UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended:
or
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to _____________.
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(IRS
Employer Identification No.) | |
|
||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| ATRX |
As of November 16, 2020, there were shares of the registrant’s common stock outstanding.
ADHERA THERAPEUTICS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share amounts)
| September 30, 2020 | December 31, 2019 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Due to related party | ||||||||
| Accrued expenses | ||||||||
| Accrued dividends | ||||||||
| Notes payable | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | - | |||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $ par value; shares authorized | ||||||||
| Series C convertible preferred stock, $ par value; $ | ||||||||
| Series D convertible preferred stock, $ par value; $ | ||||||||
| Series E convertible preferred stock, $ par value; $ | ||||||||
| Series F convertible preferred stock, $ par value; $ | ||||||||
| Common stock, $ par value; shares authorized, shares issued and outstanding as of September 30, 2020 and December 31, 2019 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for share and per share amounts)
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Preferred Stock Dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss Applicable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share – Common Shareholders - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT)
(in thousands, except for share amounts)
| Series E Preferred Stock | Series F Preferred Stock | Common Stock | Additional | Additional Paid-in | ||||||||||||||||||||||||||||||||||||
| Number | Par Value | Number | Par Value | Number | Par Value | Paid-in Capital | Capital Warrants | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Accrued dividend | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, March 31, 2019 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of Series E Preferred stock for common stock | ( | ) | — | |||||||||||||||||||||||||||||||||||||
| Accrued dividend | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, June 30, 2019 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Accrued dividend | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Series E Preferred Stock | Series F Preferred Stock | Common Stock | Additional | Additional Paid-in | ||||||||||||||||||||||||||||||||||||
| Number | Par Value | Number | Par Value | Number | Par Value | Paid-in Capital | Capital Warrants | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Accrued dividend | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||
| Issuance of warrants with notes payable, net of discount | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Accrued dividend | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Beneficial conversion feature - term loan | — | — | — | |||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Accrued dividend | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| 2020 | 2019 | |||||||
| For the Nine Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Cash Flows Used in Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share based compensation | ||||||||
| Amortization of intangibles | ||||||||
| Amortization of debt discount and fees | ||||||||
| Bad debt expense | ( | ) | ||||||
| Depreciation | ||||||||
| Non-cash interest expense | ||||||||
| Non-cash lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Due to related party | ( | ) | ||||||
| Lease liability | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows Provided by Financing Activities: | ||||||||
| Proceeds from loan payable, net of discount | ||||||||
| Notes payable issuance costs | ( | ) | ( | ) | ||||
| Net Cash Provided by Financing Activities | ||||||||
| Net (decrease) in cash | ( | ) | ( | ) | ||||
| Cash – Beginning of Period | ||||||||
| Cash - End of Period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Non-cash Investing and Financing Activities: | ||||||||
| Capitalization of operating lease right of use asset | $ | $ | ||||||
| Issuance of warrants with notes payable | ||||||||
| Beneficial conversion feature on issuance of notes | ||||||||
| Accrued dividends | ||||||||
| Conversion of Series E accrued dividend for common stock | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
(Unaudited)
Note 1 – Nature of Operations, Basis of Presentation and Significant Accounting Policies
Business Overview
Adhera Therapeutics, Inc. and its wholly-owned subsidiaries, MDRNA Research, Inc. (“MDRNA”), Cequent Pharmaceuticals, Inc. (“Cequent”), Atossa Healthcare, Inc. (“Atossa”), and IThenaPharma, Inc. (“IThena”) (collectively “Adhera,” the “Company,” “we,” “our,” or “us”), is a specialty biotech company that, to the extent that resources and opportunities become available, is strategically evolving focus in hopes of a return to a drug discovery and development company, and a departure from active commercialization and promotion of hypertension treatment options in the U.S. market.
During 2019, Adhera Therapeutics was a commercially focused entity that leveraged innovative distribution models and technologies to improve the quality of care for patients in the United States suffering from chronic and acute diseases with a focus on fixed dose combination therapies in hypertension. These efforts were primarily focused on Prestalia®, a single-pill FDC of perindopril arginine and amlodipine besylate, which we began marketing in June of 2018. Prestalia was developed in coordination with Les Laboratories, Servier, a French pharmaceutical conglomerate, that sells the formulation outside the United States under the brand names Coveram® and/or Viacoram®. Prestalia was approved by the U.S. Food and Drug Administration (“FDA”) in January 2015, and was distributed through our patented DyrctAxess platform.
In December 2019, the Company terminated its then-current business operations, including its commercial operations relating to the sale of Prestalia, and terminated the personnel associated with such operations, starting immediately, with such process being substantially completed on or prior to December 31, 2019. As a result, as of the date of this report, the Company is not engaged in any research, development or commercialization activities, and it is no longer generating any revenues from operations, including from the sale of Prestalia or any other product.
Since the end of 2019, to the extent that resources have been available, the Company has been working with its advisors to restructure our company and to identify potential strategic transactions to enhance the value of our company as such opportunities arise, including potential transactions and capital raising initiatives involving the assets relating to our legacy RNA interference programs, as well as business combination transactions with operating companies. There can be no assurance that the Company will be successful at identifying any such transactions, that we will continue to have sufficient resources to actively attempt to identify such transactions, or that such transactions will be available upon terms acceptable to us or at all. If the Company does not complete any significant strategic transactions, or raise substantial additional capital, in the immediate future, it is likely that the Company will discontinue all operations and seek bankruptcy protection.
Furthermore, the Company is evaluating all strategic options to out-license and/or divest our existing intellectual property, including our DyrctAxess platform, which is designed to offer enhanced efficiency, control and access to the information necessary to empower patients, physicians and manufacturers to achieve optimal care.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited financial statements. This quarterly report should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020 or for any future period.
| 7 |
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Adhera Therapeutics, Inc. and the wholly-owned subsidiaries, Ithena, Cequent, MDRNA, and Atossa, and eliminate any inter-company balances and transactions.
Going Concern and Management’s Liquidity Plans
The
accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going
concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of
September 30, 2020, the Company had
The
Company has incurred recurring losses and negative cash flows from operations since inception and has funded its operating losses
through the sale of common stock, preferred stock, warrants to purchase common stock, convertible notes and secured promissory
notes. The Company incurred a net operating loss of approximately $
In addition, to the extent that the Company continues its business operations, the Company anticipates that it will continue to have negative cash flows from operations, at least into the near future. However, the Company cannot be certain that it will be able to obtain such funds required for our operations at terms acceptable to us or at all. General market conditions, as well as market conditions for companies in our financial and business position, as well as the ongoing issue arising from the COVID-19 pandemic, may make it difficult for us to seek financing from the capital markets, and the terms of any financing may adversely affect the holdings or the rights of our stockholders. If the Company is unable to obtain additional financing in the future, there may be a negative impact on the financial viability of the Company. The Company plans to increase working capital by managing its cash flows and expenses, divesting development assets and raising additional capital through private or public equity or debt financing. There can be no assurance that such financing or partnerships will be available on terms which are favorable to the Company or at all. While management of the Company believes that it has a plan to fund ongoing operations, there is no assurance that its plan will be successfully implemented. Failure to raise additional capital through one or more financings, divesting development assets or reducing discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainties.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with 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 revenue and expenses during the reported period. Significant areas requiring the use of management estimates include revenue and related discounts and allowances and accruals related to our operating activity including legal and other consulting expenses. Actual results could differ materially from such estimates under different assumptions or circumstances.
Fair Value of Financial Instruments
The Company considers the fair value of cash, prepaid expenses, accounts payable, debt, and accrued expenses not to be materially different from their carrying value. These financial instruments have short-term maturities. We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
| Level 1: | Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| Level 2: | Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
| 8 |
| Level 3: | Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. |
There
were
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment indicators throughout the year and performs detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, the Company records charges for impairments. Specifically:
| ● | For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and |
| ● | For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any. |
| The
Company did |
Revenue, Net
The Company adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), effective with the quarter ended March 31, 2018. The Company terminated all commercial operations in December 2019, therefore all revenue and cost of goods sold disclosure only apply to periods prior to the first quarter of 2020.
The Company sold its medicines primarily to wholesale distributors and specialty pharmacy providers under agreements with payment terms typically less than 90 days. These customers subsequently resold the Company’s medicines to health care patients. Revenue was recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company’s contracts had a single performance obligation to transfer medicines. Accordingly, revenues from medicine sales were recognized when the customer obtained control of the Company’s medicines, which occurred at a point in time, typically upon delivery to the customer. Revenue was measured as the amount of consideration the Company expects to receive in exchange for transferring medicines and was generally based upon a list or fixed price less allowances for medicine returns, rebates and discounts. Company recorded an estimate of unrealized revenue reductions, and the related liability, for bottles sold to pharmacies but not yet prescribed.
Medicine Sales Discounts and Allowances
The nature of the Company’s contracts gave rise to variable consideration because of allowances for medicine returns, rebates and discounts. Allowances for medicine returns, rebates and discounts were recorded at the time of sale to wholesale pharmaceutical distributors and pharmacies. The Company applied significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company would be required to make adjustments to these allowances in the future. The Company’s adjustments to gross sales are discussed further below.
Patient Access Programs
The Company offered discounts to patients under which the patient received a discount on his or her prescription. In circumstances when a patient’s prescription is rejected by a third-party payer, the Company would pay for the full cost of the prescription. The Company reimbursed pharmacies for this discount directly or through third-party vendors. The Company reduced gross sales by the amount of actual co-pay and other patient assistance in the period based on the invoices received. The Company also recorded an accrual to reduce gross sales for estimated co-pay and other patient assistance on units sold to distributors or pharmacies that have not yet been prescribed/dispensed to a patient. The Company calculated accrued co-pay and other patient assistance fee estimates using the expected value method. The estimate was based on contract prices, estimated percentages of medicine that would be prescribed to qualified patients, average assistance paid based on reporting from the third-party vendors and estimated levels of inventory in the distribution channel. Accrued co-pay and other patient assistance fees were included in “accrued expenses” on the condensed consolidated balance sheet. Patient assistance programs include both co-pay assistance and fully bought down prescriptions.
| 9 |
Sales Returns
Consistent
with industry practice, the Company maintained a return policy that allows customers to return medicines within a specified period
prior to and subsequent to the medicine expiration date. Generally, medicines may be returned for a period beginning
Cost of Goods Sold
Distribution Service Fees
The Company included distribution service fees paid for inventory management services as cost of goods sold. The Company calculated accrued distribution service fee estimates using the most likely amount method. The Company accrued estimated distribution fees based on contractually determined amounts. Accrued distribution service fees were included in “accrued expenses” on the condensed consolidated balance sheet.
