10-Q 1 eigr-10q_20180630.htm 10-Q eigr-10q_20180630.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2018

OR

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

For the transition period from                      to                     

Commission file number: 001-36183

 

Eiger BioPharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

33-0971591

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2155 Park Boulevard

Palo Alto, CA

 

94306

(Address of Principal Executive Offices)

 

(Zip Code)

 

(650) 272-6138

(Registrant’s Telephone Number, Including Area Code)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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 “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

Emerging growth company

 

  

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 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 August 6, 2018, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 14,244,272.

 

 

 

 


 

EIGER BIOPHARMACEUTICALS, INC.

TABLE OF CONTENTS

 

 

 

Page No.

PART I. FINANCIAL INFORMATION

  

 

Item 1. Financial Statements:

  

3

Condensed Consolidated Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017

  

3

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017 (unaudited)

  

4

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2018 and 2017 (unaudited)

  

5

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017 (unaudited)

  

6

Notes to the Condensed Consolidated Financial Statements (unaudited)

  

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

14

Item 3. Quantitative and Qualitative Disclosures About Market Risk

  

20

Item 4. Controls and Procedures

  

20

 

 

 

PART II. OTHER INFORMATION

  

 

Item 1. Legal Proceedings

  

21

Item 1A. Risk Factors

  

21

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

  

46

Item 3. Defaults Upon Senior Securities

  

46

Item 4. Mine Safety Disclosures

  

46

Item 5. Other Information

  

46

Item 6. Exhibits

  

47

Signatures

  

48

 

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Eiger,” and “the Company” refer to Eiger Biopharmaceuticals, Inc. Eiger, Eiger Biopharmaceuticals, the Eiger logo and other trade names, trademarks or service marks of Eiger are the property of Eiger Biopharmaceuticals, Inc. This Quarterly Report on Form 10-Q contains references to our trademarks and to trademarks belonging to other entities. Trade names, trademarks and service marks of other companies appearing in this Quarterly Report on Form 10-Q are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

 

 

 


 

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Eiger BioPharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

33,323

 

 

$

32,035

 

Debt securities, available-for-sale

 

 

40,169

 

 

 

9,744

 

Prepaid expenses and other current assets

 

 

1,485

 

 

 

712

 

Total current assets

 

 

74,977

 

 

 

42,491

 

Property and equipment, net

 

 

71

 

 

 

79

 

Other assets

 

 

290

 

 

 

312

 

Total assets

 

$

75,338

 

 

$

42,882

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,438

 

 

$

3,183

 

Accrued liabilities

 

 

1,152

 

 

 

2,084

 

Current portion of long term debt

 

 

3,242

 

 

 

2,002

 

Total current liabilities

 

 

8,832

 

 

 

7,269

 

Long term debt, net

 

 

17,032

 

 

 

13,091

 

Other long term liabilities

 

 

193

 

 

 

 

Total liabilities

 

 

26,057

 

 

 

20,360

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

14

 

 

 

11

 

Additional paid-in capital

 

 

186,833

 

 

 

141,320

 

Accumulated other comprehensive loss

 

 

(14

)

 

 

(3

)

Accumulated deficit

 

 

(137,552

)

 

 

(118,806

)

Total stockholders’ equity

 

 

49,281

 

 

 

22,522

 

Total liabilities and stockholders’ equity

 

$

75,338

 

 

$

42,882

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

3


 

Eiger BioPharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

6,372

 

 

$

8,131

 

 

$

11,884

 

 

$

15,595

 

General and administrative

 

 

3,237

 

 

 

2,946

 

 

 

6,231

 

 

 

6,468

 

Total operating expenses

 

 

9,609

 

 

 

11,077

 

 

 

18,115

 

 

 

22,063

 

Loss from operations

 

 

(9,609

)

 

 

(11,077

)

 

 

(18,115

)

 

 

(22,063

)

Interest expense

 

 

(495

)

 

 

(378

)

 

 

(893

)

 

 

(741

)

Interest income

 

 

189

 

 

 

113

 

 

 

283

 

 

 

223

 

Other income (expense), net

 

 

 

 

 

196

 

 

 

(21

)

 

 

196

 

Net loss

 

$

(9,915

)

 

$

(11,146

)

 

$

(18,746

)

 

$

(22,385

)

Net loss per common share, basic and diluted

 

$

(0.82

)

 

$

(1.33

)

 

$

(1.66

)

 

$

(2.68

)

Weighted-average common shares outstanding, basic and diluted

 

 

12,045,355

 

 

 

8,367,030

 

 

 

11,291,540

 

 

 

8,363,803

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

4


 

Eiger BioPharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net loss

 

$

(9,915

)

 

