10-Q 1 sbph-10q_20200331.htm 10-Q sbph-10q_20200331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2020

or

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

For the transition period from                      to                     

Commission File Number: 001-37718

 

Spring Bank Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

52-2386345

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

35 Parkwood Drive, Suite 210

Hopkinton, MA

01748

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (508) 473-5993

 

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

 

Title of Each Class

 

Trading

Symbol

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

SBPH

 

The Nasdaq Stock Market, LLC

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.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

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

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

  

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 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 5, 2020, the registrant had 17,094,839 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Spring Bank Pharmaceuticals, Inc.

 

INDEX

 

 

 

 

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “design,” “expect,” “seek,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions.

These forward-looking statements include, but are not limited to, statements about:

 

our ongoing and planned preclinical studies and clinical trials;

 

preclinical study data and clinical trial data and the timing of results of our ongoing clinical studies and/or trials;

 

our plans to seek and enter into clinical trial collaborations and other broader collaborations; and

 

our estimates regarding prospects, strategies, expenses, operating capital requirements, results of operations and needs for additional financing.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause actual results or events to differ materially from the forward-looking statements that we make include, but are not limited to, the following:

We are very early in our development efforts and our product candidates may not be successful in later stage clinical trials. Results obtained in our preclinical studies and clinical trials to date are not necessarily indicative of results to be obtained in future clinical trials. As a result, our product candidates may never be approved as marketable therapeutics.

We will need additional funding to complete the development of our product candidates and before we can expect to become profitable from the sales of our products, if approved. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

We rely, and expect to continue to rely, on third parties to conduct our clinical trials and to manufacture our product candidates for preclinical and clinical testing. These third parties may not perform satisfactorily, which could delay our product development activities.

If we are unable to adequately protect our proprietary technology or obtain and maintain issued patents which are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.

We may not be able to retain key executives or to attract, retain and motivate key personnel. If we are unable to retain such key personnel, it could have a material adverse impact on our business and prospects.

Business interruptions resulting from the coronavirus disease 2019 (COVID-19) outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. You should also read carefully the factors described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 14, 2020, to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, press releases, and our website. Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

2


 

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements.

SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

ASSETS

 

(unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

     Cash and cash equivalents

 

$

30,633

 

 

$

28,709

 

     Marketable securities

 

 

16,873

 

 

 

25,746

 

     Prepaid expenses and other current assets

 

 

2,961

 

 

 

3,522

 

Total current assets

 

 

50,467

 

 

 

57,977

 

     Property and equipment, net

 

 

2,140

 

 

 

2,234

 

     Operating lease right-of-use assets

 

 

2,648

 

 

 

2,717

 

     Restricted cash

 

 

234

 

 

 

234

 

     Other assets

 

 

35

 

 

 

35

 

Total

 

$

55,524

 

 

$

63,197

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

     Accounts payable

 

$

1,992

 

 

$

2,210

 

     Accrued expenses and other current liabilities

 

 

2,486

 

 

 

2,438

 

     Convertible term loan, net of unamortized discount

 

 

19,147

 

 

 

 

     Accrued interest payable

 

 

399

 

 

 

403

 

     Operating lease liabilities, current

 

 

367

 

 

 

355

 

Total current liabilities

 

 

24,391

 

 

 

5,406

 

     Convertible term loan, net of unamortized discount

 

 

 

 

 

19,070

 

     Warrant liabilities

 

 

60

 

 

 

299

 

     Operating lease liabilities, noncurrent

 

 

2,774

 

 

 

2,869

 

     Other long-term liabilities

 

 

27

 

 

 

27

 

Total liabilities

 

 

27,252

 

 

 

27,671

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value—authorized, 10,000,000 shares at March 31, 2020

     and December 31, 2019; no shares issued or outstanding at March 31, 2020 and

     December 31, 2019

 

 

 

 

 

 

Common stock, $0.0001 par value—authorized, 200,000,000 shares at March 31, 2020

     and December 31, 2019; 16,582,444 and 16,513,763 shares issued and outstanding

     at March 31, 2020 and December 31, 2019, respectively

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

162,771

 

 

 

161,924

 

Accumulated deficit

 

 

(134,343

)

 

 

(126,165

)

Accumulated other comprehensive loss

 

 

(158

)

 

 

(235

)

Total stockholders’ equity

 

 

28,272

 

 

 

35,526

 

Total

 

$

55,524

 

 

$

63,197

 

 

See accompanying notes to consolidated financial statements.

