(Mark One) | |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2016 | |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to |
Delaware (State or Other Jurisdiction of Incorporation or Organization) | 46-5087339 (I.R.S. Employer Identification Number) |
Large Accelerated Filer o | Accelerated Filer o | Non-accelerated Filer ý | Smaller Reporting Company o | |||
(Do not check if a smaller reporting company) |
Page | ||
Item 1. | Financial Statements |
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 27,829,591 | $ | 66,686,695 | |||
Marketable securities | 39,504,263 | 24,652,348 | |||||
Accounts receivable | 21,787 | — | |||||
Inventory | 230,778 | — | |||||
Prepaid expenses and other current assets | 1,554,270 | 908,574 | |||||
Total current assets | 69,140,689 | 92,247,617 | |||||
Marketable securities | — | 2,312,949 | |||||
Property and equipment, net | 619,371 | 382,437 | |||||
Other assets | 64,800 | — | |||||
Restricted cash | 126,595 | 126,835 | |||||
Total assets | $ | 69,951,455 | $ | 95,069,838 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,256,889 | $ | 875,646 | |||
Accrued expenses and other current liabilities | 2,549,443 | 1,947,374 | |||||
Deferred revenue | 81,399 | — | |||||
Deferred rent, current portion | 25,351 | 24,381 | |||||
Total current liabilities | 3,913,082 | 2,847,401 | |||||
Deferred rent, net of current portion | 10,561 | 14,587 | |||||
Other long term liabilities | — | 15,442 | |||||
Total liabilities | 3,923,643 | 2,877,430 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2016 and December 31, 2015; none issued or outstanding at September 30, 2016 and December 31, 2015 | — | — | |||||
Common stock, $0.0001 par value; 100,000,000 shares authorized at September 30, 2016 and December 31, 2015; 17,970,590 and 17,943,880 shares issued at September 30, 2016 and December 31, 2015, respectively, and 16,518,347 and 15,741,618 shares outstanding at September 30, 2016 and December 31, 2015, respectively | 1,652 | 1,574 | |||||
Additional paid-in capital | 134,757,066 | 129,367,978 | |||||
Accumulated other comprehensive income (loss) | 14,672 | (24,654 | ) | ||||
Accumulated deficit | (68,745,578 | ) | (37,152,490 | ) | |||
Total stockholders' equity | 66,027,812 | 92,192,408 | |||||
Total liabilities and stockholders' equity | $ | 69,951,455 | $ | 95,069,838 |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||
Net product revenue | $ | 586,134 | $ | — | $ | 698,819 | $ | — | |||||||
Other revenue | 12,940 | — | 12,940 | — | |||||||||||
Total revenue | 599,074 | — | 711,759 | — | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of product revenue | 221,090 | — | 529,041 | — | |||||||||||
Research and development | 5,665,357 | 3,445,200 | 16,147,357 | 9,440,324 | |||||||||||
Selling, general and administrative | 5,447,847 | 4,722,281 | 15,937,326 | 11,842,896 | |||||||||||
Total costs and expenses | 11,334,294 | 8,167,481 | 32,613,724 | 21,283,220 | |||||||||||
Loss from operations | (10,735,220 | ) | (8,167,481 | ) | (31,901,965 | ) | (21,283,220 | ) | |||||||
Interest income, net | 97,726 | 14,637 | 308,877 | 34,397 | |||||||||||
Net loss | $ | (10,637,494 | ) | $ | (8,152,844 | ) | $ | (31,593,088 | ) | $ | (21,248,823 | ) | |||
Net loss attributable to common stockholders | $ | (10,637,494 | ) | $ | (8,152,844 | ) | $ | (31,593,088 | ) | $ | (21,248,823 | ) | |||
Net loss per share attributable to common stockholders — basic and diluted | $ | (0.65 | ) | $ | (0.53 | ) | $ | (1.96 | ) | $ | (1.57 | ) | |||
Weighted-average number of common shares outstanding — basic and diluted | 16,361,617 | 15,290,435 | 16,104,510 | 13,520,438 |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||
Net loss | $ | (10,637,494 | ) | $ | (8,152,844 | ) | $ | (31,593,088 | ) | $ | (21,248,823 | ) | |||
Other comprehensive gain (loss): | |||||||||||||||
Unrealized gain (loss) on available-for-sale securities | (24,818 | ) | (3,676 | ) | 39,326 | (3,676 | ) | ||||||||
Comprehensive loss | $ | (10,662,312 | ) | $ | (8,156,520 | ) | $ | (31,553,762 | ) | $ | (21,252,499 | ) |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||
Operating activities | |||||||
Net loss | $ | (31,593,088 | ) | $ | (21,248,823 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation expense | 165,373 | 36,798 | |||||
Stock-based compensation expense | 5,367,070 | 4,892,998 | |||||
Amortization and accretion on investments | 117,236 | 1,192 | |||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | 240 | (27 | ) | ||||
Accounts receivable | (21,787 | ) | — | ||||
Inventory | (109,701 | ) | — | ||||
Prepaid expenses and other current assets | (645,696 | ) | (715,105 | ) | |||
Other assets | (64,800 | ) | (35,200 | ) | |||
Accounts payable | 321,460 | 433,354 | |||||
Accrued expenses and other current liabilities | 647,455 | 1,339,165 | |||||
Deferred revenue | 81,399 | — | |||||
Deferred rent | (3,056 | ) | (13,161 | ) | |||
Other long term liabilities | (15,442 | ) | — | ||||
Net cash used in operating activities | (25,753,337 | ) | (15,308,809 | ) | |||
Investing activities | |||||||
Purchases of marketable securities | (28,086,686 | ) | (21,002,641 | ) | |||
Proceeds from maturities and sales of marketable securities | 15,469,810 | 10,998,295 | |||||
Purchases of property and equipment | (508,987 | ) | (223,265 | ) | |||
Net cash used in investing activities | (13,125,863 | ) | (10,227,611 | ) | |||
Financing activities | |||||||
Proceeds from IPO, net of offering costs | — | 80,435,430 | |||||
Proceeds from exercise of common stock | 22,096 | 6,372 | |||||
Proceeds from early exercise of common stock | — | 400,000 | |||||
Net cash provided by financing activities | 22,096 | 80,841,802 | |||||
Net (decrease) increase in cash and cash equivalents | (38,857,104 | ) | 55,305,382 | ||||
Cash and cash equivalents at beginning of period | 66,686,695 | 33,854,153 | |||||
Cash and cash equivalents at end of period | $ | 27,829,591 | $ | 89,159,535 | |||
Supplemental cash flow information | |||||||
Inventory purchases included in accounts payable and accrued expense at September 30, 2016 | $ | 121,077 | $ | — | |||
Property and equipment purchases included in accrued expense at December 31, 2015 and 2014 | $ | 106,680 | $ | 21,000 | |||
Property and equipment purchases included in accounts payable at September 30, 2015 | $ | — | $ | 5,070 | |||
IPO issuance costs included in accounts payable and accrued expenses at December 31, 2014 | $ | — | $ | 499,549 | |||
IPO issuance costs paid in cash through December 31, 2014 | $ | — | $ | 575,245 |
Level 1 | Level 2 | Level 3 | Balance as of September 30, 2016 | ||||||||||||
Cash equivalents | $ | 20,697,042 | $ | — | $ | — | $ | 20,697,042 | |||||||
Marketable securities: | |||||||||||||||
Corporate debt securities | — | 11,418,230 | — | 11,418,230 | |||||||||||
U.S. government agency securities | — | 28,086,033 | — | 28,086,033 | |||||||||||
$ | 20,697,042 | $ | 39,504,263 | $ | — | $ | 60,201,305 |
Level 1 | Level 2 | Level 3 | Balance as of December 31, 2015 | ||||||||||||
Cash equivalents | $ | 58,575,348 | $ | 1,410,322 | $ | — | $ | 59,985,670 | |||||||
Marketable securities: | |||||||||||||||
Corporate debt securities | — | 26,965,297 | — | 26,965,297 | |||||||||||
$ | 58,575,348 | $ | 28,375,619 | $ | — | $ | 86,950,967 |
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
As of September 30, 2016 | |||||||||||||||
Current (due within 1 year): | |||||||||||||||
Corporate debt securities | $ | 11,418,571 | $ | 334 | $ | (675 | ) | $ | 11,418,230 | ||||||
U.S. government agency securities | 28,071,020 | 17,937 | (2,924 | ) | 28,086,033 | ||||||||||
Total | $ | 39,489,591 | $ | 18,271 | $ | (3,599 | ) | $ | 39,504,263 |
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
As of December 31, 2015 | |||||||||||||||
Current (due within 1 year): | |||||||||||||||
Corporate debt securities | $ | 24,666,607 | $ | 1,878 | $ | (16,137 | ) | $ | 24,652,348 | ||||||
Noncurrent (due after 1 year through 5 years): | |||||||||||||||
Corporate debt securities | 2,323,344 | — | (10,395 | ) | 2,312,949 | ||||||||||
Total | $ | 26,989,951 | $ | 1,878 | $ | (26,532 | ) | $ | 26,965,297 |
September 30, 2016 | December 31, 2015 | ||||||
Raw materials | $ | 158,239 | $ | — | |||
Finished goods | 72,539 | — | |||||
Total inventory | $ | 230,778 | $ | — |
September 30, 2016 | December 31, 2015 | ||||||
Payroll and employee-related costs | $ | 1,411,663 | $ | 1,299,248 | |||
Research and development costs | 767,327 | 307,666 | |||||
Professional fees | 211,805 | 129,625 | |||||
Consumer product-related costs | 130,679 | 198,887 | |||||
Other | 27,969 | 11,948 | |||||
Total | $ | 2,549,443 | $ | 1,947,374 |
