0001564590-22-037391.txt : 20221110 0001564590-22-037391.hdr.sgml : 20221110 20221110161957 ACCESSION NUMBER: 0001564590-22-037391 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20220930 FILED AS OF DATE: 20221110 DATE AS OF CHANGE: 20221110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICINOVA INC CENTRAL INDEX KEY: 0001226616 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 330927979 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-33185 FILM NUMBER: 221377541 BUSINESS ADDRESS: STREET 1: 4275 EXECUTIVE SQUARE STREET 2: SUITE 300 CITY: LA JOLLA STATE: CA ZIP: 92037 BUSINESS PHONE: 858-373-1500 MAIL ADDRESS: STREET 1: 4275 EXECUTIVE SQUARE STREET 2: SUITE 300 CITY: LA JOLLA STATE: CA ZIP: 92037 10-Q 1 mnov-10q_20220930.htm 10-Q mnov-10q_20220930.htm
false Q3 0001226616 --12-31 true P1Y P1Y P2Y P6M P4Y1M6D P4Y6M14D http://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrent http://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrent 0.0242 0.0406 0.0042 0.0098 0.7513 0.7935 0.7431 0.7751 P4Y10M13D P5Y9M7D P4Y6M P5Y9M18D 0001226616 2022-01-01 2022-09-30 xbrli:shares 0001226616 2022-11-08 iso4217:USD 0001226616 2022-09-30 0001226616 2021-12-31 iso4217:USD xbrli:shares 0001226616 2021-07-01 2021-09-30 0001226616 2021-01-01 2021-09-30 0001226616 2022-07-01 2022-09-30 0001226616 us-gaap:CommonStockMember 2021-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001226616 us-gaap:RetainedEarningsMember 2021-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001226616 2022-01-01 2022-03-31 0001226616 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001226616 us-gaap:CommonStockMember 2022-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001226616 us-gaap:RetainedEarningsMember 2022-03-31 0001226616 2022-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001226616 2022-04-01 2022-06-30 0001226616 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001226616 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001226616 us-gaap:CommonStockMember 2022-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001226616 us-gaap:RetainedEarningsMember 2022-06-30 0001226616 2022-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001226616 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-07-01 2022-09-30 0001226616 us-gaap:CommonStockMember 2022-09-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-09-30 0001226616 us-gaap:RetainedEarningsMember 2022-09-30 0001226616 us-gaap:CommonStockMember 2020-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001226616 us-gaap:RetainedEarningsMember 2020-12-31 0001226616 2020-12-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001226616 2021-01-01 2021-03-31 0001226616 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001226616 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001226616 us-gaap:CommonStockMember 2021-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001226616 us-gaap:RetainedEarningsMember 2021-03-31 0001226616 2021-03-31 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001226616 2021-04-01 2021-06-30 0001226616 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001226616 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001226616 us-gaap:CommonStockMember 2021-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001226616 us-gaap:RetainedEarningsMember 2021-06-30 0001226616 2021-06-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001226616 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001226616 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001226616 us-gaap:CommonStockMember 2021-09-30 0001226616 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001226616 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001226616 us-gaap:RetainedEarningsMember 2021-09-30 0001226616 2021-09-30 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2011-10-31 0001226616 mnov:KisseiPharmaceuticalCoLtdMember 2021-10-01 2021-10-31 0001226616 mnov:GenzymeCorporationMember 2005-12-31 0001226616 mnov:GenzymeCorporationMember 2021-01-01 2021-09-30 0001226616 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2022-09-30 0001226616 us-gaap:CertificatesOfDepositMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-09-30 0001226616 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001226616 country:US 2022-09-30 0001226616 country:US 2022-01-01 2022-09-30 0001226616 country:JP 2022-01-01 2022-09-30 0001226616 country:JP 2022-09-30 xbrli:pure 0001226616 us-gaap:LicenseAgreementTermsMember 2022-01-01 2022-09-30 0001226616 us-gaap:LicenseAgreementTermsMember 2022-07-01 2022-09-30 0001226616 us-gaap:LicenseAgreementTermsMember 2021-01-01 2021-09-30 0001226616 us-gaap:LicenseAgreementTermsMember 2021-07-01 2021-09-30 0001226616 mnov:ProductDevelopmentMember 2022-09-30 0001226616 mnov:DevelopmentMilestoneMember 2022-09-30 0001226616 mnov:CommercializationMilestoneMember 2022-09-30 0001226616 mnov:TwoThousandThirteenEquityIncentivePlanMember 2013-06-30 0001226616 mnov:TwoThousandThirteenEquityIncentivePlanMember 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember mnov:TwoThousandThirteenEquityIncentivePlanMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember mnov:TwoThousandThirteenEquityIncentivePlanMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember mnov:TwoThousandThirteenEquityIncentivePlanMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember mnov:TwoThousandFourPlanMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember mnov:TwoThousandFourPlanMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember mnov:TwoThousandFourPlanMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockMember 2017-12-31 0001226616 us-gaap:EmployeeStockMember srt:MaximumMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockMember 2022-09-30 0001226616 us-gaap:EmployeeStockMember 2022-01-01 2022-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2022-07-01 2022-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2021-07-01 2021-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2022-01-01 2022-09-30 0001226616 mnov:ResearchAndDevelopmentAndPatentsExpenseMember 2021-01-01 2021-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2022-07-01 2022-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2021-07-01 2021-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-09-30 0001226616 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2021-01-01 2021-09-30 0001226616 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2021-01-01 2021-09-30 0001226616 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-09-30 0001226616 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001226616 us-gaap:EmployeeStockOptionMember 2022-09-30 0001226616 mnov:AtMarketIssuanceSalesAgreementMember srt:MaximumMember mnov:BRileyFBRIncMember 2019-08-23 0001226616 mnov:AtMarketIssuanceSalesAgreementMember mnov:BRileyFBRIncMember 2019-08-23 2019-08-23 0001226616 mnov:AtMarketIssuanceSalesAgreementMember 2022-01-01 2022-09-30 0001226616 mnov:AtMarketIssuanceSalesAgreementMember 2022-07-01 2022-09-30 0001226616 mnov:AtMarketIssuanceSalesAgreementMember 2021-01-01 2021-09-30 0001226616 mnov:AtMarketIssuanceSalesAgreementMember 2021-07-01 2021-09-30 0001226616 us-gaap:PrivatePlacementMember 2021-01-29 2021-01-29 0001226616 us-gaap:PrivatePlacementMember us-gaap:CommonStockMember 2021-01-29 0001226616 us-gaap:PrivatePlacementMember us-gaap:CommonStockMember 2021-01-29 2021-01-29