$

(11,146

)

 

$

(18,746

)

 

$

(22,385

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale debt securities

 

 

(14

)

 

 

2

 

 

 

(11

)

 

 

9

 

Comprehensive loss

 

$

(9,929

)

 

$

(11,144

)

 

$

(18,757

)

 

$

(22,376

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

5


 

Eiger BioPharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flow

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2018

 

 

2017

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(18,746

)

 

$

(22,385

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

22

 

 

 

19

 

Amortization of debt securities discounts

 

 

(45

)

 

 

(73

)

Non-cash interest expense

 

 

218

 

 

 

171

 

Stock-based compensation

 

 

2,324

 

 

 

2,270

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(773

)

 

 

(388

)

Other non-current assets

 

 

22

 

 

 

62

 

Accounts payable

 

 

1,255

 

 

 

1,829

 

Accrued and other liabilities

 

 

(932

)

 

 

(1,427

)

Other long term liabilities

 

 

193

 

 

 

 

Net cash used in operating activities

 

 

(16,462

)

 

 

(19,922

)

Investing activities

 

 

 

 

 

 

 

 

Purchase of debt securities available-for-sale

 

 

(40,141

)

 

 

(17,550

)

Proceeds from maturities of debt securities available-for-sale

 

 

9,750

 

 

 

20,700

 

Proceeds from intellectual property sale

 

 

 

 

 

200

 

Purchase of property and equipment

 

 

(14

)

 

 

(44

)

Net cash (used in) provided by investing activities

 

 

(30,405

)

 

 

3,306

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon public offering, net of issuance cost

 

 

42,890

 

 

 

 

Proceeds from borrowings in connection with term loan, net of issuance cost

 

 

4,963

 

 

 

 

Proceeds from issuance of common stock upon stock option exercises

 

 

268

 

 

 

 

Proceeds from issuance of common stock upon ESPP purchase

 

 

34

 

 

 

57

 

Net cash provided by financing activities

 

 

48,155

 

 

 

57

 

Net increase (decrease) in cash and cash equivalents

 

 

1,288

 

 

 

(16,559

)

Cash and cash equivalents at beginning of period

 

 

32,035

 

 

 

27,756

 

Cash and cash equivalents at end of period

 

$

33,323

 

 

$

11,197

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

6


 

Eiger BioPharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1.

Description of Business

Eiger BioPharmaceuticals, Inc. (the “Company”) is a clinical-stage biopharmaceutical company committed to bringing to market novel products for the treatment of rare diseases. The Company innovates by developing well characterized drugs acting on newly identified or novel targets in rare diseases. The Company’s mission is to systematically reduce the time and cost of the drug development process to more rapidly deliver important medicines to patients with rare diseases. Their lead program in Hepatitis Delta Virus (HDV) infection, is moving into Phase 3 with a single, pivotal trial planned to initiate by the end of the year. The Company’s principal operations are based in Palo Alto, California and it operates in one segment.

Liquidity

As of June 30, 2018, the Company had $33.3 million of cash and cash equivalents, $40.2 million of debt securities available-for-sale, an accumulated deficit of $137.6 million and negative cash flows from operating activities. The Company expects to continue to incur losses for the next several years.

Management believes that the currently available resources will be sufficient to fund its operations for at least the next 12 months following the issuance date of these unaudited condensed consolidated financial statements.

2.

Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Eiger BioPharmaceuticals, Inc. and its wholly owned subsidiaries, EBPI Merger Inc., EB Pharma LLC and Eiger BioPharmaceuticals Europe Limited, and have been prepared in accordance with accounting principles generally accepted in the United States of America, (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period or for any other future year. The balance sheet as of December 31, 2017, has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 9, 2018.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to clinical trial accrued liabilities, stock-based compensation and income taxes. The Company bases its estimates on historical experience and on various other market-specific and relevant assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Debt Securities

Short-term debt securities consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. All short-term debt securities are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale debt securities are excluded from earnings and are reported as a component of accumulated other comprehensive loss. The cost of available-for-sale debt securities sold is based on the specific-identification method. Realized gains and losses on the sale of debt securities are determined using the specific-identification method and recorded in other expense, net on the accompanying unaudited condensed consolidated statements of operations.

7


 

Accrued Research and Development Costs

The Company accrues for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of preclinical and clinical studies, and contract manufacturing activities. The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in accrued liabilities in the unaudited condensed consolidated balance sheets and within research and development expense in the unaudited condensed consolidated statements of operations. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers. The Company makes judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities.

