false 2020 Q3 0001226616 --12-31 true true us-gaap:AccountingStandardsUpdate201813Member P3Y P3Y P6M P6M P6M 0.0016 0.0168 0.0155 0.0219 0.5744 0.7582 0.6064 0.619 P4Y6M P5Y9M18D P4Y9M18D P5Y3M18D 0001226616 2020-01-01 2020-09-30 xbrli:shares 0001226616 2020-10-22 iso4217:USD 0001226616 2020-09-30 0001226616 2019-12-31 iso4217:USD xbrli:shares 0001226616 2020-07-01 2020-09-30 0001226616 2019-07-01 2019-09-30 0001226616 2019-01-01 2019-09-30 0001226616 us-gaap:CommonStockMember 2019-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001226616 us-gaap:RetainedEarningsMember 2019-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001226616 2020-01-01 2020-03-31 0001226616 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001226616 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001226616 us-gaap:CommonStockMember 2020-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001226616 us-gaap:RetainedEarningsMember 2020-03-31 0001226616 2020-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001226616 2020-04-01 2020-06-30 0001226616 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0001226616 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0001226616 us-gaap:CommonStockMember 2020-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001226616 us-gaap:RetainedEarningsMember 2020-06-30 0001226616 2020-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001226616 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001226616 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001226616 us-gaap:CommonStockMember 2020-09-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001226616 us-gaap:RetainedEarningsMember 2020-09-30 0001226616 us-gaap:CommonStockMember 2018-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001226616 us-gaap:RetainedEarningsMember 2018-12-31 0001226616 2018-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001226616 2019-01-01 2019-03-31 0001226616 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001226616 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001226616 us-gaap:CommonStockMember 2019-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001226616 us-gaap:RetainedEarningsMember 2019-03-31 0001226616 2019-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001226616 2019-04-01 2019-06-30 0001226616 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001226616 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001226616 us-gaap:CommonStockMember 2019-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001226616 us-gaap:RetainedEarningsMember 2019-06-30 0001226616 2019-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001226616 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001226616 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001226616 us-gaap:CommonStockMember 2019-09-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001226616 us-gaap:RetainedEarningsMember 2019-09-30 0001226616 2019-09-30 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2011-10-31 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2020-07-01 2020-09-30 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2020-01-01 2020-09-30 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2019-07-01 2019-09-30 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2019-01-01 2019-09-30 0001226616 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2020-09-30 0001226616 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2019-12-31 0001226616 mnov:TwoThousandThirteenEquityIncentivePlanMember 2013-06-30 0001226616 mnov:TwoThousandThirteenEquityIncentivePlanMember 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember mnov:TwoThousandThirteenEquityIncentivePlanMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember mnov:TwoThousandThirteenEquityIncentivePlanMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember mnov:TwoThousandThirteenEquityIncentivePlanMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember mnov:TwoThousandFourPlanMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember mnov:TwoThousandFourPlanMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember mnov:TwoThousandFourPlanMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockMember 2017-12-31 0001226616 us-gaap:EmployeeStockMember srt:MaximumMember 2020-01-01 2020-09-30 xbrli:pure 0001226616 us-gaap:EmployeeStockMember 2020-09-30 0001226616 us-gaap:EmployeeStockMember 2020-01-01 2020-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2020-07-01 2020-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2019-07-01 2019-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2020-01-01 2020-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2019-01-01 2019-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2020-07-01 2020-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2019-07-01 2019-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2019-01-01 2019-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2019-01-01 2019-09-30 0001226616 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0001226616 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-09-30 0001226616 us-gaap:EmployeeStockMember 2019-01-01 2019-09-30 0001226616 us-gaap:EmployeeStockOptionMember 2020-09-30 0001226616 srt:MaximumMember mnov:TwoThousandFifteenAtMarketIssuanceSalesAgreementMember mnov:MLVCoLLCMember 2015-05-22 0001226616 mnov:TwoThousandFifteenAtMarketIssuanceSalesAgreementMember mnov:MLVCoLLCMember 2015-05-21 2015-05-22 0001226616 mnov:TwoThousandFifteenAtMarketIssuanceSalesAgreementMember mnov:MLVCoLLCMember 2020-01-01 2020-09-30 0001226616 mnov:TwoThousandNineteenAtMarketIssuanceSalesAgreementMember srt:MaximumMember mnov:BRileyFBRIncMember 2019-08-23 0001226616 mnov:TwoThousandNineteenAtMarketIssuanceSalesAgreementMember mnov:BRileyFBRIncMember 2019-08-23 2019-08-23 0001226616 mnov:TwoThousandNineteenAtMarketIssuanceSalesAgreementMember 2020-01-01 2020-09-30 0001226616 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001226616 us-gaap:CommonStockMember srt:WeightedAverageMember 2020-09-30

