Description of the Business and Liquidity	9 Months Ended
Sep. 30, 2019
Description of the Business and Liquidity
Description of the Business and Liquidity	1. Description of the Business and Liquidity We are a clinical stage pharmaceutical company focused on developing and commercializing innovative therapeutics to treat epilepsy and neuropsychiatric disorders. Our clinical stage product candidate, ganaxolone, is a positive allosteric modulator of GABA_A being developed in two different routes of administration: intravenous (IV) and oral formulation. The multiple dose forms are intended to maximize the therapeutic range of ganaxolone for adult and pediatric patient populations, in acute and chronic care, and both in-patient and self-administered settings. Ganaxolone exhibits anti-seizure, anti-depression and anti-anxiety actions via its effects on synaptic and extrasynaptic GABA_A receptors. Liquidity The interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. We have not generated any product revenues and have incurred operating losses since inception, including losses of $13.8 million and $38.7 million for the three and nine months ended September 30, 2019, respectively. There is no assurance that profitable operations will ever be achieved, and if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing, and commercialization of our product candidates will require significant additional financing. We have not generated positive cash flows from operations and have used $32.4 million for operating activities in the nine months ended September 30, 2019. There are no assurances that we will be successful in obtaining an adequate level of financing for the development and commercialization of our planned product candidates. Our accumulated deficit as of September 30, 2019 was $220.2 million and we expect to incur substantial losses in future periods. Based on the our cash, cash equivalents and investment balances of $39.9 million as of September 30, 2019, we believe the Company will be able to finance its capital requirements and operations into the third quarter of 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. We plan to finance our future operations with a combination of proceeds from the issuance of equity securities, the issuance of debt, potential collaborations and revenues from potential future product sales, if any. There can be no assurance that any of these future-funding efforts will be successful. Financing may not be available in amounts or on terms acceptable to the Company, or at all. If we are unable to obtain required financing, we may be required to delay, scale-back or eliminate certain of our planned clinical and product development activities and certain other aspects of our operations and our business, which could materially and adversely affect our financial condition and operating results. In October 2017, we entered into an Equity Distribution Agreement (EDA) with JMP Securities LLC (JMP), under which JMP, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the agreement up to a maximum of $50 million worth of shares of our common stock. The EDA will terminate upon the earliest of: (1) the sale of all shares subject to the EDA, (2) October 31, 2020 or (3) the termination of the EDA in accordance with its terms. Either party may terminate the EDA at any time upon written notification to the other party in accordance with the EDA, and upon such notification, the offering will terminate. In October 2019, we sold 1,290,464 shares of our common stock pursuant to the EDA, generating net proceeds of $1.7 million, and $48.2 million is still available for use.

1. Description of the Business and Liquidity

We are a clinical stage pharmaceutical company focused on developing and commercializing innovative therapeutics to treat epilepsy and neuropsychiatric disorders. Our clinical stage product candidate, ganaxolone, is a positive allosteric modulator of GABA_A being developed in two different routes of administration: intravenous (IV) and oral formulation. The multiple dose forms are intended to maximize the therapeutic range of ganaxolone for adult and pediatric patient populations, in acute and chronic care, and both in-patient and self-administered settings. Ganaxolone exhibits anti-seizure, anti-depression and anti-anxiety actions via its effects on synaptic and extrasynaptic GABA_A receptors.

Liquidity

The interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. We have not generated any product revenues and have incurred operating losses since inception, including losses of $13.8 million and $38.7 million for the three and nine months ended September 30, 2019, respectively. There is no assurance that profitable operations will ever be achieved, and if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing, and commercialization of our product candidates will require significant additional financing. We have not generated positive cash flows from operations and have used $32.4 million for operating activities in the nine months ended September 30, 2019. There are no assurances that we will be successful in obtaining an adequate level of financing for the development and commercialization of our planned product candidates. Our accumulated deficit as of September 30, 2019 was $220.2 million and we expect to incur substantial losses in future periods. Based on the our cash, cash equivalents and investment balances of $39.9 million as of September 30, 2019, we believe the Company will be able to finance its capital requirements and operations into the third quarter of 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

We plan to finance our future operations with a combination of proceeds from the issuance of equity securities, the issuance of debt, potential collaborations and revenues from potential future product sales, if any. There can be no assurance that any of these future-funding efforts will be successful. Financing may not be available in amounts or on terms acceptable to the Company, or at all. If we are unable to obtain required financing, we may be required to delay, scale-back or eliminate certain of our planned clinical and product development activities and certain other aspects of our operations and our business, which could materially and adversely affect our financial condition and operating results.

In October 2017, we entered into an Equity Distribution Agreement (EDA) with JMP Securities LLC (JMP), under which JMP, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the agreement up to a maximum of $50 million worth of shares of our common stock. The EDA will terminate upon the earliest of: (1) the sale of all shares subject to the EDA, (2) October 31, 2020 or (3) the termination of the EDA in accordance with its terms. Either party may terminate the EDA at any time upon written notification to the other party in accordance with the EDA, and upon such notification, the offering will terminate. In October 2019, we sold 1,290,464 shares of our common stock pursuant to the EDA, generating net proceeds of $1.7 million, and $48.2 million is still available for use.