Net Loss per Share

Basic net loss per share of common stock is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table sets forth the outstanding potentially dilutive securities which have been excluded in the calculation of diluted net loss per share because including such securities would be anti-dilutive (in common stock equivalent shares):

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Options to purchase common stock

 

 

2,129,491

 

 

 

1,593,560

 

 

 

2,129,491

 

 

 

1,593,560

 

Warrants to purchase common stock

 

 

10,180

 

 

 

10,180

 

 

 

10,180

 

 

 

10,180

 

Total

 

 

2,139,671

 

 

 

1,603,740

 

 

 

2,139,671

 

 

 

1,603,740

 

 

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their balance sheet. The standard requires use of the modified retrospective transition method, with elective relief, which requires application of the guidance for all periods presented. The new standard will be effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently in the process of evaluating the impact that the standard will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. The standard is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted for all periods beginning after December 15, 2018. The Company is currently in the process of evaluating the impact the standard will have on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for certain exemptions specified in the amendment. The standard is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that fiscal year. Early adoption is permitted, but no earlier than the Company’s adoption date of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The Company elected to early adopt this standard on January 1, 2018. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.

 

 

3.

Fair Value Measurements

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). At June 30, 2018 and December 31, 2017, the carrying amount of prepaid expenses, accounts payable and accrued liabilities approximated their estimate fair value due to their relatively short maturities. Management believes the terms of long term debt reflect current market conditions for an instrument with similar terms and maturity, therefore the carrying value of the Company’s debt approximated its fair value.

8


 

Assets and liabilities recorded at fair value on a recurring basis in the unaudited condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2: Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3: Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices. The Company’s debt securities consist of available-for-sale securities and are classified as Level 2 because their value is based on valuations using significant inputs derived from or corroborated by observable market data. There were no assets or liabilities classified as Level 3 as of June 30, 2018 and December 31, 2017.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the periods presented.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value (in thousands):

 

 

 

June 30, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

14,999

 

 

$

 

 

$

 

 

$

14,999

 

Corporate debt securities

 

 

 

 

 

25,270

 

 

 

 

 

 

25,270

 

Commercial paper

 

 

 

 

 

24,277

 

 

 

 

 

 

24,277

 

Total

 

$

14,999

 

 

$

49,547

 

 

$

 

 

$

64,546

 

 

 

 

December 31, 2017

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

19,612

 

 

$

 

 

$

 

 

$

19,612

 

Corporate debt securities

 

 

 

 

 

6,501

 

 

 

 

 

 

6,501

 

Commercial paper

 

 

 

 

 

3,243

 

 

 

 

 

 

3,243

 

Total

 

$

19,612

 

 

$

9,744

 

 

$

 

 

$

29,356

 

There were no financial liabilities as of June 30, 2018 and December 31, 2017.

 

The following tables summarize the estimated value of the Company’s cash equivalents and debt securities and the gross unrealized holding gains and losses (in thousands):

 

 

 

June 30, 2018

 

 

 

Amortized cost

 

 

Unrealized gain

 

 

Unrealized loss

 

 

Estimated Fair Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

14,999

 

 

$

 

 

$

 

 

$

14,999

 

Corporate debt securities

 

 

6,382

 

 

 

 

 

 

 

 

 

6,382

 

Commercial paper

 

 

2,996

 

 

 

 

 

 

 

 

 

2,996

 

Total cash equivalents

 

$

24,377

 

 

$

 

 

$

 

 

$

24,377

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

18,903

 

 

$

 

 

$

(15

)

 

$

18,888

 

Commercial paper

 

 

21,280

 

 

 

2

 

 

 

(1

)

 

 

21,281

 

Total debt securities

 

$

40,183

 

 

$

2

 

 

$

(16

)

 

$

40,169

 

9


 

 

 

 

December 31, 2017

 

 

 

Amortized cost

 

 

Unrealized gain

 

 

Unrealized loss

 

 

Estimated Fair Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

19,612

 

 

$

 

 

$

 

 

$

19,612

 

Total cash equivalents

 

$

19,612

 

 

$

 

 

$

 

 

$

19,612

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

6,503

 

 

$

 

 

$

(2

)

 

$

6,501

 

Commercial paper

 

 

3,244

 

 

 

 

 

 

(1

)

 

 

3,243

 

Total debt securities

 

$

9,747

 

 

$

 

 

$

(3

)

 

$

9,744

 

 

As of December 31, 2017, the contractual maturity of the available-for-sale debt securities is less than one year. The Company periodically reviews the available-for-sale investments for other-than-temporary impairment loss. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period and its intent to sell. For debt securities, it also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. During the three and six months ended June 30, 2018, the Company did not recognize any other-than-temporary impairment losses.