 

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, 2022

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 November 8, 2022, the registrant had 49,046,246 shares of Common Stock ($0.001 par value) outstanding.

 

 


 

 

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:

 

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;

 

The widespread outbreak of an illness or any other communicable disease, such as COVID-19, which has lead to key employees becoming ill for a period of time;

 

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;

 

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.

 

 

2


 

 

MEDICINOVA, INC.

TABLE OF CONTENTS

 

 

 

 

 

3


 

 

PART I. FINANCIAL INFORMATION

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

 

 

MEDICINOVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30,

 

 

 

 

December 31,

 

 

 

2022

 

 

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,507,263

 

 

 

 

$

71,430,954

 

Prepaid expenses and other current assets

 

 

641,732

 

 

 

 

 

577,992

 

Total current assets

 

 

53,148,995

 

 

 

 

 

72,008,946

 

Investments

 

 

10,021,849

 

 

 

 

 

 

Goodwill

 

 

9,600,240

 

 

 

 

 

9,600,240

 

In-process research and development

 

 

4,800,000

 

 

 

 

 

4,800,000

 

Property and equipment, net

 

 

45,894

 

 

 

 

 

57,565

 

Right-of-use asset

 

 

673,092

 

 

 

 

 

824,215

 

Other non-current assets

 

 

