Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE 7 - STOCKHOLDERS’ EQUITY

On September 26, 2019, the Company’s Board of Directors approved a 1-for-4 reverse split of the Common Stock, which was effective on the OTC Markets on September 30, 2019. As a result of the reverse stock split, every 4 shares of issued and outstanding common stock were converted into 1 share of issued and outstanding common stock, with all fractional shares rounded up to the nearest whole share, and the Company’s authorized share of common stock were reduced from 200,000,000 to 50,000,000 shares. All share and per share amounts have been retroactively restated to reflect this reverse stock split.

Common Stock

During the six months ended June 30, 2020, the Company issued 35,954 shares of common stock for cashless exercise of 49,196 warrants. The Company also issued 815,471 shares of common stock for cash exercises of warrants for proceeds of $5,619,276.

During the six months ended June 30, 2020, the Company issued 115,715 shares of common stock for the exercise of options for proceeds of $530,643.

On May 15, 2020, the Company entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of the Company’s common stock, having an aggregate offering price of up to $75,000,000 . The Company is not obligated to sell any shares under the agreement. During the six months ended June 30, 2020 the Company issued 427,700 shares of common stock for net cash proceeds of $19,900,000 million under the agreement.

Options and Warrants

In December 2014, the Board of Directors adopted and the shareholders approved Relmada’s 2014 Stock Option and Equity Incentive Plan, as amended (the “Plan”), which allows for the granting of common stock awards, stock appreciation rights, and incentive and nonqualified stock options to purchase shares of the Company’s common stock to designated employees, non-employee directors, and consultants and advisors. The Plan allowed for the granting of 5,152,942 options or stock awards.

Stock options are exercisable generally for a period of 10 years from the date of grant and generally vest over four years. As of June 30, 2020, 1,018,367 shares were available for future grants under the Plan.

As of June 30, 2020, no stock appreciation rights have been issued.

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options and warrants. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The expected volatility was based on historical volatility. The Company routinely reviews its calculation of volatility changes in future volatility, the Company’s life cycle, its peer group, and other factors.

The Company uses the simplified method for share-based compensation to estimate the expected term for employee option awards for share-based compensation in its option-pricing model.

On March 9, 2020, the Company awarded a total of 350,000 options to an employee with exercise price of $45.61 and a 10-year term vesting over 4-year period. The options have an aggregate fair value of $13.1 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.51% (2) expected life of 6.25 years, (3) expected volatility of 107%, and (4) zero expected dividends.

On March 19, 2020, the Company awarded a total of 100,000 options to an employee with exercise price of $28.00 and a 10-year term vesting over a 4-year period. The options have an aggregate fair value of $2.3 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.83% (2) expected life of 6.25 years, (3) expected volatility of 108%, and (4) zero expected dividends.

On March 25, 2020, the Company awarded a total of 150,000 options to an employee with exercise price of $31.88 and a 10-year term vesting over a 4-year period. The options have an aggregate fair value of $4.0 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.67% (2) expected life of 6.25 years, (3) expected volatility of 108%, and (4) zero expected dividends.

On April 21, 2020, the Company awarded a total of 100,000 options to an employee with exercise price of $33.29 and a 10-year term vesting over a 4-year period. The options have an aggregate fair value of $2.7 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.41% (2) expected life of 6.25 years, (3) expected volatility of 108%, and (4) zero expected dividends.

On May 20, 2020, the Company awarded a total of 150,000 options to an employee with exercise price of $45.25 and a 10-year term vesting over a 4-year period. The options have an aggregate fair value of $5.6 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.44% (2) expected life of 6.25 years, (3) expected volatility of 107%, and (4) zero expected dividends

At June 30, 2020, the Company has unrecognized stock-based compensation expense of approximately $69,788,000 related to unvested stock options over the weighted average remaining service period of 3.5 years.

During the six months ended June 30, 2020, the Company recognized additional compensation expense of approximately $1.5 million related to acceleration of vesting and a nominal amount related to the modification of certain options in connection with the separation and settlement agreement with Dr. Ottavio Vitolo (see note 8).

Options

A summary of the changes in options during the six months ended June 30, 2020 is as follows:

	Number of Options			Weighted Average Exercise Price For Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding and expected to vest at December 31, 2019		3,615,602		$	19.96		9.2	$	74,837,043
Granted		850,000		$	39.60		9.76	$	4,751,500
Exercised		(115,715	)	$	4.59		-	$	-
Forfeited		(215,312	)	$	21.58		-	$	-
Outstanding and expected to vest at June 30, 2020		4,134,575		$	24.35		8.9	$	84,841,303
Options exercisable at June 30, 2020		914,103		$	11.82		7.78	$	30,202,021

Warrants

A summary of the changes in outstanding warrants during the six months ended June 30, 2020 is as follows:

	Number of Shares			Weighted Average Exercise Price Per Share
Outstanding and vested at December 31, 2019		3,646,872		$	6.83
Granted		122,000			31.69
Exercised		(855,365	)		7.23
Forfeited		(8,138	)		16.00
Outstanding and vested at June 30, 2020		2,905,369		$	7.79

On April 1, 2020, the Company granted 120,000 warrants to consultants with exercise price of $31.59, a 5-year term and immediate vesting. The warrants have an aggregated fair value of $2.5 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.26% (2) expected life of 2.5 years, (3) expected volatility of 118%, and (4) zero expected dividends.

On April 27, 2020, the Company granted 2,000 warrants to a consultant with exercise price of $37.67, a 5-year term and immediate vesting. The warrants have an aggregated fair value of $48 thousand that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.27% (2) expected life of 2.5 years, (3) expected volatility of 116%, and (4) zero expected dividends.

At June 30, 2020 the Company had approximately $103,000 of unrecognized compensation expense related to outstanding warrants.

At June 30, 2020 and December 31, 2019, the aggregate intrinsic value of warrants vested and outstanding was approximately $106,423,000 and $115,731,000, respectively.

The following summarizes the components of stock-based compensation expense which includes stock options and warrants in the unaudited consolidated statements of operations for the six months ended June 30, 2020 and 2019 (rounded to nearest $00):

	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Research and development	$	3,122,500	$	186,400
General and administrative		9,219,400		611,800
Total	$	12,341,900	$	798,200