 

 

4.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Compensation and related benefits

 

$

792

 

 

$

1,262

 

Contract research costs

 

 

271

 

 

 

634

 

Consulting costs

 

 

69

 

 

 

87

 

Franchise tax

 

 

20

 

 

 

56

 

Contract manufacturing costs

 

 

 

 

 

4

 

Other

 

 

 

 

 

41

 

Total accrued liabilities

 

$

1,152

 

 

$

2,084

 

 

 

5.

License and Collaboration Agreements

 

Merck License Agreement

 

On May 15, 2018, the Company entered into an amendment to the license agreement with Merck Sharp & Dohme Corp. (“Merck”) dated September 2, 2010, as amended, which provides for expansion of the existing exclusively licensed field of use under the license agreement with Merck to include all uses of lonafarnib related to the treatment of Hutchinson-Gilford Progeria Syndrome (“HGPS” or “Progeria”) in humans at no cost to the Company. The Company has the sole responsibility and the continuing obligation for the manufacture and supply of lonafarnib to the Progeria Research Foundation (“PRF”). Merck will not receive milestone payments in relation to lonafarnib for the treatment of progeria and progeroid laminopathies and any royalty payments for sales of a specified quantity of lonafarnib to treat the currently estimated progeria and progeroid laminopathies patient population worldwide.

 

PRF Collaboration Agreement

 

On May 15, 2018, the Company entered into a Collaboration and Supply Agreement (the “PRF Collaboration Agreement”) with PRF. Under the PRF Collaboration Agreement, the parties agreed to collaborate with respect to the development and pursuit of regulatory approval of lonafarnib for the treatment of progeria in humans. PRF granted the Company a non-exclusive, world-wide, royalty-free, sub-licensable license pertaining to all intellectual property and data controlled by PRF to prepare and file any new drug application (“NDA”) for a product containing lonafarnib for progeria and progeroid laminopathies. The Company is obligated to: (i) exclusively supply lonafarnib to PRF for use in clinical trials and non-clinical research in Progeria at the Company’s expense, (ii) prepare and be the sponsor of any NDA submission for lonafarnib to the FDA, (iii) use commercially reasonable efforts to file a NDA for Progeria by a specified date, (iv) submit a rare pediatric disease designation and a request for expedited approval in connection with a NDA filing, (v) establish a patient support program in progeria and progeroid laminopathies, and (vi) use commercially reasonable efforts to develop a pediatric formulation of lonafarnib for use in progeria and progeroid laminopathies.

 

10


 

Under the PRF Collaboration Agreement, the Company is solely responsible for any additional studies necessary for obtaining an NDA for progeria and progeroid laminopathies and is also responsible for any additional costs for such studies up to $2.0 million. The PRF Collaboration Agreement continues for an initial term of ten years and automatically renews for subsequent renewal terms of two years each unless either party terminates earlier.

 

Clinigen Master Service Agreement

 

On April 26, 2018, the Company entered into a master service agreement with Clinigen Healthcare Ltd. (“Clinigen”) in anticipation of its obligations under the PRF Collaboration Agreement to establish an Expanded Access Program for children with progeria and progeroid laminopathies. On May 23, 2018, the Company entered into the first statement of work (“SOW”) under the agreement. Pursuant to the SOW, Clinigen became an authorized non-exclusive worldwide distributor of lonafarnib, the unlicensed pharmaceutical product (the “Product”). The Company is responsible for supply of the Product to Clinigen and Clinigen is responsible for selling the Product to patients as part of the patient support program. Clinigen is also obligated to set up, manage and close-out the patient support program. The agreement will continue on a country-by-country basis until the Product is commercially available in that country. No charges have been recognized under this agreement as of June 30, 2018.

 

 

6.

Debt

In December 2016, the Company entered into an aggregate $25.0 million loan with Oxford Finance LLC (the “Oxford Loan”). The loan matures on July 1, 2021. The Company borrowed $15.0 million in December 2016 (“Tranche A”). In May 2018, the Company entered into an amendment to the Oxford Loan (the “Amendment”) and borrowed $5.0 million (“Amended Tranche B”). The remaining $5.0 million (“Amended Tranche C”) will be available to the Company upon achievement of positive top line data from the lonafarnib Phase 2 trial in HDV, which was achieved in the fourth quarter of 2016, plus positive top line Phase 2 data from at least one of the following programs: (i) pegylated interferon lambda (Lambda) in HDV, (ii) exendin 9-39 in PBH based on the Company’s own IND, or (iii) ubenimex in lymphedema. As of June 30, 2018, the Company did not meet any of the clinical milestones and is not eligible to access the final $5.0 million under the Oxford Loan.