101,700

 

 

 

 

 

115,492

 

Total assets

 

$

78,391,770

 

 

 

 

$

87,406,458

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

552,720

 

 

 

 

$

402,740

 

Accrued liabilities and other current liabilities

 

 

3,808,474

 

 

 

 

 

2,298,203

 

Operating lease liability

 

 

167,073

 

 

 

 

 

131,965

 

Total current liabilities

 

 

4,528,267

 

 

 

 

 

2,832,908

 

Deferred tax liability

 

 

201,792

 

 

 

 

 

201,792

 

Other non-current liabilities

 

 

555,840

 

 

 

 

 

694,674

 

Total liabilities

 

 

5,285,899

 

 

 

 

 

3,729,374

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized at

   September 30, 2022 and December 31, 2021; 49,046,246 and 49,043,246

   shares issued and outstanding at September 30, 2022 and December

   31, 2021, respectively

 

 

49,046

 

 

 

 

 

49,043

 

Additional paid-in capital

 

 

477,309,782

 

 

 

 

 

476,788,012

 

Accumulated other comprehensive loss

 

 

(124,264

)

 

 

 

 

(98,877

)

Accumulated deficit

 

 

(404,128,693

)

 

 

 

 

(393,061,094

)

Total stockholders’ equity

 

 

73,105,871

 

 

 

 

 

83,677,084

 

Total liabilities and stockholders' equity

 

$

78,391,770

 

 

 

 

$

87,406,458

 

 

See accompanying notes.

 

4


 

MEDICINOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

 

 

2021

 

Revenues

 

$

 

 

$

37,500

 

 

$

 

 

 

 

$

4,037,500

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research, development and patents

 

 

2,454,203

 

 

 

2,088,618

 

 

 

7,131,168

 

 

 

 

 

6,761,015

 

General and administrative

 

 

1,443,264

 

 

 

1,550,821

 

 

 

4,266,246

 

 

 

 

 

5,389,466

 

Total operating expenses

 

 

3,897,467

 

 

 

3,639,439

 

 

 

11,397,414

 

 

 

 

 

12,150,481

 

Operating loss

 

 

(3,897,467

)

 

 

(3,601,939

)

 

 

(11,397,414

)

 

 

 

 

(8,112,981

)

Interest income

 

 

253,755

 

 

 

36,153

 

 

 

382,369

 

 

 

 

 

107,159

 

Other expense

 

 

(8,472

)

 

 

(13,381

)

 

 

(52,554

)

 

 

 

 

(45,285

)

Net loss applicable to common stockholders

 

$

(3,652,184

)

 

$

(3,579,167

)

 

$

(11,067,599

)

 

 

 

$

(8,051,107

)

Basic and diluted net loss per common share

 

$

(0.07

)

 

$

(0.07

)

 

$

(0.23

)

 

 

 

$

(0.17

)

Shares used to compute basic and diluted net loss per common share

 

 

49,046,246

 

 

 

48,987,836

 

 

 

49,045,037

 

 

 

 

 

48,445,840

 

Net loss applicable to common stockholders

 

$

(3,652,184

)

 

$

(3,579,167

)

 

$

(11,067,599

)

 

 

 

$

(8,051,107

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(5,972

)

 

 

(1,362

)

 

 

(25,387

)

 

 

 

 

(6,820

)

Comprehensive loss

 

$

(3,658,156

)

 

$

(3,580,529

)

 

$

(11,092,986

)

 

 

 

$

(8,057,927

)

 

See accompanying notes.