Shipping Fees
The Company included fees incurred by pharmacies for shipping medicines to patients as cost of goods sold. The Company calculated accrued shipping fee estimates using the expected value method. The Company recorded accrued shipping fees in “accrued expenses” on the condensed consolidated balance sheet.
Non-Commercial Product
The Company recorded the cost of non-commercial product distributed to patients as a cost of goods sold.
Royalties on Product Sales
The Company recorded royalty fees on the sale of commercial product as a cost of goods sold.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU No. 2016-2”). Under ASU No. 2016-2, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities by class of underlying assets. ASU No. 2016-2 became effective for the Company beginning in the first quarter of 2019. The Company adopted this standard on January 1, 2019, using a modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The adoption did not have a material impact on its condensed consolidated statement of operations. The Company elected to not recognize lease assets and liabilities for leases with an initial term of twelve months or less.
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. Potentially dilutive securities which include outstanding warrants, stock options and preferred stock have been excluded from the computation of diluted net loss per share as their effect would be anti-dilutive. For all periods presented, basic and diluted net loss were the same.
| 10 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Numerator | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss allocable to common stock holders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator | ||||||||||||||||
| Weighted average common shares outstanding used to compute net loss per share, basic and diluted | ||||||||||||||||
| Net loss per share of common stock, basic and diluted | ||||||||||||||||
| Net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| For the Nine Months ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Stock options outstanding | ||||||||
| Warrants | ||||||||
| Series C Preferred Stock | ||||||||
| Series D Preferred Stock | ||||||||
| Series E Preferred Stock | ||||||||
| Series F Preferred Stock | ||||||||
| Convertible debt | ||||||||
| Total | ||||||||
Note 2 - Intangible Assets
Intangible Assets
Amortization
expense for the three and nine months ended September 30, 2019 was approximately $
Note 3 – Notes Payable
2019 Term Loan
During
2019, the Company entered into term loan subscription agreements with certain accredited investors, pursuant to which the Company
issued secured promissory notes (the “Notes”) in the aggregate principal amount of approximately $
The
Notes accrue interest at a rate of
The
unpaid principal balance of the Notes, plus accrued and unpaid interest thereon, will mature on the earliest to occur of: (i)
June 28, 2020 (subject to extension for up to sixty (
| 11 |
On
December 28, 2019, the Company defaulted on the initial interest payment on the loan and the interest rate per annum increased
to the default rate of
The
Company recognized approximately $
As
of September 30, 2020, the Company has recorded approximately $
2020 Term Loan
On
February 5, 2020, the Company entered into a Securities Purchase Agreement accredited investors pursuant to purchase: (i) original
issue discount unsecured Convertible Promissory Notes (the “Notes”), issued at a
The
maturity date is the six (6) month anniversary of the original issue date, or August 5, 2020, or such earlier date as the Note
is required or permitted to be repaid as provided thereunder, and to pay interest to the Holder on the aggregate unconverted and
then outstanding principal amount of the Note. Interest shall accrue to the Holders on the aggregate unconverted and then outstanding
principal amount of the Notes at the rate of
On
or after May 5, 2020 until the Notes are no longer outstanding, the Notes shall be convertible, in whole or in part, at any time,
and from time to time, into shares of Common Stock at the option of the noteholder. The conversion price shall be the lower of:
(i) $ per share of Common Stock and (ii)
The
exercise price of the Warrants shall be equal to the conversion price of the Notes, provided, that on the date that the Notes
are no longer outstanding, the exercise price shall be fixed at the conversion price of the Notes on such date, with the exercise
price of the Warrants thereafter (and the number of shares of Common Stock issuable upon the exercise thereof) being subject to
adjustment as set forth in the Warrants. The warrants have a
The
Company recorded a discount related to the warrants of approximately $
On
June 15, 2020, the Company defaulted on certain covenants in the 2020 term loan and the interest rate reset to the default rate
of
The
Company recognized $
| 12 |
As of September 30, 2020, the debt discount and issuance costs for this term loan were fully amortized. The Company remains in default on the repayment of principal and interest on the notes.
Secured Promissory Note
On
June 26, 2020, the Company issued to an existing investor in the Company a
On
or after September 24, 2020, the Note shall be convertible, in whole or in part, into shares of common stock of the Company at
the option of the noteholder at a conversion price of $
The
obligations of the Company under the Note are secured by a senior lien and security interest in all of the assets of the Company
and certain of its wholly-owned subsidiaries pursuant to the terms and conditions of a Security Agreement dated June 26, 2020
by the Company in favor of the noteholder. In connection with the issuance of the Note, the holders of the secured promissory
notes that the Company issued to select accredited investors between June 28, 2019 and August 5, 2019 in the aggregate principal
amount of approximately $
On
August 5, 2020, the Company defaulted on certain covenants in the loan and the interest rate reset to the default rate of
For
the three and nine month period ended September 30, 2020 the Company recognized approximately $
As
of September 30, 2020 the Company has recorded approximately $
Note 4 - Licensing Agreements
Les Laboratories Servier
As a result of the Asset Purchase Agreement that the Company entered into with Symplmed Pharmaceuticals LLC in June 2017, Symplmed assigned to the Company an Amended and Restated License and Commercialization Agreement with Les Laboratories Servier, pursuant to which the Company has the exclusive right to manufacture, have manufactured, develop, promote, market, distribute and sell Prestalia® in the U.S. (and its territories and possessions). The terms of the agreement include single-digit royalty payments based on net sales and milestone payments based upon the attainment of sales thresholds. The agreement includes a termination clause pursuant to which Servier has the right to terminate the agreement in various circumstances, including, without limitation, as a result of the failure by the Company to achieve certain sales thresholds by the dates set forth in the agreement.
For
the three and nine month period ended September 30, 2019 the Company paid $
Biofarma
As
consideration for the Prestalia Trademark license which the Company assumed in connection with the Asset Purchase Agreement with
Symplmed, the Company pays low single digit royalties to Biofarma, an affiliate of Servier and the holder of the Prestalia trademark.
For the three and nine month period ended September 30, 2019, the Company paid approximately $
| 13 |
License of DiLA2 Assets
On
March 16, 2018, the Company entered into an exclusive sublicensing agreement for certain intellectual property rights to its DiLA2
delivery system. The agreement included an upfront payment of $
Note 5 - Related Party Transactions
Due to Related Party
The Company and other related entities have had a commonality of ownership and/or management control, and as a result, the reported operating results and/or financial position of the Company could significantly differ from what would have been obtained if such entities were autonomous.
The Company had a Master Services Agreement (“MSA”) with Autotelic Inc., a related party that is partly owned by one of the Company’s former Board members and executive officers, namely Vuong Trieu, Ph.D., effective November 15, 2016. The MSA stated that Autotelic Inc. will provide business functions and services to the Company and allowed Autotelic Inc. to charge the Company for these expenses paid on its behalf. The MSA included personnel costs allocated based on amount of time incurred and other services such as consultant fees, clinical studies, conferences and other operating expenses incurred on behalf of the Company. The MSA required a 90-day written termination notice in the event either party requires to terminate such services. We and Autotelic Inc. agreed to terminate the MSA effective October 31, 2018. Dr. Trieu resigned as a director of our company effective October 1, 2018.
An
unpaid balance of approximately $
Transactions with BioMauris, LLC/Erik Emerson
Until February of 2019, the Company had engaged the services of BioMauris, LLC, of which Erik Emerson, a former executive officer and director of our company, served as Executive Chairman.
During
the nine months ended September 30, 2019, the Company recorded approximately $
Beginning
in the second quarter of 2019 when components of the financial transaction took place and became fully effective in July 2019,
Mr. Emerson became the owner of an equity interest of
approximately
| 14 |
Note 6 - Stockholders’ Equity
Series E Convertible Preferred Stock Private Placement
In
April and May 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing
pursuant to which we sold shares of our Series E Preferred, at a
purchase price of $
We
received net proceeds of approximately $
In October 2018, an investor converted shares of Series E Preferred into shares of our common stock.
In
April 2019, the Company issued unregistered shares of our common stock to a holder of our Series E Convertible Preferred
Stock in connection with the conversion of $
As
of September 30, 2020, the Company had recorded accrued dividends of approximately $
Series F Convertible Preferred Stock Private Placement
In
July 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant
to which we sold shares of our Series F Preferred, at a purchase price of $
The
Company received proceeds of approximately $
On
November 9, 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant
to which we sold shares of our Series F Preferred Stock, at a purchase price of $
| 15 |
On
October 30, 2019, the Company repurchased shares of Series F Convertible Preferred Stock including accrued and unpaid dividends
and warrants to purchase
As
of September 30, 2020, the Company had recorded accrued dividends of approximately $
Warrants
As
of September 30, 2020, there were
| Expiring in 2021 | ||||
| Expiring in 2022 | ||||
| Expiring in 2023 | ||||
| Expiring in 2024 | ||||
| Expiring thereafter | ||||
| Total |
The
above includes price adjustable warrants, including
A
total of
Stock Options
| Options Outstanding | ||||||||
| Shares | Weighted Average Exercise Price | |||||||
| Outstanding, December 31, 2019 | $ | |||||||
| Options granted | ||||||||
| Options expired / forfeited | ( | ) | ||||||
| Outstanding, September 30, 2020 | ||||||||
| Exercisable, September 30, 2020 | $ | |||||||
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding | Weighted- Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | |||||||||||||||||
| $ | - $ | $ | $ | |||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| Totals | $ | $ | ||||||||||||||||||||
| 16 |
Weighted-Average Exercisable Remaining Contractual Life (Years):
During the nine months ended September 30, 2020, the Company granted stock options to employees.