 

 

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SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In Thousands, Except Share and Per Share Data)

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

$

5,303

 

 

$

5,567

 

General and administrative

 

 

2,879

 

 

 

2,810

 

Total operating expenses

 

 

8,182

 

 

 

8,377

 

Loss from operations

 

 

(8,182

)

 

 

(8,377

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

241

 

 

 

361

 

Interest expense

 

 

(476

)

 

 

 

Change in fair value of warrant liabilities

 

 

239

 

 

 

2,821

 

Net loss

 

 

(8,178

)

 

 

(5,195

)

Unrealized gain/(loss) on marketable securities

 

 

77

 

 

 

(116

)

Comprehensive loss

 

$

(8,101

)

 

$

(5,311

)

Net loss per common share - basic and diluted

 

$

(0.49

)

 

$

(0.32

)

Weighted-average number of shares outstanding - basic and diluted

 

 

16,523,750

 

 

 

16,436,970

 

 

See accompanying notes to consolidated financial statements.

 

 

 


4


 

SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(In Thousands, Except Share and Per Share Data)

 

For the Three Months Ended

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Other

Comprehensive

 

 

Total

Stockholders’

 

March 31, 2020

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2019

 

 

16,513,763

 

 

$

2

 

 

$

161,924

 

 

$

(126,165

)

 

$

(235

)

 

$

35,526

 

Stock-based compensation

 

 

 

 

 

 

 

 

792

 

 

 

 

 

 

 

 

 

792

 

Issuance of common stock for services rendered

 

 

26,881

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Issuance of common stock in connection with

     at-the-market offering, net of issuance costs

 

 

41,800

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

 

 

30

 

Net unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77

 

 

 

77

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,178

)

 

 

 

 

 

(8,178

)

Balance at March 31, 2020

 

 

16,582,444

 

 

$

2

 

 

$

162,771

 

 

$

(134,343

)

 

$

(158

)

 

$

28,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Other

Comprehensive

 

 

Total

Stockholders’

 

March 31, 2019

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2018

 

 

16,434,614

 

 

$

2

 

 

$

157,931

 

 

$

(102,068

)

 

$

(5

)

 

$

55,860

 

Stock-based compensation

 

 

 

 

 

 

 

 

913

 

 

 

 

 

 

 

 

 

913

 

Issuance of common stock for services rendered

 

 

7,918

 

 

 

 

 

 

84

 

 

 

 

 

 

 

 

 

84

 

Net unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(116

)

 

 

(116

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(5,195

)

 

 

 

 

 

(5,195

)

Balance at March 31, 2019

 

 

16,442,532

 

 

$

2

 

 

$

158,928

 

 

$

(107,263

)

 

$

(121

)

 

$

51,546

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

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SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

 

 

 

For the Three Months Ended

March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(8,178

)

 

$

(5,195

)

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

96

 

 

 

83

 

Operating lease right-of-use asset amortization

 

 

69

 

 

 

65

 

Change in fair value of warrant liabilities

 

 

(239

)

 

 

(2,821

)

Non-cash interest expense

 

 

77

 

 

 

 

Non-cash investment expense

 

 

(127

)

 

 

(12

)

Non-cash stock-based compensation

 

 

817

 

 

 

972

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

561

 

 

 

431

 

Other assets

 

 

 

 

 

(31

)

Accounts payable

 

 

(218

)

 

 

106

 

Accrued expenses and other liabilities

 

 

44

 

 

 

(411

)

Operating lease liabilities

 

 

(83

)

 

 

26

 

Net cash used in operating activities

 

 

(7,181

)

 

 

(6,787

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sale of marketable securities

 

 

15,077

 

 

 

8,884

 

Purchases of marketable securities

 

 

(6,000

)

 

 

 

Purchases of property and equipment

 

 

(2

)

 

 

(71

)

Net cash provided by investing activities

 

 

9,075

 

 

 

8,813

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock in connection

     with at-the-market offering, net of issuance costs

 

 

30

 

 

 

 

Cash provided by financing activities

 

 

30

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

 

 

1,924

 

 

 

2,026

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

28,943

 

 

 

14,958

 

Cash, cash equivalents and restricted cash, end of period

 

$

30,867

 

 

$

16,984

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for taxes

 

$

 

 

$

 

Cash paid for interest, net

 

$

403

 

 

$

 

 

See accompanying notes to consolidated financial statements.

