Based Compensation [Abstract] | ||||
Stock-based compensation expense | $ 1,027,107 | $ 801,174 | $ 2,215,554 | $ 1,678,436 |
Stock Options, Assumptions Used to Value Stock Options and Warrants Granted (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Assumptions Used in Determining Fair Value of Stock Options and Warrants Granted [Abstract] | ||||
Volatility | 87.82% | 85.71% | 89.06% | 88.93% |
Risk-free interest rate | 2.27% | 1.84% | 2.31% | 1.89% |
Expected term | 2 years 6 months | 5 years 6 months 22 days | 4 years 2 months 26 days | 5 years 11 months 26 days |
Dividend rate | 0.00% | 0.00% | 0.00% | 0.00% |
Fair value of option on grant date (in dollars per share) | $ 0.58 | $ 7.15 | $ 5.54 | $ 6.73 |
Debt (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
May 23, 2017 |
Aug. 01, 2016 |
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Loan and Security Agreement [Abstract] | ||||||
Payments for debt issuance costs | $ 990,000 | $ 0 | ||||
Repayments of debt | 20,000,000 | $ 0 | ||||
Original Loan Agreement [Member] | ||||||
Loan and Security Agreement [Abstract] | ||||||
Payments for debt issuance costs | $ 90,000 | |||||
Additional interest rate charged on due date | 1.50% | |||||
Amended Loan Agreement [Member] | ||||||
Loan and Security Agreement [Abstract] | ||||||
Aggregate principal amount of borrowing capacity | $ 20,000,000 | |||||
Payments for debt issuance costs | $ 900,000 | |||||
Repayments of debt | 20,000,000 | |||||
Payments for accrued interest | 100,000 | |||||
Future principal payments due | $ 0 | $ 0 | ||||
First Term Loan under Amended Loan Agreement [Member] | ||||||
Loan and Security Agreement [Abstract] | ||||||
Face amount | $ 15,000,000 | |||||
Second Term Loan under Amended Loan Agreement [Member] | ||||||
Loan and Security Agreement [Abstract] | ||||||
Face amount | $ 5,000,000 |
Retirement Plan (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Retirement Plan [Abstract] | ||||
401(k) employer contribution | $ 47,834 | $ 48,999 | $ 130,550 | $ 170,619 |
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