Total expense related to stock options was approximately $ and $ for the nine months ended September 30, 2020 and 2019, respectively.
As of September 30, 2020, the Company had unrecognized compensation expense related to unvested stock options.
As of September 30, 2020, the intrinsic value of options outstanding was .
Note 8 - Commitments and Contingencies
Litigation
Because of the nature of the Company’s business it is subject to claims and/or threatened legal actions, which arise out of the normal course of business. As of the date of this filing, the Company is not aware of any pending lawsuits against it, its officers or directors.
Leases
On
December 9, 2019, the Company entered into a Standard Form Office Lease with ThreeCo Partners, LLC as landlord, pursuant to which
the Company leased its corporate headquarters located at 4815 Emperor Boulevard, Suite 100, Durham, North Carolina 27703 for a
term of
Other than as described above, the Company does not own or lease any real property or facilities that are material to its current business operations. If the Company continues its business operations, the Company may seek to lease additional facilities in order to support its operational and administrative needs.
Note 9 - Subsequent Events
Except for the events discussed below, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.
Convertible Note
On
October 30, 2020, the Company issued to an existing investor in and lender to the Company a
The
note matures on
The
note is convertible, in whole or in part, at any time, and from time to time, into shares of the common stock of the Company at
the option of the noteholder at a conversion price of $
| 17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect management’s current views with respect to future events and financial performance. The following discussion should be read in conjunction with the financial statements and related notes contained in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (“SEC”) on April 14, 2020. Forward-looking statements are projections in respect of future events or financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.
Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform them to actual results, new information, future events or otherwise, except as otherwise required by securities and other applicable laws.
The following factors, among others, could cause our or our industry’s future results to differ materially from historical results or those anticipated:
| ● | our ability to obtain additional funding for our company, whether pursuant to a capital raising transaction arising from the sale of our securities, a strategic transaction or otherwise; | |
| ● | our ability to satisfy our disclosure obligations under the Securities Exchange Act of 1934, as amended, and to maintain the registration of our common stock thereunder; and | |
| ● | our ability to attract and retain qualified officers, directors, employees and consultants as necessary. |
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on April 14, 2020, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any forward-looking statements after the date of this report to conform these statements to actual results.
As used in this quarterly report and unless otherwise indicated, the terms “we,” “us,” “our” or the “Company” refer to Adhera Therapeutics, Inc., a Delaware corporation, and its wholly-owned subsidiaries, MDRNA Research, Inc., Cequent Pharmaceuticals, Inc., Atossa Healthcare, Inc., and IthenaPharma, Inc. Unless otherwise specified, all dollar amounts are expressed in United States dollars. Our common stock is currently listed on the OTC Market, OTCQB tier, under the symbol “ATRX.”
| 18 |
Corporate Overview
Nature of Business
Adhera Therapeutics, Inc. and its wholly-owned subsidiaries, MDRNA Research, Inc. (“MDRNA”), Cequent Pharmaceuticals, Inc. (“Cequent”), Atossa Healthcare, Inc. (“Atossa”), and IThenaPharma, Inc. (“IThena”) (collectively “Adhera,” the “Company,” “we,” “our,” or “us”), is a specialty biotech company that, to the extent that resources and opportunities become available, is strategically evolving focus in hopes of a return to a drug discovery and development company, and a departure from active commercialization and promotion of hypertension treatment options in the U.S. market.
During 2019, Adhera Therapeutics was a commercially focused entity that leveraged innovative distribution models and technologies to improve the quality of care for patients in the United States suffering from chronic and acute diseases with a focus on fixed dose combination therapies in hypertension. These efforts were primarily focused on Prestalia®, a single-pill FDC of perindopril arginine and amlodipine besylate, which we began marketing in June of 2018. Prestalia was developed in coordination with Les Laboratories, Servier, a French pharmaceutical conglomerate, that sells the formulation outside the United States under the brand names Coveram® and/or Viacoram®. Prestalia was approved by the U.S. Food and Drug Administration (“FDA”) in January 2015, and was distributed through our patented DyrctAxess platform.
In December 2019, we terminated our then-current business operations, including our commercial operations relating to the sale of Prestalia, and terminated the personnel associated with such operations, starting immediately, with such process being substantially completed on or prior to December 31, 2019. As a result, as of the date of this report, we are not engaged in any research, development or commercialization activities, and we are no longer generating any revenues from operations, including from the sale of Prestalia or any other product.
Since the end of 2019, to the extent that resources have been available, we have been working with our advisors to restructure our company and to identify potential strategic transactions to enhance the value of our company as such opportunities arise, including potential transactions and capital raising initiatives involving the assets relating to our legacy RNA interference programs, as well as business combination transactions with operating companies. There can be no assurance that we will be successful at identifying any such transactions, that we will continue to have sufficient resources to actively attempt to identify such transactions, or that such transactions will be available upon terms acceptable to us or at all. If we do not complete any significant strategic transactions, or raise substantial additional capital, in the immediate future, it is likely that we will discontinue all operations and seek bankruptcy protection.
Furthermore, we are evaluating all strategic options to out-license and/or divest our existing intellectual property including our DyrctAxess platform, which is designed to offer enhanced efficiency, control and access to the information necessary to empower patients, physicians and manufacturers to achieve optimal care.
Appointment of Company Executives
On July 7, 2020, Andrew Kucharchuk was appointed as Chief Executive Officer and as a member of the Company’s Board of Directors. On July 10, 2020, Mr. Kucharchuk was appointed to serve as Chairman of the Company’s Board of Directors, and Charles L. Rice was appointed to serve as a member of the Company’s Board of Directors.
Need for Future Financing
We will require substantial additional funds on an immediate basis to continue our business operations. We have, in the past, raised additional capital to supplement our commercialization, clinical and pre-clinical development and operational expenses. We will need to raise additional funds through equity financing, debt financing, strategic alliances, or other sources, which may result in significant further dilution in the equity ownership of our shares, or result in further encumbrances being placed on our assets. There can be no assurance that additional financing will be available when needed or, if available, that it can be obtained on commercially reasonable terms, or that it will be sufficient for us to successfully engage in any of our planned business operations. If we are not able to obtain additional financing on a timely basis as required, or generate significant capital from the out-licensing and/or divestiture of existing assets, we will not be able to meet our other obligations as they become due and will be forced to scale down or even cease our operations altogether.
| 19 |
Results of Operations
Comparison of the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019
Net Sales
For the three-month period ended September 30, 2020, we recorded no sales as a result of the termination of our commercial operations in December 2019. We recorded net sales of approximately $51,000, net of related discounts for the three months ended September 30, 2019 related to the sale of Prestalia.
Cost of Sales
For the three-month period ended September 30, 2020 we recorded no cost of sales as a result of our termination of commercial operations related to the sale of Prestalia in December 2019. We recorded approximately $106,000 as the cost of sales for Prestalia for the three months ended September 30, 2019.
Operating Expenses
Our operating expenses for the three months ended September 30, 2020 and 2019 are summarized as follows:
| Three Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | Increase/ (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Sales and marketing | $ | 20 | $ | 1,311 | $ | (1,291 | ) | |||||
| General and administrative expenses | 174 | 840 | (666 | ) | ||||||||
| Amortization | — | 18 | (18 | ) | ||||||||
| Total operating expenses | $ | 194 | $ | 2,169 | $ | (1,975 | ) | |||||
Sales, Marketing and Commercial Operations
For the three months ended September 30, 2020, sales, marketing and commercial operations expense decreased by approximately $1.3 million as compared to the three months ended September 30, 2019, primarily due to the Company’s strategic decision to terminate the commercial sale of Prestalia in December 2019.
General and Administrative
General and administrative expense decreased by approximately $0.7 million for the three months ended September 30, 2020, as compared to the three months ended September 30, 2019 primarily due to the Company’s strategic decision to terminate commercial operations related to the sale of Prestalia in December 2019.
Amortization Expense
Amortization of intangible assets decreased by approximately $18,000 for the three-month period ended September 30, 2020 primarily due to the write-off of intangibles in 2019 as a result of our decision to divest assets that no longer align with our strategic objectives. No amortization expense was recognized for the three months ended September 30, 2020.
Other Income (Expense)
| Three Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | (Increase)/ Decrease | ||||||||||
| (in thousands) | ||||||||||||
| Other income | $ | 5 | $ | — | $ | 5 | ||||||
| Interest expense | (255 | ) | (332 | ) | 77 | |||||||
| Amortization of debt discount | (95 | ) | — | (95 | ) | |||||||
| Total other expense, net | $ | (345 | ) | $ | (332 | ) | $ | (13 | ) | |||
| 20 |
Other income for the three months ended September 30, 2020 was a result of fees received from release of certain intellectual property rights in 2019 from a third-party vendor and fees received from the cancellation of a contractual obligation from a third-party vendor. Interest expense for the three months ended September 30, 2020 decreased by $77,000 compared to the three months ended September 30, 2019 primarily due to a decrease in the amortization of debt issuance costs for our 2019 term loan which matured on June 30, 2020. The amortization of debt discount was related to our 2020 term loans.
Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
Net Sales
For the nine-month period ended September 30, 2020, we recorded no sales as a result of the termination of our commercial operations in December 2019. We recorded net sales of approximately $120,000, net of related discounts for the nine months ended September 30, 2019 related to the sale of Prestalia.
Cost of Sales
For the nine-month period ended September 30, 2020 we recorded no cost of sales as a result of our termination of commercial operations related to the sale of Prestalia in December 2019. We recorded approximately $304,000 as the cost of sales for Prestalia for the nine months ended September 30, 2019.