 

 

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Spring Bank Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

 

 

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Spring Bank Pharmaceuticals, Inc. (the “Company”) is a clinical-stage biopharmaceutical company engaged in the discovery and development of novel therapeutics for the treatment of a range of cancers and inflammatory diseases using its proprietary small molecule nucleotide platform. The Company designs its compounds to selectively target and modulate the activity of specific proteins implicated in various disease states. The Company’s internally-developed programs are primarily designed to stimulate and/or dampen immune responses. The Company is devoting its resources to advancing multiple programs in its STING (STimulator of INterferon Genes) product portfolio.

Until January 2020, the Company was developing inarigivir, an orally-administered investigational selective immunomodulator, as a potential treatment for chronic hepatitis B virus, or HBV. Inarigivir was being evaluated in multiple clinical trials, including the Company’s Phase 2b CATALYST trials, designed to evaluate both treatment-naïve and virally-suppressed non-cirrhotic patients with HBV under multiple dosing regimens. The Company discontinued the development of inarigivir based on an ongoing assessment of patients in its Phase 2b CATALYST trials.

Since its inception in 2002 and prior to its initial public offering (“IPO”) in May 2016, the Company built its technology platform and product candidate pipeline, supported by grants and through private financings. The Company has three wholly owned subsidiaries: Sperovie Biosciences, Inc. formed in September 2015, SBP Securities Corporation formed in December 2016 and SBP International Limited formed in May 2019.

The Company’s success is dependent upon its ability to successfully complete clinical development and obtain regulatory approval of its product candidates, successfully commercialize approved products, generate revenue, and, ultimately, attain profitable operations.

Basis of Presentation and Liquidity

The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”).

The accompanying interim financial statements as of March 31, 2020 and for the three months ended March 31, 2020 and 2019, and related interim information contained within the notes to the financial statements, are unaudited. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of March 31, 2020, results of operations for the three months ended March 31, 2020 and 2019, statement of stockholders’ equity for the three months ended March 31, 2020 and 2019 and its cash flows for the three months ended March 31, 2020 and 2019. These interim financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on February 14, 2020. The results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full fiscal year or any interim period.

As of March 31, 2020, the Company had an accumulated deficit of $134.3 million and $47.5 million in cash, cash equivalents and marketable securities. On April 8, the Company repaid in full its $20.0 million convertible term loan (see Note 12).

The Company expects to continue to incur significant and increasing losses for the foreseeable future. The Company anticipates that its expenses will increase significantly as it continues to develop SB 11285 and its other product candidates. The Company does not have any committed external source of funds. As a result, the Company will need additional financing to support its continuing operations. Adequate additional funds may not be available to the Company on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect common stockholder rights. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish valuable rights to its technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to the Company.

There can be no assurance, however, that the Company will be able to receive cash proceeds from any of these potential sources. Refer to Part II, Item 1A. — Risk Factors — Business interruptions resulting from the coronavirus disease 2019 (COVID-19) outbreak

7


 

or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business, included elsewhere in this Quarterly Report on Form 10-Q regarding the adverse impact of the COVID-19 pandemic on, among other things, capital market conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sperovie Biosciences, Inc., SBP Securities Corporation and SBP International Limited. Sperovie Biosciences, Inc. had operations consisting mainly of legal fees associated with intellectual property activities as of March 31, 2020. Sperovie Biosciences, Inc. is a joint borrower with the Company under the Company’s term loan (see Note 9). SBP Securities Corporation had assets primarily related to investments in marketable securities and operations consisting primarily of interest income as of March 31, 2020. SBP International Limited had operations consisting mainly of clinical trial oversight, including European data protection oversight, as of March 31, 2020. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates relied upon in preparing the accompanying financial statements related to the fair value of warrants, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, and accounting for certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates.