The Oxford Loan bears interest at a floating rate per annum equal to the greater of either the 30-day U.S. Dollar LIBOR reported in the Wall Street Journal plus 6.41% or 6.95%. Commencing on the first day of the month following the funding of Tranche A, the Company is required to repay the Tranche A in 18 monthly interest only payments, and starting on August 1, 2018, 36 equal monthly payments of principal and interest. Upon the receipt of Amended Tranche B, the interest only period for borrowed funds was extended by six months until February 1, 2019, followed by 30 equal monthly payments of principal plus accrued interest. At the time of final payment, the Company is required to pay an exit fee of 7.5% of the original principal balance of each tranche, which will be $1.1 million for Tranche A and $0.4 million for Amended Tranche B. In addition, at the time of final payment of Amended Tranche B, the Company is required to pay an additional exit fee of $0.1 million. The Company recorded as a liability and debt discount the exit fee at the origination of the term loan. In addition, the Company incurred loan origination fees and debt issuance costs of $0.3 million which were recorded as a direct deduction from the carrying amount of the related debt liability. The Company is also required to pay a 5.0% success fee within 30 days following the FDA’s approval of the Company’s first product. This fee is enforceable within 10 years from the funding of Tranche A. In connection with the execution of the Loan Agreement, the Company agreed to certain customary representations and warranties.

The loan is secured by the perfected first priority liens on the Company's assets, including a commitment by the Company to not allow any liens to be placed upon the Company’s intellectual property. The Oxford Loan includes customary events of default, including failure to pay amounts due, breaches of covenants and warranties, material adverse effect events, certain cross defaults and judgments, and insolvency. If the Company is unable to comply with these covenants or if the Company defaults on any portion of the outstanding borrowings, the lenders can also impose a 5.0% penalty and restrict access to additional borrowings under the loan and security agreement. The Company was in compliance with the terms under the Oxford Loan as of June 30, 2018 and December 31, 2017.

The Company is permitted to make voluntary prepayments of the Oxford Loan with a prepayment fee, calculated as of the loan origination date, equal to (i) 3.0% of the loan prepaid during the first 12 months, (ii) 2.0% of the loan prepaid in months 13-24 and (iii) 1.0% of the loan prepaid thereafter. The Company is required to make mandatory prepayments of the outstanding loan upon the acceleration by lender following the occurrence of an event of default, along with a payment of the final payment, the prepayment fee and any other obligations that are due and payable at the time of prepayment.

11


 

The Company accounts for the amortization of the debt discount utilizing the effective interest method. The Company recorded interest expense of $0.5 million and $0.9 million for the three and six months ended June 30, 2018. Long-term debt and unamortized discount balances are as follows (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Face value of long term debt

 

$

20,000

 

 

$

15,000

 

Exit fee

 

 

1,585

 

 

 

1,125

 

Unamortized debt discount associated with exit fee, debt issuance costs and loan

   origination fees

 

 

(1,311

)

 

 

(1,032

)

Total long term debt

 

 

20,274

 

 

 

15,093

 

Less: current portion of long term debt

 

 

(3,242

)

 

 

(2,002

)

Long term debt, net

 

$

17,032

 

 

$

13,091

 

 

 

7.

Stock-Based Compensation

The following table summarizes stock option activity under the Company’s stock-based compensation plan during the six months ended June 30, 2018 (in thousands, except option and share data):

 

 

 

Shares

Available for

Grant

 

 

Number of

Options

 

 

Weighted-

Average

Exercise

Price

 

 

Weighted-

Average

Remaining

Contractual

Life

(in Years)

 

 

Aggregate

Intrinsic

Value

 

Outstanding as of December 31, 2017

 

 

799,375

 

 

 

1,467,051

 

 

$

12.70

 

 

 

8.41

 

 

$

4,511

 

Additional options authorized

 

 

526,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

 

(867,500

)

 

 

867,500

 

 

$

10.34

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

(28,151

)

 

$

9.55

 

 

 

 

 

 

 

 

 

Canceled and forfeited

 

 

176,909

 

 

 

(176,909

)

 

$

13.22

 

 

 

 

 

 

 

 

 

Outstanding as of June 30, 2018

 

 

635,114

 

 

 

2,129,491

 

 

$

11.74

 

 

 

8.39

 

 

$

4,623

 

Vested and exercisable as of June 30, 2018

 

 

 

 

 

 

772,552

 

 

$

12.80

 

 

 

7.28

 

 

$

2,017

 

 

During the three and six months ended June 30, 2018, the Company granted employees stock options for zero and 799,500 shares, respectively. The weighted-average grant date fair value of these options was zero and $7.50 for the three and six months ended June 30, 2018, respectively. During the three and six months ended June 30, 2017, the Company granted employees stock options for 60,000 and 523,700 shares, respectively. The weighted-average grant date fair value of these options was $5.41 and $7.69 for the three and six months ended June 30, 2017, respectively.  