Operating Expenses
Our operating expenses for the nine months ended September 30, 2020 and 2019 are summarized as follows:
| Nine Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | Increase/ (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Sales and marketing | $ | 818 | $ | 3,518 | $ | (2,700 | ) | |||||
| General and administrative expenses | 1,055 | 3,806 | (2,751 | ) | ||||||||
| Amortization | — | 53 | (53 | ) | ||||||||
| Total operating expenses | $ | 1,873 | $ | 7,377 | $ | (5,504 | ) | |||||
Sales, Marketing and Commercial Operations
For the nine months ended September 30, 2020, sales, marketing and commercial operations expense decreased by approximately $2.7 million as compared to the nine months ended September 30, 2019, primarily due to the Company’s strategic decision to terminate the commercial sale of Prestalia in December 2019. Sales and marketing expense for the nine months ended September 30, 2020, included approximately $679,000 of PDUFA fees for Prestalia and other expenses related to the shut-down of our commercial operations.
General and Administrative
General and administrative expense decreased by approximately $2.8 million for the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019 primarily due to the Company’s strategic decision to terminate commercial operations related to the sale of Prestalia in December 2019.
Amortization Expense
Amortization of intangible assets decreased by approximately $53,000 for the nine-month period ended September 30, 2020 primarily due to the write-off of intangibles in 2019 as a result of our decision to divest assets that no longer align with our strategic objectives. No amortization expense was recognized for the nine months ended September 30, 2020.
| 21 |
Other Income (Expense)
| Nine Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | (Increase)/Decrease | ||||||||||
| (in thousands) | ||||||||||||
| Other income | $ | 45 | $ | — | $ | 45 | ||||||
| Interest expense | (1,082 | ) | (333 | ) | (749 | ) | ||||||
| Amortization of debt discount | (373 | ) | — | (373 | ) | |||||||
| Total other expense, net | $ | (1,410 | ) | $ | (333 | ) | $ | (1,077 | ) | |||
Other income for the nine months ended September 30, 2020 was a result of fees received from release of certain intellectual property rights in 2019 from a third-party vendor and fees received from the cancellation of a contractual obligation from a third-party vendor. Interest expense for the nine months ended September 30, 2020 increased by $749,000 compared to the nine months ended September 30, 2019 primarily due to accrued interest and amortization of debt issuance costs for our term loans. The amortization of debt discount was related to our 2020 term loans.
Working Capital
| (in thousands) | September 30, 2020 | December 31, 2019 | ||||||
| Current assets | $ | 54 | $ | 420 | ||||
| Current liabilities | (14,080 | ) | (10,307 | ) | ||||
| Working deficit | $ | (14,026 | ) | $ | (9,887 | ) | ||
Negative working capital as of September 30, 2020 was approximately $14.0 million as compared to negative working capital of approximately $9.9 million as of December 31, 2019. The decrease in working capital is primarily related to an increase in our current liabilities as of September 30, 2020 including approximately $0.6 million of notes payable net of issuance costs, an increase in accrued dividends for our convertible preferred stock of approximately $1.2 million and an increase in accounts payable and accrued expenses of $1.6 million related to our operating activities.
Cash Flows and Liquidity
Net cash used in Operating Activities
Net cash used in operating activities was approximately $0.5 million during the nine months ended September 30, 2020. This was primarily due to our net loss of approximately $3.3 million, partially offset by non-cash interest expense related to our term loans of approximately $1.5 million and other changes in operating assets and liabilities including an increase in accounts payable and accrued expenses of approximately $1.0 million.
Comparatively, net cash used in operating activities was approximately $6.2 million during the nine months ended September 30, 2019. This was primarily due to the net loss of approximately $7.9 million offset by non-cash charges of approximately $0.7 million for share based compensation expense and other changes in working capital.
Net cash used in Investing Activities
There was no cash used in or provided by investing activities for the nine months ended September 30, 2020 or September 30, 2019.
Net cash provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2020 and September 30, 2019 was approximately $0.4 million and $5.0 million, respectively from the issuance of promissory notes to certain accredited investors.
We will need to raise immediate additional operating capital in order to maintain our operations and to realize our business plan. Without additional sources of cash and/or the deferral, reduction, or elimination of significant planned expenditures, we will not have the cash resources to continue as a going concern thereafter.
| 22 |
Future Financing
We will require immediate additional funds to continue our business. Historically, we have raised additional capital to supplement our commercialization, clinical development and operational expenses. We will need to raise additional funds required through equity financing, debt financing, strategic alliances or other sources, which may result in further dilution in the equity ownership of our shares. There can be no assurance that additional financing will be available when needed or, if available, that it can be obtained on commercially reasonable terms. Failure to raise additional capital through one or more financings, divesting development assets or reducing discretionary spending could have a material adverse effect on our ability to achieve our intended business objectives. These factors raise substantial doubt about our ability to continue as a going concern. If we do not complete any significant strategic transactions, or raise substantial additional capital, in the immediate future, it is likely that we will discontinue all operations and seek bankruptcy protection.
Off-Balance Sheet Arrangements
As of September 30, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our financial statements included herein for the period ended September 30, 2020 and in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.
New and Recently Adopted Accounting Pronouncements
Any new and recently adopted accounting pronouncements are more fully described in Note 1 to our financial statements included herein for the period ended September 30, 2020.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4 CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Management identified material weaknesses in internal control over financial reporting as described under the heading “Management Report on Internal Control” contained in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Form 10-K”), which have not been fully remediated, and therefore our principal executive officer and our principal financial officer concluded that, as of September 30, 2020, our disclosure controls and procedures were not effective.
Internal Control Over Financial Reporting
Management has reported to the Board of Directors (and, to the extent applicable, the Audit Committee thereof) material weaknesses described under the heading “Management Report on Internal Control” contained in Item 9A of the 2019 Form 10-K. The material weaknesses discussed therein have not been fully remediated. There have been no changes in our internal control over financial reporting or in other factors during the fiscal quarter ended September 30, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. To remediate the material weakness identified in the 2019 Form 10-K, we plan to hire additional experienced accounting and other personnel to assist with filings and financial record keeping, and to take additional steps to improve our financial reporting systems and enhance our existing policies, procedures and controls, as resources allow.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
| 23 |
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General
Currently, there is no material litigation pending against our company. From time to time, we may become a party to litigation and subject to claims incident to the ordinary course of our business. Although the results of such litigation and claims in the ordinary course of business cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, results of operations or financial condition. Regardless of outcome, litigation can have an adverse impact on us because of defense costs, diversion of management resources and other factors.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”), as filed with the SEC on April 14, 2020, in addition to other information contained in those documents and reports that we have filed with the SEC pursuant to the Securities Act and the Exchange Act since the date of the filing of the Annual Report, including, without limitation, this Quarterly Report on Form 10-Q, in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be adversely affected due to any of those risks.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
Item 6. Exhibits
| Exhibit No. | Description | |
| 31.1 | Certification of Principal Executive and Principal Financial Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended. (1) | |
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) | |
| 101INS | XBRL Instance Document (1) | |
| 101SCH | XBRL Taxonomy Extension Schema Document (1) | |
| 101CAL | XBRL Taxonomy Extension Calculation Linkbase Document (1) | |
| 101DEF | XBRL Taxonomy Extension Definition Linkbase Document (1) | |
| 101LAB | XBRL Taxonomy Extension Label Linkbase Document (1) | |
| 101PRE | XBRL Taxonomy Extension Presentation Linkbase Document (1) | |
| (1) | Filed herewith. | |
| (2) | Furnished herewith. |
| 24 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ADHERA THERAPEUTICS, INC. | ||
| Date: November 18, 2020 | By: | /s/ Andrew Kucharchuk |
Andrew Kucharchuk CEO (Principal Executive Officer and Principal Financial Officer) | ||
| 25 |
Exhibit 31.1
ADHERA THERAPEUTICS, INC.
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Andrew Kucharchuk, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Adhera Therapeutics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am 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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my 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. | I have disclosed, based on my 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. |
| By: | /s/ Andrew Kucharchuk | |
| Andrew Kucharchuk | ||
| CEO | ||
| (Principal Executive Officer and Principal Financial Officer) | ||
| Date: | November 18, 2020 |
Exhibit 32.1
ADHERA THERAPEUTICS, INC.
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of Adhera Therapeutics, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:
| 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 operation of the Company. |
| By: | /s/ Andrew Kucharchuk | |
| Andrew Kucharchuk | ||
| CEO | ||
| (Principal Executive Officer and Principal Financial Officer) | ||
| Date: | November 18, 2020 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Income Statement [Abstract] | ||||
| Net sales | $ 51 | $ 120 | ||
| Cost of sales | 106 | 304 | ||
| Gross loss | (55) | (184) | ||
| Operating expenses | ||||
| Sales and marketing | 20 | 1,311 | 818 | 3,518 |
| General and administrative | 174 | 840 | 1,055 | 3,806 |
| Amortization | 18 | 53 | ||
| Total operating expenses | 194 | 2,169 | 1,873 | 7,377 |
| Loss from operations | (194) | (2,224) | (1,873) | (7,561) |
| Other income (expense) | ||||
| Other income | 5 | 45 | ||
| Interest expense | (255) | (332) | (1,082) | (333) |
| Amortization of debt discount | (95) | (373) | ||
| Net loss | (539) | (2,556) | (3,283) | (7,894) |
| Preferred Stock Dividends | (388) | (389) | (1,153) | (1,128) |
| Net Loss Applicable to Common Stockholders | $ (927) | $ (2,945) | $ (4,436) | $ (9,022) |
| Net loss per share – Common Shareholders - basic and diluted | $ (0.09) | $ (0.27) | $ (0.41) | $ (0.83) |
| Weighted average shares outstanding - basic and diluted | 10,869,530 | 10,869,530 | 10,869,530 | 10,830,816 |
Nature of Operations, Basis of Presentation and Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nature of Operations, Basis of Presentation and Significant Accounting Policies | Note 1 – Nature of Operations, Basis of Presentation and Significant Accounting Policies
Business Overview
Adhera Therapeutics, Inc. and its wholly-owned subsidiaries, MDRNA Research, Inc. (“MDRNA”), Cequent Pharmaceuticals, Inc. (“Cequent”), Atossa Healthcare, Inc. (“Atossa”), and IThenaPharma, Inc. (“IThena”) (collectively “Adhera,” the “Company,” “we,” “our,” or “us”), is a specialty biotech company that, to the extent that resources and opportunities become available, is strategically evolving focus in hopes of a return to a drug discovery and development company, and a departure from active commercialization and promotion of hypertension treatment options in the U.S. market.
