Derivative Warrant Liability

12 Months Ended

Dec. 31, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Warrant Liability

7. Derivative Warrant Liability

The following warrants were sold by the Company:

• December 2013, the Company sold warrants to purchase 71,013 shares of the Company’s common stock (the “2013 Warrants”).

• August 2014, the Company sold warrants to purchase 50,000 shares of the Company’s common stock (the “2014 Warrants”).

• February 2015, the Company sold Series A warrants to purchase 110,833 shares of the Company’s common stock (the “Series A Warrants”) and Series B warrants to purchase 110,833 shares of the Company’s common stock (the “Series B Warrants”).

• May 2015, the Company sold Series C warrants to purchase 21,500 shares of the Company’s common stock (the “Series C Warrants”).  

• December 2015, the Company sold Series D warrants to purchase 502,500 shares of the Company’s common stock (the “Series D Warrants”) and Series E warrants to purchase 400,000 shares of the Company’s common stock (the “Series E Warrants”).

• April 2016, the Company sold 514,644 Series F warrants to purchase one share of common stock (the “Series F Warrant”) and 1,029,286 Series H warrants, each to purchase one share of common stock (the “Series H Warrant”), and 328,571 pre-funded Series G warrants (“Series G Warrants”) to purchase one share of common stock, pursuant to an underwritten public offering.  

• September 2016, the Company sold 712,503 Series I warrants to purchase one share of common stock (the “Series I Warrant”) and 185,000 pre-funded Series J warrants (“Series J Warrants”) to purchase one share of common stock, pursuant to an underwritten public offering.

The following sets forth information pertaining to shares issued upon the exercise of such warrants for the year ended December 31, 2016:

	Issuance Date	Expiration Date	Exercise Price as of December 31, 2016		Shares Underlying Warrants on Issuance Date		Shares Issued upon Warrant Exercises as of December 31, 2016			Shares Underlying Warrants Outstanding as of December 31, 2016
2013 Warrants	12/16/2013	12/16/2018	$	49.80		71,013		(15,239	)		55,774
2014 Warrants	8/5/2014	8/5/2019	$	36.20		50,000		(30,538	)		19,462
Series A Warrants	2/3/2015	2/3/2020	$	5.80		110,833		(99,416	)		11,417
Series B Warrants	2/3/2015	8/3/2015		-		110,833		(96,795	)		-
Series C Warrants	5/19/2015	5/19/2020	$	27.80		21,500		-			21,500
Series D Warrants	12/11/2015	12/11/2020	$	2.00		502,500		(501,570	)		930
Series E Warrants	12/11/2015	12/11/2020		-		400,000		(400,000	)		-
Series F Warrants	4/1/2016	4/1/2021	$	5.80		514,644		(233,857	)		280,787
Series G Warrants	4/1/2016	4/1/2017		-		328,571		(328,571	)		-
Series H Warrants	4/1/2016	10/1/2016		-		1,029,286		(900,436	)		-
Series I Warrants	9/13/2016	9/13/2021	$	11.00		712,503		-			712,503
Series J Warrants	9/13/2016	9/13/2017		-		185,000		(185,000	)		-
						4,036,683		(2,791,422	)		1,102,373

The agreements governing the above warrants include the following terms:

• certain warrants have exercise prices which are subject to adjustment for certain events, including the issuance of stock dividends on the Company’s common stock and, in certain instances, the issuance of the Company’s common stock or instruments convertible into the Company’s common stock at a price per share less than the exercise price of the respective warrants;

• warrant holders may exercise the warrants through a cashless exercise if, and only if, the Company does not have an effective registration statement then available for the issuance of the shares of its common stock. If an effective registration statement is available for the issuance of its common stock, a holder may only exercise the warrants through a cash exercise;