 

5


 

MEDICINOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

Nine Months Ended September 30, 2022

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Accumulated

other

comprehensive

 

 

Accumulated

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

deficit

 

 

equity

 

Balance at December 31, 2021

 

 

49,043,246

 

 

$

49,043

 

 

$

476,788,012

 

 

$

(98,877

)

 

$

(393,061,094

)

 

$

83,677,084

 

Share-based compensation

 

 

 

 

 

 

81,053

 

 

 

 

 

 

 

81,053

 

Net loss

 

 

 

 

 

 

 

 

 

 

(3,386,417

)

 

 

(3,386,417

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

(7,435

)

 

 

 

 

(7,435

)

Balance at March 31, 2022

 

 

49,043,246

 

 

 

49,043

 

 

 

476,869,065

 

 

 

(106,312

)

 

 

(396,447,511

)

 

 

80,364,285

 

Share-based compensation

 

 

 

 

 

 

 

 

274,502

 

 

 

 

 

 

 

 

 

274,502

 

Issuance of common stock for option exercises

 

 

3,000

 

 

 

3

 

 

 

7,917

 

 

 

 

 

 

 

7,920

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,028,998

)

 

 

(4,028,998

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

(11,980

)

 

 

 

 

 

(11,980

)

Balance at June 30, 2022

 

 

49,046,246

 

 

 

49,046

 

 

 

477,151,484

 

 

 

(118,292

)

 

 

(400,476,509

)

 

 

76,605,729

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

158,298

 

 

 

 

 

 

 

 

 

 

 

158,298

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,652,184

)

 

 

(3,652,184

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,972

)

 

 

 

 

 

 

(5,972

)

Balance at September 30, 2022

 

 

49,046,246

 

 

$

49,046

 

 

$

477,309,782

 

 

$

(124,264

)

 

$

(404,128,693

)

 

$

73,105,871

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Accumulated

other

comprehensive

 

 

Accumulated

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

deficit

 

 

equity

 

Balance at December 31, 2020

 

 

45,024,560

 

 

$

45,025

 

 

$

454,296,536

 

 

$

(88,219

)

 

$

(382,926,842

)

 

$

71,326,500

 

Share-based compensation

 

 

 

 

 

 

1,139,636

 

 

 

 

 

 

 

1,139,636

 

Issuance of common stock for option

   exercises

 

 

86,250

 

 

 

86

 

 

 

212,089

 

 

 

 

 

 

 

 

 

212,175

 

Issuance of shares under an employee stock

   purchase plan (ESPP)

 

 

1,424

 

 

 

2

 

 

 

6,108

 

 

 

 

 

 

 

6,110

 

Issuance of common stock in a private

   placement transaction, net of issuance costs

 

 

3,656,307

 

 

 

3,656

 

 

 

19,877,992

 

 

 

 

 

 

 

 

 

19,881,648

 

Net loss

 

 

 

 

 

 

 

 

 

 

(187,799

)

 

 

(187,799

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

(6,821

)

 

 

 

 

(6,821

)

Balance at March 31, 2021

 

 

48,768,541

 

 

 

48,769

 

 

 

475,532,361

 

 

 

(95,040

)

 

 

(383,114,641

)

 

 

92,371,449

 

Share-based compensation

 

 

 

 

 

 

 

 

755,905

 

 

 

 

 

 

 

 

 

755,905

 

Issuance of common stock for option exercises

 

 

155,622

 

 

 

155

 

 

 

389,583

 

 

 

 

 

 

 

389,738

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,284,141

)

 

 

(4,284,141

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

1,363

 

 

 

 

 

1,363

 

Balance at June 30, 2021

 

 

48,924,163

 

 

 

48,924

 

 

 

476,677,849

 

 

 

(93,677

)

 

 

(387,398,782

)

 

 

89,234,314

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

578,944

 

 

 

-

 

 

 

-

 

 

 

578,944

 

Issuance of common stock for option exercises

 

 

104,083

 

 

 

104

 

 

 

249,507

 

 

 

 

 

 

 

 

 

249,611

 

Net loss

 

 

 

 

 

 

 

 

 

 

(3,579,167

)

 

 

(3,579,167

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

(1,362

)

 

 

 

 

(1,362

)

Balance at September 30, 2021

 

 

49,028,246

 

 

$

49,028

 

 

$

477,506,300

 

 

$

(95,039

)

 

$

(390,977,949

)

 

$

86,482,340

 

 

See accompanying notes.

 

6


 

MEDICINOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine months ended

 

 

 

September 30,

 

 

 

2022

 

 

 

 

2021

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(11,067,599

)

 

 

 

$

(8,051,107

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

Non-cash stock-based compensation

 

 

513,853

 

 

 

 

 

2,474,485

 

Depreciation and amortization

 

 

13,376

 

 

 

 

 

19,775

 

Non-cash interest on investments

 

 

(21,849

)

 

 

 

 

 

Change in carrying amount of right-of-use asset

 

 

151,123

 

 

 

 

 

163,282

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(49,947

)

 

 

 

 

(510,486

)

Accounts payable, accrued liabilities and other liabilities

 

 

1,660,250

 

 

 

 

 

330,492

 

Operating lease liabilities

 

 

(103,726

)

 

 

 

 

(169,080

)

Net cash used in operating activities

 

 

(8,904,519

)

 

 

 

 

(5,742,639

)

Investing activities:

 

 

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(10,000,000

)

 

 

 

 

 

Acquisition of property and equipment

 

 

 

 

 

 

 

(28,732

)

Net cash used in investing activities

 

 

(10,000,000

)

 

 

 

 

(28,732

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock and exercise of common

   stock options

 

 

7,920

 

 

 

 

 

20,851,540

 

Common stock issuance costs

 

 

 

 

 

 

 

(118,368

)

Proceeds from issuance of equity awards under ESPP

 

 

 

 

 

 

 

6,110

 

Net cash provided by financing activities

 

 

7,920

 

 

 

 

 

20,739,282

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(27,092

)

 

 

 

 

20,710

 

Net change in cash and cash equivalents

 

 

(18,923,691

)

 

 

 

 

14,988,621

 

Cash and cash equivalents, beginning of period

 

 

71,430,954

 

 

 

 

 

60,036,763

 

Cash and cash equivalents, end of period

 

$

52,507,263

 

 

 

 

$

75,025,384

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

 

 

 

 

Right-of-use asset obtained in exchange for operating lease liability

 

$

 

 

 

 

$

875,515

 

 

See accompanying notes.

 

 

7


 

 

MEDICINOVA, INC.

Notes to Condensed 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. 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. The Company 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 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, substance dependence and addiction (e.g., methamphetamine dependence, opioid dependence, and alcohol dependence), and prevention of acute respiratory distress syndrome, and MN-001 (tipelukast) for fibrotic and other diseases such as nonalcoholic fatty liver disease (NAFLD), 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 condensed 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 8-03 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 condensed 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 condensed 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, 2021 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, 2021 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, MediciNova Japan, Inc., MediciNova (Europe) Limited, MediciNova Europe GmbH and Avigen Inc. The financial statements of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Intercompany transaction gains or losses at each period end are included as translation adjustments and recorded within other comprehensive income or loss. 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 small molecule 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, with original maturities of three months or less from the date of purchase.

 

 

8


 

 

Investments

Investments purchased with an original maturity of greater than three months are classified as investments. Investments are stated at fair value and are classified as current or non-current based on the nature of the securities as well as their stated maturities. As of September 30, 2022, investments consisted of a bank certificate of deposit with an original purchased maturity of thirteen months.

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 $2.4 million and $2.0 million for the three months ended September 30, 2022 and 2021, respectively, and $6.8 million and $6.4 million for the nine months ended September 30, 2022 and 2021, respectively.

 

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 in Research, Development and Patents expenses. Such patent-related expenses totaled $0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $0.3 million and $0.4 million for the nine months ended September 30, 2022 and 2021, 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.

Leases

The Company determines if an arrangement is a lease at inception and if so, determines whether the lease qualifies as an operating or finance lease. The Company does not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less and does not separate non-lease components from lease components. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate that the Company would expect to pay to borrow on a collateralized and fully amortizing basis over a similar term an amount equal to the lease payments in a similar economic environment.