During 2019, Adhera Therapeutics was a commercially focused entity that leveraged innovative distribution models and technologies to improve the quality of care for patients in the United States suffering from chronic and acute diseases with a focus on fixed dose combination therapies in hypertension. These efforts were primarily focused on Prestalia®, a single-pill FDC of perindopril arginine and amlodipine besylate, which we began marketing in June of 2018. Prestalia was developed in coordination with Les Laboratories, Servier, a French pharmaceutical conglomerate, that sells the formulation outside the United States under the brand names Coveram® and/or Viacoram®. Prestalia was approved by the U.S. Food and Drug Administration (“FDA”) in January 2015, and was distributed through our patented DyrctAxess platform.
In December 2019, the Company terminated its then-current business operations, including its commercial operations relating to the sale of Prestalia, and terminated the personnel associated with such operations, starting immediately, with such process being substantially completed on or prior to December 31, 2019. As a result, as of the date of this report, the Company is not engaged in any research, development or commercialization activities, and it is no longer generating any revenues from operations, including from the sale of Prestalia or any other product.
Since the end of 2019, to the extent that resources have been available, the Company has been working with its advisors to restructure our company and to identify potential strategic transactions to enhance the value of our company as such opportunities arise, including potential transactions and capital raising initiatives involving the assets relating to our legacy RNA interference programs, as well as business combination transactions with operating companies. There can be no assurance that the Company will be successful at identifying any such transactions, that we will continue to have sufficient resources to actively attempt to identify such transactions, or that such transactions will be available upon terms acceptable to us or at all. If the Company does not complete any significant strategic transactions, or raise substantial additional capital, in the immediate future, it is likely that the Company will discontinue all operations and seek bankruptcy protection.
Furthermore, the Company is evaluating all strategic options to out-license and/or divest our existing intellectual property, including our DyrctAxess platform, which is designed to offer enhanced efficiency, control and access to the information necessary to empower patients, physicians and manufacturers to achieve optimal care.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited financial statements. This quarterly report should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020 or for any future period.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Adhera Therapeutics, Inc. and the wholly-owned subsidiaries, Ithena, Cequent, MDRNA, and Atossa, and eliminate any inter-company balances and transactions.
Going Concern and Management’s Liquidity Plans
The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2020, the Company had no cash or cash equivalents and has negative working capital of approximately $14.0 million.
The Company has incurred recurring losses and negative cash flows from operations since inception and has funded its operating losses through the sale of common stock, preferred stock, warrants to purchase common stock, convertible notes and secured promissory notes. The Company incurred a net operating loss of approximately $0.5 million and $3.3 million for the three and nine months ended September 30, 2020, respectively. The Company had an accumulated deficit of approximately $43.8 million as of September 30, 2020.
In addition, to the extent that the Company continues its business operations, the Company anticipates that it will continue to have negative cash flows from operations, at least into the near future. However, the Company cannot be certain that it will be able to obtain such funds required for our operations at terms acceptable to us or at all. General market conditions, as well as market conditions for companies in our financial and business position, as well as the ongoing issue arising from the COVID-19 pandemic, may make it difficult for us to seek financing from the capital markets, and the terms of any financing may adversely affect the holdings or the rights of our stockholders. If the Company is unable to obtain additional financing in the future, there may be a negative impact on the financial viability of the Company. The Company plans to increase working capital by managing its cash flows and expenses, divesting development assets and raising additional capital through private or public equity or debt financing. There can be no assurance that such financing or partnerships will be available on terms which are favorable to the Company or at all. While management of the Company believes that it has a plan to fund ongoing operations, there is no assurance that its plan will be successfully implemented. Failure to raise additional capital through one or more financings, divesting development assets or reducing discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainties.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with 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 revenue and expenses during the reported period. Significant areas requiring the use of management estimates include revenue and related discounts and allowances and accruals related to our operating activity including legal and other consulting expenses. Actual results could differ materially from such estimates under different assumptions or circumstances.
Fair Value of Financial Instruments
The Company considers the fair value of cash, prepaid expenses, accounts payable, debt, and accrued expenses not to be materially different from their carrying value. These financial instruments have short-term maturities. We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
There were no liabilities or assets measured at fair value on a recurring basis as of September 30, 2020 or December 31, 2019.
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment indicators throughout the year and performs detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, the Company records charges for impairments. Specifically:
Revenue, Net
The Company adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), effective with the quarter ended March 31, 2018. The Company terminated all commercial operations in December 2019, therefore all revenue and cost of goods sold disclosure only apply to periods prior to the first quarter of 2020.
The Company sold its medicines primarily to wholesale distributors and specialty pharmacy providers under agreements with payment terms typically less than 90 days. These customers subsequently resold the Company’s medicines to health care patients. Revenue was recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company’s contracts had a single performance obligation to transfer medicines. Accordingly, revenues from medicine sales were recognized when the customer obtained control of the Company’s medicines, which occurred at a point in time, typically upon delivery to the customer. Revenue was measured as the amount of consideration the Company expects to receive in exchange for transferring medicines and was generally based upon a list or fixed price less allowances for medicine returns, rebates and discounts. Company recorded an estimate of unrealized revenue reductions, and the related liability, for bottles sold to pharmacies but not yet prescribed.
Medicine Sales Discounts and Allowances
The nature of the Company’s contracts gave rise to variable consideration because of allowances for medicine returns, rebates and discounts. Allowances for medicine returns, rebates and discounts were recorded at the time of sale to wholesale pharmaceutical distributors and pharmacies. The Company applied significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company would be required to make adjustments to these allowances in the future. The Company’s adjustments to gross sales are discussed further below.
Patient Access Programs
The Company offered discounts to patients under which the patient received a discount on his or her prescription. In circumstances when a patient’s prescription is rejected by a third-party payer, the Company would pay for the full cost of the prescription. The Company reimbursed pharmacies for this discount directly or through third-party vendors. The Company reduced gross sales by the amount of actual co-pay and other patient assistance in the period based on the invoices received. The Company also recorded an accrual to reduce gross sales for estimated co-pay and other patient assistance on units sold to distributors or pharmacies that have not yet been prescribed/dispensed to a patient. The Company calculated accrued co-pay and other patient assistance fee estimates using the expected value method. The estimate was based on contract prices, estimated percentages of medicine that would be prescribed to qualified patients, average assistance paid based on reporting from the third-party vendors and estimated levels of inventory in the distribution channel. Accrued co-pay and other patient assistance fees were included in “accrued expenses” on the condensed consolidated balance sheet. Patient assistance programs include both co-pay assistance and fully bought down prescriptions.
Sales Returns
Consistent with industry practice, the Company maintained a return policy that allows customers to return medicines within a specified period prior to and subsequent to the medicine expiration date. Generally, medicines may be returned for a period beginning nine months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the medicine expiration date or the time that the medicine is dispensed to the patient. The majority of medicine returns result from medicine dating, which falls within the range set by the Company’s policy and are settled through the issuance of a credit to the customer. The Company calculates sales returns using the expected value method. The estimate of the provision for returns is based upon industry experience. This period is known to the Company based on the shelf life of medicines at the time of shipment. The Company recorded sales returns in “accrued expenses” as a reduction of revenue.
Cost of Goods Sold
Distribution Service Fees
The Company included distribution service fees paid for inventory management services as cost of goods sold. The Company calculated accrued distribution service fee estimates using the most likely amount method. The Company accrued estimated distribution fees based on contractually determined amounts. Accrued distribution service fees were included in “accrued expenses” on the condensed consolidated balance sheet.
Shipping Fees
The Company included fees incurred by pharmacies for shipping medicines to patients as cost of goods sold. The Company calculated accrued shipping fee estimates using the expected value method. The Company recorded accrued shipping fees in “accrued expenses” on the condensed consolidated balance sheet.
Non-Commercial Product
The Company recorded the cost of non-commercial product distributed to patients as a cost of goods sold.
Royalties on Product Sales
The Company recorded royalty fees on the sale of commercial product as a cost of goods sold.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU No. 2016-2”). Under ASU No. 2016-2, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities by class of underlying assets. ASU No. 2016-2 became effective for the Company beginning in the first quarter of 2019. The Company adopted this standard on January 1, 2019, using a modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The adoption did not have a material impact on its condensed consolidated statement of operations. The Company elected to not recognize lease assets and liabilities for leases with an initial term of twelve months or less.
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. Potentially dilutive securities which include outstanding warrants, stock options and preferred stock have been excluded from the computation of diluted net loss per share as their effect would be anti-dilutive. For all periods presented, basic and diluted net loss were the same.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Intangible Assets | Note 2 - Intangible Assets
Intangible Assets
Amortization expense for the three and nine months ended September 30, 2019 was approximately $18,000 and $53,000, respectively. No amortization expense was recognized for the three or nine months ended September 30, 2020.
|
Notes Payable |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Debt Disclosure [Abstract] | |
| Notes Payable | Note 3 – Notes Payable
2019 Term Loan
During 2019, the Company entered into term loan subscription agreements with certain accredited investors, pursuant to which the Company issued secured promissory notes (the “Notes”) in the aggregate principal amount of approximately $5.7 million. The Company paid $707,000 in debt issuance costs which was recorded as a debt discount to be amortized as interest expense over the term of the loan using the straight-line method.