Cash and Cash Equivalents

Cash equivalents are stated at fair value and include short-term, highly liquid investments with remaining maturities of 90 days or less at the date of purchase. Included in cash and cash equivalents as of March 31, 2020 are money market fund investments of $22.7 million and included in cash and cash equivalents as of December 31, 2019 are money market fund investments of $21.1 million and United States treasury securities of $6.0 million, which are reported at fair value (see Note 5).

Restricted Cash

As of March 31, 2020 and December 31, 2019, restricted cash consists of approximately $234,000, which is held as a security deposit required in conjunction with a lease agreement for the Company’s principal office and laboratory space entered into in October 2017.

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and marketable securities. Substantially all of the Company’s cash is held at financial institutions that management believes to be of high credit quality. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Investments in Marketable Securities

The Company invests excess cash balances in short-term and long-term marketable securities. The Company classifies investments in marketable securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time of purchase. At each balance sheet date presented, all investments in securities are classified as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary,” including the intention to sell and, if so, marks the investment to market through a charge to the Company’s consolidated statements of operations and comprehensive loss.

8


 

Property and Equipment, Net

Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives:

Asset Category

 

Useful Life

Equipment

 

5-7 years

Furniture and fixtures

 

5 years

Leasehold improvements

 

Lesser of 10 years or the remaining

term of the respective lease

 

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and operating lease liabilities in the Company’s consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term to each lease. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. As of March 31, 2020, no such impairment has occurred.

Research and Development Costs

Research and development expenses consist primarily of costs incurred for the Company’s research activities, including discovery efforts, and the development of product candidates, which include:

 

expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical activities and clinical trials on the Company’s behalf as well as contract manufacturing organizations, or CMOs, that manufacture drug products for use in the Company’s preclinical and clinical trials;

 

salaries, benefits and other related costs, including stock-based compensation expense, for personnel in the Company’s research and development functions;

 

costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

 

the cost of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

 

costs related to compliance with regulatory requirements; and

 

facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

The Company expenses research and development costs as incurred. The Company recognizes external development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its vendors and its clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in the Company’s consolidated financial statements as prepaid or accrued research and development expenses.

9


 

Warrants

The Company accounts for freestanding warrants within stockholders equity or as liabilities based on the characteristics and provisions of each instrument. The Company evaluates outstanding warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. If none of the criteria in the evaluation in these standards are met, the warrants are classified as a component of stockholders equity and initially recorded at their grant date fair value without subsequent remeasurement. Warrants that meet the criteria are classified as liabilities and remeasured to their fair value at the end of each reporting period.

Stock-Based Compensation

The Company’s stock-based payments include stock options, performance-based restricted stock units (“performance-based RSUs”), time-based restricted stock units (“time-based RSUs”) and grants of common stock. The Company accounts for all stock-based payment awards granted to employees and nonemployees using a fair value method. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, which is generally the vesting period, on a straight-line basis. The Company accounts for forfeitures as they occur.

The Company measures the fair value of the performance-based RSUs relating to the total share return performance using a Monte Carlo valuation model. The Company measures the fair value of the performance-based RSUs relating to the milestone performance goals using the fair value method and the probability that the specified performance criteria will be met. Each quarter the Company updates its assessment of the probability that the specified milestone criteria will be achieved and adjusts its estimate of the fair value, if necessary. Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss based on the department to which the related services are provided.

Financial Instruments

The Company’s financial instruments consist of cash equivalents, marketable securities, accounts payable, a term loan and liability classified warrants. The carrying amounts of cash and cash equivalents and accounts payable approximate their fair value due to the short-term nature of those financial instruments. The fair value of the marketable securities and liability classified warrants are remeasured to fair value each reporting period (see Note 5). The fair value of the term loan approximates its face value due to market terms.

Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include cash equivalents, marketable securities and warrant liabilities.

10


 

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive.

For the three months ended March 31, 2020 and 2019, both methods are equivalent. Basic and diluted net loss per share is described further in Note 2.

Income Taxes

Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities as well as net operating loss and tax credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the consolidated financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of interest expense. As of March 31, 2020 and December 31, 2019, the Company has not identified any material uncertain tax positions.

Guarantees and Indemnifications

As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity.

The Company leases its principal office and laboratory space in Hopkinton, Massachusetts under a non-cancelable operating lease. The Company has standard indemnification arrangements under the lease that require it to indemnify the landlords against liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or nonperformance under the Company’s lease.

Through March 31, 2020, the Company had not experienced any losses related to these indemnification obligations and no material claims were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Segment Information

Operating segments are identified as components of an enterprise about which separate and discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief executive officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement. This ASU removes, modifies and adds certain disclosure requirements of ASC Topic 820. The ASU is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard as of January 1, 2020; however, the adoption of this standard did not impact the Company’s consolidated financial statements.

11


 

2. NET LOSS PER SHARE

The following table summarizes the computation of basic and diluted net loss per share of the Company for such periods (in thousands, except share and per share data):

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Net loss

 

$

(8,178

)

 

$

(5,195

)

Weighted-average number of shares outstanding - basic and diluted

 

 

16,523,750

 

 

 

16,436,970

 

Net loss per common share - basic and diluted

 

$

(0.49

)

 

$

(0.32

)

 

Diluted net loss per common share is the same as basic net loss per common share for all periods presented.

The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact due to the losses reported:

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Convertible debt

 

 

2,328,642

 

 

 

 

Common stock warrants

 

 

1,927,124

 

 

 

1,662,124

 

Stock options, RSUs and inducement awards

 

 

1,871,058

 

 

 

1,919,765

 

 

3. INVESTMENTS

Cash in excess of the Company’s immediate requirements is invested in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital.

 

The following table summarizes the Company’s investments, by category, as of March 31, 2020 and December 31, 2019 (in thousands):

 

 

 

March 31,

 

 

December 31,

 

Investments - Current:

 

2020

 

 

2019

 

Debt securities - available for sale

 

$

16,873

 

 

$

25,746

 

Total

 

$

16,873

 

 

$

25,746

 

 

A summary of the Company’s available-for-sale classified investments as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

 

 

At March 31, 2020

 

 

 

Cost

Basis

 

 

Accumulated

Unrealized

Gains

 

 

Accumulated

Unrealized

Losses

 

 

 

Fair

Value

 

Investments - Current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

5,028

 

 

$

 

 

$

(73

)

 

 

$

4,955

 

United States treasury securities

 

 

12,003

 

 

 

 

 

 

(85

)

 

 

$

11,918

 

Total

 

$

17,031

 

 

$

 

 

$

(158

)

 

 

$

16,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

Cost

Basis

 

 

Accumulated

Unrealized

Gains

 

 

Accumulated

Unrealized

Losses

 

 

 

Fair

Value

 

Investments - Current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

4,990

 

 

$

 

 

$

(58

)

 

 

$

4,932

 

United States treasury securities

 

 

20,979

 

 

 

 

 

 

(165

)

 

 

 

20,814

 

Total

 

$

25,969

 

 

$

 

 

$

(223

)

(1)

 

$

25,746

 

(1) $(12) of unrealized losses are included in the cash and cash equivalents balance as of December 31, 2019, a total of $(235) net

    unrealized losses at December 31, 2019.

 


12


 

The amortized cost and fair value of the Company’s available-for-sale investments, by contract maturity, as of March 31, 2020 consisted of the following (in thousands):

 

 

Amortized Cost

 

 

Fair Value

 

Due in one year or less

 

$

17,031

 

 

$

16,873

 

Total

 

$

17,031

 

 

$

16,873

 

 

 

4. PROPERTY AND EQUIPMENT, NET

Property and equipment as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Equipment

 

$

1,278

 

 

$

1,278

 

Furniture and fixtures

 

 

425

 

 

 

450

 

Leasehold improvements

 

 

1,356

 

 

 

1,356

 

Total property and equipment

 

 

3,059

 

 

 

3,084

 

Less: accumulated depreciation and amortization

 

 

(919

)

 

 

(850

)

Property and equipment, net

 

$

2,140

 

 

$

2,234

 

 

Depreciation expense for the three months ended March 31, 2020 and 2019 was $96,000 and $83,000, respectively.

 

5. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its United States treasury securities and fixed income securities within Level 2 because their fair values are determined using alternative pricing sources or models that utilized market observable inputs.

 


13


 

A summary of the assets and liabilities that are measured at fair value as of March 31, 2020 and December 31, 2019 is as follows (in thousands):

 

 

 

 

 

 

Fair Value Measurement at

March 31, 2020

 

Assets:

 

Carrying

Value

 

 

Quoted Prices in

Active Markets

for Identical

Assets

(Level 1)

 

 

Significant

other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Money market funds(1)

 

$

22,662

 

 

$

22,662

 

 

$

 

 

$

 

Fixed income securities

 

 

16,873

 

 

 

 

 

 

16,873

 

 

 

 

Total

 

$

39,535

 

 

$

22,662

 

 

$

16,873

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liabilities

 

$

60

 

 

$

 

 

$

 

 

$

60

 

Total

 

$

60

 

 

$

 

 

$

 

 

$

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurement at

December 31, 2019

 

Assets:

 

Carrying

Value

 

 

Quoted Prices in

Active Markets

for Identical

Assets

(Level 1)

 

 

Significant

other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Money market funds (1)

 

$

21,065

 

 

$

21,065

 

 

$

 

 

$

 

United States treasury securities (1)

 

 

5,982

 

 

 

 

 

 

5,982

 

 

 

 

Fixed income securities

 

 

25,746

 

 

 

 

 

 

25,746

 

 

 

 

Total

 

$

52,793

 

 

$

21,065

 

 

$

31,728

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liabilities

 

$

299

 

 

$

 

 

$

 

 

$

299

 

Total

 

$

299

 

 

$

 

 

$

 

 

$

299

 

 

(1) Money market funds and United States treasury securities with maturities of less than 90 days at the date of purchase are included within cash and cash
     equivalents in the accompanying consolidated balance sheets and are recognized at fair value.

 

The following table reflects the change in the Company’s Level 3 liabilities, which consists of the warrants issued in a private placement in November 2016 (see Note 7), for the period ended March 31, 2020 (in thousands):

 

 

November Private

Placement Warrants

 

Balance at December 31, 2018

 

$

8,511

 

     Change in fair value

 

 

(8,212

)

Balance at December 31, 2019

 

 

299

 

     Change in fair value

 

 

(239

)

Balance at March 31, 2020

 

$

60

 

 

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Preclinical and clinical studies

 

$

1,717

 

 

$

1,473

 

Compensation and benefits

 

 

388

 

 

 

614

 

Accounting and legal

 

 

219

 

 

 

240

 

Other

 

 

162

 

 

 

111

 

Total accrued expenses and other current liabilities

 

$

2,486

 

 

$

2,438

 

 

 

 


14


 

7. WARRANTS

In connection with the Company’s IPO, the Company issued to the sole book-running manager for the IPO a warrant to purchase 27,600 shares of common stock in May 2016 and a warrant to purchase 747 shares of common stock in June 2016 (together, the “IPO Warrants”). The IPO Warrants are exercisable at an exercise price of $15.00 per share and expire on May 5, 2021. The Company evaluated the terms of the IPO Warrants and concluded that they should be equity-classified. The fair value of the May 2016 IPO Warrants was estimated on the applicable issuance dates using a Black-Scholes pricing model based on the following assumptions: an expected term of 4.99 years; expected stock price volatility of 87%; a risk-free rate of 1.20%; and a dividend yield of 0%. The fair value of the June 2016 IPO Warrants was estimated on the applicable issuance dates using a Black-Scholes pricing model based on the following assumptions: an expected term of 4.92 years; expected stock price volatility of 87%; a risk-free interest rate of 1.23%; and a dividend yield of 0%. The aggregate fair value of the IPO Warrants was approximately $0.2 million.

In November 2016, the Company entered into a definitive agreement with respect to the private placement of 1,644,737 shares of common stock and warrants to purchase 1,644,737 shares of common stock (the “November 2016 Private Placement Warrants”) to a group of accredited investors. These investors paid $9.12 for each share of common stock and warrant to purchase one share of common stock. The November 2016 Private Placement Warrants are exercisable at an exercise price of $10.79 per share and expire on November 23, 2021. The Company evaluated the terms of these warrants and concluded that they are liability-classified. In November 2016, the Company recorded the fair value of these warrants of approximately $8.3 million using a Black-Scholes pricing model. The Company must recognize any change in the value of the warrant liability each reporting period in the statement of operations. As of March 31, 2020 and December 31, 2019, the fair value of the November 2016 Private Placement Warrants was approximately $0.1 million and $0.3 million, respectively and 10,960 shares have been exercised to date (see Note 5).