Number of Shares | Weighted-Average Grant Date Fair Value | |||||
Unvested at December 31, 2015 | 2,202,262 | $ | 0.10 | |||
Issued | — | — | ||||
Vested | (762,228 | ) | 0.10 | |||
Unvested at September 30, 2016 | 1,440,034 | $ | 0.10 |
Number of Shares | Weighted-Average Grant Date Fair Value | |||||
Unvested at December 31, 2015 | — | $ | — | |||
Issued | 18,194 | 9.51 | ||||
Vested | (5,985 | ) | 9.25 | |||
Unvested at September 30, 2016 | 12,209 | $ | 9.63 |
Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||
Outstanding at December 31, 2015 | 1,824,973 | $ | 8.34 | |||||||||
Granted | 759,820 | 10.04 | ||||||||||
Exercised | (8,516 | ) | 2.59 | |||||||||
Cancelled or forfeited | (256,030 | ) | 11.99 | |||||||||
Outstanding at September 30, 2016 | 2,320,247 | $ | 8.51 | 8.37 | $ | 9,167,034 | ||||||
Exercisable at September 30, 2016 | 773,252 | $ | 7.31 | 8.05 | $ | 4,216,112 | ||||||
Vested or expected to vest at September 30, 2016 | 2,161,668 | $ | 8.69 | 7.99 | $ | 8,229,864 |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||
Research and development | $ | 783,603 | $ | 617,476 | $ | 2,063,764 | $ | 2,429,769 | |||||||
Selling, general and administrative | 1,076,985 | 889,203 | 3,303,306 | 2,463,229 | |||||||||||
Total | $ | 1,860,588 | $ | 1,506,679 | $ | 5,367,070 | $ | 4,892,998 |
September 30, 2016 | September 30, 2015 | ||||
Options to purchase common stock | 2,320,247 | 1,342,141 | |||
Unvested restricted common stock | 1,452,243 | 2,456,338 | |||
Unvested restricted common stock issued upon early exercise of stock options | — | 37,064 | |||
Total | 3,772,490 | 3,835,543 |
• | The Consumer Operations segment, which reflects the total revenue and costs and expenses related to HOTSHOT and the Company's consumer operations. |
• | The Drug Development segment, which reflects the costs and expenses related to the Company's efforts to develop innovative and proprietary drug products to treat nocturnal leg cramps and muscle cramps and spasms associated with severe neuromuscular conditions. |
Three months Ended September 30, 2016 | Consumer Operations | Drug Development | Corporate | Consolidated | ||||||
Total revenue | $ | 599,074 | — | — | $ | 599,074 | ||||
Interest income, net | $ | — | — | 97,726 | $ | 97,726 | ||||
Loss from operations | $ | 2,690,601 | 5,550,853 | 2,493,766 | $ | 10,735,220 |
Three months Ended September 30, 2015 | Consumer Operations | Drug Development | Corporate | Consolidated | ||||||
Total revenue | $ | — | — | — | $ | — | ||||
Interest income, net | $ | — | — | 14,637 | $ | 14,637 | ||||
Loss from operations | $ | 2,578,891 | 3,258,877 | 2,329,713 | $ | 8,167,481 |
Nine months Ended September 30, 2016 | Consumer Operations | Drug Development | Corporate | Consolidated | ||||||
Total revenue | $ | 711,759 | — | — | $ | 711,759 | ||||
Interest income, net | $ | — | — | 308,877 | $ | 308,877 | ||||
Loss from operations | $ | 8,461,803 | 15,517,670 | 7,922,492 | $ | 31,901,965 |
Nine months Ended September 30, 2015 | Consumer Operations | Drug Development | Corporate | Consolidated | ||||||
Total revenue | $ | — | — | — | $ | — | ||||
Interest income, net | $ | — | — | 34,397 | $ | 34,397 | ||||
Loss from operations | $ | 5,412,144 | 9,177,410 | 6,693,666 | $ | 21,283,220 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Change | ||||||||||||
Net product revenue | $ | 586,134 | $ | — | $ | 586,134 | N/A | |||||||
Other revenue | 12,940 | — | 12,940 | N/A | ||||||||||
Total revenue | 599,074 | — | 599,074 | N/A | ||||||||||
Costs and expenses: | ||||||||||||||
Cost of product revenue | 221,090 | — | 221,090 | N/A | ||||||||||
Research and development | 5,665,357 | 3,445,200 | 2,220,157 | 64 | % | |||||||||
Selling, general and administrative | 5,447,847 | 4,722,281 | 725,566 | 15 | % | |||||||||
Total costs and expenses | 11,334,294 | 8,167,481 | 3,166,813 | 39 | % | |||||||||
Loss from operations | (10,735,220 | ) | (8,167,481 | ) | (2,567,739 | ) | 31 | % | ||||||
Interest income, net | 97,726 | 14,637 | 83,089 | 568 | % | |||||||||
Net loss | $ | (10,637,494 | ) | $ | (8,152,844 | ) | $ | (2,484,650 | ) | 30 | % |
• | $1.8 million of increased costs primarily related to clinical studies of our drug product candidate, a single molecule, chemically synthesized, TRP ion channel activator and IND-supporting pre-clinical activities for our drug product candidate; |
• | $0.3 million of increased costs for clinical studies of our drug product candidate outside the United States; |
• | $0.2 million increase in stock-based compensation expense, primarily due to the revaluation of stock awards related to the conversion of an employee to a consultant; and |
• | $0.1 million decrease in salaries expense due to personnel changes. |
• | $0.5 million of increased costs within our Consumer Operations segment for print and digital media campaigns, sponsorships, marketing and promotional costs for our consumer brand and HOTSHOT; |
• | $0.3 million of increased corporate personnel costs, including salaries and other compensation-related costs such as stock-based compensation, related to additional administrative personnel hired to support our growth and increased activities; |
• | $0.2 million of increased personnel costs incurred by our Consumer Operations segment, including salaries and other compensation-related costs such as stock-based compensation, primarily related to employee termination costs; |
• | $0.1 million of costs within our Consumer Operations segment for HOTSHOT distribution expenses related to HOTSHOT sales; |
• | $0.1 million increase in other costs, primarily facility and office-expense related; and |
• | $0.5 million decrease in external consulting costs within our Consumer Operations segment due to decreased use. |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | Change | ||||||||||||
Net product revenue | $ | 698,819 | $ | — | $ | 698,819 | N/A | |||||||
Other revenue | 12,940 | — | 12,940 | N/A | ||||||||||
Total revenue | 711,759 | — | 711,759 | N/A | ||||||||||
Costs and expenses: | ||||||||||||||
Cost of product revenue | 529,041 | — | 529,041 | N/A | ||||||||||
Research and development | 16,147,357 | 9,440,324 | 6,707,033 | 71 | % | |||||||||
Selling, general and administrative | 15,937,326 | 11,842,896 | 4,094,430 | 35 | % | |||||||||
Total costs and expenses | 32,613,724 | 21,283,220 | 11,330,504 | 53 | % | |||||||||
Loss from operations | (31,901,965 | ) | (21,283,220 | ) | (10,618,745 | ) | 50 | % | ||||||
Interest income, net | 308,877 | 34,397 | 274,480 | 798 | % | |||||||||
Net loss | $ | (31,593,088 | ) | $ | (21,248,823 | ) | $ | (10,344,265 | ) | 49 | % |
• | $5.3 million of increased costs related to clinical studies of our drug product candidate, a single molecule, chemically synthesized, TRP ion channel activator, IND-supporting pre-clinical activities for our drug product candidate, clinical studies of alternate formulations of our extract formulation and manufacture of clinical supply; |
• | $1.0 million of increased costs for clinical studies of our drug product candidate outside of the United States; |
• | $0.3 million increase related to our Consumer Operations segment for continued research of our consumer product; |
• | $0.2 million increase in consulting expenses to supplement Drug Development segment personnel due to increased activities; and |
• | $0.1 million decrease in other costs, primarily allocated insurance and office-related expenses. |
• | $1.3 million of increased external costs within our Consumer Operations segment related to developing our consumer brand and HOTSHOT, including brand development and strategy costs, and marketing and promotional costs for pre-launch and launch activities, as selling commenced in the second quarter of 2016; |
• | $1.1 million of increased corporate personnel costs, including salaries and other compensation-related costs such as stock-based compensation, related to additional administrative personnel hired to support our growth and increased activities; |
• | $1.0 million of increased personnel costs incurred by our Consumer Operations segment, including salaries and other compensation-related costs such as stock-based compensation, due to hiring additional personnel to support the launch of HOTSHOT, as well as employee termination costs; |
• | $0.4 million of increased external consulting costs for our Consumer Operations segment, as well as professional general and administrative costs; and |
• | $0.3 million increase in other costs, primarily facility and office-expense related. |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||
Net cash (used in) provided by: | |||||||