The Notes accrue interest at a rate of 12.0% per annum. Interest is payable quarterly with the first interest payment to be made on December 28, 2019, and each subsequent payment every three months thereafter.
The unpaid principal balance of the Notes, plus accrued and unpaid interest thereon, will mature on the earliest to occur of: (i) June 28, 2020 (subject to extension for up to sixty (60) days based upon the mutual agreement of the Company and the holders of a majority of the unpaid principal balance of all outstanding Notes) or (ii) at any time following an Event of Default. The Notes may not be prepaid without the prior written consent of the holders of the Notes. The Notes are secured by a first lien and security interest on all the assets of the Company and certain of its wholly owned subsidiaries.
On December 28, 2019, the Company defaulted on the initial interest payment on the loan and the interest rate per annum increased to the default rate of 15%.
The Company recognized approximately $215,000 and $986,000 in interest expense related to Notes for the three and nine months ended September 30, 2020, including approximately $0 and $347,000 related to the amortization of debt issuance costs for the three and nine months ended September 30, 2020, respectively. The Company recognized approximately $326,000 and $330,000 in interest expense related to the Notes for the three and nine months ended September 30, 2019, including approximately $147,000 and $148,000 related to the amortization of debt issuance costs for the three and nine months ended September 30, 2019, respectively.
As of September 30, 2020, the Company has recorded approximately $5.7 million of debt related to the principal on the notes and $961,000 in accrued interest on the accompanying balance sheet. The Company is currently in default on the repayment of principal and interest on the notes.
2020 Term Loan
On February 5, 2020, the Company entered into a Securities Purchase Agreement accredited investors pursuant to purchase: (i) original issue discount unsecured Convertible Promissory Notes (the “Notes”), issued at a 10% original issue discount, for a total purchase price of $499,950, and (ii) warrants to purchase up to such number of shares of the common stock of the Company as is equal to the product obtained by multiplying 1.75 by the quotient obtained by dividing (A) the principal amount of the Notes by (B) the then applicable conversion price of the Notes.
The maturity date is the six (6) month anniversary of the original issue date, or August 5, 2020, or such earlier date as the Note is required or permitted to be repaid as provided thereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of the Note. Interest shall accrue to the Holders on the aggregate unconverted and then outstanding principal amount of the Notes at the rate of 10% per annum, calculated on the basis of a 360-day year and shall accrue daily commencing on the original issue date until payment in full of the outstanding principal (or conversion to the extent applicable), together with all accrued and unpaid interest, liquidated damages and other amounts which may become due thereunder, has been made.
On or after May 5, 2020 until the Notes are no longer outstanding, the Notes shall be convertible, in whole or in part, at any time, and from time to time, into shares of Common Stock at the option of the noteholder. The conversion price shall be the lower of: (i) $ per share of Common Stock and (ii) 70% of the volume weighted average price of the Common Stock on the trading market on which the Common Stock is then listed or quoted for trading for the prior ten (10) trading days (as adjusted for stock splits, stock combinations and similar events); provided, that if the Notes are not prepaid on or before May 5, 2020, then the conversion price shall be the lower of (x) 60% of the conversion price as calculated above or (y) $ (as adjusted for stock splits, stock combinations and similar events). The conversion price of the Notes shall also be adjusted as a result of subsequent equity sales by the Company, with customary exceptions.
The exercise price of the Warrants shall be equal to the conversion price of the Notes, provided, that on the date that the Notes are no longer outstanding, the exercise price shall be fixed at the conversion price of the Notes on such date, with the exercise price of the Warrants thereafter (and the number of shares of Common Stock issuable upon the exercise thereof) being subject to adjustment as set forth in the Warrants. The warrants have a 5 year term.
The Company recorded a discount related to the warrants of approximately $322,000, including a discount of $30,000 and issuance costs of $53,000 based on the relative fair value of the instruments as determined by using the Monte-Carlo simulation model. The Company also recorded a debt discount related to the convertible debt of approximately $21,000 and debt issuance cost of $38,000 using the relative fair value method to be amortized as interest expense over the term of the loan using the straight-line method.
On June 15, 2020, the Company defaulted on certain covenants in the 2020 term loan and the interest rate reset to the default rate of 18%.
The Company recognized $31,000 and $86,000 in interest expense related to the notes for the three and nine months ended September 30, 2020, respectively including $7,000 and $38,000 related to the amortization of debt issuance costs. The Company amortized $67,000 and $343,000 of debt discount for the three and nine months ended September 30, 2020, respectively.
As of September 30, 2020, the debt discount and issuance costs for this term loan were fully amortized. The Company remains in default on the repayment of principal and interest on the notes.
Secured Promissory Note
On June 26, 2020, the Company issued to an existing investor in the Company a 10% original issue discount Senior Secured Convertible Promissory Note for a purchase price of $52,500. The Note matures on the date that is the six (6) month anniversary of the original issue date. Interest shall accrue on the aggregate unconverted and then outstanding principal amount of the Note at the rate of 10% per annum, calculated on the basis of a 360-day year. The Company recorded approximately $14,000 in debt issuance cost to be amortized over the life of the loan using the straight-line method.
On or after September 24, 2020, the Note shall be convertible, in whole or in part, into shares of common stock of the Company at the option of the noteholder at a conversion price of $0.02 (as adjusted for stock splits, stock combinations and similar events); provided, that if an event of default has occurred under the Note, then the conversion price shall be 65% of the lowest closing bid price of the Company’s common stock as reported on its principal trading market for the twenty consecutive trading day period ending on (and including) the trading day immediately preceding the date on which the conversion notice was delivered. The conversion price shall also be adjusted as a result of subsequent equity sales by the Company. Because the share price on the commitment date was in excess of the conversion price, the Company recorded a beneficial conversion feature of $50,000 related to this note that was credited to additional paid in capital, and reduced the carrying amount. The discount recorded is being amortized to interest expense over the life of the loan using the straight-line method.
The obligations of the Company under the Note are secured by a senior lien and security interest in all of the assets of the Company and certain of its wholly-owned subsidiaries pursuant to the terms and conditions of a Security Agreement dated June 26, 2020 by the Company in favor of the noteholder. In connection with the issuance of the Note, the holders of the secured promissory notes that the Company issued to select accredited investors between June 28, 2019 and August 5, 2019 in the aggregate principal amount of approximately $5.7 million agreed to subordinate their lien and security interest in the assets of the Company and its subsidiaries as set forth in the Security Agreement dated June 28, 2019 that such holders entered into with the Company and its subsidiaries to the security interest granted to the holder of the Note.
On August 5, 2020, the Company defaulted on certain covenants in the loan and the interest rate reset to the default rate of 18%.
For the three and nine month period ended September 30, 2020 the Company recognized approximately $9,000 and $10,000 in interest expense including $7,000 and $8,000 related to the amortization of debt issuance costs, respectively. For the three and nine month period ended September 30, 2020 the Company recognized $28,000 and $30,000 related to the amortization of debt discount.
As of September 30, 2020 the Company has recorded approximately $58,000 in debt and $26,000 and $6,000 in unamortized debt discount and issuance cost respectively.
|
Licensing Agreements |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Licensing Agreements | |
| Licensing Agreements | Note 4 - Licensing Agreements
Les Laboratories Servier
As a result of the Asset Purchase Agreement that the Company entered into with Symplmed Pharmaceuticals LLC in June 2017, Symplmed assigned to the Company an Amended and Restated License and Commercialization Agreement with Les Laboratories Servier, pursuant to which the Company has the exclusive right to manufacture, have manufactured, develop, promote, market, distribute and sell Prestalia® in the U.S. (and its territories and possessions). The terms of the agreement include single-digit royalty payments based on net sales and milestone payments based upon the attainment of sales thresholds. The agreement includes a termination clause pursuant to which Servier has the right to terminate the agreement in various circumstances, including, without limitation, as a result of the failure by the Company to achieve certain sales thresholds by the dates set forth in the agreement.
For the three and nine month period ended September 30, 2019 the Company paid $8,000 and $27,000, respectively for royalties under the license agreement with Les Laboratories-Servier. No royalties were paid for the three or nine month period ended September 30, 2020.
Biofarma
As consideration for the Prestalia Trademark license which the Company assumed in connection with the Asset Purchase Agreement with Symplmed, the Company pays low single digit royalties to Biofarma, an affiliate of Servier and the holder of the Prestalia trademark. For the three and nine month period ended September 30, 2019, the Company paid approximately $1,000 and $3,000, respectively to Biofarma. No royalties were paid for the three or nine month period ended September 30, 2020.
License of DiLA2 Assets
On March 16, 2018, the Company entered into an exclusive sublicensing agreement for certain intellectual property rights to its DiLA2 delivery system. The agreement included an upfront payment of $200,000 and future additional consideration for sales and development milestones. The upfront fee was contingent upon the Company obtaining a third-party consent to the agreement within ninety days of execution. As of September 30, 2020 and December 31, 2019, the Company had not obtained consent for the sublicense and has classified the upfront payment as an accrued liability on its balance sheet.
|
Related Party Transactions |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Note 5 - Related Party Transactions
Due to Related Party
The Company and other related entities have had a commonality of ownership and/or management control, and as a result, the reported operating results and/or financial position of the Company could significantly differ from what would have been obtained if such entities were autonomous.
The Company had a Master Services Agreement (“MSA”) with Autotelic Inc., a related party that is partly owned by one of the Company’s former Board members and executive officers, namely Vuong Trieu, Ph.D., effective November 15, 2016. The MSA stated that Autotelic Inc. will provide business functions and services to the Company and allowed Autotelic Inc. to charge the Company for these expenses paid on its behalf. The MSA included personnel costs allocated based on amount of time incurred and other services such as consultant fees, clinical studies, conferences and other operating expenses incurred on behalf of the Company. The MSA required a 90-day written termination notice in the event either party requires to terminate such services. We and Autotelic Inc. agreed to terminate the MSA effective October 31, 2018. Dr. Trieu resigned as a director of our company effective October 1, 2018.