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the warrants is as follows:

 

 

March 31,

2020

 

 

December 31,

2019

 

Risk-free interest rate

 

 

0.2

%

 

 

1.6

%

Expected term (in years)

 

 

1.6

 

 

 

1.9

 

Expected volatility

 

 

100.0

%

 

 

100.0

%

Expected dividend yield

 

 

0

%

 

 

0

%

 

In September 2019, the Company entered into a term loan (the “Convertible Term Loan”) with Pontifax Medison Finance (Israel) L.P. and Pontifax Medison Finance (Cayman) L.P., as lenders, and Pontifax Medison Finance GP, L.P., in its capacity as administrative agent and collateral agent for itself and the lenders, providing for a $20.0 million term loan (see Note 9). In connection with the Company’s Convertible Term Loan, the Company issued to certain lenders warrants to purchase 250,000 shares of common stock (the “Pontifax Warrants”). Prior to their amendment in April 2020 (see Note 12), the Pontifax Warrants were exercisable at an exercise price of $6.57 per share. The Pontifax Warrants expire on September 19, 2025. The Company evaluated the terms of the Pontifax Warrants and concluded that they are equity-classified. The fair value of the Pontifax Warrants was estimated on the issuance date using a Black-Scholes pricing model based on the following assumptions: an expected term of 6.0 years; expected stock price volatility of 83.2%; a risk-free interest rate of 1.7%; and a dividend yield of 0%. The aggregate fair value of the Pontifax Warrants was approximately $0.6 million and was recorded as a discount to the term loan and will be amortized over the life of the term loan using the effective interest rate method.

In September 2019, the Company issued warrants to a service provider to purchase 15,000 shares of common stock (the “September 2019 Warrants”). The September 2019 Warrants are exercisable at an exercise price of $4.21 per share and expire on September 19, 2021. The Company evaluated the terms of the September 2019 Warrants and concluded that they are equity-classified. The fair value of the September 2019 Warrants was estimated on the applicable issuance date using a Black-Scholes pricing model based on the following assumptions: an expected term of 2.0 years; expected stock price volatility of 69.4%; a risk-free interest rate of 1.7%; and a dividend yield of 0%. The aggregate fair value of the September 2019 Warrants was approximately $19,000. Approximately $13,000 and $6,000 has been expensed during the periods ended March 31, 2020 and December 31, 2019, respectively.

15


 

 

A summary of the warrant activity for the three months ended March 31, 2020 and for the year ended December 31, 2019 is as follows:

 

 

 

Warrants

 

Outstanding at December 31, 2018

 

 

1,662,124

 

     Grants

 

 

265,000

 

     Exercises

 

 

 

     Expirations/cancellations

 

 

 

Outstanding at December 31, 2019

 

 

1,927,124

 

     Grants

 

 

 

     Exercises

 

 

 

     Expirations/cancellations

 

 

 

Outstanding at March 31, 2020

 

 

1,927,124

 

 

8. STOCKHOLDERS’ EQUITY

Common and Preferred Stock

In August 2017, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which the Company may offer and sell, from time to time through Cantor, shares of the Company’s common stock having an aggregate offering price of up to $50.0 million. The Company pays Cantor a commission rate equal to 3.0% of the aggregate gross proceeds from each sale. During the three months ended March 31, 2020, the Company sold an aggregate of 41,800 shares of its common stock pursuant to the Sales Agreement at a weighted-average selling price of $1.42 per share, which resulted in approximately $30,000 in net proceeds to the Company. During the year ended December 31, 2019, the Company sold an aggregate of 600 shares of its common stock pursuant to the Sales Agreement at a weighted-average selling price of $10.03 per share, which resulted in de minimis net proceeds to the Company.