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 and completed 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 condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

 

 

9


 

 

 

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. In November 2019, the FASB issued an amendment making this ASU effective for fiscal years beginning after December 15, 2022 for smaller reporting companies. The new standard will be effective for the Company on January 1, 2023 or at such earlier time where it is no longer a smaller reporting company. The Company has determined that there will not be a material impact on its consolidated financial statements upon adoption of this standard on January 1, 2023.

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded features that could be recognized separately from the host contract. Consequently, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. ASU 2020-06 also requires use of the if-converted method in the diluted earnings per share calculation for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years for smaller reporting companies, with early adoption permitted. The new standard will be effective for the Company on January 1, 2024 or at such earlier time where it is no longer a smaller reporting company. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

 

 

2. Revenue Recognition

Revenue Recognition Policy

Revenues historically have consisted 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 at a point in time or over 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 the customer (3) the vendor’s performance does not create an asset for which the vendor has an alternative use, and (4) 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. The Company assessed the services in accordance with the authoritative guidance and concluded that it met the definition of a collaborative arrangement per Accounting Standards Codification (“ASC”) 808, Collaborative Arrangements (“ASC 808”), which was outside the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”). Since ASC 808 did not provide recognition and measurement guidance for collaborative arrangements, the Company analogized to ASC 606 and concluded the two studies to be performed under the agreement represented two separate performance obligations. No services have been provided under the collaboration agreement subsequent to completion of the first study in 2013. In October 2021, the Company refunded $1.3 million of the prepayment. On October 24, 2022, the Company and Kissei finalized the termination of the collaboration agreement and canceled the second study contemplated thereunder.

Genzyme Corporation

In December 2005, Avigen, Inc. and Genzyme Corporation (“Genzyme”) entered into an Assignment Agreement (the “Genzyme Agreement”) in which Genzyme acquired certain gene therapy intellectual property, programs and other related assets from Avigen, Inc. in exchange for an initial $12.0 million payment. Avigen could also receive additional development milestone payments, sublicensing fees, and royalty payments based on the successful development of products by Genzyme utilizing technologies previously developed by Avigen. The Company subsequently acquired Avigen in December 2009 along with Avigen’s rights and obligations under the Genzyme Agreement. If Genzyme fails to diligently pursue the commercialization or marketing of products using the assigned technology, as specified in the Genzyme Agreement, some of the rights assigned could revert back to the Company at a future date.

 

10


 

The development milestones outlined in the Genzyme Agreement did not meet the definition of a substantive milestone obligation under authoritative guidance on revenue recognition for milestone payments, as Genzyme was responsible for the development of the products and there is no further substantive service effort required by the Company. In March 2021, the Company received notice that a gene therapy product based on AAV (adeno-associated virus) vector technology, which was covered under the Genzyme Agreement, achieved two clinical development milestones, triggering two milestone payments.  Accordingly, the Company recognized revenue of $4.0 million during the nine months ended September 30, 2021.

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.

The carrying amounts, estimated fair values and valuation inputs levels of the Company’s assets that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, were as follows:

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

 

 

Carrying Amount

 

 

Fair Value

 

 

Carrying Amount

 

 

Fair Value

 

 

Valuation Inputs

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Money market funds

 

$

698,842

 

 

$

698,842

 

 

$

694,293

 

 

$

694,293

 

 

Level 1

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Bank certificates of deposit

 

$

10,021,849

 

 

$

10,021,849

 

 

 

 

 

 

 

 

Level 2

 

4. Commitments and Contingencies

Lease Commitments

The Company has operating leases primarily for real estate in the United States and Japan. The United States lease is for the Company’s headquarters in San Diego and has a term of five years ending January 31, 2027, with annual escalations. The Company’s lease in Tokyo, Japan has a term of two years ending May 2023 with an auto-renewal, two-year extension. The real estate operating leases are included in "Right-of-use asset” on the Company's balance sheet and represents the Company’s right to use the underlying assets for the lease term. The Company’s obligation to make lease payments are included in "Operating lease liability" and "Other non-current liabilities" on the Company's balance sheet.

 

11


 

Information related to the Company’s right-of-use assets and related lease liabilities are as follows:

 

 

Three months ended