Operating activities | $ | (25,753,337 | ) | $ | (15,308,809 | ) | |
Investing activities | (13,125,863 | ) | (10,227,611 | ) | |||
Financing activities | 22,096 | 80,841,802 | |||||
Net (decrease) increase in cash and cash equivalents | $ | (38,857,104 | ) | $ | 55,305,382 |
• | successfully enrolling, and completing, clinical studies and trials; |
• | receiving marketing approvals from applicable regulatory authorities; |
• | establishing arrangements with third-party manufacturers; |
• | obtaining and maintaining patent and trade secret protection and regulatory exclusivity; and |
• | launching commercial sales of our products, if and when approved, whether alone or in collaboration with others. |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
FLEX PHARMA, INC. | ||||
By: | /s/ Christoph Westphal | |||
Christoph Westphal, M.D., Ph.D. President and Chief Executive Officer | ||||
By: | /s/ John McCabe | |||
John McCabe Vice President, Finance (Principal Financial and Accounting Officer) | ||||
Date: November 2, 2016 |
Exhibit number | Description of Document | ||
3.1 | (1) | Amended and Restated Certificate of Incorporation of the Registrant. | |
3.2 | (1) | Amended and Restated Bylaws of the Registrant. | |
4.1 | (2) | Form of Common Stock Certificate of the Registrant. | |
4.2 | (2) | Amended and Restated Investors' Rights Agreement, dated July 23, 2014, by and among the Registrant and certain of its stockholders. | |
10.1 | + | Advisor Agreement, dated August 24, 2016, by and among Flex Innovation Group LLC, the Registrant and Marina Hahn. | |
31.1 | Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. | ||
31.2 | Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. | ||
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350. | ||
101 | The following materials from Flex Pharma, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language):(i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations (iii) Unaudited Condensed Consolidated Statements of Comprehensive Loss, (iv) Unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements. |
1. | Advisory Services. The Company retains Advisor, and Advisor agrees to provide, advisory services to the Company relating to the development and commercialization of the Company’s consumer products (the “Advisory Services”) as the Company may from time to time reasonably request; provided, however, that in no event shall Advisor be required to provide in excess of 10 hours of Advisory Services in any month during the term of this Agreement. Advisor agrees to render the Advisory Services to the Company, or to its designee, (a) at such reasonably convenient times and places as the Company may reasonably request, with due regard for Advisor’s personal and professional obligations, and (b) on a commercially reasonable basis. Advisor will comply with all rules, procedures and standards promulgated from time to time by the Company with regard to Advisor’s access to and use of the Company’s property, information, equipment and facilities. Advisor agrees to furnish the Company with written reports with respect to the Advisory Services if and when requested by the Company, with the time spent in preparing such reports to be counted as part of the 10-hour limit. Advisor shall be permitted to continue to use her Company email account until the termination of this Agreement in accordance with section 7 below. |
4. | Confidential Information |
/s/ CHRISTOPH WESTPHAL | ||
Christoph Westphal, M.D., Ph.D. | ||
November 2, 2016 | President and Chief Executive Officer(Principal Executive Officer) |
/s/ JOHN MCCABE | ||
John McCabe | ||
November 2, 2016 | Vice President, Finance (Principal Financial and Accounting Officer) |
/s/ CHRISTOPH WESTPHAL | ||
Christoph Westphal, M.D., Ph.D. | ||
November 2, 2016 | President and Chief Executive Officer(Principal Executive Officer) |
/s/ JOHN MCCABE | ||
John McCabe | ||
November 2, 2016 | Vice President, Finance (Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 28, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Flex Pharma, Inc. | |
Entity Central Index Key | 0001615219 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 17,970,590 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 17,970,590 | 17,943,880 |
Common stock, shares outstanding (in shares) | 16,518,347 | 15,741,618 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Net product revenue | $ 586,134 | $ 0 | $ 698,819 | $ 0 |
Other revenue | 12,940 | 0 | 12,940 | 0 |
Total revenue | 599,074 | 0 | 711,759 | 0 |
Costs and expenses: | ||||
Cost of product revenue | 221,090 | 0 | 529,041 | 0 |
Research and development | 5,665,357 | 3,445,200 | 16,147,357 | 9,440,324 |
Selling, general and administrative | 5,447,847 | 4,722,281 | 15,937,326 | 11,842,896 |
Total costs and expenses | 11,334,294 | 8,167,481 | 32,613,724 | 21,283,220 |
Loss from operations | (10,735,220) | (8,167,481) | (31,901,965) | (21,283,220) |
Interest income, net | 97,726 | 14,637 | 308,877 | 34,397 |
Net loss | (10,637,494) | (8,152,844) | (31,593,088) | (21,248,823) |
Net loss attributable to common stockholders | $ (10,637,494) | $ (8,152,844) | $ (31,593,088) | $ (21,248,823) |
Net loss per share attributable to common stockholders - basic and diluted (in usd per share) | $ (0.65) | $ (0.53) | $ (1.96) | $ (1.57) |
Weighted-average number of common shares outstanding — basic and diluted (in shares) | 16,361,617 | 15,290,435 | 16,104,510 | 13,520,438 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2016 |
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Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (10,637,494) | $ (8,152,844) | $ (31,593,088) | $ (21,248,823) |
Other comprehensive gain (loss): | ||||
Unrealized gain (loss) on available-for-sale securities | (24,818) | (3,676) | 39,326 | (3,676) |
Comprehensive loss | $ (10,662,312) | $ (8,156,520) | $ (31,553,762) | $ (21,252,499) |
Organization and operations |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and operations | Organization and operations The Company Flex Pharma, Inc. (the "Company") is a biotechnology company that is developing innovative and proprietary treatments for nocturnal leg cramps, muscle cramps and spasms associated with severe neuromuscular conditions, and exercise-associated muscle cramps. The Company's consumer product and drug product candidates are based on the potential mechanism of action described as Chemical Neuro Stimulation, which is the process by which a small molecule chemical signal, acting topically, induces a neuronal sensory signal that produces a beneficial effect. The Company's consumer product and drug product candidates activate certain receptors in primary sensory neurons, which then act via neuronal circuits to reduce the repetitive firing, or hyperexcitability, of alpha-motor neurons in the spinal cord, thereby preventing or reducing the frequency and intensity of muscle cramps and spasms. The Company intends to initially focus its drug development efforts on products to treat nocturnal leg cramps and spasms, spasticity and cramping associated with multiple sclerosis and motor neuron disease, such as amyotrophic lateral sclerosis. In the second quarter of 2016, the Company launched its consumer brand and cornerstone consumer product, HOTSHOTTM, which is intended to prevent and treat exercise-associated muscle cramps. HOTSHOT is sold directly to consumers via e-commerce on the Company's branded website and is also sold to a select number of specialty retailers and sports teams. In connection with the launch of HOTSHOT, the Company began operating as two reportable segments, Consumer Operations and Drug Development. See Note 11 for additional discussion and information on our reportable segments. The Company is subject to risks common to companies in the biotechnology and consumer products industries, including, but not limited to, risks of failure of pre-clinical studies, clinical studies and clinical trials, the need to obtain marketing approval for its drug product candidates, the need to successfully commercialize and gain market acceptance of its drug product candidates and its consumer products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and development by competitors of alternative products. In February 2015, the Company sold 5,491,191 shares of common stock (inclusive of 91,191 shares of common stock sold by the Company pursuant to the exercise of an overallotment option granted to the underwriters in connection with the offering) through an underwritten initial public offering ("IPO") at a price of $16.00 per share. The aggregate net proceeds received by the Company from the offering were approximately $79,900,000, after deducting underwriting discounts and commissions and offering expenses payable by the Company of approximately $8,000,000 (See Note 2). Liquidity The Company has incurred an accumulated deficit of $68,745,578 since inception and will require substantial additional capital to fund its research and development and commercialization and growth of its consumer brand and HOTSHOT. The Company had unrestricted cash, cash equivalents and marketable securities of $67,333,854 at September 30, 2016. The Company believes its existing cash, cash equivalents and marketable securities will be sufficient to allow the Company to fund its current operating plan for at least the next 12 months. |