An unpaid balance of approximately $4,000 is included in due to related party in the accompanying balance sheets for both periods ending September 30, 2020 and December 31, 2019.
Transactions with BioMauris, LLC/Erik Emerson
Until February of 2019, the Company had engaged the services of BioMauris, LLC, of which Erik Emerson, a former executive officer and director of our company, served as Executive Chairman.
During the nine months ended September 30, 2019, the Company recorded approximately $32,000 for related party expenses incurred under the agreement. No related party liability was recorded as of September 30, 2020 or December 31, 2019.
Beginning in the second quarter of 2019 when components of the financial transaction took place and became fully effective in July 2019, Mr. Emerson became the owner of an equity interest of approximately 22% in Pharma Hub Network, our third-party network manager. During the third quarter of 2019, the Company terminated the relationship with Pharma Hub Network. For the nine months ended September 30, 2019, the Company recorded approximately $25,000 and $62,000 in related party expense for services provided by Pharma Hub Network. For the nine months ended September 30, 2020, the Company recorded no related party expenses related to the agreement. No related party liability was recorded on the accompanying balance sheets as of September 30, 2020 or December 31, 2019.
|
Stockholders’ Equity |
9 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||
| Stockholders’ Equity | Note 6 - Stockholders’ Equity
Series E Convertible Preferred Stock Private Placement
In April and May 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold shares of our Series E Preferred, at a purchase price of $5,000 per share of Series E Preferred. Each share of Series E Preferred is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5 year warrant to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Series E Preferred purchased by such investor at an initial exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. In July of 2018, the conversion price of the warrants was adjusted down to $0.50 upon issuance of the Series F Convertible Preferred Stock. Series E Preferred accrues 8% dividends per annum which are payable in cash or stock at the Company’s discretion. The Series E Preferred has voting rights, dividend rights, liquidation preferences, conversion rights and anti-dilution rights as described in the Certificate of Designation of Preferences, Rights and Limitations of the Preferred Stock, which we filed with the Secretary of State of Delaware in April 2018. The Warrants have full-ratchet anti-dilution protection, are exercisable for a period of five years and contain customary exercise limitations.
We received net proceeds of approximately $12.2 million from the sale of the Series E Preferred, after deducting placement agent fees and estimated expenses payable by us of approximately $2.0 million associated with such closing. In connection with the private placement described above, we also issued to the placement agent for such private placement a Warrant to purchase 2,958,460 shares of our common stock.
In October 2018, an investor converted shares of Series E Preferred into shares of our common stock.
In April 2019, the Company issued unregistered shares of our common stock to a holder of our Series E Convertible Preferred Stock in connection with the conversion of $53,923 of “Stated Value” of our Series E Convertible Preferred Stock.
As of September 30, 2020, the Company had recorded accrued dividends of approximately $3.4 million on Series E Preferred Stock.
Series F Convertible Preferred Stock Private Placement
In July 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold shares of our Series F Preferred, at a purchase price of $5,000 per share of Series F Preferred. Each share of Series F Preferred is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5 year warrant (the “Warrants”, and collectively with the Preferred Stock, the “Securities”) to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Series F Preferred purchased by such investor at an initial exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. The Series F Preferred accrues 8% dividends per annum which are payable in cash or stock at the Company’s discretion. The Series F Preferred has voting rights, dividend rights, liquidation preferences, conversion rights and anti-dilution rights as described in the Certificate of Designation of Preferences, Rights and Limitations of the Preferred Stock, which we filed with the Secretary of State of Delaware in July 2018. The Warrants have full-ratchet anti-dilution protection, are exercisable for a period of five years and contain customary exercise limitations.
The Company received proceeds of approximately $1.4 million from the sale of the Securities, after deducting placement agent fees and estimated expenses payable by us of approximately $180,000 associated with such closing. We used the proceeds of the offering for funding our commercial operations to the sale and promotion of our Prestalia product, working capital needs, capital expenditures, the repayment of certain liabilities and other general corporate purposes. In connection with the private placement described above, we also issued to the placement agent for such private placement a Warrant to purchase 308,000 shares of our common stock. The Warrant has a five-year term and an initial exercise price of $ per share.
On November 9, 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold shares of our Series F Preferred Stock, at a purchase price of $5,000 per share of Preferred Stock. Each share of Series F Preferred is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5 year warrant to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Series F Preferred purchased by such investor at an initial exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. We received total net proceeds of approximately $0.3 million from the issuance of the securities described above, after deducting placement agent fees and estimated expenses payable by us associated with such closing. In connection with the private placement described above, we also issued to the placement agent for such private placement a Warrant to purchase 73,000 shares of our common stock. The Warrant has a five-year term and an initial exercise price of $ per share.
On October 30, 2019, the Company repurchased shares of Series F Convertible Preferred Stock including accrued and unpaid dividends and warrants to purchase 150,000 shares of common stock for $100,000 from our former CEO pursuant to an amendment to the settlement agreement dated April 4, 2019. The Company also committed to purchase from such officer the remaining Series F Convertible Preferred Stock and related warrants held by such officer for $100,000 by not later than March 1, 2020. As of September 30, 2020, the Company had not repurchased the remaining shares.
As of September 30, 2020, the Company had recorded accrued dividends of approximately $310,000 on Series F Preferred Stock.
Warrants
As of September 30, 2020, there were 69,047,000 warrants outstanding, with a weighted average exercise price of $ per share, and annual expirations as follows:
The above includes price adjustable warrants, including 34,718,750 warrants issued with the 2020 term loan which are subject to adjustment based upon the final conversion price of the note.
A total of 1,189,079 warrants expired during the nine months ended September 30, 2020.
|
Stock Incentive Plans |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Incentive Plans |
Stock Options
Weighted-Average Exercisable Remaining Contractual Life (Years):
During the nine months ended September 30, 2020, the Company granted stock options to employees.
Total expense related to stock options was approximately $ and $ for the nine months ended September 30, 2020 and 2019, respectively.
As of September 30, 2020, the Company had unrecognized compensation expense related to unvested stock options.
As of September 30, 2020, the intrinsic value of options outstanding was .
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 8 - Commitments and Contingencies
Litigation
Because of the nature of the Company’s business it is subject to claims and/or threatened legal actions, which arise out of the normal course of business. As of the date of this filing, the Company is not aware of any pending lawsuits against it, its officers or directors.
Leases
On December 9, 2019, the Company entered into a Standard Form Office Lease with ThreeCo Partners, LLC as landlord, pursuant to which the Company leased its corporate headquarters located at 4815 Emperor Boulevard, Suite 100, Durham, North Carolina 27703 for a term of 19 months commencing January 1, 2020. The base monthly rent for such space was $3,795. On February 1, 2020 the Company terminated the lease.
Other than as described above, the Company does not own or lease any real property or facilities that are material to its current business operations. If the Company continues its business operations, the Company may seek to lease additional facilities in order to support its operational and administrative needs.
|
Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 9 - Subsequent Events
Except for the events discussed below, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.
Convertible Note
On October 30, 2020, the Company issued to an existing investor in and lender to the Company a 10% original issue discount senior secured convertible promissory note for a purchase price of $111,111. Additionally, the Company issued the noteholder 1,587,301 warrants to purchase the Company’s common stock at $ per share subject to certain adjustments as defined in the agreement.
The note matures on April 30, 2021, or such earlier date as the note is required or permitted to be repaid. Interest shall accrue on the aggregate unconverted and then outstanding principal amount of the note at the rate of 10% per annum, calculated on the basis of a 360-day year.
The note is convertible, in whole or in part, at any time, and from time to time, into shares of the common stock of the Company at the option of the noteholder at a conversion price of $0.07 (as adjusted for stock splits, stock combinations and similar events); provided, that if an event of default has occurred under the Note, then the conversion price shall be 70% of then conversion price. The conversion price shall also be adjusted as a result of subsequent equity sales by the Company. The obligations of the Company under the note are secured by a senior lien and security interest in all of the assets of the Company. |
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited financial statements. This quarterly report should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020 or for any future period.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation | Principles of Consolidation
The condensed consolidated financial statements include the accounts of Adhera Therapeutics, Inc. and the wholly-owned subsidiaries, Ithena, Cequent, MDRNA, and Atossa, and eliminate any inter-company balances and transactions.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Going Concern and Management’s Liquidity Plans | Going Concern and Management’s Liquidity Plans
The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2020, the Company had no cash or cash equivalents and has negative working capital of approximately $14.0 million.
The Company has incurred recurring losses and negative cash flows from operations since inception and has funded its operating losses through the sale of common stock, preferred stock, warrants to purchase common stock, convertible notes and secured promissory notes. The Company incurred a net operating loss of approximately $0.5 million and $3.3 million for the three and nine months ended September 30, 2020, respectively. The Company had an accumulated deficit of approximately $43.8 million as of September 30, 2020.
In addition, to the extent that the Company continues its business operations, the Company anticipates that it will continue to have negative cash flows from operations, at least into the near future. However, the Company cannot be certain that it will be able to obtain such funds required for our operations at terms acceptable to us or at all. General market conditions, as well as market conditions for companies in our financial and business position, as well as the ongoing issue arising from the COVID-19 pandemic, may make it difficult for us to seek financing from the capital markets, and the terms of any financing may adversely affect the holdings or the rights of our stockholders. If the Company is unable to obtain additional financing in the future, there may be a negative impact on the financial viability of the Company. The Company plans to increase working capital by managing its cash flows and expenses, divesting development assets and raising additional capital through private or public equity or debt financing. There can be no assurance that such financing or partnerships will be available on terms which are favorable to the Company or at all. While management of the Company believes that it has a plan to fund ongoing operations, there is no assurance that its plan will be successfully implemented. Failure to raise additional capital through one or more financings, divesting development assets or reducing discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainties. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates | Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with 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 revenue and expenses during the reported period. Significant areas requiring the use of management estimates include revenue and related discounts and allowances and accruals related to our operating activity including legal and other consulting expenses. Actual results could differ materially from such estimates under different assumptions or circumstances.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | Fair Value of Financial Instruments
The Company considers the fair value of cash, prepaid expenses, accounts payable, debt, and accrued expenses not to be materially different from their carrying value. These financial instruments have short-term maturities. We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
There were no liabilities or assets measured at fair value on a recurring basis as of September 30, 2020 or December 31, 2019.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment indicators throughout the year and performs detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, the Company records charges for impairments. Specifically:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue, Net | Revenue, Net
The Company adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), effective with the quarter ended March 31, 2018. The Company terminated all commercial operations in December 2019, therefore all revenue and cost of goods sold disclosure only apply to periods prior to the first quarter of 2020.