 

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 September 30, 2020

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: 001-33185

 

MEDICINOVA, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

33-0927979

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

4275 Executive Square, Suite 300

La Jolla, CA

 

92037

(Address of Principal Executive Offices)

 

(Zip Code)

 

(858) 373-1500

(Registrant’s Telephone Number, Including Area Code)

 

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

 

Common Stock, $0.001 par value

 

MNOV

 

The Nasdaq Stock Market LLC

(Title of each class)

 

(Trading symbol(s))

 

(Name of each exchange on which registered)

 

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, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer”, “large 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 October 22, 2020, the registrant had 44,927,560 shares of Common Stock ($0.001 par value) outstanding.

 

 

 


 

2


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q, in particular "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," and the information incorporated by reference herein contains “forward-looking statements”. The forward-looking statements are contained principally in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this report. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend," "expect," "could," "plan," "potential," "predict," "seek," "should," "would" or the negative version of these words and similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those described in "Risk Factors" and elsewhere in this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this report. Considering the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

 

The widespread outbreak of an illness or any other communicable disease, such as COVID-19, or any other public health crisis, could adversely affect our business, results of operations and financial condition;

 

Inability to raise additional capital if needed;

 

Inability to generate revenues from product sales to continue business operations;

 

Inability to develop and commercialize our product candidates;

 

Failure or delay in completing clinical trials or obtaining Food and Drug Administration or foreign regulatory approval for our product candidates in a timely manner;

 

Unsuccessful clinical trials stemming from clinical trial designs, failure to enroll a sufficient number of patients, undesirable side effects and other safety concerns;

 

Inability to demonstrate sufficient efficacy of product candidates;

 

Reliance on the success of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates;

 

Delays in commencement or completion of clinical trials or suspension or termination of clinical trials;

 

Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;

 

Competitors may develop products rendering our product candidates obsolete and noncompetitive;

 

Inability to successfully attract partners and enter into collaborations on acceptable terms;

 

Dependence on third parties to conduct clinical trials and to manufacture product candidates;

 

Dependence on third parties to market and distribute products;

 

Our product candidates, if approved, may not gain market acceptance or obtain adequate coverage for third party reimbursement;

 

Disputes or other developments concerning our intellectual property rights;

 

Actual and anticipated fluctuations in our quarterly or annual operating results;

 

Price and volume fluctuations in the overall stock markets;

 

Litigation or public concern about the safety of our potential products;

 

International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange;

 

High quality material for our products may become difficult to obtain or expensive;

 

3


 

 

Strict government regulations on our business;

 

Regulations governing the production or marketing of our product candidates;

 

Loss of, or inability to attract, key personnel; and

 

Economic, political, foreign exchange and other risks associated with international operations.

 

 

 

 

 

4


 

MEDICINOVA, INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

6

 

 

 

ITEM 1.

 

CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

6

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

16

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

20

ITEM 4.

 

CONTROLS AND PROCEDURES

20

 

 

 

 

PART II. OTHER INFORMATION

21

 

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

21

ITEM 1A.

 

RISK FACTORS

21

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

21

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

21

ITEM 4.

 

MINE SAFETY DISCLOSURES

21

ITEM 5.

 

OTHER INFORMATION

21

ITEM 6.

 

EXHIBITS

22

 

 

SIGNATURES

23

 

 

 

 

5


 

PART I. FINANCIAL INFORMATION

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS.