• the exercise price and the number and type of securities purchasable upon exercise of the warrants are subject to adjustment upon certain corporate events, including certain combinations, consolidations, liquidations, mergers, recapitalizations, reclassifications, reorganizations, stock dividends and stock splits, a sale of all or substantially all of the Company’s assets and certain other events; and

• in the event of an extraordinary transaction (as defined in the respective warrant agreements), generally including any merger with or into another entity, sale of all or substantially all of the Company’s assets, tender offer or exchange offer, or reclassification of its common stock, in which the successor entity (as defined in the respective warrant agreements) that assumes the warrant is not a publicly traded company, the Company or any successor entity will pay the warrant holder, at such holder’s option, exercisable at any time concurrently with or within 30 days after the consummation of the extraordinary transaction, an amount of cash equal to the value of such holder’s warrants as determined in accordance with an appropriate valuation model and the terms of the respective warrant agreement.

Based on these terms, the Company has determined that the 2013 Warrants, the 2014 Warrants, the 2015 Warrants and the 2016 Warrants (together, the “Warrants”) qualify as derivatives and, as such, are presented as a derivative warrant liability on the consolidated balance sheets and recorded at fair value each reporting period. The fair value of the Warrants was estimated to be $2.7 million and $10.5 million as of December 31, 2016 and December 31, 2015, respectively. The decrease in the estimated fair value of the Warrants represents an unrealized (gain)/loss which has been recorded as a loss from the change in fair value of derivative warrant liability in the consolidated statements of operations.

During the twelve months ended December 31, 2016, Common Stock was issued as a result of exercise of Warrants as described below:

	Twelve Months Ended December 31, 2016
	Common Stock Issued		Proceeds
Series A Warrants		83,333	$	500,000
Series D Warrants		501,570		1,315,694
Series E Warrants		326,450		65,290
Series F Warrants		233,857		1,403,143
Series G Warrants		328,571		65,714
Series H Warrants		900,436		8,911,537
Series J Warrants		185,000		37,000
		2,559,217	$	12,298,378

In May 2016, as permitted by Section 2(a) of the Series H Warrant agreement, the board of directors of the Company approved a voluntary reduction of the exercise price of Series H Warrants exercisable into 375,000 shares of the Company’s common stock, from an exercise price of $15.00 per share of common stock to $6.00 per share of common stock, for the remaining term of these warrants. Except for the reduction in exercise price, the terms of these Series H Warrants remain unchanged.

In June 2016, as permitted by Section 2(a) of the Series H Warrant agreement, the Board of Directors of the Company approved a voluntary reduction of the exercise price of Series H Warrants exercisable into 150,000 shares of the Company’s common stock, from an exercise price of $15.00 per share of common stock to $8.40 per share of common stock, for the remaining term of these warrants. The board of directors of the Company also approved a voluntary reduction of the exercise price of Series H Warrants exercisable into 100,000 shares of the Company’s common stock, from an exercise price of $15.00 per share of common stock to $10.40 per share of common stock, for the remaining term of these warrants. Ultimately, the Company adjusted the exercise price to $10.40 per share of common stock for Series H Warrants exercisable into 50,000 shares of the Company’s common stock. Except for the reduction in exercise price, the terms of these Series H Warrants remain unchanged.

In June 2016, as permitted by Section 9 of the Series D Warrant agreement, the Company agreed with certain holders of the Series D Warrants to amend the exercise price and accelerate the initial exercise date for Series D Warrants exercisable into 208,370 shares of the Company’s common stock held by such holders. Pursuant to that amendment, with respect to these Series D Warrants held by those holders, the exercise price was increased from an exercise price of $2.00 per share of common stock to $3.50 per share of common stock, for the remaining term of these warrants and the initial exercise date was changed from June 11, 2016 to June 8, 2016. Except for the change in exercise price and the initial exercise date, the terms of these Series D Warrants remained unchanged.

As of December 31, 2016, all of the Series B, E, G, H, and J Series Warrants for which the exercise price had been adjusted were fully exercised or expired.