The Company sold its medicines primarily to wholesale distributors and specialty pharmacy providers under agreements with payment terms typically less than 90 days. These customers subsequently resold the Company’s medicines to health care patients. Revenue was recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company’s contracts had a single performance obligation to transfer medicines. Accordingly, revenues from medicine sales were recognized when the customer obtained control of the Company’s medicines, which occurred at a point in time, typically upon delivery to the customer. Revenue was measured as the amount of consideration the Company expects to receive in exchange for transferring medicines and was generally based upon a list or fixed price less allowances for medicine returns, rebates and discounts. Company recorded an estimate of unrealized revenue reductions, and the related liability, for bottles sold to pharmacies but not yet prescribed.
Medicine Sales Discounts and Allowances
The nature of the Company’s contracts gave rise to variable consideration because of allowances for medicine returns, rebates and discounts. Allowances for medicine returns, rebates and discounts were recorded at the time of sale to wholesale pharmaceutical distributors and pharmacies. The Company applied significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company would be required to make adjustments to these allowances in the future. The Company’s adjustments to gross sales are discussed further below.
Patient Access Programs
The Company offered discounts to patients under which the patient received a discount on his or her prescription. In circumstances when a patient’s prescription is rejected by a third-party payer, the Company would pay for the full cost of the prescription. The Company reimbursed pharmacies for this discount directly or through third-party vendors. The Company reduced gross sales by the amount of actual co-pay and other patient assistance in the period based on the invoices received. The Company also recorded an accrual to reduce gross sales for estimated co-pay and other patient assistance on units sold to distributors or pharmacies that have not yet been prescribed/dispensed to a patient. The Company calculated accrued co-pay and other patient assistance fee estimates using the expected value method. The estimate was based on contract prices, estimated percentages of medicine that would be prescribed to qualified patients, average assistance paid based on reporting from the third-party vendors and estimated levels of inventory in the distribution channel. Accrued co-pay and other patient assistance fees were included in “accrued expenses” on the condensed consolidated balance sheet. Patient assistance programs include both co-pay assistance and fully bought down prescriptions.
Sales Returns
Consistent with industry practice, the Company maintained a return policy that allows customers to return medicines within a specified period prior to and subsequent to the medicine expiration date. Generally, medicines may be returned for a period beginning nine months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the medicine expiration date or the time that the medicine is dispensed to the patient. The majority of medicine returns result from medicine dating, which falls within the range set by the Company’s policy and are settled through the issuance of a credit to the customer. The Company calculates sales returns using the expected value method. The estimate of the provision for returns is based upon industry experience. This period is known to the Company based on the shelf life of medicines at the time of shipment. The Company recorded sales returns in “accrued expenses” as a reduction of revenue.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Goods Sold | Cost of Goods Sold
Distribution Service Fees
The Company included distribution service fees paid for inventory management services as cost of goods sold. The Company calculated accrued distribution service fee estimates using the most likely amount method. The Company accrued estimated distribution fees based on contractually determined amounts. Accrued distribution service fees were included in “accrued expenses” on the condensed consolidated balance sheet.
Shipping Fees
The Company included fees incurred by pharmacies for shipping medicines to patients as cost of goods sold. The Company calculated accrued shipping fee estimates using the expected value method. The Company recorded accrued shipping fees in “accrued expenses” on the condensed consolidated balance sheet.
Non-Commercial Product
The Company recorded the cost of non-commercial product distributed to patients as a cost of goods sold.
Royalties on Product Sales
The Company recorded royalty fees on the sale of commercial product as a cost of goods sold.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU No. 2016-2”). Under ASU No. 2016-2, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities by class of underlying assets. ASU No. 2016-2 became effective for the Company beginning in the first quarter of 2019. The Company adopted this standard on January 1, 2019, using a modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The adoption did not have a material impact on its condensed consolidated statement of operations. The Company elected to not recognize lease assets and liabilities for leases with an initial term of twelve months or less.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss per Common Share |
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. Potentially dilutive securities which include outstanding warrants, stock options and preferred stock have been excluded from the computation of diluted net loss per share as their effect would be anti-dilutive. For all periods presented, basic and diluted net loss were the same.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Computation of Net Loss Per Share |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Anti-dilutive Securities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||
| Schedule of Warrant Activity |
|
Stock Incentive Plans (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Option Activity |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Additional Information on Stock Options Outstanding |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Accounting Policies [Abstract] | ||||||||
| Net loss | $ (539) | $ (906) | $ (1,838) | $ (2,556) | $ (2,780) | $ (2,558) | $ (3,283) | $ (7,894) |
| Preferred stock dividends | (388) | (389) | (1,153) | (1,128) | ||||
| Net Loss allocable to common stock holders | $ (927) | $ (2,945) | $ (4,436) | $ (9,022) | ||||
| Weighted average common shares outstanding used to compute net loss per share, basic and diluted | 10,869,530 | 10,869,530 | 10,869,530 | 10,830,816 | ||||
| Net loss per share | $ (0.09) | $ (0.27) | $ (0.41) | $ (0.83) | ||||
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
| Accounting Policies [Abstract] | ||||
| Cash or cash equivalents | $ 0 | $ 0 | ||
| Working Capital (Deficit) | 14,000,000 | 14,000,000 | ||
| Net operating loss | 500,000 | 3,300,000 | ||
| Accumulated deficit | 43,800,000 | 43,800,000 | ||
| Liabilities, fair value disclosure | 0 | 0 | $ 0 | |
| Assets, fair value disclosure | $ 0 | 0 | $ 0 | |
| Impairment of long-lived assets | $ 0 | $ 0 | ||
| Period eligible for refund prior to expiration date | 9 months | |||
| Period eligible for refund after expiration date | 1 year | |||
Intangible Assets (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||
| Amortization expense | $ 0 | $ 18,000 | $ 0 | $ 53,000 |
Licensing Agreements (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Mar. 16, 2018 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Les Laboratories Servier License Agreement [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Payments for royalties | $ 0 | $ 8,000 | $ 0 | $ 27,000 | |
| Biofarma License Agreement [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Payments for royalties | $ 0 | $ 1,000 | $ 0 | $ 3,000 | |
| License Of DiLA Assets [Member] | Accrued Liabilities [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Upfront payment agreement for license agreement | $ 200,000 | ||||
| Upfront payment contingency period | 90 days | ||||
Related Party Transactions (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
Jul. 31, 2019 |
|
| Entity Listings [Line Items] | |||||
| Due to related party | $ 4,000 | $ 4,000 | |||
| Pharma Hub Network [Member] | Erik Emerson [Member] | |||||
| Entity Listings [Line Items] | |||||
| Equity method, ownership percentage | 22.00% | ||||
| BioMauris, LLC [Member] | |||||
| Entity Listings [Line Items] | |||||
| Related party expense | $ 32,000 | ||||
| BioMauris, LLC [Member] | Accounts Payable and Accrued Liabilities [Member] | |||||
| Entity Listings [Line Items] | |||||
| Due to related party | 0 | 0 | |||
| Pharma Hub Network [Member] | |||||
| Entity Listings [Line Items] | |||||
| Due to related party | 0 | $ 0 | |||
| Related party expense | $ 25,000 | $ 0 | $ 62,000 | ||
Schedule of Warrant Activity (Details) |
Sep. 30, 2020
shares
|
|---|---|
| Equity [Abstract] | |
| Expiring in 2021 | 343,750 |
| Expiring in 2022 | |
| Expiring in 2023 | 33,645,847 |
| Expiring in 2024 | 335,452 |
| Expiring thereafter | 34,721,951 |
| Total | 69,047,000 |
Stock Incentive Plans (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Options granted (in shares) | ||
| Share-based Payment Arrangement, Option [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Weighted average exercisable remaining contractual life | 9 months 29 days | |
| Options granted (in shares) | 0 | |
| Share-based payment arrangement, expense | $ 8,000 | $ 708,000 |
| Unrecognized compensation expense | 0 | |
| Intrinsic value of options outstanding | $ 0 | |
Commitments and Contingencies (Details Narrative) - ThreeCo Partners, LLC [Member] |
Dec. 09, 2019
USD ($)
|
|---|---|
| Entity Listings [Line Items] | |
| Operating lease term of contract | 19 months |
| Operating lease, monthly rent | $ 3,795 |
Subsequent Events (Details Narrative) |
Oct. 30, 2020
USD ($)
$ / shares
shares
|
May 05, 2020
$ / shares
|
|---|---|---|
| Subsequent Event [Line Items] | ||
| Debt instrument conversion price | $ 0.50 | |
| Subsequent Event [Member] | Senior Secured Convertible Promissory Note [Member] | Investor and lender [Member] | ||
| Subsequent Event [Line Items] | ||
| Debt instrument interest rate | 10.00% | |
| Purchase price | $ | $ 111,111 | |
| Warrants issued | shares | 1,587,301 | |
| Price per common stock | $ 0.08 | |
| Debt Instrument, Maturity Date | Apr. 30, 2021 | |
| Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |
| Debt instrument conversion price | $ 0.07 | |
| Debt instrument conversion ratio | 0.70 |