 

 

MEDICINOVA, INC.

CONSOLIDATED BALANCE SHEETS 

 

 

 

September 30,

 

 

 

 

December 31,

 

 

 

2020

 

 

 

 

2019

 

 

 

(Unaudited)

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

61,661,341

 

 

 

 

$

63,792,657

 

Prepaid expenses and other current assets

 

 

893,843

 

 

 

 

 

511,916

 

Total current assets

 

 

62,555,184

 

 

 

 

 

64,304,573

 

Goodwill

 

 

9,600,240

 

 

 

 

 

9,600,240

 

In-process research and development

 

 

4,800,000

 

 

 

 

 

4,800,000

 

Property and equipment, net

 

 

28,857

 

 

 

 

 

40,550

 

Other non-current assets

 

 

309,112

 

 

 

 

 

459,811

 

Total assets

 

$

77,293,393

 

 

 

 

$

79,205,174

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

376,271

 

 

 

 

$

451,326

 

Accrued expenses and other liabilities

 

 

1,428,003

 

 

 

 

 

1,776,912

 

Total current liabilities

 

 

1,804,274

 

 

 

 

 

2,228,238

 

Long-term deferred revenue

 

 

1,694,163

 

 

 

 

 

1,694,163

 

Deferred tax liability

 

 

201,792

 

 

 

 

 

201,792

 

Other non-current liabilities

 

 

39,891

 

 

 

 

 

186,358

 

Total liabilities

 

 

3,740,120

 

 

 

 

 

4,310,551

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized at September 30, 2020 and December 31, 2019; 44,927,560 and 43,908,065 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

44,928

 

 

 

 

 

43,908

 

Additional paid-in capital

 

 

453,539,933

 

 

 

 

 

444,016,341

 

Accumulated other comprehensive loss

 

 

(90,035

)

 

 

 

 

(92,681

)

Accumulated deficit

 

 

(379,941,553

)

 

 

 

 

(369,072,945

)

Total stockholders’ equity

 

 

73,553,273

 

 

 

 

 

74,894,623

 

Total liabilities and stockholders' equity

 

$

77,293,393

 

 

 

 

$

79,205,174

 

 

See accompanying notes.

 

6


 

MEDICINOVA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

  

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research, development and patents

 

$

2,237,877

 

 

$

1,150,815

 

 

$

5,687,658

 

 

$

4,250,205

 

General and administrative

 

 

1,492,139

 

 

 

1,494,750

 

 

 

5,477,223

 

 

 

7,556,740

 

Total operating expenses

 

 

3,730,016

 

 

 

2,645,565

 

 

 

11,164,881

 

 

 

11,806,945

 

Operating loss

 

 

(3,730,016

)

 

 

(2,645,565

)

 

 

(11,164,881

)

 

 

(11,806,945

)

Interest income

 

 

37,204

 

 

 

288,643

 

 

 

324,175

 

 

 

900,462

 

Other expense

 

 

(11,008

)

 

 

(21,582

)

 

 

(27,902

)

 

 

(51,087

)

Net loss applicable to common stockholders

 

$

(3,703,820

)

 

$

(2,378,504

)

 

$

(10,868,608

)

 

$

(10,957,570

)

Basic and diluted net loss per common share

 

$

(0.08

)

 

$

(0.05

)

 

$

(0.25

)

 

$

(0.26

)

Shares used to compute basic and diluted net

   loss per common share

 

 

44,643,736

 

 

 

43,343,329

 

 

 

44,229,715

 

 

 

42,963,287

 

Net loss applicable to common stockholders

 

$

(3,703,820

)

 

$

(2,378,504

)

 

$

(10,868,608

)

 

$

(10,957,570

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

2,761

 

 

 

(782

)

 

 

2,646

 

 

 

792

 

Comprehensive loss

 

$

(3,701,059

)

 

$

(2,379,286

)

 

$

(10,865,962

)

 

$

(10,956,778

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.