 

2014 Stock Incentive Plan and 2015 Stock Incentive Plan

In April 2014, the Company’s Board of Directors approved the 2014 Stock Incentive Plan (the “2014 Plan”) and authorized 750,000 shares of common stock to be issued under the 2014 Plan.

The Company’s 2015 Stock Incentive Plan (the “2015 Plan”) became effective immediately prior to the closing of the Company’s IPO on May 11, 2016. Upon the effectiveness of the 2015 Plan, 116,863 shares of common stock that remained available for grant under the 2014 Plan became available for grant under the 2015 Plan, and no further awards were available to be issued under the 2014 Plan.

The Company’s Board of Directors initially adopted the 2015 Plan in December 2015, subject to stockholder approval, and authorized 750,000 shares of Common Stock to be issued under the 2015 Plan. The 2014 Plan and 2015 Plan provide for the issuance of common stock, stock options and other stock-based awards to employees, officers, directors, consultants and advisors of the Company.

Amended and Restated 2015 Stock Incentive Plan

In March 2018, the Board approved the Amended and Restated 2015 Plan. Upon receipt of stockholder approval at the Company’s 2018 annual meeting in June 2018, the 2015 Plan was amended and restated in its entirety increasing the authorized number of shares of common stock reserved for issuance by 800,000 shares (together with the 2014 Plan, the 2015 Plan, the “Stock Incentive Plans”). Pursuant to the Amended and Restated 2015 Plan, there are 1,666,863 shares authorized for issuance. In addition, to the extent any outstanding awards under the 2014 Plan expire, terminate or are otherwise surrendered, cancelled or forfeited after the closing of the Company’s IPO, those shares are added to the authorized shares under the Amended and Restated 2015 Plan. The total amount of shares authorized for issuance under both the 2014 Plan and the Amended and Restated 2015 Plan is 2,300,000. As of March 31, 2020, the Company had 352,399 shares available for issuance under the Amended and Restated 2015 Plan.

The exercise price of stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the Stock Incentive Plans expire 10 years after the grant date, unless the Board sets a shorter term. There were no stock options granted prior to 2015.

16


 

The following table summarizes the option activity under the Stock Incentive Plans for the three months ended March 31, 2020 and the year ended December 31, 2019:

 

 

Options

 

 

Weighted-Average

Exercise Price

Per Share

 

 

Aggregate

Intrinsic

Value

 

Outstanding at December 31, 2018

 

 

1,299,565

 

 

$

11.18

 

 

$

881,385

 

     Granted

 

 

395,500

 

 

 

9.61

 

 

 

 

     Exercised

 

 

 

 

 

 

 

 

 

     Cancelled

 

 

(22,750

)

 

 

13.36

 

 

 

 

Outstanding at December 31, 2019

 

 

1,672,315

 

 

 

10.78

 

 

 

 

     Granted

 

 

225,000

 

 

 

1.41

 

 

 

 

     Exercised

 

 

 

 

 

 

 

 

 

     Cancelled

 

 

(315,257

)

 

 

11.26

 

 

 

 

Options outstanding at March 31, 2020

 

 

1,582,058

 

 

$

9.35

 

 

$

 

Options exercisable at March 31, 2020

 

 

991,466

 

 

$

10.85

 

 

$

 

 

As of March 31, 2020, all options outstanding have a weighted-average remaining contractual life of 7.3 years. The weighted-average fair value of all stock options granted for the three months ended March 31, 2020 was $0.98. Intrinsic value at March 31, 2020 and December 31, 2019 is based on the closing price of the Company’s common stock on that date of $0.93 per share and $1.58 per share, respectively.

In January 2018, the Company issued a stock option award as an inducement grant for the purchase of an aggregate of 50,000 shares of the Company’s common stock, outside of the Stock Incentive Plans, at an exercise price of $12.02 per share. In February 2019, the Company issued a stock option award as an inducement grant for the purchase of an aggregate of 40,000 shares of the Company’s common stock, outside of the Stock Incentive Plans, at an exercise price of $10.39 per share. These inducement grants are excluded from the option activity table above.

The assumptions the Company used to determine the fair value of stock options granted to employees and directors during the three months ended March 31, 2020 and 2019 are as follows, presented on a weighted-average basis:

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Risk-free interest rate

 

 

0.7