The Company records stock-based compensation of stock options granted to employees by estimating the fair value of stock-based awards using the Black-Scholes option pricing model and amortizes the fair value of the stock-based awards granted over the applicable vesting period of the awards on a straight-line basis. The fair value of employee stock options was estimated using the following weighted-average assumptions:

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2018

 

2017

 

2018

 

2017

Expected term (in years)

 

 

5.27-6.02

 

5.27-6.08

 

5.27-6.02

Volatility

 

 

79.0%-80.0%

 

84.00%-84.50%

 

79.0%-80.0%

Risk free interest rate

 

 

1.6%-1.9%

 

2.35%-2.68%

 

1.6%-2.2%

Dividend yield

 

 

 

 

 

12


 

Stock-Based Compensation Expense

Total stock-based compensation expense recognized for options granted was as follows (in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Research and development

 

$

471

 

 

$

215

 

 

$

794

 

 

$

498

 

General and administrative

 

 

850

 

 

 

731

 

 

 

1,530

 

 

 

1,772

 

Total

 

$

1,321

 

 

$

946

 

 

$

2,324

 

 

$

2,270

 

 

As of June 30, 2018, the total unrecognized compensation expense related to unvested options was $11.1 million, which the Company expects to recognize over an estimated weighted average period of 2.9 years.

 

 

8.

Income Taxes

The tax expense for the three and six months ended June 30, 2018 was zero due to the Company’s loss position and full valuation allowance. This is consistent with the zero-tax expense for the three and six months ended June 30, 2017.

 

 

9.

Legal Matters

In July 2015, following Celladon’s announcements of the negative CUPID 2 data and the suspension of further research and development activities and the subsequent declines of the price of its common stock, three putative class actions were filed in the U.S. District Court for the Southern District of California against Celladon and certain of its current and former officers. The complaints generally alleged that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by making materially false and misleading statements regarding the clinical trial program for MYDICAR, thereby artificially inflating the price of Celladon’s common stock. The complaints sought unspecified monetary damages and other relief, including attorneys’ fees. On December 9, 2015, the district court consolidated the three putative securities class actions and appointed a lead plaintiff to represent the putative class. The lead plaintiff filed a consolidated amended complaint on February 29, 2016.

On October 7, 2016, the district court granted defendants’ motion to dismiss the consolidated amended complaint and granted leave to amend within 60 days from the date of the district court’s order. The lead plaintiff subsequently filed a notice of intent not to amend the consolidated amended complaint and instead indicated that it intended to appeal the district court’s decision. On December 9, 2016, the district court closed the case.

On December 28, 2016, the lead plaintiff filed a notice to the United States Court of Appeals for the Ninth Circuit appealing the district court’s order dismissing the consolidated amended complaint. On May 5, 2017, the lead plaintiff and appellant filed his opening appellate brief. On July 5, 2017, defendants filed their answering appellate brief response. The Plaintiff subsequently filed their response to the Company’s July 5, 2017 filing on August 19, 2017. Oral arguments are scheduled to be heard on August 28, 2018 before the Ninth Circuit Court of Appeals. 

It is possible that additional suits will be filed, or allegations made by stockholders, with respect to these same or other matters and also naming the Company and/or Celladon’s former officers and directors as defendants. The Company believes that it has meritorious defenses and intends to defend these lawsuits vigorously. Due to the early stage of these proceedings, the Company is not able to predict or reasonably estimate the ultimate outcome or possible losses relating to these claims.

 

 

10.

Commitments and Contingencies

Lease Agreement

In October 2017, the Company entered into a non-cancelable facility lease agreement for 8,029 square feet of office space located at 2155 Park Blvd. in Palo Alto, California 94306. The lease commenced on March 1, 2018 and expires in February 2023. The lease has one three-year renewal option prior to expiration and includes rent escalation clauses through the lease term. In October 2017, the Company provided a security deposit of $0.3 million. The future minimum rent payable under the new lease agreement is approximately $0.6 million per year.

 

There were no other changes in commitments and contingencies during the three and six months ended June 30, 2018.

 

11. Subsequent Events

 

On August 3, 2018, the Company borrowed the final $5.0 million under the Oxford Loan upon achievement of certain clinical milestones. The final borrowing did not have any impact on terms, conditions, representations, warranties, covenants or agreements set forth in the Oxford Loan.