 

7


 

MEDICINOVA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Accumulated

other

comprehensive

 

 

Accumulated

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit

 

 

equity

 

Balance at December 31, 2019

 

 

43,908,065

 

 

$

43,908

 

 

$

444,016,341

 

 

$

(92,681

)

 

$

(369,072,945

)

 

$

74,894,623

 

Share-based compensation

 

 

 

 

 

 

596,378

 

 

 

 

 

 

 

596,378

 

Issuance of shares under an employee stock purchase plan (ESPP)

 

 

1,979

 

 

 

2

 

 

 

6,252

 

 

 

 

 

 

 

6,254

 

Issuance of common stock under at-the-market equity distribution

   and sales agreements, net of offering costs

 

 

68,952

 

 

 

69

 

 

 

412,623

 

 

 

 

 

 

 

 

 

412,692

 

Net loss

 

 

 

 

 

 

 

 

 

 

(2,713,559

)

 

 

(2,713,559

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

(120

)

 

 

 

 

(120

)

Balance at March 31, 2020

 

 

43,978,996

 

 

 

43,979

 

 

 

445,031,594

 

 

 

(92,801

)

 

 

(371,786,504

)

 

 

73,196,268

 

Share-based compensation

 

 

 

 

 

 

 

 

1,147,154

 

 

 

 

 

 

 

 

 

1,147,154

 

Issuance of common stock for option exercises

 

 

143,863

 

 

 

144

 

 

 

438,118

 

 

 

 

 

 

 

438,262

 

Issuance of common stock under at-the-market equity distribution

   and sales agreements, net of offering costs

 

 

140,719

 

 

 

141

 

 

 

762,342

 

 

 

 

 

 

 

 

 

762,483

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,451,229

)

 

 

(4,451,229

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Balance at June 30, 2020

 

 

44,263,578

 

 

 

44,264

 

 

 

447,379,208

 

 

 

(92,796

)

 

 

(376,237,733

)

 

 

71,092,943

 

Share-based compensation

 

 

 

 

 

 

 

 

1,033,971

 

 

 

 

 

 

 

 

 

1,033,971

 

Issuance of common stock for option exercises

 

 

60,000

 

 

 

60

 

 

 

187,990

 

 

 

 

 

 

 

188,050

 

Issuance of shares under an employee stock purchase plan (ESPP)

 

 

1,855

 

 

 

2

 

 

 

5,452

 

 

 

 

 

 

 

 

 

5,454

 

Issuance of common stock under at-the-market equity distribution

   and sales agreements, net of offering costs

 

 

602,127

 

 

 

602

 

 

 

4,933,312

 

 

 

 

 

 

 

 

 

4,933,914

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,703,820

)

 

 

(3,703,820

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

2,761

 

 

 

 

 

 

2,761

 

Balance at September 30, 2020

 

 

44,927,560

 

 

$

44,928

 

 

$

453,539,933

 

 

$

(90,035

)

 

$

(379,941,553

)

 

$

73,553,273

 

 

 

8


 

 

 

 

Nine Months Ended September 30, 2019

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Accumulated

other

comprehensive

 

 

Accumulated

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit

 

 

equity

 

Balance at December 31, 2018

 

 

42,081,306

 

 

$

42,081

 

 

$

429,289,968

 

 

$

(93,150

)

 

$

(356,131,287

)

 

$

73,107,612

 

Share-based compensation

 

 

 

 

 

 

 

 

2,699,500

 

 

 

 

 

 

 

 

 

2,699,500

 

Issuance of shares under an employee stock purchase plan

 

 

2,401

 

 

 

2

 

 

 

16,901

 

 

 

 

 

 

 

 

 

16,903

 

Issuance of common stock under at-the-market equity distribution

   and sales agreements, net of offering costs

 

 

 

 

 

 

 

 

(8,532

)

 

 

 

 

 

 

 

 

(8,532

)

Issuance of common stock for option exercises

 

 

977,454

 

 

 

978

 

 

 

3,919,757

 

 

 

 

 

 

 

 

 

3,920,735

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,697,190

)

 

 

(4,697,190

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

(1,781

)

 

 

 

 

 

(1,781

)

Balance at March 31, 2019

 

 

43,061,161

 

 

 