Summary of significant accounting policies and recent accounting pronouncements |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies and recent accounting pronouncements | Summary of significant accounting policies and recent accounting pronouncements The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements. As of September 30, 2016, the Company’s significant accounting policies, which are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “2015 10-K”), have not changed, other than as noted below. Revenue Revenue is comprised of net product revenue and other revenue. Net product revenue includes sales of HOTSHOT finished goods to e-commerce customers, specialty retailers and sports teams. Other revenue consists of payments made by customers for expedited shipping and handling, which the Company began offering during the third quarter of 2016. Revenue is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. For sales through September 30, 2016, the Company issued refunds to e-commerce customers, upon request, within 21 days of shipment. As the Company currently does not have adequate history to accurately estimate refunds, all e-commerce sales, and their related costs, are deferred and revenue is recognized once the refund period lapses. For specialty retailers and sports teams, the Company does not offer a right of return or refund and revenue is recognized at the time products are delivered to customers. Discounts provided to customers are accounted for as a reduction of net product revenue. Net product revenue and other revenue are presented net of taxes collected from customers and remitted to governmental authorities. The Company had no customers that represented greater than 10% of total revenue during the three and nine months ended September 30, 2016. All revenue was generated from sales within the United States. Accounts receivable and allowance for doubtful accounts Accounts receivable are stated at their carrying values, net of any allowances for doubtful accounts. Accounts receivable consist primarily of amounts due from specialty retailers and sports teams, for which collectibility is reasonably assured. Receivables are evaluated for collectibility on a regular basis and an allowance for doubtful accounts is recorded, if necessary. No allowance for doubtful accounts was deemed necessary at September 30, 2016. Cost of product revenue Cost of product revenue includes the cost of raw materials utilized to produce HOTSHOT, co-packing fees, repacking fees, in-bound freight charges and warehouse and transportation costs incurred to bring HOTSHOT finished goods to salable condition. All other costs incurred after this condition is met are considered selling costs and included in selling, general and administrative expenses. Cost of product revenue also includes write-offs for inventory that has become obsolete, has a cost basis in excess of its estimated realizable value, or exceeds projected sales, as well as depreciation expense related to manufacturing equipment purchased to support production. Inventory The Company launched HOTSHOT in the second quarter of 2016 and began capitalizing inventory costs associated with HOTSHOT in the first quarter of 2016, when it was determined that the inventory costs had probable future economic benefit. Inventory is stated at the lower of cost or estimated net realizable value, on a first-in, first-out ("FIFO") basis. The Company outsources the manufacture of HOTSHOT to a co-packer. Inventory at September 30, 2016 includes raw materials available for future production runs, as well as finished goods. The Company periodically analyzes its inventory levels and writes down inventory that has become obsolete, has a cost basis in excess of its estimated realizable value, or exceeds projected sales. Estimates of excess inventory consider factors such as inventory levels, production requirements, projected sales and the estimated shelf-lives of inventory components. Inventory write-offs are recorded as a component of cost of product revenue. Advertising expense Advertising expense consists of media and production costs related to print and digital advertising. All advertising is expensed as incurred. Total advertising expenses are included in selling, general and administrative and were approximately $1,154,000 and $2,580,000 for the three and nine months ended September 30, 2016, respectively. Shipping and handling costs Shipping and handling costs related to the movement of inventory to the Company's co-packer and from the co-packer to the Company's third party warehousing partner is capitalized as inventory and expensed as a cost of product revenue when revenue is recognized. Shipping and handling costs to move finished goods from the Company's warehousing partner to the Company's third party fulfillment partner or to customer locations are included in selling, general and administrative expenses in the condensed consolidated statement of operations, and were approximately $98,000 and $126,000 for the three and nine months ended September 30, 2016, respectively. There were no such costs in 2015 as the Company had not yet launched HOTSHOT. Unaudited interim financial information Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the 2015 10-K. The condensed consolidated financial statements as of September 30, 2016, for the three and nine months ended September 30, 2016 and September 30, 2015, and the related information contained within the notes to the condensed consolidated financial statements, are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as annual audited consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s condensed consolidated financial position as of September 30, 2016, and the statements of operations, comprehensive loss and cash flows for the three and nine month periods ended September 30, 2016 and 2015. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016, or any other future annual or interim periods. Initial public offering On February 3, 2015, the Company completed its IPO, whereby the Company sold 5,491,191 shares of its common stock (inclusive of 91,191 shares of common stock sold by the Company pursuant to the exercise of an overallotment option granted to the underwriters in connection with the IPO) at a price of $16.00 per share. The shares began trading on the Nasdaq Global Market on January 29, 2015. The aggregate net proceeds received by the Company from the IPO were approximately $79,900,000, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. Upon the closing of the IPO, all outstanding shares of convertible preferred stock converted into 6,971,108 shares of common stock. Additionally, the Company is now authorized to issue 100,000,000 shares of common stock. Deferred IPO issuance costs, which primarily consisted of direct incremental legal and accounting fees related to the Company's IPO, were previously capitalized at December 31, 2014. Upon the closing of the IPO in February 2015, IPO issuance costs, which totaled $1,848,737, were offset against the IPO proceeds within additional paid-in capital. Basis of presentation and use of estimates The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company's management evaluates its estimates, which include, but are not limited to, estimates related to clinical study accruals, estimates related to inventory realizability, stock-based compensation expense and amounts of expenses during the reported period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. Principles of consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: TK Pharma, Inc., a Massachusetts Securities Corporation, and Flex Innovation Group LLC, a Delaware limited liability company, which contains the Company's consumer-related operations. All significant intercompany balances and transactions have been eliminated in consolidation. Concentration of risk The Company outsources the manufacture of HOTSHOT to a single co-packer that produces bottled finished goods. The Company also sources certain raw materials from sole suppliers. A disruption in the supply of materials or the production of finished goods could significantly impact the Company's revenues in the future as alternative sources of raw materials and co-packing may not be available at commercially reasonable rates or within a reasonably short period of time. Recent accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU provides for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2016 with no early adoption permitted. In July 2015, the FASB deferred the effective date of this accounting update to annual periods beginning after December 15, 2017, along with an option to permit early adoption as of the original effective date. The Company is required to adopt the amendments in the ASU using one of two acceptable methods: retrospectively to all prior reporting periods presented, with certain practical expedients permitted; or retrospectively with the cumulative effect of initially adopting the ASU recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifying the implementation guidance on principal versus agent considerations. Specifically, an entity is required to determine whether the nature of a promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). The determination influences the timing and amount of revenue recognition. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements for ASU 2014-09. The Company is currently evaluating the impact of the guidance related to the Company's launch of HOTSHOT, and does not expect the impact to be material. In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements - Going Concern (Subtopic 205-40). The ASU requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The new standard is effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has concluded that if this standard had been adopted as of September 30, 2016, no additional disclosures would be required. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330). This ASU simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods therein. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The Company is currently in the process of evaluating the impact of the guidance related to the launch of HOTSHOT. In February 2016, the FASB issued ASU No. 2016-02 Leases. The ASU requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their income statements over the lease term. It will also require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements and disclosures. In March 2016, the FASB issued ASU No. 2016-09 Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU simplifies several aspects of the accounting for employee share-based payment transactions. The amendments in the update include income tax consequences related to excess tax benefits and tax deficiencies, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for all entities in any interim or annual period. The Company is currently evaluating the impact of ASU 2016-09 on its consolidated financial statements and disclosures. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update amends the guidance in ASU 230 Statement of Cash Flows, and clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with the objective of reducing the existing diversity in practice related to eight specific cash flow issues. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements. The Company believes that the impact of other recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption. |
Fair value measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurements The Company records cash equivalents and marketable securities at fair value. ASC Topic 820 Fair Value Measurements and Disclosures established a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3 – Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. The following tables summarize the cash equivalents and marketable securities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015:
Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services or other market observable data. The pricing services utilize industry standard valuation models, including both income and market based approaches and observable market inputs to determine value. The majority of the Company's cash equivalents consist of money market funds that are valued based on publicly available quoted market prices for identical securities as of September 30, 2016. After completing its validation procedures, the Company did not adjust or override any fair value carrying amounts as of September 30, 2016. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of assets or liabilities between Level 1 and Level 2 during the nine months ended September 30, 2016 or the year ended December 31, 2015. The Company had no financial assets or liabilities that were classified as Level 3 at any time during the nine months ended September 30, 2016 or the year ended December 31, 2015. |
Cash equivalents and marketable securities |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents and marketable securities | Cash equivalents and marketable securities The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents as of September 30, 2016 and December 31, 2015 consisted of money market funds. Marketable securities as of September 30, 2016 consisted of corporate debt securities and U.S. government agency securities. Marketable securities as of December 31, 2015 consisted of corporate debt securities. Management determines the appropriate classification of the securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The Company classifies its marketable securities as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities. Marketable securities are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in stockholders’ equity and a component of total comprehensive income (loss) in the condensed consolidated statement of comprehensive income (loss), until realized. Realized gains and losses are included in investment income on a specific-identification basis. There were immaterial realized gains on marketable securities during the three and nine months ended September 30, 2016 and 2015. The Company reviews marketable securities for other-than-temporary impairment whenever the fair value of a marketable security is less than the amortized cost and evidence indicates that a marketable security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the consolidated statement of operations if the Company has experienced a credit loss, has the intent to sell the marketable security, or if it is more likely than not that the Company will be required to sell the marketable security before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period. Marketable securities at September 30, 2016 and December 31, 2015 consisted of the following:
At September 30, 2016, all investments held by the Company were classified as current. The Company had $24,652,348 of marketable securities classified as current and $2,312,949 of marketable securities classified as noncurrent as of December 31, 2015. Investments classified as current have maturities of less than one year. Investments classified as noncurrent are those that (i) have a maturity greater than one year and (ii) management does not intend to liquidate within the next year, although these funds are available for use and therefore classified as available-for-sale. The Company held four and eleven debt securities that were in an unrealized loss position at September 30, 2016 and December 31, 2015, respectively, all of which have been in a continuous loss position for less than 12 months. The aggregate fair value of debt securities in an unrealized loss position was $10,604,705 and $24,967,915 at September 30, 2016 and December 31, 2015, respectively. There were no individual securities that were in a significant unrealized loss position as of September 30, 2016 or December 31, 2015. The Company evaluated its securities for other-than-temporary impairment and no marketable securities were considered to be other-than-temporarily impaired as of September 30, 2016. |
Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory The Company began capitalizing inventory as of March 31, 2016, when it was determined that the inventory had a probable future economic benefit. Inventory has been recorded at cost as of September 30, 2016. Costs capitalized at September 30, 2016 relate to finished goods from the initial production run of HOTSHOT, as well as raw materials to be used in the second production run, planned for the fourth quarter of 2016. The Company held no inventory at December 31, 2015. The following table presents inventory:
In the first quarter of 2016, the Company wrote off materials purchased for the initial production run of HOTSHOT finished goods that, upon completion, were not expected to be sold based upon projected sales, estimated product shelf life, the number of units produced and production level requirements. The initial production run of HOTSHOT finished goods was completed in the second quarter of 2016, at which time the Company wrote off production costs incurred for those finished goods that were not expected to be sold. During the third quarter of 2016, the Company wrote off additional finished goods that are not expected to be sold based on shelf life requirements and the Company's next production run, which is planned to take place during the fourth quarter of 2016. Write-offs totaled $32,734 and $258,684 for the three and nine months ended September 30, 2016, respectively, and are included in cost of product revenue in the accompanying condensed consolidated statement of operations. The cost of product revenue related to deferred revenue is capitalized and recorded as cost of product revenue at the time the revenue is recognized. |
Accrued expenses and other current liabilities |
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Accrued expenses and other current liabilities | Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following:
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Common stock |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock | Common stock As of September 30, 2016, the Company had authorized 100,000,000 shares of common stock, $0.0001 par value per share. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors. The Company does not intend to declare dividends for the foreseeable future. Restricted common stock to founders In March 2014, the Company sold 4,553,415 shares of restricted common stock to the founders of the Company ("recipients"), for $0.0004 per share, for total proceeds of $1,950. In April 2014, based upon anti-dilution provisions granted to the recipients, an additional 867,314 shares of restricted common stock were sold to the same recipients, after which the anti-dilution provisions were terminated. The restricted common stock vested 25% upon issuance, and the remaining 75% vests ratably over four years, during which time the Company has the right to repurchase the unvested shares held by a recipient if the relationship between such recipient and the Company ceases. If the relationship terminates, the Company has 90 days to repurchase unvested shares at $0.0004 per share. Such shares are not accounted for as outstanding until they vest. There were 3,980,695 shares of restricted common stock outstanding as of September 30, 2016. Unvested restricted common stock awards to non-employees are re-measured at each vest date and each financial reporting date. The following is a summary of restricted common stock activity:
Restricted common stock to consultants During the nine months ended September 30, 2016, the Company issued 18,194 shares of restricted common stock to non-employee consultants and advisors. The Company has the right to repurchase any unvested shares held by a recipient if the relationship between such recipient and the Company ceases. If the relationship terminates, the Company has 90 days to repurchase unvested shares at $0.0001 per share. Such shares are not accounted for as outstanding until they vest. There were 5,985 shares of restricted common stock issued to consultants outstanding as of September 30, 2016. Unvested restricted common stock awards to non-employees are re-measured at each vest date and each financial reporting date. The following is a summary of restricted common stock activity:
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Stock-based compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | Stock-based compensation In March 2014, the Company adopted the Flex Pharma, Inc. 2014 Equity Incentive Plan (the "2014 Plan"), under which it had the ability to grant incentive stock options ("ISOs"), non-qualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to purchase up to 116,754 shares of common stock. In April 2014, the Company amended the 2014 Plan to reserve for the issuance of up to 1,451,087 shares of common stock pursuant to equity awards. In September 2014, the Company further amended the 2014 Plan to reserve for the issuance of up to 2,070,200 shares of common stock pursuant to equity awards. Terms of stock award agreements, including vesting requirements, were determined by the board of directors, subject to the provisions of the 2014 Plan. For options granted under the 2014 Plan, the exercise price equaled the fair market value of the common stock as determined by the board of directors on the date of grant. No further awards will be granted under the 2014 Plan. In January 2015, the Company's board of directors adopted, and the Company's stockholders approved, the 2015 Equity Incentive Plan (the "2015 Plan"), which became effective immediately prior to the closing of the Company's IPO. The 2015 Plan provides for the grant of ISOs, nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance-based stock awards and other stock-based awards. Additionally, the 2015 Plan provides for the grant of performance-based cash awards. ISOs may be granted only to the Company's employees. All other awards may be granted to the Company's employees, including officers, and to non-employee directors and consultants. As of September 30, 2016, there were 402,326 shares remaining available for the grant of stock awards under the 2015 Plan. The Company has awarded stock options to its employees, directors, advisors and consultants, pursuant to the plans described above. Stock options subsequent to the completion of the Company's IPO are granted with an exercise price equal to the closing market price of the Company's common stock on the date of grant. Stock options generally vest over one to four years and have a contractual term of ten years. Stock options are valued using the Black-Scholes option pricing model and compensation cost is recognized based on the resulting value over the service period. Unvested awards to non-employees are re-measured at each vest date and at each financial reporting date. The following table summarizes stock option activity for employees and non-employees for the nine months ended September 30, 2016:
Total stock-based compensation expense recognized for employee and non-employee restricted common stock, and stock options granted to employees and non-employees is included in the Company's condensed consolidated statement of operations as follows:
As of September 30, 2016, there was approximately $14,469,895 of total unrecognized compensation cost related to unvested equity awards. Total unrecognized compensation cost will be adjusted for the re-measurement of non-employee awards as well as future changes in employee and non-employee forfeitures, if any. The Company expects to recognize that cost over a remaining weighted-average period of 2.10 years. In November 2015, the Company granted 150,000 performance-based stock options to an employee, which would have vested upon the achievement of certain future revenue milestones. During the third quarter of 2016, these options were cancelled in conjunction with an employment termination agreement. The vesting conditions had not previously been considered probable, and no stock-based compensation expense was recorded related to this award. In May 2016, in connection with an amendment to an employment agreement, the Company recorded stock-based compensation expense for a modification to an option award that totaled approximately $227,000. In August 2016, in connection with an employment termination agreement, the Company recorded stock-based compensation expense for a modification to an option award that totaled approximately $58,000. Employee stock purchase plan In January 2015, the Company's board of directors adopted, and the Company's stockholders approved, the 2015 Employee Stock Purchase Plan (the "ESPP"), which became effective upon the date of execution of the underwriting agreement pursuant to which the Company's common stock was priced in connection with the IPO. As of September 30, 2016, the Company had not yet instituted any offering periods under the ESPP and no shares of the Company's common stock have been purchased under the ESPP. |
Income taxes |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using statutory rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. Based upon the Company's history of operating losses and the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a full valuation allowance against the Company’s otherwise recognizable net deferred tax assets. There was no significant income tax provision or benefit for the three or nine months ended September 30, 2016 or 2015. |
Net loss per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss per share | Net loss per share Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period, determined using the treasury stock method and the if-converted method, for convertible securities, if inclusion of these is dilutive. Because the Company has reported a net loss for the periods presented, diluted net loss per common share is the same as basic net loss per common share. The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding for the periods indicated, because including them would have had an anti-dilutive impact:
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Segment Information |
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Segment Information | Segment Information Effective as of the second quarter of 2016 and in connection with the launch of HOTSHOT, the Company operates as two reportable segments:
The Company discloses information about its reportable segments based on the way that the Company's Chief Operating Decision Maker, who the Company has identified as the Chief Executive Officer, and management, organizes segments within the Company for making operating decisions and assessing financial performance. The Company evaluates the performance of its reportable segments based on revenue and operating income or loss. The accounting policies of the segments are the same as those described herein as well as those described in Note 1 to the audited consolidated financial statements in the 2015 Form 10-K. Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to "Corporate". No asset information has been provided for the Company's reportable segments as management does not measure or allocate such assets on a reportable segment basis. Information for the Company's reportable segments for the three months ended September 30, 2016 and 2015 are as follows:
Information for the Company's reportable segments for the nine months ended September 30, 2016 and 2015 are as follows:
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Summary of significant accounting policies and recent accounting pronouncements (Policies) |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Revenue | Net product revenue and other revenue are presented net of taxes collected from customers and remitted to governmental authorities. Revenue Revenue is comprised of net product revenue and other revenue. Net product revenue includes sales of HOTSHOT finished goods to e-commerce customers, specialty retailers and sports teams. Other revenue consists of payments made by customers for expedited shipping and handling, which the Company began offering during the third quarter of 2016. Revenue is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. For sales through September 30, 2016, the Company issued refunds to e-commerce customers, upon request, within 21 days of shipment. As the Company currently does not have adequate history to accurately estimate refunds, all e-commerce sales, and their related costs, are deferred and revenue is recognized once the refund period lapses. For specialty retailers and sports teams, the Company does not offer a right of return or refund and revenue is recognized at the time products are delivered to customers. |
Revenue, Discounts and Refunds | Discounts provided to customers are accounted for as a reduction of net product revenue. |
Accounts receivable | Accounts receivable are stated at their carrying values, net of any allowances for doubtful accounts. Accounts receivable consist primarily of amounts due from specialty retailers and sports teams, for which collectibility is reasonably assured. |
Allowance for doubtful accounts | Receivables are evaluated for collectibility on a regular basis and an allowance for doubtful accounts is recorded, if necessary. |
Inventory | Inventory The Company launched HOTSHOT in the second quarter of 2016 and began capitalizing inventory costs associated with HOTSHOT in the first quarter of 2016, when it was determined that the inventory costs had probable future economic benefit. Inventory is stated at the lower of cost or estimated net realizable value, on a first-in, first-out ("FIFO") basis. The Company outsources the manufacture of HOTSHOT to a co-packer. Inventory at September 30, 2016 includes raw materials available for future production runs, as well as finished goods. The Company periodically analyzes its inventory levels and writes down inventory that has become obsolete, has a cost basis in excess of its estimated realizable value, or exceeds projected sales. Estimates of excess inventory consider factors such as inventory levels, production requirements, projected sales and the estimated shelf-lives of inventory components. Inventory write-offs are recorded as a component of cost of product revenue. |
Advertising expense | Advertising expense Advertising expense consists of media and production costs related to print and digital advertising. All advertising is expensed as incurred. |
Shipping and handling costs | Shipping and handling costs Shipping and handling costs related to the movement of inventory to the Company's co-packer and from the co-packer to the Company's third party warehousing partner is capitalized as inventory and expensed as a cost of product revenue when revenue is recognized. Shipping and handling costs to move finished goods from the Company's warehousing partner to the Company's third party fulfillment partner or to customer locations are included in selling, general and administrative expenses in the condensed consolidated statement of operations |
Basis of presentation | The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB"). |
Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company's management evaluates its estimates, which include, but are not limited to, estimates related to clinical study accruals, estimates related to inventory realizability, stock-based compensation expense and amounts of expenses during the reported period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. |
Principles of consolidation | Principles of consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: TK Pharma, Inc., a Massachusetts Securities Corporation, and Flex Innovation Group LLC, a Delaware limited liability company, which contains the Company's consumer-related operations. All significant intercompany balances and transactions have been eliminated in consolidation. |
Concentration of risk | Concentration of risk The Company outsources the manufacture of HOTSHOT to a single co-packer that produces bottled finished goods. The Company also sources certain raw materials from sole suppliers. A disruption in the supply of materials or the production of finished goods could significantly impact the Company's revenues in the future as alternative sources of raw materials and co-packing may not be available at commercially reasonable rates or within a reasonably short period of time. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU provides for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2016 with no early adoption permitted. In July 2015, the FASB deferred the effective date of this accounting update to annual periods beginning after December 15, 2017, along with an option to permit early adoption as of the original effective date. The Company is required to adopt the amendments in the ASU using one of two acceptable methods: retrospectively to all prior reporting periods presented, with certain practical expedients permitted; or retrospectively with the cumulative effect of initially adopting the ASU recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifying the implementation guidance on principal versus agent considerations. Specifically, an entity is required to determine whether the nature of a promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). The determination influences the timing and amount of revenue recognition. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements for ASU 2014-09. The Company is currently evaluating the impact of the guidance related to the Company's launch of HOTSHOT, and does not expect the impact to be material. In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements - Going Concern (Subtopic 205-40). The ASU requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The new standard is effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has concluded that if this standard had been adopted as of September 30, 2016, no additional disclosures would be required. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330). This ASU simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods therein. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The Company is currently in the process of evaluating the impact of the guidance related to the launch of HOTSHOT. In February 2016, the FASB issued ASU No. 2016-02 Leases. The ASU requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their income statements over the lease term. It will also require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements and disclosures. In March 2016, the FASB issued ASU No. 2016-09 Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU simplifies several aspects of the accounting for employee share-based payment transactions. The amendments in the update include income tax consequences related to excess tax benefits and tax deficiencies, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for all entities in any interim or annual period. The Company is currently evaluating the impact of ASU 2016-09 on its consolidated financial statements and disclosures. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update amends the guidance in ASU 230 Statement of Cash Flows, and clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with the objective of reducing the existing diversity in practice related to eight specific cash flow issues. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements. The Company believes that the impact of other recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption. |
Fair value measurements | Fair value measurements The Company records cash equivalents and marketable securities at fair value. ASC Topic 820 Fair Value Measurements and Disclosures established a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3 – Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. |
Cash equivalents | The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. |
Marketable securities | Marketable securities as of September 30, 2016 consisted of corporate debt securities and U.S. government agency securities. Marketable securities as of December 31, 2015 consisted of corporate debt securities. Management determines the appropriate classification of the securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The Company classifies its marketable securities as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities. Marketable securities are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in stockholders’ equity and a component of total comprehensive income (loss) in the condensed consolidated statement of comprehensive income (loss), until realized. Realized gains and losses are included in investment income on a specific-identification basis. There were immaterial realized gains on marketable securities during the three and nine months ended September 30, 2016 and 2015. The Company reviews marketable securities for other-than-temporary impairment whenever the fair value of a marketable security is less than the amortized cost and evidence indicates that a marketable security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the consolidated statement of operations if the Company has experienced a credit loss, has the intent to sell the marketable security, or if it is more likely than not that the Company will be required to sell the marketable security before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period. |
Fair value measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash Equivalents and Marketable Securities Measured at Fair Value on a Recurring Basis | The following tables summarize the cash equivalents and marketable securities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015:
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Cash equivalents and marketable securities (Tables) |
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Schedule of Marketable Securities | Marketable securities at September 30, 2016 and December 31, 2015 consisted of the following:
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Net | The following table presents inventory:
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Accrued expenses and other current liabilities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses | Accrued expenses and other current liabilities consisted of the following:
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Schedule of other current liabilities | Accrued expenses and other current liabilities consisted of the following:
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Common stock (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted common stock activity | The following is a summary of restricted common stock activity:
The following is a summary of restricted common stock activity:
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Stock-based compensation (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock option activity | The following table summarizes stock option activity for employees and non-employees for the nine months ended September 30, 2016:
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Summary of stock-based compensation expense | Total stock-based compensation expense recognized for employee and non-employee restricted common stock, and stock options granted to employees and non-employees is included in the Company's condensed consolidated statement of operations as follows:
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Net loss per share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of antidilutive securities excluded from computation of earnings per share | The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding for the periods indicated, because including them would have had an anti-dilutive impact:
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Segment Information (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Information for the Company's Operating Segments | Information for the Company's reportable segments for the three months ended September 30, 2016 and 2015 are as follows:
Information for the Company's reportable segments for the nine months ended September 30, 2016 and 2015 are as follows:
|
Organization and operations (Details) |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 03, 2015
USD ($)
$ / shares
shares
|
Feb. 28, 2015
USD ($)
$ / shares
shares
|
Sep. 30, 2016
USD ($)
segment
|
Sep. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Subsidiary, Sale of Stock [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Proceeds from IPO, net of offering costs | $ 79,900,000 | $ 79,900,000 | $ 0 | $ 80,435,430 | |
Underwriting discounts, commissions, and offering expenses | $ 8,000,000 | ||||
Retained earnings (accumulated deficit) | (68,745,578) | $ (37,152,490) | |||
Cash, cash equivalents, and marketable securities | $ 67,333,854 | ||||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, shares issued | shares | 5,491,191 | 5,491,191 | |||
Common stock, price per share (in usd per share) | $ / shares | $ 16.00 | $ 16.00 | |||
Over-Allotment Option | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, shares issued | shares | 91,191 | 91,191 |
Inventory (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Inventory Disclosure [Abstract] | |||
Raw materials | $ 158,239 | $ 158,239 | $ 0 |
Finished goods | 72,539 | 72,539 | 0 |
Total inventory | 230,778 | 230,778 | $ 0 |
Write-off of inventory | $ 32,734 | $ 258,684 |
Accrued expenses and other current liabilities (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Payroll and employee-related costs | $ 1,411,663 | $ 1,299,248 |
Research and development costs | 767,327 | 307,666 |
Professional fees | 211,805 | 129,625 |
Consumer product-related costs | 130,679 | 198,887 |
Other | 27,969 | 11,948 |
Total | $ 2,549,443 | $ 1,947,374 |
Stock-based compensation - Summary of stock-based compensation expense (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Employee Service Share-Based Compensation Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 1,860,588 | $ 1,506,679 | $ 5,367,070 | $ 4,892,998 |
Research and development | ||||
Employee Service Share-Based Compensation Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 783,603 | 617,476 | 2,063,764 | 2,429,769 |
Selling, general and administrative | ||||
Employee Service Share-Based Compensation Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 1,076,985 | $ 889,203 | $ 3,303,306 | $ 2,463,229 |
Income taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax provision (benefit) | $ 0 | $ 0 | $ 0 | $ 0 |
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