13


 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of Eiger’s financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, Eiger’s consolidated financial statements and related notes thereto for the year ended December 31, 2017, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 9, 2018. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations, intentions and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included elsewhere in this report.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These 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, performances or achievements expressed or implied by the forward-looking statements In some cases, forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to, among other thing, our future plans, objectives, expectations, intentions, the potential for our programs, the timing of our clinical trials and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q in Part II, Item 1A — “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this Quarterly Report on Form 10-Q, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

Overview

We are a clinical stage biopharmaceutical company focused on bringing to market novel product candidates for the treatment of rare diseases. Since our founding in 2008, we have worked with investigators at Stanford University and evaluated a number of potential development candidates from pharmaceutical companies to comprise a pipeline of novel product candidates. Our resulting pipeline includes our lead program which is about to initiate Phase 3 clinical development and three Phase 2 candidates addressing three distinct rare diseases. In May, we added a fifth program to our pipeline to develop lonafarnib for the treatment of Hutchinson-Gilford Progeria Syndrome (HGPS or Progeria) and progeroid laminopathies, rare and fatal genetic conditions characterized by accelerated aging in children.

Our programs have several aspects in common: the disease targets represent conditions of high medical need which are inadequately treated by current standard of care; the therapeutic approaches are supported by an understanding of disease biology and mechanism as elucidated by our academic research relationships; prior clinical experience with the product candidates guides an understanding of safety; and the development paths leverage the experience and capabilities of our experienced, commercially-focused management team.

Our pipeline includes lonafarnib, our lead program addressing Hepatitis Delta Virus, or HDV, pegylated interferon, lambda (Lambda) for HDV, lonafarnib for progeria and progeroid laminopathies, exendin 9-39 for post-bariatric hypoglycemia, or PBH, and ubenimex for lymphedema. For Lambda in HDV, exendin 9-39 in PBH, and ubenimex in lymphedema, we plan to deliver Phase 2 data by the end of the year. For lonafarnib in progeria and progeroid laminopathies, we plan to receive regulatory guidance on next steps from FDA and EMA by the end of the year.

In January 2018, we announced that Phase 2 LIBERTY study results in pulmonary arterial hypertension (PAH) demonstrated no improvement overall or in key subgroups for both the primary efficacy endpoint of pulmonary vascular resistance (PVR) and the secondary endpoint of 6-minute walk distance. The company discontinued development of ubenimex in PAH based on these results.

14


 

We have no products approved for commercial sale and have not generated any revenue from product sales. We have never been profitable and have incurred operating losses in each year since inception and we do not anticipate that we will achieve profitability in the near term. Our net losses were $18.7 million and $22.4 million for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, we had an accumulated deficit of $137.6 million. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

We expect to incur significant expenses and increasing operating losses for at least the next several years as we initiate and continue the clinical development of, and seek regulatory approval for, our product candidates and add personnel necessary to operate as a public company with an advanced clinical candidate pipeline of products. We have and will be hiring additional financial and other personnel, upgrading our financial information systems and incurring costs associated with operating as a public company. We expect that our operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of clinical development programs and efforts to achieve regulatory approval.

Financial Operations Overview

Research and Development Expenses

Research and development expenses represent costs incurred to conduct research and development, such as the development of our product candidates. We recognize all research and development costs as they are incurred. Research and development expenses consist primarily of the following:

 

expenses incurred under agreements with consultants, contract research organizations and clinical trial sites that conduct research and development activities on our behalf;

 

laboratory and vendor expenses related to the execution of clinical trials;

 

contract manufacturing expenses, primarily for the production of clinical trial supplies;

 

license fees associated with our license agreements; and

 

internal costs that are associated with activities performed by our research and development organization and generally benefit multiple programs. These costs are not separately allocated by product candidate. Unallocated internal research and development costs consist primarily of:

 

personnel costs, which include salaries, benefits and stock-based compensation expense;

 

allocated facilities and other expenses, which include expenses for rent and maintenance of facilities and depreciation expense; and

 

regulatory expenses and technology license fees related to development activities.

The largest component of our operating expenses has historically been the investment in manufacturing capabilities, and research and development activities. However, we do not allocate internal research and development costs, such as salaries, benefits, stock-based compensation expense and indirect costs to product candidates on a program-specific basis. The following table shows our research and development expenses for the three and six months ended June 30, 2018 and 2017 (in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Product candidates:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lonafarnib HDV

 

$

2,663

 

 

$

1,271

 

 

$

3,806

 

 

$

2,390

 

Ubenimex PAH (terminated in January 2018)

 

 

495

 

 

 

3,012

 

 

 

1,428

 

 

 

5,639

 

Exendin 9-39 PBH

 

 

654

 

 

 

1,096

 

 

 

1,343

 

 

 

1,819

 

Lambda HDV

 

 

566

 

 

 

739

 

 

 

1,089

 

 

 

1,422

 

Ubenimex Lymphedema

 

 

340

 

 

 

373

 

 

 

793

 

 

 

859

 

Internal research and development costs

 

 

1,654

 

 

 

1,640

 

 

 

3,425

 

 

 

3,466

 

Total research and development expense

 

$

6,372

 

 

$

8,131

 

 

$

11,884

 

 

$

15,595

 

 

We expect research and development expenses will increase in the future as we advance our product candidates into and through later stage clinical trials and pursue regulatory approvals, which will require a significant investment in regulatory support and contract manufacturing and clinical trial material related costs. In addition, we continue to evaluate opportunities to acquire or in-license other product candidates and technologies, which may result in higher research and development expenses due to license fee and/or milestone payments.