43,061

 

 

 

435,917,594

 

 

 

(94,931

)

 

 

(360,828,477

)

 

 

75,037,247

 

Share-based compensation

 

 

 

 

 

 

 

 

1,842,514

 

 

 

 

 

 

 

 

 

1,842,514

 

Issuance of common stock for option exercises

 

 

38,000

 

 

 

38

 

 

 

180,332

 

 

 

 

 

 

 

 

 

180,370

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,881,876

)

 

 

(3,881,876

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

3,355

 

 

 

 

 

 

3,355

 

Balance at June 30, 2019

 

 

43,099,161

 

 

 

43,099

 

 

 

437,940,440

 

 

 

(91,576

)

 

 

(364,710,353

)

 

 

73,181,610

 

Share-based compensation

 

 

 

 

 

 

 

 

373,844

 

 

 

 

 

 

 

 

 

373,844

 

Issuance of shares under an employee stock purchase plan (ESPP)

 

 

1,541

 

 

 

2

 

 

 

10,415

 

 

 

 

 

 

 

 

 

10,417

 

Issuance of common stock, net of offering costs

 

 

347,902

 

 

 

348

 

 

 

3,164,107

 

 

 

 

 

 

 

 

 

3,164,455

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,378,504

)

 

 

(2,378,504

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

(782

)

 

 

 

 

 

(782

)

Balance at September 30, 2019

 

 

43,448,604

 

 

$

43,449

 

 

$

441,488,806

 

 

$

(92,358

)

 

$

(367,088,857

)

 

$

74,351,040

 

 

See accompanying notes.

 


 

9


 

MEDICINOVA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine months ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,868,608

)

 

$

(10,957,570

)

Adjustments to reconcile net loss to net cash used in operating

   activities:

 

 

 

 

 

 

 

 

Non-cash stock-based compensation

 

 

2,777,503

 

 

 

4,915,858

 

Depreciation and amortization

 

 

15,487

 

 

 

18,347

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(225,543

)

 

 

(452,515

)

Accounts payable, accrued liabilities and other liabilities

 

 

(576,116

)

 

 

(244,725

)

Net cash used in operating activities

 

 

(8,877,277

)

 

 

(6,720,605

)

Investing activities:

 

 

 

 

 

 

 

 

Acquisition of property and equipment

 

 

(3,794

)

 

 

(4,013

)

Net cash used in investing activities

 

 

(3,794

)

 

 

(4,013

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, exercise of common

stock options and warrants, net of issuance costs

 

 

6,735,401

 

 

 

7,257,028

 

Proceeds from issuance of equity awards under ESPP

 

 

11,708

 

 

 

27,320

 

Net cash provided by financing activities

 

 

6,747,109

 

 

 

7,284,348

 

Effect of exchange rate changes on cash and cash equivalents

 

 

2,646

 

 

 

(241

)

Net change in cash and cash equivalents

 

 

(2,131,316

)

 

 

559,489

 

Cash and cash equivalents, beginning of period

 

 

63,792,657

 

 

 

62,313,418

 

Cash and cash equivalents, end of period

 

$

61,661,341

 

 

$

62,872,907

 

 

See accompanying notes.

 

 

 

10


 

MEDICINOVA, INC.

Notes to Consolidated Financial Statements

(Unaudited)

 

 

1. Interim Financial Information

Organization and Business

MediciNova, Inc. (the “Company” or “MediciNova”) was incorporated in the state of Delaware in September 2000 and is a public company. The Company’s common stock is listed in both the United States and Japan and trades on the NASDAQ Global Market and the JASDAQ Market of the Tokyo Stock Exchange. MediciNova is a biopharmaceutical company focused on developing novel therapeutics for the treatment of serious diseases with unmet medical needs with a commercial focus on the United States market. The Company’s current strategy is to focus its development activities on BC-PIV vaccine for COVID-19 (Coronavirus Disease 2019), MN-166 (ibudilast) for neurological and other disorders such as progressive multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), chemotherapy-induced peripheral neuropathy, degenerative cervical myelopathy, glioblastoma, and substance dependence and addiction (e.g., methamphetamine dependence, opioid dependence and alcohol dependence), as well as for acute respiratory distress syndrome (ARDS), and MN-001 (tipelukast) for fibrotic diseases such as nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis (IPF). The Company’s pipeline also includes MN-221 (bedoradrine) for the treatment of acute exacerbation of asthma and MN-029 (denibulin) for solid tumor cancers.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions of the Securities and Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of MediciNova, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation.  

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company operates in a single operating segment – the acquisition and development of therapeutics for the treatment of serious diseases with unmet medical needs.

Cash and Cash Equivalents

         Cash and cash equivalents consist of cash and other highly liquid investments including money market accounts.

Research, Development and Patents

Research and development costs are expensed in the period incurred. Research and development costs primarily consist of salaries and related expenses for personnel, facilities and depreciation, research and development supplies, licenses and outside services. Such research and development costs totaled $2.1 million and $1.1 million for the three months ended September 30, 2020 and 2019, respectively and $5.4 million and $4.0 million for the nine months ended September 30, 2020 and 2019, respectively.

 

 

11


 

Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. The Company includes all external costs related to the filing of patents on developments in Research, Development and Patents expenses. Such patent-related expenses totaled $0.1 million for each of the three months ended September 30, 2020 and 2019, respectively and $0.3 million for each of the nine months ended September 30, 2020 and 2019, respectively.

Clinical Trial Accruals and Prepaid Expenses

Costs for preclinical studies, clinical studies and manufacturing activities are recognized as research and development expenses based on an evaluation of the progress by Company vendors towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided to the Company by such vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services are performed. The Company determines accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of studies, or the services completed. The Company’s estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Costs that are paid in advance of performance are deferred as a prepaid expense and amortized over the service period as the services are provided.

Impact of COVID-19 on the Company’s Business

The pandemic caused by an outbreak of a new strain of coronavirus (“COVID-19” or “the pandemic”) has resulted, and is likely to continue to result, in significant national and global economic disruption and may adversely affect the Company’s business. Although the pandemic resulted in a decrease in the number of patient visits at certain of the Company’s clinical trial sites, the Company expects this effect to be temporary. The Company has seen an increase in the number of patient visits compared to earlier in the pandemic and the Company continues to enroll patients in clinical trials. Throughout the pandemic, the Company has continued with routine clinical trial activities including executing new clinical trial agreements, negotiating budgets, institutional review board (IRB) approvals, site training, and other activities related to the initiation of new clinical trial sites. In addition, following the outbreak of the pandemic, the Company designed a clinical trial to evaluate MN-166 (ibudilast) for prevention of acute respiratory distress syndrome (ARDS) caused by COVID-19. Based on the Company’s current assessment, the Company does not expect a material negative impact on its clinical development plans, long-term development timeline or liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, industry, and workforce.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The modified standard eliminates the requirement to disclose changes in unrealized gains and losses included in earnings for recurring Level 3 fair value measurements and requires that changes in unrealized gains and losses be included in other comprehensive income for recurring Level 3 fair value measurements of instruments. The standard also requires the disclosure of the range and weighted average used to develop significant unobservable inputs and how weighted average is calculated for recurring and nonrecurring Level 3 fair value measurements. The amendment was effective for fiscal years beginning after December 15, 2019 and interim periods within that fiscal year with early adoption permitted. The Company adopted ASU 2018-13 on January 1, 2020 with no material impact on its consolidated financial statements.

 

2. Revenue Recognition

Revenue Recognition Policy

Revenues consist mainly of research and development services performed under a contract with a customer. The Company evaluates the separate performance obligation(s) under each contract, allocates the transaction price to each performance obligation considering the estimated stand-alone selling prices of the services and recognizes revenue upon the satisfaction of such obligations over time or at a point in time dependent on the satisfaction of one of the following criteria: (1) the customer simultaneously receives and consumes the economic benefits provided by the vendor’s performance (2) the vendor creates or enhances an asset controlled by

 

12


 

the customer (3) the vendor’s performance does not create an asset for which the vendor has an alternative use, and the vendor has an enforceable right to payment for performance completed to date.

Kissei Pharmaceutical Co., Ltd

In October 2011, the Company entered into a collaboration agreement with Kissei Pharmaceutical Co., Ltd., (“Kissei”), to perform research and development services relating to MN-221 (bedoradrine) in exchange for a non-refundable upfront payment of $2.5 million. Under the terms of the agreement, the Company is responsible for all costs to be incurred in the performance of these services. The Company assessed the services in accordance with the authoritative guidance and concluded that the two studies to be performed under the agreement represented two separate performance obligations. The transaction price was allocated among the two studies that were deemed separate performance obligations based on the expected costs to be incurred for each obligation. Revenue is recognized proportional to the total costs expected for each performance obligation as incurred over the service period. The first study was completed in 2013 and the timing of the second study is undetermined as of September 30, 2020. The amount received from Kissei and allocated, net of the amount recorded as revenue, is included on the balance sheet as long-term deferred revenue and will be recognized as revenue as the remaining performance obligation is satisfied. No revenue was recognized for the three and nine months ended September 30, 2020 and 2019 in connection with the collaboration agreement with Kissei.

3. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1: 

Observable inputs such as quoted prices in active markets;

 

 

Level 2: 

Inputs are quoted prices for similar items in active markets or quoted prices for identical or similar items in markets that are not active near the measurement date; and

 

 

Level 3: 

Unobservable inputs due to little or no market data, which require the reporting entity to develop its own assumptions.

Cash equivalents, including money market accounts of $694,109 and $691,649 measured at fair value as of September 30, 2020 and December 31, 2019, respectively, are classified within Level 1.

 

4. Stock-based Compensation

Stock Incentive Plans

In June 2013, the Company adopted the 2013 Equity Incentive Plan, or 2013 Plan, under which the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. The 2013 Plan is the successor to the Company’s Amended and Restated 2004 Stock Incentive Plan, or 2004 Plan. A total of 8,700,000 shares of common stock are reserved for issuance under the 2013 Plan. In addition, “returning shares” that may become available from time to time are added back to the plan. “Returning shares” are shares that are subject to outstanding awards granted under the 2004 Plan that expire or terminate prior to exercise or settlement, are forfeited because of the failure to vest, are repurchased, or are withheld to satisfy tax withholding or purchase price obligations in connection with such awards. Although the Company no longer grants equity awards under the 2004 Plan, all outstanding stock awards granted under the 2004 Plan will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the 2004 Plan. As of September 30, 2020, 2,872,135 shares remain available for future grants under the 2013 Plan.

The Company occasionally issues employee performance-based stock options, the vesting of which is based on a determination made by the board of directors as to the achievement of certain corporate objectives at the end of the performance period. The grant date of such awards is the date on which the board of directors makes its determination. For periods preceding the grant date, the expense related to these awards is measured based on their fair value at each reporting date.

Stock Options

Options granted under the 2013 Plan and the 2004 Plan have terms of ten years from the date of grant unless earlier terminated and generally vest over a three or four year period. The exercise price of all options granted through September 30, 2020 and in 2019, was equal to the market value of the Company’s common stock on the date of grant.

 

13


 

A summary of stock option activity and related information as of September 30, 2020 is as follows:

 

 

 

Number of

Option Shares

 

 

Weighted Average

Exercise Price

 

 

Outstanding at December 31, 2019

 

 

6,802,093

 

 

$

5.61

 

 

Granted

 

 

1,367,000

 

 

 

6.69

 

 

Exercised

 

 

(203,863

)

 

 

3.07

 

 

Cancelled

 

 

(454,843

)

 

 

8.92

 

 

Outstanding at September 30, 2020

 

 

7,510,387

 

 

$

5.68

 

 

Exercisable at September 30, 2020

 

 

6,174,387

 

 

$

5.45

 

 

 

Employee Stock Purchase Plan

Under the Company’s 2007 Employee Stock Purchase Plan (ESPP), 300,000 shares of common stock were originally reserved for issuance. In addition, the shares reserved automatically increase each year by a number equal to the lesser of: (i) 15,000 shares; (ii)