15


 

The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in timely developing and achieving regulatory approval for our product candidates. The probability of success of our product candidates may be affected by numerous factors, including clinical data, competition, intellectual property rights, manufacturing capability and commercial viability. As a result, we are unable to determine the duration and completion costs of our development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.

General and Administrative Expenses

General and administrative expenses consist of personnel costs, allocated expenses and expenses for outside professional services, including legal, audit, accounting services, insurance costs and costs associated with being a public company. Personnel costs consist of salaries, benefits and stock-based compensation. Allocated expenses consist of facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation expense and other supplies. Our expenses include costs related to compliance with the rules and regulations of the SEC and NASDAQ, additional insurance, investor relations, banking fees and other administrative expenses and professional services.

Interest Expense

Interest expense consists of interest and amortization of the debt discount related to the Oxford Loan borrowing in December 2016, as amended.

Interest Income

Interest income consists of interest earned on our investments in debt securities and cash equivalents.

 

 

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates.

There have been no material changes to our critical accounting policies during the six months ended June 30, 2018 as compared to the critical accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Results of Operations

Comparison of the Three Months Ended June 30, 2018 and 2017

 

 

 

Three Months Ended June 30,

 

 

$

 

 

%

 

 

 

2018

 

 

2017

 

 

Change

 

 

Change

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

6,372

 

 

$

8,131

 

 

$

(1,759

)

 

 

(22

%)

General and administrative

 

 

3,237

 

 

 

2,946

 

 

 

291

 

 

 

10

%

Total operating expenses

 

 

9,609

 

 

 

11,077

 

 

 

(1,468

)

 

 

(13

%)

Loss from operations

 

 

(9,609

)

 

 

(11,077

)

 

 

1,468

 

 

 

 

 

Interest expense

 

 

(495

)

 

 

(378

)

 

 

(117

)

 

 

31

%

Interest income

 

 

189

 

 

 

113

 

 

 

76

 

 

 

67

%

Other income, net

 

 

 

 

 

196

 

 

 

(196

)

 

 

(100

%)

Net loss

 

$

(9,915

)

 

$

(11,146

)

 

$

1,231

 

 

 

(11

%)

 

16


 

Research and development expenses

Research and development expenses decreased by $1.7 million to $6.4 million for the three months ended June 30, 2018, from $8.1 million for the same period in 2017. The decrease was primarily due to a $1.7 million decrease in consulting fees and clinical expenditures due to decreased program activity and a $0.3 million decrease in compensation and personnel related expenses due to a decrease in headcount and recruitment activity. The decrease was partially offset by a $0.3 million increase in stock-based compensation expense due to options granted in 2018.

General and administrative expenses

General and administrative expenses increased by $0.3 million to $3.2 million for the three months ended June 30, 2018, from $2.9 million for the same period in 2017. The increase was primarily due to a $0.2 million increase in facility and insurance expenses related to the new office lease and a $0.2 million increase in compensation and personnel related expenses due to increased travel expenses and higher salaries and benefits in 2018. The increase was partially offset by a $0.1 million decrease in legal, consulting, advisory, and accounting services.

 

Interest expense

Interest expense increased by $0.1 million to $0.5 million for the three months ended June 30, 2018 from $0.4 million for the same period in 2017. Interest expense primarily increased due to a draw of $5.0 million under the Oxford Loan in the second quarter of 2018.

 

Interest income

Interest income increased by $0.1 million to $0.2 million for the three months ended June 30, 2018 from $0.1 million for the same period in 2017. The increase was primarily due to an increase in the interest earned on our investments in debt securities and cash equivalents in 2018 as compared to 2017.

 

Other income, net

Other income, net in 2017 primarily consisted of the payment received from Theragene for MYDICAR sale, and there was no such income earned for the three months ended June 30, 2018.

 

Comparison of the Six Months Ended June 30, 2018 and 2017

 

 

 

Six Months Ended June 30,

 

 

$

 

 

%

 

 

 

2018

 

 

2017

 

 

Change

 

 

Change

 

Operating expenses: