10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended: September 30, 2017

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

For the transition period from               to            

Commission File Number: 001-36856

CONTRAVIR PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 46-2783806
(I.R.S. Employer Identification No.)

399 Thornall Street, First Floor, Edison, New Jersey
(Address of principal executive offices)

08837
(Zip Code)

(732) 902-4000

(Registrant’s telephone number)

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 x  No o

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)	Emerging growth company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

The number of the registrant’s shares of common stock outstanding was 78,278,306 as of November 13, 2017.

CONTRAVIR PHARMACEUTICALS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):	1
	Condensed Consolidated Balance Sheets as of September 30, 2017and June 30, 2017	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended September 30, 2017 and 2016	2
	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended September 30, 2017	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2017 and 2016	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II—OTHER INFORMATION
Item 6.	Exhibits	24
SIGNATURES		25

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for ContraVir Pharmaceuticals, Inc. may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Factors that may cause such differences include, but are not limited to, those discussed under Item 1A. Risk Factors and elsewhere in the audited financial statements as of and for the period ended June 30, 2017 contained in the Company’s Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on September 28, 2017. These factors include the uncertainties associated with product development, the risk that products that appeared promising in early clinical trials do not demonstrate safety and efficacy in larger-scale clinical trials, the risk that we will not obtain approval to market our products, the risks associated with dependence upon key personnel and the need for additional financing. We do not assume any obligation to update forward-looking statements as circumstances change and thus you should not unduly rely on these statements.

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

CONTRAVIR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2017			June 30, 2017
	(Unaudited)
ASSETS
Current Assets:
Cash	$	8,778,699		$	12,982,748
Prepaid expenses	158,628			210,174
Total Current Assets	8,937,327			13,192,922
Property and equipment, net	61,572			67,564
In-process research and development	3,190,000			3,190,000
Goodwill	1,870,924			1,870,924
Other assets	61,289			63,182
Total Assets	$	14,121,112		$	18,384,592
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,483,093		$	1,626,791
Accrued expenses	1,327,600			1,318,083
Total Current Liabilities	2,810,693			2,944,874
Contingent consideration	3,439,699			3,410,000
Deferred tax liability	1,269,620			1,269,620
Derivative financial instruments, at estimated fair value-warrants	1,608,335			1,702,231
Total Liabilities	9,128,347			9,326,725
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Convertible preferred stock, par value $0.0001 per share. Authorized 20,000,000 shares	—			—
Series A convertible preferred stock, stated value $10.00 per share, 104,013 and 104,013 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively	1,040,128			1,040,128
Common stock, par value of $.0001 per share. Authorized 120,000,000 shares, 78,169,715 and 75,707,348 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively	7,817			7,571
Additional paid-in capital	69,222,541			67,513,713
Accumulated deficit	(65,277,721		)	(59,503,545		)
Total Stockholders’ Equity	4,992,765			9,057,867
Total Liabilities and Stockholders’ Equity	$	14,121,112		$	18,384,592

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

1

CONTRAVIR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016
Revenues	$	—		$	—
Costs and Expenses:
Research and development	3,963,477			3,129,708
General and administrative	1,874,896			1,747,351
Loss from Operations	(5,838,373		)	(4,877,059		)
Change in fair value of derivative instruments-warrants and contingent consideration	64,197			60,162
Net loss		(5,774,176	)		(4,816,897	)
Other comprehensive income
Foreign currency translation adjustment	—			—
Comprehensive loss	$	(5,774,176	)	$	(4,816,897	)
Weighted Average Common Shares Outstanding
Basic and Diluted	76,578,997			37,919,087
Net Loss per Common Share
Basic and Diluted	$	(0.08	)	$	(0.13	)

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

2

CONTRAVIR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Preferred Stock, Series A $0.0001 par value			Common Stock, $0.0001 par value			Additional					Total
	Shares	Amount		Shares	Par Value		Paid in Capital		Accumulated Deficit			Stockholder’s Equity
Balance July 1, 2017	104,103	$	1,040,128	75,707,348	$	7,571	$	67,513,713	$	(59,503,545	)	$	9,057,867
Issuance of common stock, net	—	—		2,462,367	246		1,317,683		—			1,317,929
Stock based compensation expense	—	—		—	—		391,145		—			391,145
Net loss	—	—		—	—		—		(5,774,176		)	(5,774,176		)
Balance September 30, 2017	104,103	$	1,040,128	78,169,715	$	7,817	$	69,222,541	$	(65,277,721	)	4,992,765

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

3

CONTRAVIR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended			Three Months Ended
	September 30, 2017			September 30, 2016
Cash Flows From Operating Activities:
Net loss	$	(5,774,176	)	$	(4,816,897	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	391,145			501,116
Change in fair value of derivative instrument-warrants	(93,896		)	(60,162		)
Change in fair value of contingent consideration	29,699			5,000
Depreciation and amortization expense	5,992			7,054
Changes in operating assets and liabilities:
Accounts payable and accrued expense	14,722			88,922
Current portion of capital lease	—			(10,410		)
Prepaid expenses and other assets	53,439			(92,583		)
Net Cash used in Operating Activities	(5,373,075		)	(4,377,960		)
Cash Flows From Investing Activities:
Purchases of property and equipment	—			—
Net Cash used in Investing Activities	—			—
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock	1,169,026			—
Issuance of common stock via stock option exercise	—			2,180
Net Cash provided by Financing Activities	1,169,026			2,180
Net decrease in cash	(4,204,049		)	(4,375,780		)
Cash at beginning of period	12,982,748			7,403,940
Cash at end of period	$	8,778,699		$	3,028,160
Supplementary Disclosure Of Non-Cash Financing Activities:
Stock issued to employees in lieu of cash payment for accrued bonus	$	148,903		$	—
Conversion of Series A convertible preferred stock	$	—		$	10,669,092
Conversion of Series B convertible preferred stock	$	—		$	1,200,000

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

4

CONTRAVIR PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Business Overview

ContraVir Pharmaceuticals Inc. (“ContraVir” or the “Company”) is a biopharmaceutical company focused primarily on the clinical development and commercialization of targeted antiviral therapies with a specific focus on developing a potentially curative therapy for hepatitis B virus (HBV). The Company is developing two novel anti-HBV compounds with complementary mechanisms of action. Our lead compound, TXL™, is currently in Phase 2a development and is designed to deliver high intrahepatic concentrations of TFV, while minimizing off-target effects caused by high levels of circulating TFV. CRV431, our second compound for HBV, is a next-generation cyclophilin inhibitor with a unique structure that increases its potency and selective index against TXL

2. Basis of Presentation and Going Concern

These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“GAAP”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial information. The consolidated balance sheet as of June 30, 2017 was derived from the audited annual financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended June 30, 2017 contained in the Company’s Annual Report on Form 10-K (“Form 10-K”) filed with the SEC on September 28, 2017.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of ContraVir and its subsidiaries ContraVir Research Inc. and Ciclofilin Pharmaceuticals Corp, which conducts its operations in Canada. All intercompany balances and transactions have been eliminated in consolidation.

Going Concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern within one year of the issuance of these consolidated financial statements, contemplates the realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern. As of September 30, 2017, the Company had $8.8 million in cash. Net cash used in operating activities was $5.4 million for the three months ended September 30, 2017. Net loss for the three months ended September 30, 2017 was $5.7 million. As of September 30, 2017, the Company had working capital of $6.1 million. The Company has not generated revenue to date and has incurred substantial losses and negative cash flows from operations since its inception. The Company has historically funded its operations through issuances of common and preferred stock.

The Company will be required to raise additional capital within the next year to continue the development and commercialization of its current product candidates and to continue to fund operations at its current cash expenditure levels. The significant uncertainties surrounding the clinical development timelines and costs and the need to raise a significant amount of capital raises substantial doubt about the Company’s ability to continue as a going concern from one year after the Company’s financial statements have been issued without additional capital becoming available. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business. If the Company is unable to raise additional capital when required or on acceptable terms, it may have to (i) significantly delay, scale back or discontinue the development and/or commercialization of its product candidate; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that the Company would otherwise seek to develop or commercialize ourselves on unfavorable terms.

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3. Summary of Significant Accounting Policies

Use of Estimates

The preparation of 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. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended June 30, 2017 included in the Company’s Form 10-K filed with the SEC on September 28, 2017. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

Cash

As of September 30, 2017 and June 30, 2017, the amount of cash was approximately $8.8 million and $13.0 million, respectively, consisting primarily of checking accounts held at U.S. commercial banks. Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced losses related to these balances.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (ASC 820), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or 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 a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

·Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

·Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

·Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments consist of cash and accounts payable. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short term nature.

Derivative financial instruments

The Company has issued common stock warrants in connection with the execution of certain equity financings. The fair value of the warrants, which were deemed to be derivative instruments based on certain contingent put features, was recorded as a derivative liability under the provisions of ASC Topic 815 Derivatives and Hedging (“ASC 815”) upon issuance. Subsequently, the liability is adjusted to fair value as of the end of each reporting period and the changes in fair

6

value of derivative liabilities are recorded in the statements of operations under the caption “Change in fair value of derivative financial instruments—warrants.” See Note 4 for additional information.

Goodwill and In-Process Research & Development

In accordance with ASC Topic 350, Intangibles — Goodwill and Other (“ASC Topic 350”), goodwill and acquired IPR&D are determined to have indefinite lives and, therefore, are not amortized. Instead, they are tested for impairment annually, in the Company’s fourth quarter, and between annual tests if the Company becomes aware of an event or a change in circumstances that would indicate the carrying value may be impaired. Pursuant to ASU No. 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment, and No. 2012-02, Intangibles — Goodwill and Other(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that the goodwill or the acquired IPR&D is impaired. If the Company chooses to first assess qualitative factors and determines that it is not more likely than not goodwill or acquired IPR&D is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to do in some periods but not in others.

If the Company performs a quantitative assessment of goodwill, it utilizes the two-step approach prescribed under ASC Topic 350. Step 1 requires a comparison of the carrying value of a reporting unit, including goodwill, to its estimated fair value. The Company tests for impairment at the entity level because it operates on the basis of a single reporting unit. If the carrying value exceeds fair value, the Company then performs Step 2 to measure the amount of impairment loss, if any. In Step 2, the Company estimates the fair value of its individual assets, including identifiable intangible assets, and liabilities to determine the implied fair value of goodwill. The Company then compares the carrying value of its goodwill to its implied fair value. The excess of the carrying value of goodwill over its implied fair value, if any, is recorded as an impairment charge.

Goodwill relates to amounts that arose in connection with the acquisition of Ciclofilin. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations. There was no impairment of goodwill as of September 30, 2017.

IPR&D acquired in a business combination is capitalized as indefinite-lived assets on the Company’s consolidated balance sheets at its acquisition-date fair value. Once the project is completed, the carrying value of the IPR&D is reclassified to other intangible assets, net and is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the IPR&D projects are expensed as incurred.

The projected discounted cash flow models used to estimate the fair values of the Company’s IPR&D assets, acquired in connection with the Ciclofilin acquisition, reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a drug development asset, including: (i) probability of successfully completing clinical trials and obtaining regulatory approval; (ii) market size, market growth projections, and market share; (iii) estimates regarding the timing of and the expected costs to advance clinical programs to commercialization; (iv) estimates of future cash flows from potential product sales; and (v) a discount rate.

If IPR&D becomes impaired or is abandoned, the carrying value of the IPR&D is written down to its revised fair value with the related impairment charge recognized in the period in which the impairment occurs. If the carrying value of the asset becomes impaired as the result of unfavorable data from any ongoing or future clinical trial, changes in assumptions that negatively impact projected cash flows, or because of any other information regarding the prospects of successfully developing or commercializing our programs, the Company could incur significant charges in the period in which the impairment occurs. There was no impairment of IPR&D as of September 30, 2017.

Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, product and environmental liability, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (“ASC 450”), the Company records accruals for such loss contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized.

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Research and Development

Research and development costs, which include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, license costs, regulatory and scientific consulting fees, as well as contract research, insurance and FDA consultants, are accounted for in accordance with ASC Topic 730, Research and Development, (“ASC 730”). Also, as prescribed by this guidance, patent filing and maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.

ContraVir does not currently have any commercial biopharmaceutical products, and does not expect to have such for several years, if at all. Accordingly, our research and development costs are expensed as incurred. While certain of our research and development costs may have future benefits, our policy of expensing all research and development expenditures is predicated on the fact that ContraVir has no history of successful commercialization of product candidates to base any estimate of the number of future periods that would be benefited.

Also as prescribed by ASC 730, non-refundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts would be recognized as an expense. At September 30, 2017 and June 30, 2017, the Company had prepaid research and development costs of $55,123 and $75,484.

Share-based payments

ASC Topic 718 “Compensation—Stock Compensation” (“ASC 718”) requires companies to measure the cost of employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. Generally, the Company issues stock options with only service based vesting conditions and records the expense for these awards using the straight-line method.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. ContraVir has a limited trading history in its common stock and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The Company accounts for stock options issued to non-employees in accordance with ASC Topic 505-50 “Equity-Based Payment to Non-Employees” and accordingly the value of the stock compensation to non-employees is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company’s common stock and updated assumption inputs in the Black-Scholes option-pricing model.

ASC 718 requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised (excess tax benefits) be classified as cash inflows from financing activities and cash outflows from operating activities. Due to ContraVir’s accumulated deficit position, no excess tax benefits have been recognized.

Business Combinations

The Company accounts for its business acquisitions, such as our acquisition of Ciclofilin in June of 2016, under the acquisition method of accounting as indicated in FASB ASC 805, “Business Combinations”, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquired business; and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and

8

liabilities and non-controlling interest in the acquiree, based on the fair value estimates as of the date of acquisition. In accordance with ASC 805, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

Contingent consideration assumed in a business combination is remeasured at fair value each reporting period and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in other expense.

4. Recent Accounting Pronouncements

In May of 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This guidance is to be applied for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In January of 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which amended the 2014 amendments to the FASB Accounting Standards Codification that allowed companies an alternative accounting treatment for subsequently measuring goodwill. This amendment is Phase 1 of a project by the FASB Board to simplify how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. These amendments are to be applied on a prospective basis and are required to be adopted for annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The Company is required to adopt the guidance in the first quarter of fiscal 2019 and early adoption is permitted. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The Company is currently evaluating the timing and the impact of these amendments on its statement of cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The new standard identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing

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and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about:

·Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

·Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

·Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In August 2015, the FASB issued updated guidance deferring the effective date of the revenue recognition standard. In March, April and May 2016 and September 2017, the FASB issued additional updated guidance, which clarifies certain aspects of the ASU and the related implementation guidance issued by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

5. Stockholder’s Equity and Derivative Liability

Preferred stock, Common Stock and Warrant Offering

During the period from August 5, 2016 to September 29, 2016, certain holders of the Company’s Series A Convertible Preferred Stock elected to convert approximately 1.1 million shares of Series A Convertible Preferred stock into approximately 22.2 million shares of the Company’s common stock. In addition, in September 2016, the holder of the Company’s Series B Convertible Preferred stock elected to convert the outstanding 120,000 shares of Series B Convertible Preferred stock into approximately 1.1 million shares of the Company’s common stock

On October 7, 2015, the Company entered into an underwriting agreement related to the public offering and sale of 5,000,000 shares of common stock and warrants to purchase up to 3,000,000 shares of common stock, at a fixed combined price to the public of $3.00 under the Company’s current shelf registration statement on Form S-3. The shares of common stock and warrants were issued separately on October 13, 2015. The warrants are immediately exercisable and will be exercisable for a period of five years from the date of issuance at an exercise price of $4.25 per share. There is not, nor is there expected to be, any trading market for the warrants issued in the offering contemplated by the Underwriting Agreement. The Company also granted the Underwriters a 45-day option to purchase up to an additional 750,000 additional shares of common stock and additional warrants to purchase up to 450,000 shares of common stock at $3.00, which was not exercised. The gross proceeds to the Company were $15.0 million, before deducting the underwriting discount and other offering expenses payable by the Company of approximately $1.5 million. If the warrants were exercised in full, ContraVir would receive additional proceeds of approximately $12.8 million.

If the Company consummates any merger, consolidation, sale or other reorganization event in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the fundamental transaction and continuing for 90 days, an amount of cash equal to the value of the remaining unexercised portion of the warrant as determined in accordance with the Black-Scholes option pricing model on the date of such fundamental transaction. As a result of these terms, in accordance with the guidance contained in ASC Topic 815-40, the Company has determined that the warrants issued in connection with this financing transaction must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s statement of operations and comprehensive loss. Upon the issuance of these warrants, the fair value of approximately $4.4 million was recorded as derivative financial instruments liability—warrants.

The fair value of these liability classified warrants was estimated using the Black-Scholes option pricing model. The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. The Company has a limited trading history in its common stock, therefore, expected

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volatility is based on that of comparable public development stage biotechnology companies. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement.

The following assumptions were used to measure the warrants at issuance and to remeasure the liability as of September 30, 2017 and June 30, 2017:

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	3.03 years			3.28 years
Risk-free interest rate	1.77		%	1.73		%
Expected volatility	73		%	66		%
Dividend yield	—			—

On April 4, 2016, the Company closed on a public offering of 4,929,578 shares of its common stock and warrants to purchase up to 2,464,789 shares of common stock, at a fixed combined price to the public of $1.42 under the Company’s current shelf registration statement on Form S-3. The warrants are immediately exercisable and will be exercisable for a period of five years from the date of issuance at an exercise price of $1.70 per share. There is not, nor is there expected to be, any trading market for the warrants issued in the offering contemplated by the Underwriting Agreement. The gross proceeds to the Company were $7.0 million, before deducting the underwriting discount and other offering expenses payable by the Company of approximately $0.7 million. If the warrants were exercised in full, ContraVir would receive additional proceeds of approximately $4.2 million.

Similar to the terms of the warrants issued in October 2015, if the Company consummates any merger, consolidation, sale or other reorganization event in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the fundamental transaction and continuing for 90 days, an amount of cash equal to the value of the remaining unexercised portion of the warrant as determined in accordance with the Black-Scholes option pricing model on the date of such fundamental transaction. As a result of these terms, in accordance with the guidance contained in ASC Topic 815-40, the Company has determined that the warrants issued in connection with this financing transaction must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s statement of operations and comprehensive loss. Upon the issuance of these warrants, the fair value of approximately $1.5 million was recorded as derivative financial instruments liability—warrants.

The fair value of these liability classified warrants was estimated using the Black-Scholes option pricing model. The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. The Company has a limited trading history in its common stock, therefore, expected volatility is based on that of comparable public development stage biotechnology companies. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement.

The following assumptions were used to measure the warrants at issuance and to remeasure the liability as of September 30, 2017 and June 30, 2017:

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	3.51 years			3.76 years
Risk-free interest rate	1.77		%	1.73		%
Expected volatility	73		%	66		%
Dividend yield	—			—

On April 25, 2017, the Company closed on a public offering of 12,000,000 shares of its common stock and warrants to purchase up to 6,000,000 shares of common stock, at a fixed combined price to the public of $1.00 under the Company’s current shelf registration statement on Form S-3. The warrants are immediately exercisable and will be exercisable for a period

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of five years from the date of issuance at an exercise price of $1.25 per share. There is not, nor is there expected to be, any trading market for the warrants issued in the offering contemplated by the Underwriting Agreement. The gross proceeds to the Company were $12.0 million, before deducting the underwriting discount and other offering expenses payable by the Company of approximately $0.5 million. If the warrants were exercised in full, ContraVir would receive additional proceeds of approximately $7.5 million.

If the Company consummates any merger, consolidation, sale or other reorganization event in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the fundamental transaction and continuing for 90 days, an amount of cash equal to the value of the remaining unexercised portion of the warrant as determined in accordance with the Black-Scholes option pricing model on the date of such fundamental transaction. As a result of these terms, in accordance with the guidance contained in ASC Topic 815-40, the Company has determined that the warrants issued in connection with this financing transaction must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s statement of operations and comprehensive loss. Upon the issuance of these warrants, the fair value of approximately $4.0 million was recorded as derivative financial instruments liability - warrants.

The fair value of these liability classifed warrants were estimated using the Black-Scholes option pricing model. The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. The Company has a limited trading history in its common stock, therefore, expected volatility is based on that of comparable public development stage biotechnology companies. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement.

The following assumptions were used to measure the warrants at issuance and to remeasure the liability as of September 30, 2017 and June 30, 2017:

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	4.56 years			4.76 years
Risk-free interest rate	1.77		%	1.72		%
Expected volatility	73		%	66		%
Dividend yield	—			—

The following table sets forth the components of changes in the Company’s derivative financial instruments liability balance for the three months ended September 30, 2017:

Date	Description	Number of Warrants Outstanding	Derivative Instrument Liability
July 1, 2017	Balance of derivative financial instruments liability	11,414,789	$	1,702,231
	Change in fair value of warrants for the three months ended September 30, 2017	—	(93,896		)
September 30, 2017	Balance of derivative financial instruments liability	11,414,789	$	1,608,335

Controlled Equity Offering Sales Agreement

On March 9, 2015, the Company entered into a Controlled Equity Offering Sales Agreement (the “Agreement”), with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which the Company may offer and sell, from time to time, through Cantor shares of the Company’s common stock, par value $0.0001 per share (the “Shares”), up to an aggregate offering price of $50.0 million. The Company intends to use the net proceeds from these sales to fund research and development activities and for working capital and other general corporate purposes, and possible acquisitions of other companies, products or technologies, though no such acquisitions are currently contemplated.

Under the Agreement, Cantor may sell the Shares by methods deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly

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on The NASDAQ Capital Market, on any other existing trading market for the Shares or to or through a market maker. In addition, under the Agreement, Cantor may sell the Shares by any other method permitted by law, including in privately negotiated transactions. Subject to the terms and conditions of the Agreement, Cantor will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of The NASDAQ Capital Market, to sell the Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The Company is not obligated to make any sales of the Shares under the Agreement. The offering of Shares pursuant to the Agreement will terminate upon the earlier of (1) the sale of all of the Shares subject to the Agreement or (2) the termination of the Agreement by Cantor or the Company. ContraVir will pay Cantor a commission of up to 3.0% of the gross sales price per share sold and has agreed to provide Cantor with customary indemnification and contribution rights.

During the three months ended September 30, 2017, the Company sold approximately 2.2 million shares of the Company’s common stock resulting in net proceeds of approximately $1.2 million, under the Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co., as sales agent.

6. Fair Value Measurements

The following table presents the Company’s liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of September 30, 2017 and June 30, 2017.

	Fair value			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2017
Derivative liabilities related to warrants	$	(1,608,335	)	$	—	$	—	$	(1,608,335	)
Contingent consideration	$	(3,439,699	)	$	—	$	—	$	(3,439,699	)
As of June 30, 2017
Derivative liabilities related to warrants	$	(1,702,231	)	$	—	$	—	$	(1,702,231	)
Contingent consideration	$	(3,410,000	)	$	—	$	—	$	(3,410,000	)

The unrealized gains or losses on the derivative liabilities are recorded as a change in fair value of derivative liabilities-warrants in the Company’s statement of operations. See Note 5 for a rollfoward of the derivative liability for the three months ended September 30, 2017. The financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, the Company reviews the assets and liabilities that are subject to ASC 815-40. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

As discussed in Note 3, contingent consideration was recorded for the acquisition of Ciclofilin on June 10, 2016. The contingent consideration represented the acquisition date fair value of potential future payments, to be paid in cash and Company stock, upon the achievement of certain milestones and was estimated based on a probability-weighted discounted cash flow model. The following table presents the change in fair value of the contingent consideration as of September 30, 2017.

	Acquisition- related Contingent Consideration
Liabilities
Balance at June 30, 2017	$	3,410,000
Change in fair value recorded in earnings	29,699
Balance at September 30, 2017	$	3,439,699

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7. Indefinite-lived Intangible Assets and Goodwill

IPR&D

The Company’s IPR&D asset consisted of the following at:

	September 30, 2017		June 30, 2017
IPR&D asset:
CRV431	$	3,190,000	$	3,190,000

No impairment losses were recorded on IPR&D during the three months ended September 30, 2017.

Goodwill

The table below provides a roll-forward of the Company’s goodwill balance:

	Amount
Goodwill balance at July 1, 2017	$	1,870,924
Changes during the three months ended September 30, 2017	—
Goodwill balance at September 30, 2017	$	1,870,924

No impairment losses were recorded on goodwill during the three months ended September 30, 2017.

8. Accrued Liabilities

The Company’s accrued expenses consist of the following:

	September 30, 2017		June 30, 2017
Research and development	$	242,942	$	307,544
Professional fees	—		14,304
Payroll and related costs	975,426		931,664
Legal fees	83,241		64,571
Other	25,991		—
Total accrued expenses	$	1,327,600	$	1,318,083

9. Accounting for Share-Based Payments

On June 3, 2013, ContraVir adopted the 2013 Equity Incentive Plan (the “Plan”). Stock options granted under the Plan typically will vest after three years of continuous service from the grant date and will have a contractual term of ten years. ContraVir has reserved 7,700,000 shares of common stock issuable pursuant to the Plan. As of September 30, 2017, the Company had 1,028,814 shares of common stock available for grant under the Plan.

The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified. For the three months ended September 30, 2017 and 2016, ContraVir recorded the following stock based compensation expense:

	Three months ended September 30, 2017		Three months ended September 30, 2016
General and administrative	$	313,100	$	361,186
Research and development	78,045		139,930
Total stock-based compensation expense	$	391,145	$	501,116

A summary of stock option activity and of changes in stock options outstanding under the Plan for the three months ended September 30, 2017 is presented below:

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	Number of Options	Exercise Price Per Share	Weighted Average Exercise Price Per Share		Intrinsic Value		Weighted Average Remaining Contractual Term
Balance outstanding, July 1, 2017	6,481,186	$0.11—$4.38	$	1.54	$	220,019	7.53
Granted	190,000	0.50 - $0.58	$	0.55
Balance outstanding, September 30, 2017	6,671,186	$0.11—$4.38	$	1.51	$	164,024	7.30
Vested awards and those expected to vest at September 30, 2017	3,779,099	$0.11—$4.38	$	1.57	$	164,024	7.30
Vested and exercisable at September 30, 2017	6,584,423	$0.11—$4.38	$	1.51	$	163,985	7.28

The aggregate intrinsic value of stock options in the tables above is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted-average grant-date fair value per share of options granted to employees during the three months ended September 30, 2017 and 2016 was $0.37 and $0.72.

As of September 30, 2017, the unrecognized compensation cost related to non-vested stock options outstanding, net of expected forfeitures, was approximately $1.6 to be recognized over a weighted-average remaining vesting period of approximately 2.07.

The following weighted-average assumptions were used in the Black-Scholes valuation model to estimate fair value of stock option awards to employees during the three months ended September 30, 2017 and 2016.

	Three months ended September 30, 2017			Three months ended September 30, 2016
Stock price	$	0.58		$	1.07
Risk-free interest rate	1.51		%	1.25		%
Dividend yield	—			—
Expected volatility	71.8		%	80.5		%
Expected term (in years)	6.0years			5.7years

Risk-free interest rate—Based on the daily yield curve rates for U.S. Treasury obligations with maturities which correspond to the expected term of the Company’s stock options.

Dividend yield—ContraVir has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.

Expected volatility—Because ContraVir has a limited trading history in its common stock, the Company based expected volatility on that of comparable public development stage biotechnology companies.

Expected term—The expected option term represents the period that stock-based awards are expected to be outstanding based on the simplified method provided in SAB No. 107. Options are considered to be “plain vanilla” if they have the following basic characteristics: (i) granted “at-the-money”; (ii) exercisability is conditioned upon service through the vesting date; (iii) termination of service prior to vesting results in forfeiture; (iv) limited exercise period following termination of service; and (v) options are non-transferable and non-hedgeable.

In December 2007, the SEC issued SAB No. 110, Share-Based Payment, (“SAB No. 110”). SAB No. 110 was effective January 1, 2008 and expresses the views of the Staff of the SEC with respect to extending the use of the simplified method, as discussed in SAB No. 107, in developing an estimate of the expected term of “plain vanilla” share options in accordance with ASC 718. The Company will use the simplified method until it has the historical data necessary to provide a reasonable estimate of expected life in accordance with SAB No. 107, as amended by SAB No. 110. For the expected term, the Company has “plain-vanilla” stock options, and therefore used a simple average of the vesting period and the contractual term for options granted as permitted by SAB No. 107.

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Forfeitures—ASC 718 requires forfeitures to be estimated at the time of grant and revised if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company uses its actual forfeiture rate of 3%.

10. Loss per Share

Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share, (“ASC Topic 260”) for all periods presented. In accordance with ASC Topic 260, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. The following table sets forth the computation of basic and diluted net loss per share for the periods indicated:

	Three months ended
	September 30, 2017			September 30, 2016
Net loss	$	(5,774,176	)	$	(4,816,897	)
Weighted average common shares outstanding	76,578,997			37,919,087
Net loss per share of common stock—basic and diluted	$	(0.08	)	$	(0.13	)

The following outstanding securities at September 30, 2017 and 2016 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive:

	Three months ended September 30, 2017	Three months ended September 30, 2016
Common shares issuable upon conversion of Series A preferred stock 216	2,166,934	3,814,396
Stock options	6,671,186	5,738,456
Warrants	11,414,789	5,464,789
Total	20,252,909	15,017,641

The liability classified warrants disclosed above have been excluded from the computation of diluted earnings per share because their exercise price exceeds the average market price of the Company’s common stock during the respective period.

11. Commitments and Contingencies

License Agreement with Chimerix, Inc.

On December 17, 2014, the Company entered into an exclusive license agreement with Chimerix pursuant to which the Company has licensed TXL from Chimerix for further clinical development and commercialization. TXL is a highly potent analog of the antiviral drug tenofovir DF (Viread®). Under the terms of the agreement, ContraVir licensed TXL from Chimerix in exchange for an upfront payment consisting of 120,000 shares of ContraVir Series B Convertible Preferred Stock. In addition, Chimerix is eligible to receive up to approximately $20.0 million in clinical, regulatory and initial commercial milestone payments in the United States and Europe, as well as royalties and additional milestone payments based on commercial sales in those territories. Either party may terminate the License Agreement upon the occurrence of a material breach by the other party (subject to standard cure periods), or upon certain events involving the bankruptcy or insolvency of the other party. The Company may also terminate the License Agreement without cause on a country by country basis upon sixty days’ prior written notice to Chimerix.

The fair value of the Preferred B shares exchanged for the license was determined to be equal to the amount paid per share of the Series A, as the provision of the Preferred B shares were the same as the Preferred A Shares, based on an arm’s length transaction. Therefore, the fair value of the Preferred B shares issued was $10.00 per share or $1.2 million. The cost of the license was classified as a research and development expense in the amount of $1.2 million as the compound is early stage, has not yet reached technological feasibility and has no alternative use. As of the date of this report, no amounts had been accrued related to the milestone payments Chimerix is eligible to receive.

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License Agreement with University College Cardiff Consultants Limited (“Cardiff”)

On June 10, 2013, the Company and Synergy entered into a Contribution Agreement, as amended and restated on August 5, 2013, or the Contribution Agreement, to transfer to the Company the FV-100 assets, in exchange for the issuance to Synergy of 9,000,000 shares of the Company’s common stock representing 100% of the outstanding shares of the Company’s common stock as of immediately following such issuance. Pursuant to the Contribution Agreement, Synergy transferred ownership of all intellectual property rights acquired from Bristol-Myers Squibb (“BMS”) including all historical research, clinical study protocols, data, results and patents related to the FV-100 assets as well as assumed the obligations of Synergy, including all liabilities of Synergy, under the asset purchase agreement, dated August 17, 2012, by and between Synergy and BMS, or the BMS Agreement.

The FV-100 assets acquired from BMS are licensed from Cardiff pursuant to the terms of that certain Patent and Technology License Agreement, dated as of February 2, 2005, between Cardiff and CRI, an entity with no prior relationship with us, as amended March 27, 2007, or the Cardiff Agreement.

The Cardiff Agreement shall remain in full force and effect until the date upon which the last of the last patent or the last continuation or extension to any patents within the Patent Rights (as defined in the Cardiff Agreement) expires. Any milestone and/or royalty payment under the Cardiff Agreement shall be payable for as long as the Cardiff Agreement is in effect. The Cardiff Agreement may be terminated in its entirety, for among other reasons and in the following manner as set forth below: (a) automatically by Cardiff, if we become bankrupt or insolvent and/or if our business shall be placed in the hands of a receiver, assignee, or trustee; (b) upon ninety (90) calendar days written notice from Cardiff, if we breach or default (i) on the payment or report obligations or use of name obligations or (ii) on any other obligation under the Cardiff Agreement, subject to a ninety (90) calendar-day cure period; (c) if we have defaulted or been in excess of one (1) month late on its payment obligations pursuant to the terms of the Cardiff Agreement on any two (2) occasions in a twelve (12) month period, subject to a cure period; (d) upon one hundred twenty (120) calendar days written notice from us if any particular patent or patents included in Patent Rights and which account for at least thirty (30%) percent of the total royalty to Cardiff, is or are irrevocably adjudicated to be invalid; or (e) upon ninety (90) calendar days written notice from us if Cardiff is in breach of Section 11.1 (Confidential Information and Publication) unless, before the end of the such ninety (90) calendar-day notice period, Cardiff has cured the default or breach to our reasonable satisfaction and so notifies us, stating the manner of the cure.

The terms of the Cardiff Agreement provided in consideration for a license of all of Cardiff’s rights in any technical information, know-how, processes, procedures, compositions, devices, methods, formulae, protocols, techniques related to the FV-100 Assets, or the Patent Rights. The Cardiff Agreement provided for an initial base payment of $270,000, which has previously been paid by CRI, subsequent milestone payments covering (i) initiation of a clinical trial at each phase, (ii) marketing (FDA) approval and (iii) on achieving the milestone of aggregate net sales in three different tiers, as well as a low single digit royalty based on net sales. The total aggregate amount of milestone payments that could be payable to Cardiff by the Company under the Cardiff Agreement is equal to $400,000 as follows:

Milestone payments upon occurrence of the following events:

·Upon initiation of a Phase 3 clinical trial for a licensed product, $150,000

·Upon approval of the first NDA for any licensed product, $250,000

The terms of the BMS Agreement provided for an initial base payment of $1.0 million, subsequent milestone payments of $3.0 million and $6.0 million, respectively, covering (i) marketing (FDA) approval and (ii) on achieving the milestone of aggregate net sales equal to or greater than $125.0 million, as well as a single digit royalty based on net sales. The total aggregate amount of milestone payments that could be payable to BMS under the BMS Agreement is equal to $9 million. The duration of any milestone payment obligation owed to BMS shall continue until the earliest of (i) payment, in full, of all milestone payments as required under the BMS Agreement, (ii) our determination using commercially reasonable standards consistent with the exercise of prudent scientific and business judgment and consistent with those standards used by us for its other therapeutic products at a similar stage of development and with similar commercial potential, to terminate the development of the FV-100 assets, and (iii) the tenth (10th) anniversary of the date of the BMS Agreement, The duration of any royalty payment obligation to BMS shall commence on the date of the first commercial sale of the FV-100 assets in a country until the expiration of any claim of an issued and unexpired patent which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction of any of our patents or any other patent covering the use or sale of the FV-100 assets in such country. The transactions contemplated by the BMS Agreement closed on August 17, 2012 and neither party can terminate the remaining obligations owed under the

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BMS Agreement. No milestone payments have been made under this agreement and as of the date of this report, no amounts had been accrued related to the remaining milestone payments BMS is eligible to receive.

12. Related Party Transactions

One of the Company’s Directors, Timothy Block, is President of the Baruch S. Blumberg Institute (“Blumberg Institute”). On May 29, 2015, the Company entered into a Sponsored Research Agreement (“Agreement”) with Blumberg Institute, pursuant to which the Company is sponsoring research by investigators affiliated with the Blumberg Institute with respect to TXL. The Company incurred expenses related to the agreement of approximately $25,000 and $25,000 for the three months ended September 30, 2017 and 2016, respectively.

The Company is a party to a Consulting agreement dated June 1, 2016 with Gabriele Cerrone. Mr. Cerrone is a principal stockholder of the Company and provides general corporate consulting services. For the three months ended September 30, 2017 and 2016, the Company incurred expenses related to services performed by Mr. Cerrone of $30,000 and $30,000, respectively.

13. Subsequent Event

On October 27, 2017 the Company issued a press release on Form 8-K stating the decision to discontinue the Phase 3 trial of Valnivudine™, the company’s investigational drug being developed to reduce incidence of Postherpetic Neuralgia pain (“PHN”). The approval of a second herpes zoster vaccine, along with continued success of ZostavaxTM, is expected to further reduce the incidence of shingles and corresponding numbers of patients with PHN. The decision to discontinue the Phase 3 study enables the Company to utilize available capital to further advance the HBV product candidates. There is no impact to the Company’s recorded assets as of September 30, 2017.

In November 2017, the Company received approval from the New Jersey Economic Development Authority’s (NJEDA) Technology Business Tax Certificate Transfer (NOL) program to sell a percentage of its unused New Jersey net operating losses (NOL’s) and R&D tax credits. As a result, the Company expects to receive approximately $1.6 million of net cash proceeds prior to the end of 2017.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our condensed consolidated financial statements and other financial information appearing elsewhere in this quarterly report. In addition to historical information, the following discussion and other parts of this quarterly report contain forward-looking statements. You can identify these statements by forward-looking words such as “plan,” “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. Forward-looking statements include information concerning possible or assumed future business success or financial results. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under “Risk Factors” in our Annual Report on Form 10-K (“Form 10-K”) as of and for the year ended June 30, 2017 filed with the United States Securities and Exchange Commission (“SEC”) on September 28, 2017. Accordingly, to the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of us, please be advised that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in forward-looking statements, and you should not unduly rely on such statements.

Business Overview

We are a biopharmaceutical company focused on the development of antiviral drugs with a primary emphasis on the treatment of Hepatitis B virus (“HBV”) infections. We are developing two compounds to treat HBV infection, TXL and CRV431. TXL is a highly potent oral lipid prodrug of tenofovir. Prodrugs are designed to improve the characteristics of drugs, such as better efficacy, lower pill burden, improved safety, etc. Another prodrug of tenofovir, Viread®, is approved for the treatment of HIV and HBV infections. CRV431 is a novel drug candidate also designed for the treatment of HBV

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infection. CRV431 is a novel drug candidate also designed for the treatment of HBV infection. CRV431, a non-immunosuppressive analog of cyclosporine that we acquired through our merger with Ciclofilin Pharmaceuticals Inc. CRV431 has been designed to target enzymes (“cyclophilins”) that play a key role in the HBV viral life cycle.

TXL

TXL is a novel lipid acyclic nucleoside phosphonate that delivers high intracellular concentrations of the active antiviral agent tenofovir diphosphate. TXL’s novel structure results in decreased circulating levels of tenofovir (TFV), lowering systemic exposure and thereby reducing the potential for renal side effects. We intend to develop TXL for the treatment of chronic Hepatitis B Virus (HBV) infection and have completed a Phase 1b clinical trial in healthy volunteers, demonstrating a favorable safety, tolerability and drug distribution profile. We are currently testing TXL in a Phase 2a proof of concept study testing multiple doses of TXL versus Viread®.

We licensed TXL from Chimerix in exchange for an upfront payment of 120,000 shares of our preferred stock, valued at $1.2 million at the time of the deal. During September 2016, Chimerix elected to convert their Series B Preferred stock into approximately 1.0 million shares of our common stock. We have a composition of matter patent for TXL providing intellectual property protection to at least 2031. The decision to develop TXL for Hepatitis B has been taken because we do not see a large opportunity to grow the HIV market with new compounds, even though TXL is 200 times more potent than tenofovir in vitro. We believe the Hepatitis B market is poised for exceptional growth. The strategy for TXL is to develop the compound to serve as the backbone therapy in future HBV combination therapies. We have opened an Investigational New Drug (“IND”) for HBV and have initiated our HBV clinical development program in the U.S.

CRV431

CRV431 is a novel drug candidate designed to target a class of proteins called cyclophilins, of which there are many types. Cyclophilins play a role in health and in the pathogenesis of certain diseases, and are known as peptidyl prolyl isomerases. The isomerase activity plays an important role in a number of biological processes including, for example, folding of proteins to confer certain 3-dimensional configurations. And, specific host cyclophilins (e.g., cyclophilin A, B, C, D) play a role in the life cycle of certain viruses, including for example, HBV, HIV, and hepatitis C virus (“HCV”) infections. CRV431 has been developed to inhibit the role of host cyclophilins and therefore interfere in the propagation of these viruses. CRV431 does not directly target the virus and, as such, should be less susceptible to drug resistance, borne from viral mutations.

Thus far, in vitro testing of CRV431 has been conducted in-house and in collaboration with external groups including for example, the Scripps Research Institute (“Scripps”). Data in various cell lines of either transfected or infected HBV demonstrates nanomolar efficacy (EC50 values) and micromolar toxicity (CC50 values). The selective index (SI), therefore, is wide and suggests that CRV431 presents a viable clinical drug candidate for the treatment of viral infections, including HBV. Additional testing in a transgenic mouse model of HBV indicated that CRV431 reduced HBV DNA in the liver. In a non-alcoholic steatohepatitis (NASH) mouse model, CRV431 demonstrated anti-fibrotic potential, thus addressing an important concern of the downstream effects of chronic HBV infection and liver disease. Both animal models confirmed that CRV431 is orally active and appeared to be well tolerated.

FINANCIAL OPERATIONS OVERVIEW

From inception through September 30, 2017, we have sustained an accumulated deficit of approximately $65.3. From inception through September 30, 2017, we have not generated any revenue from operations and expect to incur additional losses to perform further research and development activities and do not currently have any commercial biopharmaceutical products. We do not expect to have such for several years, if at all.

Our product development efforts are thus in their early stages and we cannot make estimates of the costs or the time they will take to complete. The risk of completion of any program is high because of the many uncertainties involved in bringing new drugs to market including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, the extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses and competing technologies being developed by organizations with significantly greater resources.

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CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Our accounting policies are described in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA of our Annual Report on Form 10-K (“Form 10-K”) as of and for year ended June 30, 2017, filed with the SEC on September 28, 2017. There have been no changes to our critical accounting policies since June 30, 2017.

OFF-BALANCE SHEET ARRANGEMENTS

We had no off-balance sheet arrangements as of September 30, 2017.

RECENT ACCOUNTING PRONOUNCEMENTS

In May of 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This guidance is to be applied for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In January of 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which amended the 2014 amendments to the FASB Accounting Standards Codification that allowed companies an alternative accounting treatment for subsequently measuring goodwill. This amendment is Phase 1 of a project by the FASB Board to simplify how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. These amendments are to be applied on a prospective basis and are required to be adopted for annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The Company is required to adopt the guidance in the first quarter of fiscal 2019 and early adoption is permitted. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The Company is currently evaluating the timing and the impact of these amendments on its statement of cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The new standard identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

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In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about:

·Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

·Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

·Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In August 2015, the FASB issued updated guidance deferring the effective date of the revenue recognition standard. In March, April and May 2016 and September 2017, the FASB issued additional updated guidance, which clarifies certain aspects of the ASU and the related implementation guidance issued by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

RESULTS OF OPERATIONS

Comparison of Three Months Ended September 30, 2017 and 2016

	Three months ended
	September 30, 2017			September 30, 2016			Change
Revenues	$	—		$	—		$	—
Costs and Expenses:
Research and development	3,963,477			3,129,708			833,769
General and administrative	1,874,896			1,747,351			127,545
Loss from operations	(5,838,373		)	(4,877,059		)	961,314
Change in fair value of derivative instruments-warrants and contingent consideration	64,197			60,162			4,035
Net loss	$	(5,774,176	)	$	(4,816,897	)	$	957,279

We had no revenues during the three months ended September 30, 2017 or 2016 because we do not have any commercial biopharmaceutical products and we do not expect to have such products for several years, if at all.

Research and development expenses increased approximately $0.8 million from $3.1 million for the three months ended September 30, 2016 to $3.9 million for the three months ended September 30, 2017. The increase was primarily comprised of $1.5 million of Chemicals, Manufacturing and Controls (“CMC”) activities and regulatory consulting, partially offset by an $0.8 million decrease in costs associated with completed TXL clinical trials

General and administrative expenses increased approximately $0.1 million from $1.7 million for the three months ended September 30, 2016 to $1.8 million for the three months ended September 30, 2017. The increase of $0.1 million is primarily due to $0.1 million increase in salaries and related expenses due to added personnel, and $0.1 million increase in professional and legal fees offset by a decrease of $0.1 million of stock compensation.

The increase in the change in fair value of derivative instruments and contingent consideration liabilities from the three months ended September 30, 2016 compared to the three months ended September 30, 2017 was due to the mark to market of our outstanding warrants and contingent consideration.

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LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes our cash flows for the three months ended September 30, 2017 and 2016:

	Three months ended
	September 30, 2017			September 30, 2016
Net cash (used in) provided by:
Operating activities	$	(5,373,075	)	$	(4,377,960	)
Investing activities	—			—
Financing activities	1,169,026			2,180
Net decrease in cash	$	(4,204,049	)	$	(4,375,780	)

As of September 30, 2017, we had $8.8 million in cash. Net cash used in operating activities was approximately $5.4 million for the three months ended September 30, 2017. As of September 30, 2017, we had a working capital of $6.1 million compared to negative working capital of $1.5 million as of September 30, 2016.

On March 9, 2015, we entered into a Controlled Equity Offering Sales Agreement (the “Agreement”), with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which we may offer and sell, from time to time, through Cantor shares of our common stock, par value $0.0001 per share (the “Shares”), up to an aggregate offering price of $50.0 million. We intend to use the net proceeds from these sales to fund our research and development activities, and for working capital and other general corporate purposes, and possible acquisitions of other companies, products or technologies, though no such acquisitions are currently contemplated.

Under the Agreement, Cantor may sell the Shares by methods deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on The NASDAQ Capital Market, on any other existing trading market for the Shares or to or through a market maker. In addition, under the Agreement, Cantor may sell the Shares by any other method permitted by law, including in privately negotiated transactions.

We are not obligated to make any sales of the Shares under the Agreement. The offering of Shares pursuant to the Agreement will terminate upon the earlier of (1) the sale of all of the Shares subject to the Agreement or (2) the termination of the Agreement by Cantor or us. We will pay Cantor a commission of up to 3.0% of the gross sales price per share sold.

During the three months ended September 30, 2017, we sold approximately 2.2 million shares of our common stock resulting in net proceeds of approximately $1.2 million under the Agreement.

In November 2017, we received approval from the New Jersey Economic Development Authority’s (NJEDA) Technology Business Tax Certificate Transfer (NOL) program to sell a percentage of our unused New Jersey net operating losses (NOL’s) and R&D tax credits. As a result, we expect to receive approximately $1.6 million of net cash proceeds prior to the end of 2017.

Operating and Capital Expenditure Requirements

As of September 30, 2017, we had an accumulated deficit of $65.3 million, and expect to incur significant and increasing operating losses for the next several years as we expand our research, development and clinical trials of TXL and CRV431. We are unable to predict the extent of any future losses or when we will become profitable, if at all.

Our unaudited financial statements as of September 30, 2017 have been prepared under the assumption that we will continue as a going concern within one year of the issuance of these consolidated financial statements, contemplates the realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our inability to continue as a going concern. We have not generated revenue to date and have incurred substantial losses and negative cash flows from operations since our inception. We have historically funded our operations through issuances of common and preferred stock. Our independent registered public accounting firm has issued a report on our audited June 30, 2017 financial statements that included an explanatory paragraph referring to our recurring losses from operations; and expressing substantial doubt in our ability to continue as a going concern from one year after the

22

our financial statements have been issued without additional capital becoming available. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to generate revenue. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We will be required to raise additional capital within the next year to continue the development and commercialization of current product candidates and to continue to fund operations at the current cash expenditure levels. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize its self on unfavorable terms.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.  CONTROLS AND PROCEDURES

Our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, as of September 30, 2017, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are not effective, and that we have material weaknesses in our financial closing process that are more fully described in our Annual Report on Form 10-K. We intend to implement remedial measures designed to address the ineffectiveness of our disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d) of the Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation of the internal control over financial reporting to determine whether any changes occurred during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our principal executive officer and principal financial officer concluded there were no such changes during the quarter ended September 30, 2017.

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PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS

31.1	Certification of Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.
31.2	Certification of Principal Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CONTRAVIR PHARMACEUTICALS, INC. (Registrant)
Date: November 14, 2017	By:	/s/ JAMES SAPIRSTEIN
		James Sapirstein
		President and Chief Executive Officer
Date: November 14, 2017	By:	/s/ JOHN CAVAN
		John Cavan
		Chief Financial Officer

25

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, James Sapirstein, certify that:

1)I have reviewed this report on Form 10-Q of ContraVir Pharmaceuticals, Inc.

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2017	/s/ JAMES SAPIRSTEIN
	James Sapirstein
	Chief Executive Officer and Director
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, John Cavan, certify that:

1)I have reviewed this report on Form 10-Q of ContraVir Pharmaceuticals, Inc.

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2017	/s/ JOHN CAVAN
	John Cavan
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

CONTRAVIR PHARMACEUTICALS, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2017

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I am the Chief Executive Officer of ContraVir Pharmaceuticals, Inc., a Delaware corporation (the “Company”). I am delivering this certificate in connection with the Form 10-Q of the Company for the quarter ended September 30, 2017 and filed with the Securities and Exchange Commission (“Form 10-Q”).

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I hereby certify that, to the best of my knowledge, the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2017	/s/ JAMES SAPIRSTEIN
	James Sapirstein
	Chief Executive Officer and Director (Principal Executive
	Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

CONTRAVIR PHARMACEUTICALS, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2017

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I am the Chief Financial Officer of ContraVir Pharmaceuticals, Inc., a Delaware corporation (the “Company”). I am delivering this certificate in connection with the Form 10-Q of the Company for the quarter ended September 30, 2017 and filed with the Securities and Exchange Commission (“Form 10-Q”).

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I hereby certify that, to the best of my knowledge, the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2017	/s/ JOHN CAVAN
	John Cavan
	Chief Financial Officer

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	Sep. 30, 2017	Nov. 13, 2017
Document and Entity Information
Entity Registrant Name	ContraVir Pharmaceuticals, Inc.
Entity Central Index Key	0001583771
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		78,278,306
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Current Assets:
Cash	$ 8,778,699	$ 12,982,748
Prepaid expenses	158,628	210,174
Total Current Assets	8,937,327	13,192,922
Property and equipment, net	61,572	67,564
In-process research and development	3,190,000	3,190,000
Goodwill	1,870,924	1,870,924
Other assets	61,289	63,182
Total Assets	14,121,112	18,384,592
Current Liabilities:
Accounts payable	1,483,093	1,626,791
Accrued expenses	1,327,600	1,318,083
Total Current Liabilities	2,810,693	2,944,874
Contingent consideration	3,439,699	3,410,000
Deferred tax liability	1,269,620	1,269,620
Derivative financial instruments, at estimated fair value-warrants	1,608,335	1,702,231
Total Liabilities	9,128,347	9,326,725
Commitments and contingencies (Note 12)
Stockholders' Equity:
Convertible preferred stock
Common stock, par value of $.0001 per share. Authorized 120,000,000 shares, 78,169,715 and 75,707,348 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively	7,817	7,571
Additional paid-in-capital	69,222,541	67,513,713
Accumulated deficit	(65,277,721)	(59,503,545)
Total Stockholders' Equity	4,992,765	9,057,867
Total Liabilities and Stockholders' Equity	14,121,112	18,384,592
Series A convertible preferred stock
Stockholders' Equity:
Convertible preferred stock	$ 1,040,128	$ 1,040,128

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Jun. 30, 2017
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	78,169,715	75,707,348
Common stock, shares outstanding	78,169,715	75,707,348
Convertible preferred stock
Convertible preferred stock, par/stated value (in dollars per share)	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized	20,000,000	20,000,000
Series A convertible preferred stock
Convertible preferred stock, par/stated value (in dollars per share)	$ 10.00	$ 10.00
Convertible preferred stock, shares issued	104,013	104,013
Convertible preferred stock, shares outstanding	104,013	104,013

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Costs and Expenses:
Research and development	$ 3,963,477	$ 3,129,708
General and administrative	1,874,896	1,747,351
Loss from Operations	(5,838,373)	(4,877,059)
Change in fair value of derivative instruments-warrants and contingent consideration	64,197	60,162
Net loss	(5,774,176)	(4,816,897)
Comprehensive loss	$ (5,774,176)	$ (4,816,897)
Weighted Average Common Shares Outstanding
Basic and Diluted (in shares)	76,578,997	37,919,087
Net Loss per Common Share
Basic and Diluted (in dollars per share)	$ (0.08)	$ (0.13)

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 3 months ended Sep. 30, 2017 - USD ($)	Preferred stock Series A convertible preferred stock	Common Stock	Additional Paid in Capital	Accumulated Deficit	Total
Balance at Jun. 30, 2017	$ 1,040,128	$ 7,571	$ 67,513,713	$ (59,503,545)	$ 9,057,867
Balance (in shares) at Jun. 30, 2017	104,103	75,707,348
Changes in Stockholders' Equity
Issuance of common stock, net		$ 246	1,317,683		1,317,929
Issuance of common stock, net (in shares)		2,462,367
Stock-based compensation expense			391,145		391,145
Net loss				(5,774,176)	(5,774,176)
Balance at Sep. 30, 2017	$ 1,040,128	$ 7,817	$ 69,222,541	$ (65,277,721)	$ 4,992,765
Balance (in shares) at Sep. 30, 2017	104,103	78,169,715

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows From Operating Activities:
Net loss	$ (5,774,176)	$ (4,816,897)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	391,145	501,116
Change in fair value of derivative instrument-warrants	(93,896)	(60,162)
Change in fair value of contingent consideration	29,699	5,000
Depreciation and amortization expense	5,992	7,054
Changes in operating assets and liabilities:
Accounts payable and accrued expense	14,722	88,922
Current portion of capital lease		(10,410)
Prepaid expenses and other assets	53,439	(92,583)
Net Cash used in Operating Activities	(5,373,075)	(4,377,960)
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock	1,169,026
Issuance of common stock via stock option exercise		2,180
Net Cash provided by Financing Activities	1,169,026	2,180
Net decrease in cash	(4,204,049)	(4,375,780)
Cash at beginning of period	12,982,748	7,403,940
Cash at end of period	8,778,699	3,028,160
Supplementary Disclosure Of Non-Cash Financing Activities:
Stock issued to employees in lieu of cash payment for accrued bonus	$ 148,903
Series A convertible preferred stock
Supplementary Disclosure Of Non-Cash Financing Activities:
Conversion of convertible preferred stock		10,669,092
Series B convertible preferred stock
Supplementary Disclosure Of Non-Cash Financing Activities:
Conversion of convertible preferred stock		$ 1,200,000

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Business Overview

3 Months Ended

Sep. 30, 2017

Business Overview

Business Overview

1. Business Overview

ContraVir Pharmaceuticals Inc. (“ContraVir” or the “Company”) is a biopharmaceutical company focused primarily on the clinical development and commercialization of targeted antiviral therapies with a specific focus on developing a potentially curative therapy for hepatitis B virus (HBV). The Company is developing two novel anti-HBV compounds with complementary mechanisms of action. Our lead compound, TXL™, is currently in Phase 2a development and is designed to deliver high intrahepatic concentrations of TFV, while minimizing off-target effects caused by high levels of circulating TFV. CRV431, our second compound for HBV, is a next-generation cyclophilin inhibitor with a unique structure that increases its potency and selective index against TXL

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Basis of Presentation and Going Concern

3 Months Ended

Sep. 30, 2017

Basis of Presentation and Going Concern

Basis of Presentation and Going Concern

2. Basis of Presentation and Going Concern

These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“GAAP”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial information. The consolidated balance sheet as of June 30, 2017 was derived from the audited annual financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended June 30, 2017 contained in the Company’s Annual Report on Form 10-K (“Form 10-K”) filed with the SEC on September 28, 2017.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of ContraVir and its subsidiaries ContraVir Research Inc. and Ciclofilin Pharmaceuticals Corp, which conducts its operations in Canada. All intercompany balances and transactions have been eliminated in consolidation.

Going Concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern within one year of the issuance of these consolidated financial statements, contemplates the realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern. As of September 30, 2017, the Company had $8.8 million in cash. Net cash used in operating activities was $5.4 million for the three months ended September 30, 2017. Net loss for the three months ended September 30, 2017 was $5.7 million. As of September 30, 2017, the Company had working capital of $6.1 million. The Company has not generated revenue to date and has incurred substantial losses and negative cash flows from operations since its inception. The Company has historically funded its operations through issuances of common and preferred stock.

The Company will be required to raise additional capital within the next year to continue the development and commercialization of its current product candidates and to continue to fund operations at its current cash expenditure levels. The significant uncertainties surrounding the clinical development timelines and costs and the need to raise a significant amount of capital raises substantial doubt about the Company’s ability to continue as a going concern from one year after the Company’s financial statements have been issued without additional capital becoming available. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business. If the Company is unable to raise additional capital when required or on acceptable terms, it may have to (i) significantly delay, scale back or discontinue the development and/or commercialization of its product candidate; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that the Company would otherwise seek to develop or commercialize ourselves on unfavorable terms.

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Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

3. Summary of Significant Accounting Policies

Use of Estimates

The preparation of 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. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended June 30, 2017 included in the Company’s Form 10-K filed with the SEC on September 28, 2017. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

Cash

As of September 30, 2017 and June 30, 2017, the amount of cash was approximately $8.8 million and $13.0 million, respectively, consisting primarily of checking accounts held at U.S. commercial banks. Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced losses related to these balances.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (ASC 820), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or 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 a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

· Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

· Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

· Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments consist of cash and accounts payable. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short term nature.

Derivative financial instruments

The Company has issued common stock warrants in connection with the execution of certain equity financings. The fair value of the warrants, which were deemed to be derivative instruments based on certain contingent put features, was recorded as a derivative liability under the provisions of ASC Topic 815 Derivatives and Hedging (“ASC 815”) upon issuance. Subsequently, the liability is adjusted to fair value as of the end of each reporting period and the changes in fair value of derivative liabilities are recorded in the statements of operations under the caption “Change in fair value of derivative financial instruments—warrants.” See Note 4 for additional information.

Goodwill and In-Process Research & Development

In accordance with ASC Topic 350, Intangibles — Goodwill and Other (“ASC Topic 350”), goodwill and acquired IPR&D are determined to have indefinite lives and, therefore, are not amortized. Instead, they are tested for impairment annually, in the Company’s fourth quarter, and between annual tests if the Company becomes aware of an event or a change in circumstances that would indicate the carrying value may be impaired. Pursuant to ASU No. 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment, and No. 2012-02, Intangibles — Goodwill and Other(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that the goodwill or the acquired IPR&D is impaired. If the Company chooses to first assess qualitative factors and determines that it is not more likely than not goodwill or acquired IPR&D is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to do in some periods but not in others.

If the Company performs a quantitative assessment of goodwill, it utilizes the two-step approach prescribed under ASC Topic 350. Step 1 requires a comparison of the carrying value of a reporting unit, including goodwill, to its estimated fair value. The Company tests for impairment at the entity level because it operates on the basis of a single reporting unit. If the carrying value exceeds fair value, the Company then performs Step 2 to measure the amount of impairment loss, if any. In Step 2, the Company estimates the fair value of its individual assets, including identifiable intangible assets, and liabilities to determine the implied fair value of goodwill. The Company then compares the carrying value of its goodwill to its implied fair value. The excess of the carrying value of goodwill over its implied fair value, if any, is recorded as an impairment charge.

Goodwill relates to amounts that arose in connection with the acquisition of Ciclofilin. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations. There was no impairment of goodwill as of September 30, 2017.

IPR&D acquired in a business combination is capitalized as indefinite-lived assets on the Company’s consolidated balance sheets at its acquisition-date fair value. Once the project is completed, the carrying value of the IPR&D is reclassified to other intangible assets, net and is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the IPR&D projects are expensed as incurred.

The projected discounted cash flow models used to estimate the fair values of the Company’s IPR&D assets, acquired in connection with the Ciclofilin acquisition, reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a drug development asset, including: (i) probability of successfully completing clinical trials and obtaining regulatory approval; (ii) market size, market growth projections, and market share; (iii) estimates regarding the timing of and the expected costs to advance clinical programs to commercialization; (iv) estimates of future cash flows from potential product sales; and (v) a discount rate.

If IPR&D becomes impaired or is abandoned, the carrying value of the IPR&D is written down to its revised fair value with the related impairment charge recognized in the period in which the impairment occurs. If the carrying value of the asset becomes impaired as the result of unfavorable data from any ongoing or future clinical trial, changes in assumptions that negatively impact projected cash flows, or because of any other information regarding the prospects of successfully developing or commercializing our programs, the Company could incur significant charges in the period in which the impairment occurs. There was no impairment of IPR&D as of September 30, 2017.

Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, product and environmental liability, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (“ASC 450”), the Company records accruals for such loss contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized.

Research and Development

Research and development costs, which include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, license costs, regulatory and scientific consulting fees, as well as contract research, insurance and FDA consultants, are accounted for in accordance with ASC Topic 730, Research and Development, (“ASC 730”). Also, as prescribed by this guidance, patent filing and maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.

ContraVir does not currently have any commercial biopharmaceutical products, and does not expect to have such for several years, if at all. Accordingly, our research and development costs are expensed as incurred. While certain of our research and development costs may have future benefits, our policy of expensing all research and development expenditures is predicated on the fact that ContraVir has no history of successful commercialization of product candidates to base any estimate of the number of future periods that would be benefited.

Also as prescribed by ASC 730, non-refundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts would be recognized as an expense. At September 30, 2017 and June 30, 2017, the Company had prepaid research and development costs of $55,123 and $75,484.

Share-based payments

ASC Topic 718 “Compensation—Stock Compensation” (“ASC 718”) requires companies to measure the cost of employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. Generally, the Company issues stock options with only service based vesting conditions and records the expense for these awards using the straight-line method.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. ContraVir has a limited trading history in its common stock and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The Company accounts for stock options issued to non-employees in accordance with ASC Topic 505-50 “Equity-Based Payment to Non-Employees” and accordingly the value of the stock compensation to non-employees is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company’s common stock and updated assumption inputs in the Black-Scholes option-pricing model.

ASC 718 requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised (excess tax benefits) be classified as cash inflows from financing activities and cash outflows from operating activities. Due to ContraVir’s accumulated deficit position, no excess tax benefits have been recognized.

Business Combinations

The Company accounts for its business acquisitions, such as our acquisition of Ciclofilin in June of 2016, under the acquisition method of accounting as indicated in FASB ASC 805, “Business Combinations”, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquired business; and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities and non-controlling interest in the acquiree, based on the fair value estimates as of the date of acquisition. In accordance with ASC 805, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

Contingent consideration assumed in a business combination is remeasured at fair value each reporting period and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in other expense.

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Recent Accounting Pronouncements

3 Months Ended

Sep. 30, 2017

Recent Accounting Pronouncements

Recent Accounting Pronouncements

4. Recent Accounting Pronouncements

In May of 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This guidance is to be applied for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In January of 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which amended the 2014 amendments to the FASB Accounting Standards Codification that allowed companies an alternative accounting treatment for subsequently measuring goodwill. This amendment is Phase 1 of a project by the FASB Board to simplify how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. These amendments are to be applied on a prospective basis and are required to be adopted for annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In August 2016, the FASB issued ASU No. 2016-15,  Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The Company is required to adopt the guidance in the first quarter of fiscal 2019 and early adoption is permitted. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The Company is currently evaluating the timing and the impact of these amendments on its statement of cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The new standard identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about:

· Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

· Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

· Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In August 2015, the FASB issued updated guidance deferring the effective date of the revenue recognition standard. In March, April and May 2016 and September 2017, the FASB issued additional updated guidance, which clarifies certain aspects of the ASU and the related implementation guidance issued by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact that this guidance will have on its results of operations, financial position and cash flows.

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Stockholder's Equity and Derivative Liability

3 Months Ended

Sep. 30, 2017

Stockholder's Equity and Derivative Liability

Stockholders' Equity and Derivative Liability

5. Stockholder’s Equity and Derivative Liability

Preferred stock, Common Stock and Warrant Offering

During the period from August 5, 2016 to September 29, 2016, certain holders of the Company’s Series A Convertible Preferred Stock elected to convert approximately 1.1 million shares of Series A Convertible Preferred stock into approximately 22.2 million shares of the Company’s common stock. In addition, in September 2016, the holder of the Company’s Series B Convertible Preferred stock elected to convert the outstanding 120,000 shares of Series B Convertible Preferred stock into approximately 1.1 million shares of the Company’s common stock

On October 7, 2015, the Company entered into an underwriting agreement related to the public offering and sale of 5,000,000 shares of common stock and warrants to purchase up to 3,000,000 shares of common stock, at a fixed combined price to the public of $3.00 under the Company’s current shelf registration statement on Form S-3. The shares of common stock and warrants were issued separately on October 13, 2015. The warrants are immediately exercisable and will be exercisable for a period of five years from the date of issuance at an exercise price of $4.25 per share. There is not, nor is there expected to be, any trading market for the warrants issued in the offering contemplated by the Underwriting Agreement. The Company also granted the Underwriters a 45-day option to purchase up to an additional 750,000 additional shares of common stock and additional warrants to purchase up to 450,000 shares of common stock at $3.00, which was not exercised. The gross proceeds to the Company were $15.0 million, before deducting the underwriting discount and other offering expenses payable by the Company of approximately $1.5 million. If the warrants were exercised in full, ContraVir would receive additional proceeds of approximately $12.8 million.

If the Company consummates any merger, consolidation, sale or other reorganization event in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the fundamental transaction and continuing for 90 days, an amount of cash equal to the value of the remaining unexercised portion of the warrant as determined in accordance with the Black-Scholes option pricing model on the date of such fundamental transaction. As a result of these terms, in accordance with the guidance contained in ASC Topic 815-40, the Company has determined that the warrants issued in connection with this financing transaction must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s statement of operations and comprehensive loss. Upon the issuance of these warrants, the fair value of approximately $4.4 million was recorded as derivative financial instruments liability—warrants.

The fair value of these liability classified warrants was estimated using the Black-Scholes option pricing model. The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. The Company has a limited trading history in its common stock, therefore, expected volatility is based on that of comparable public development stage biotechnology companies. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement.

The following assumptions were used to measure the warrants at issuance and to remeasure the liability as of September 30, 2017 and June 30, 2017:

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	3.03 years			3.28 years
Risk-free interest rate	1.77		%	1.73		%
Expected volatility	73		%	66		%
Dividend yield	—			—

On April 4, 2016, the Company closed on a public offering of 4,929,578 shares of its common stock and warrants to purchase up to 2,464,789 shares of common stock, at a fixed combined price to the public of $1.42 under the Company’s current shelf registration statement on Form S-3. The warrants are immediately exercisable and will be exercisable for a period of five years from the date of issuance at an exercise price of $1.70 per share. There is not, nor is there expected to be, any trading market for the warrants issued in the offering contemplated by the Underwriting Agreement. The gross proceeds to the Company were $7.0 million, before deducting the underwriting discount and other offering expenses payable by the Company of approximately $0.7 million. If the warrants were exercised in full, ContraVir would receive additional proceeds of approximately $4.2 million.

Similar to the terms of the warrants issued in October 2015, if the Company consummates any merger, consolidation, sale or other reorganization event in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the fundamental transaction and continuing for 90 days, an amount of cash equal to the value of the remaining unexercised portion of the warrant as determined in accordance with the Black-Scholes option pricing model on the date of such fundamental transaction. As a result of these terms, in accordance with the guidance contained in ASC Topic 815-40, the Company has determined that the warrants issued in connection with this financing transaction must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s statement of operations and comprehensive loss. Upon the issuance of these warrants, the fair value of approximately $1.5 million was recorded as derivative financial instruments liability—warrants.

The fair value of these liability classified warrants was estimated using the Black-Scholes option pricing model. The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. The Company has a limited trading history in its common stock, therefore, expected volatility is based on that of comparable public development stage biotechnology companies. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement.

The following assumptions were used to measure the warrants at issuance and to remeasure the liability as of September 30, 2017 and June 30, 2017:

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	3.51 years			3.76 years
Risk-free interest rate	1.77		%	1.73		%
Expected volatility	73		%	66		%
Dividend yield	—			—

On April 25, 2017, the Company closed on a public offering of 12,000,000 shares of its common stock and warrants to purchase up to 6,000,000 shares of common stock, at a fixed combined price to the public of $1.00 under the Company’s current shelf registration statement on Form S-3. The warrants are immediately exercisable and will be exercisable for a period of five years from the date of issuance at an exercise price of $1.25 per share. There is not, nor is there expected to be, any trading market for the warrants issued in the offering contemplated by the Underwriting Agreement. The gross proceeds to the Company were $12.0 million, before deducting the underwriting discount and other offering expenses payable by the Company of approximately $0.5 million. If the warrants were exercised in full, ContraVir would receive additional proceeds of approximately $7.5 million.

If the Company consummates any merger, consolidation, sale or other reorganization event in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the fundamental transaction and continuing for 90 days, an amount of cash equal to the value of the remaining unexercised portion of the warrant as determined in accordance with the Black-Scholes option pricing model on the date of such fundamental transaction. As a result of these terms, in accordance with the guidance contained in ASC Topic 815-40, the Company has determined that the warrants issued in connection with this financing transaction must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s statement of operations and comprehensive loss. Upon the issuance of these warrants, the fair value of approximately $4.0 million was recorded as derivative financial instruments liability - warrants.

The fair value of these liability classifed warrants were estimated using the Black-Scholes option pricing model. The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. The Company has a limited trading history in its common stock, therefore, expected volatility is based on that of comparable public development stage biotechnology companies. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement.

The following assumptions were used to measure the warrants at issuance and to remeasure the liability as of September 30, 2017 and June 30, 2017:

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	4.56 years			4.76 years
Risk-free interest rate	1.77		%	1.72		%
Expected volatility	73		%	66		%
Dividend yield	—			—

The following table sets forth the components of changes in the Company’s derivative financial instruments liability balance for the three months ended September 30, 2017:

Date	Description	Number of Warrants Outstanding	Derivative Instrument Liability
July 1, 2017	Balance of derivative financial instruments liability	11,414,789	$	1,702,231
	Change in fair value of warrants for the three months ended September 30, 2017	—	(93,896		)
September 30, 2017	Balance of derivative financial instruments liability	11,414,789	$	1,608,335

Controlled Equity Offering Sales Agreement

On March 9, 2015, the Company entered into a Controlled Equity Offering Sales Agreement (the “Agreement”), with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which the Company may offer and sell, from time to time, through Cantor shares of the Company’s common stock, par value $0.0001 per share (the “Shares”), up to an aggregate offering price of $50.0 million. The Company intends to use the net proceeds from these sales to fund research and development activities and for working capital and other general corporate purposes, and possible acquisitions of other companies, products or technologies, though no such acquisitions are currently contemplated.

Under the Agreement, Cantor may sell the Shares by methods deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on The NASDAQ Capital Market, on any other existing trading market for the Shares or to or through a market maker. In addition, under the Agreement, Cantor may sell the Shares by any other method permitted by law, including in privately negotiated transactions. Subject to the terms and conditions of the Agreement, Cantor will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of The NASDAQ Capital Market, to sell the Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The Company is not obligated to make any sales of the Shares under the Agreement. The offering of Shares pursuant to the Agreement will terminate upon the earlier of (1) the sale of all of the Shares subject to the Agreement or (2) the termination of the Agreement by Cantor or the Company. ContraVir will pay Cantor a commission of up to 3.0% of the gross sales price per share sold and has agreed to provide Cantor with customary indemnification and contribution rights.

During the three months ended September 30, 2017, the Company sold approximately 2.2 million shares of the Company’s common stock resulting in net proceeds of approximately $1.2 million, under the Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co., as sales agent.

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Fair Value Measurements

3 Months Ended

Sep. 30, 2017

Fair Value Measurements

Fair Value Measurements

6. Fair Value Measurements

The following table presents the Company’s liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of September 30, 2017 and June 30, 2017.

	Fair value			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2017
Derivative liabilities related to warrants	$	(1,608,335	)	$	—	$	—	$	(1,608,335	)
Contingent consideration	$	(3,439,699	)	$	—	$	—	$	(3,439,699	)
As of June 30, 2017
Derivative liabilities related to warrants	$	(1,702,231	)	$	—	$	—	$	(1,702,231	)
Contingent consideration	$	(3,410,000	)	$	—	$	—	$	(3,410,000	)

The unrealized gains or losses on the derivative liabilities are recorded as a change in fair value of derivative liabilities-warrants in the Company’s statement of operations. See Note 5 for a rollfoward of the derivative liability for the three months ended September 30, 2017. The financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, the Company reviews the assets and liabilities that are subject to ASC 815-40. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

As discussed in Note 3, contingent consideration was recorded for the acquisition of Ciclofilin on June 10, 2016. The contingent consideration represented the acquisition date fair value of potential future payments, to be paid in cash and Company stock, upon the achievement of certain milestones and was estimated based on a probability-weighted discounted cash flow model. The following table presents the change in fair value of the contingent consideration as of September 30, 2017.

	Acquisition- related Contingent Consideration
Liabilities
Balance at June 30, 2017	$	3,410,000
Change in fair value recorded in earnings	29,699
Balance at September 30, 2017	$	3,439,699

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Indefinite-lived Intangible Assets and Goodwill

3 Months Ended

Sep. 30, 2017

Indefinite-lived Intangible Assets and Goodwill

Indefinite-lived Intangible Assets and Goodwill

7. Indefinite-lived Intangible Assets and Goodwill

IPR&D

The Company’s IPR&D asset consisted of the following at:

	September 30, 2017		June 30, 2017
IPR&D asset:
CRV431	$	3,190,000	$	3,190,000

No impairment losses were recorded on IPR&D during the three months ended September 30, 2017.

Goodwill

The table below provides a roll-forward of the Company’s goodwill balance:

	Amount
Goodwill balance at July 1, 2017	$	1,870,924
Changes during the three months ended September 30, 2017	—
Goodwill balance at September 30, 2017	$	1,870,924

No impairment losses were recorded on goodwill during the three months ended September 30, 2017.

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Accrued Liabilities

3 Months Ended

Sep. 30, 2017

Accrued Liabilities

Accrued Liabilities

8. Accrued Liabilities

The Company’s accrued expenses consist of the following:

	September 30, 2017		June 30, 2017
Research and development	$	242,942	$	307,544
Professional fees	—		14,304
Payroll and related costs	975,426		931,664
Legal fees	83,241		64,571
Other	25,991		—
Total accrued expenses	$	1,327,600	$	1,318,083

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Accounting for Share-Based Payments

3 Months Ended

Sep. 30, 2017

Accounting for Share-Based Payments

Accounting for Share-Based Payments

9. Accounting for Share-Based Payments

On June 3, 2013, ContraVir adopted the 2013 Equity Incentive Plan (the “Plan”). Stock options granted under the Plan typically will vest after three years of continuous service from the grant date and will have a contractual term of ten years. ContraVir has reserved 7,700,0000 shares of common stock issuable pursuant to the Plan. As of September 30, 2017, the Company had 1,028,814 shares of common stock available for grant under the Plan.

The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified. For the three months ended September 30, 2017 and 2016, ContraVir recorded the following stock based compensation expense:

	Three months ended September 30, 2017		Three months ended September 30, 2016
General and administrative	$	313,100	$	361,186
Research and development	78,045		139,930
Total stock-based compensation expense	$	391,145	$	501,116

A summary of stock option activity and of changes in stock options outstanding under the Plan for the three months ended September 30, 2017 is presented below:

	Number of Options	Exercise Price Per Share	Weighted Average Exercise Price Per Share		Intrinsic Value		Weighted Average Remaining Contractual Term
Balance outstanding, July 1, 2017	6,481,186	$0.11—$4.38	$	1.54	$	220,019	7.53
Granted	190,000	0.50 - $0.58	$	0.55
Balance outstanding, September 30, 2017	6,671,186	$0.11—$4.38	$	1.51	$	164,024	7.30
Vested awards and those expected to vest at September 30, 2017	3,779,099	$0.11—$4.38	$	1.57	$	164,024		7.30
Vested and exercisable at September 30, 2017	6,584,423	$0.11—$4.38	$	1.51	$	163,985	7.28

The aggregate intrinsic value of stock options in the tables above is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted-average grant-date fair value per share of options granted to employees during the three months ended September 30, 2017 and 2016 was $0.37 and $0.72.

As of September 30, 2017, the unrecognized compensation cost related to non-vested stock options outstanding, net of expected forfeitures, was approximately $1.6 to be recognized over a weighted-average remaining vesting period of approximately 2.07.

The following weighted-average assumptions were used in the Black-Scholes valuation model to estimate fair value of stock option awards to employees during the three months ended September 30, 2017 and 2016.

	Three months ended September 30, 2017			Three months ended September 30, 2016
Stock price	$	0.58		$	1.07
Risk-free interest rate	1.51		%	1.25		%
Dividend yield	—			—
Expected volatility	71.8		%	80.5		%
Expected term (in years)	6.0years			5.7years

Risk-free interest rate—Based on the daily yield curve rates for U.S. Treasury obligations with maturities which correspond to the expected term of the Company’s stock options.

Dividend yield—ContraVir has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.

Expected volatility—Because ContraVir has a limited trading history in its common stock, the Company based expected volatility on that of comparable public development stage biotechnology companies.

Expected term—The expected option term represents the period that stock-based awards are expected to be outstanding based on the simplified method provided in SAB No. 107. Options are considered to be “plain vanilla” if they have the following basic characteristics: (i) granted “at-the-money”; (ii) exercisability is conditioned upon service through the vesting date; (iii) termination of service prior to vesting results in forfeiture; (iv) limited exercise period following termination of service; and (v) options are non-transferable and non-hedgeable.

In December 2007, the SEC issued SAB No. 110, Share-Based Payment, (“SAB No. 110”). SAB No. 110 was effective January 1, 2008 and expresses the views of the Staff of the SEC with respect to extending the use of the simplified method, as discussed in SAB No. 107, in developing an estimate of the expected term of “plain vanilla” share options in accordance with ASC 718. The Company will use the simplified method until it has the historical data necessary to provide a reasonable estimate of expected life in accordance with SAB No. 107, as amended by SAB No. 110. For the expected term, the Company has “plain-vanilla” stock options, and therefore used a simple average of the vesting period and the contractual term for options granted as permitted by SAB No. 107.

Forfeitures—ASC 718 requires forfeitures to be estimated at the time of grant and revised if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company uses its actual forfeiture rate of 3%.

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Loss per Share

3 Months Ended

Sep. 30, 2017

Loss per Share

Loss per Share

10. Loss per Share

Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share, (“ASC Topic 260”) for all periods presented. In accordance with ASC Topic 260, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. The following table sets forth the computation of basic and diluted net loss per share for the periods indicated:

	Three months ended
	September 30, 2017			September 30, 2016
Net loss	$	(5,774,176	)	$	(4,816,897	)
Weighted average common shares outstanding	76,578,997			37,919,087
Net loss per share of common stock—basic and diluted	$	(0.08	)	$	(0.13	)

The following outstanding securities at September 30, 2017 and 2016 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive:

	Three months ended September 30, 2017	Three months ended September 30, 2016
Common shares issuable upon conversion of Series A preferred stock 216	2,166,934	3,814,396
Stock options	6,671,186	5,738,456
Warrants	11,414,789	5,464,789
Total	20,252,909	15,017,641

The liability classified warrants disclosed above have been excluded from the computation of diluted earnings per share because their exercise price exceeds the average market price of the Company’s common stock during the respective period.

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Commitments and Contingencies

3 Months Ended

Sep. 30, 2017

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

License Agreement with Chimerix, Inc.

On December 17, 2014, the Company entered into an exclusive license agreement with Chimerix pursuant to which the Company has licensed TXL from Chimerix for further clinical development and commercialization. TXL is a highly potent analog of the antiviral drug tenofovir DF (Viread®). Under the terms of the agreement, ContraVir licensed TXL from Chimerix in exchange for an upfront payment consisting of 120,000 shares of ContraVir Series B Convertible Preferred Stock. In addition, Chimerix is eligible to receive up to approximately $20.0 million in clinical, regulatory and initial commercial milestone payments in the United States and Europe, as well as royalties and additional milestone payments based on commercial sales in those territories. Either party may terminate the License Agreement upon the occurrence of a material breach by the other party (subject to standard cure periods), or upon certain events involving the bankruptcy or insolvency of the other party. The Company may also terminate the License Agreement without cause on a country by country basis upon sixty days’ prior written notice to Chimerix.

The fair value of the Preferred B shares exchanged for the license was determined to be equal to the amount paid per share of the Series A, as the provision of the Preferred B shares were the same as the Preferred A Shares, based on an arm’s length transaction. Therefore, the fair value of the Preferred B shares issued was $10.00 per share or $1.2 million. The cost of the license was classified as a research and development expense in the amount of $1.2 million as the compound is early stage, has not yet reached technological feasibility and has no alternative use. As of the date of this report, no amounts had been accrued related to the milestone payments Chimerix is eligible to receive.

License Agreement with University College Cardiff Consultants Limited (“Cardiff”)

On June 10, 2013, the Company and Synergy entered into a Contribution Agreement, as amended and restated on August 5, 2013, or the Contribution Agreement, to transfer to the Company the FV-100 assets, in exchange for the issuance to Synergy of 9,000,000 shares of the Company’s common stock representing 100% of the outstanding shares of the Company’s common stock as of immediately following such issuance. Pursuant to the Contribution Agreement, Synergy transferred ownership of all intellectual property rights acquired from Bristol-Myers Squibb (“BMS”) including all historical research, clinical study protocols, data, results and patents related to the FV-100 assets as well as assumed the obligations of Synergy, including all liabilities of Synergy, under the asset purchase agreement, dated August 17, 2012, by and between Synergy and BMS, or the BMS Agreement.

The FV-100 assets acquired from BMS are licensed from Cardiff pursuant to the terms of that certain Patent and Technology License Agreement, dated as of February 2, 2005, between Cardiff and CRI, an entity with no prior relationship with us, as amended March 27, 2007, or the Cardiff Agreement.

The Cardiff Agreement shall remain in full force and effect until the date upon which the last of the last patent or the last continuation or extension to any patents within the Patent Rights (as defined in the Cardiff Agreement) expires. Any milestone and/or royalty payment under the Cardiff Agreement shall be payable for as long as the Cardiff Agreement is in effect. The Cardiff Agreement may be terminated in its entirety, for among other reasons and in the following manner as set forth below: (a) automatically by Cardiff, if we become bankrupt or insolvent and/or if our business shall be placed in the hands of a receiver, assignee, or trustee; (b) upon ninety (90) calendar days written notice from Cardiff, if we breach or default (i) on the payment or report obligations or use of name obligations or (ii) on any other obligation under the Cardiff Agreement, subject to a ninety (90) calendar-day cure period; (c) if we have defaulted or been in excess of one (1) month late on its payment obligations pursuant to the terms of the Cardiff Agreement on any two (2) occasions in a twelve (12) month period, subject to a cure period; (d) upon one hundred twenty (120) calendar days written notice from us if any particular patent or patents included in Patent Rights and which account for at least thirty (30%) percent of the total royalty to Cardiff, is or are irrevocably adjudicated to be invalid; or (e) upon ninety (90) calendar days written notice from us if Cardiff is in breach of Section 11.1 (Confidential Information and Publication) unless, before the end of the such ninety (90) calendar-day notice period, Cardiff has cured the default or breach to our reasonable satisfaction and so notifies us, stating the manner of the cure.

The terms of the Cardiff Agreement provided in consideration for a license of all of Cardiff’s rights in any technical information, know-how, processes, procedures, compositions, devices, methods, formulae, protocols, techniques related to the FV-100 Assets, or the Patent Rights. The Cardiff Agreement provided for an initial base payment of $270,000, which has previously been paid by CRI, subsequent milestone payments covering (i) initiation of a clinical trial at each phase, (ii) marketing (FDA) approval and (iii) on achieving the milestone of aggregate net sales in three different tiers, as well as a low single digit royalty based on net sales. The total aggregate amount of milestone payments that could be payable to Cardiff by the Company under the Cardiff Agreement is equal to $400,000 as follows:

Milestone payments upon occurrence of the following events:

· Upon initiation of a Phase 3 clinical trial for a licensed product, $150,000

· Upon approval of the first NDA for any licensed product, $250,000

The terms of the BMS Agreement provided for an initial base payment of $1.0 million, subsequent milestone payments of $3.0 million and $6.0 million, respectively, covering (i) marketing (FDA) approval and (ii) on achieving the milestone of aggregate net sales equal to or greater than $125.0 million, as well as a single digit royalty based on net sales. The total aggregate amount of milestone payments that could be payable to BMS under the BMS Agreement is equal to $9 million. The duration of any milestone payment obligation owed to BMS shall continue until the earliest of (i) payment, in full, of all milestone payments as required under the BMS Agreement, (ii) our determination using commercially reasonable standards consistent with the exercise of prudent scientific and business judgment and consistent with those standards used by us for its other therapeutic products at a similar stage of development and with similar commercial potential, to terminate the development of the FV-100 assets, and (iii) the tenth (10th) anniversary of the date of the BMS Agreement, The duration of any royalty payment obligation to BMS shall commence on the date of the first commercial sale of the FV-100 assets in a country until the expiration of any claim of an issued and unexpired patent which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction of any of our patents or any other patent covering the use or sale of the FV-100 assets in such country. The transactions contemplated by the BMS Agreement closed on August 17, 2012 and neither party can terminate the remaining obligations owed under the BMS Agreement. No milestone payments have been made under this agreement and as of the date of this report, no amounts had been accrued related to the remaining milestone payments BMS is eligible to receive.

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Related Party Transactions

3 Months Ended

Sep. 30, 2017

Related Party Transactions

Related Party Transactions

12. Related Party Transactions

One of the Company’s Directors, Timothy Block, is President of the Baruch S. Blumberg Institute (“Blumberg Institute”). On May 29, 2015, the Company entered into a Sponsored Research Agreement (“Agreement”) with Blumberg Institute, pursuant to which the Company is sponsoring research by investigators affiliated with the Blumberg Institute with respect to TXL. The Company incurred expenses related to the agreement of approximately $25,000 and $25,000 for the three months ended September 30, 2017 and 2016, respectively.

The Company is a party to a Consulting agreement dated June 1, 2016 with Gabriele Cerrone. Mr. Cerrone is a principal stockholder of the Company and provides general corporate consulting services. For the three months ended September 30, 2017 and 2016, the Company incurred expenses related to services performed by Mr. Cerrone of $30,000 and $30,000, respectively.

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Subsequent Event

3 Months Ended

Sep. 30, 2017

Subsequent Event

Subsequent Event

13. Subsequent Event

On October 27, 2017 the Company issued a press release on Form 8-K stating the decision to discontinue the Phase 3 trial of Valnivudine™, the company’s investigational drug being developed to reduce incidence of Postherpetic Neuralgia pain (“PHN”). The approval of a second herpes zoster vaccine, along with continued success of ZostavaxTM, is expected to further reduce the incidence of shingles and corresponding numbers of patients with PHN. The decision to discontinue the Phase 3 study enables the Company to utilize available capital to further advance the HBV product candidates. There is no impact to the Company’s recorded assets as of September 30, 2017.

In November 2017, the Company received approval from the New Jersey Economic Development Authority’s (NJEDA) Technology Business Tax Certificate Transfer (NOL) program to sell a percentage of its unused New Jersey net operating losses (NOL’s) and R&D tax credits. As a result, the Company expects to receive approximately $1.6 million of net cash proceeds prior to the end of 2017.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies

Use of Estimates

Use of Estimates

The preparation of 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. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended June 30, 2017 included in the Company’s Form 10-K filed with the SEC on September 28, 2017. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

Cash

Cash

As of September 30, 2017 and June 30, 2017, the amount of cash was approximately $8.8 million and $13.0 million, respectively, consisting primarily of checking accounts held at U.S. commercial banks. Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced losses related to these balances.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (ASC 820), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or 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 a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

· Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

· Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

· Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments consist of cash and accounts payable. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short term nature.

Derivative financial instruments

Derivative financial instruments

The Company has issued common stock warrants in connection with the execution of certain equity financings. The fair value of the warrants, which were deemed to be derivative instruments based on certain contingent put features, was recorded as a derivative liability under the provisions of ASC Topic 815 Derivatives and Hedging (“ASC 815”) upon issuance. Subsequently, the liability is adjusted to fair value as of the end of each reporting period and the changes in fair value of derivative liabilities are recorded in the statements of operations under the caption “Change in fair value of derivative financial instruments—warrants.” See Note 4 for additional information.

Goodwill and In-Process Research and Development

Goodwill and In-Process Research & Development

In accordance with ASC Topic 350, Intangibles — Goodwill and Other (“ASC Topic 350”), goodwill and acquired IPR&D are determined to have indefinite lives and, therefore, are not amortized. Instead, they are tested for impairment annually, in the Company’s fourth quarter, and between annual tests if the Company becomes aware of an event or a change in circumstances that would indicate the carrying value may be impaired. Pursuant to ASU No. 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment, and No. 2012-02, Intangibles — Goodwill and Other(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not (that is, a likelihood of more than 50%) that the goodwill or the acquired IPR&D is impaired. If the Company chooses to first assess qualitative factors and determines that it is not more likely than not goodwill or acquired IPR&D is impaired, the Company is not required to take further action to test for impairment. The Company also has the option to bypass the qualitative assessment and perform only the quantitative impairment test, which the Company may choose to do in some periods but not in others.

If the Company performs a quantitative assessment of goodwill, it utilizes the two-step approach prescribed under ASC Topic 350. Step 1 requires a comparison of the carrying value of a reporting unit, including goodwill, to its estimated fair value. The Company tests for impairment at the entity level because it operates on the basis of a single reporting unit. If the carrying value exceeds fair value, the Company then performs Step 2 to measure the amount of impairment loss, if any. In Step 2, the Company estimates the fair value of its individual assets, including identifiable intangible assets, and liabilities to determine the implied fair value of goodwill. The Company then compares the carrying value of its goodwill to its implied fair value. The excess of the carrying value of goodwill over its implied fair value, if any, is recorded as an impairment charge.

Goodwill relates to amounts that arose in connection with the acquisition of Ciclofilin. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations. There was no impairment of goodwill as of September 30, 2017.

IPR&D acquired in a business combination is capitalized as indefinite-lived assets on the Company’s consolidated balance sheets at its acquisition-date fair value. Once the project is completed, the carrying value of the IPR&D is reclassified to other intangible assets, net and is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the IPR&D projects are expensed as incurred.

The projected discounted cash flow models used to estimate the fair values of the Company’s IPR&D assets, acquired in connection with the Ciclofilin acquisition, reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a drug development asset, including: (i) probability of successfully completing clinical trials and obtaining regulatory approval; (ii) market size, market growth projections, and market share; (iii) estimates regarding the timing of and the expected costs to advance clinical programs to commercialization; (iv) estimates of future cash flows from potential product sales; and (v) a discount rate.

If IPR&D becomes impaired or is abandoned, the carrying value of the IPR&D is written down to its revised fair value with the related impairment charge recognized in the period in which the impairment occurs. If the carrying value of the asset becomes impaired as the result of unfavorable data from any ongoing or future clinical trial, changes in assumptions that negatively impact projected cash flows, or because of any other information regarding the prospects of successfully developing or commercializing our programs, the Company could incur significant charges in the period in which the impairment occurs. There was no impairment of IPR&D as of September 30, 2017.

Contingencies

Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, product and environmental liability, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (“ASC 450”), the Company records accruals for such loss contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized.

Research and Development

Research and Development

Research and development costs, which include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, license costs, regulatory and scientific consulting fees, as well as contract research, insurance and FDA consultants, are accounted for in accordance with ASC Topic 730, Research and Development, (“ASC 730”). Also, as prescribed by this guidance, patent filing and maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.

ContraVir does not currently have any commercial biopharmaceutical products, and does not expect to have such for several years, if at all. Accordingly, our research and development costs are expensed as incurred. While certain of our research and development costs may have future benefits, our policy of expensing all research and development expenditures is predicated on the fact that ContraVir has no history of successful commercialization of product candidates to base any estimate of the number of future periods that would be benefited.

Also as prescribed by ASC 730, non-refundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts would be recognized as an expense. At September 30, 2017 and June 30, 2017, the Company had prepaid research and development costs of $55,123 and $75,484.

Share-based payments

Share-based payments

ASC Topic 718 “Compensation—Stock Compensation” (“ASC 718”) requires companies to measure the cost of employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. Generally, the Company issues stock options with only service based vesting conditions and records the expense for these awards using the straight-line method.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. ContraVir has a limited trading history in its common stock and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The Company accounts for stock options issued to non-employees in accordance with ASC Topic 505-50 “Equity-Based Payment to Non-Employees” and accordingly the value of the stock compensation to non-employees is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company’s common stock and updated assumption inputs in the Black-Scholes option-pricing model.

ASC 718 requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised (excess tax benefits) be classified as cash inflows from financing activities and cash outflows from operating activities. Due to ContraVir’s accumulated deficit position, no excess tax benefits have been recognized.

Business Combinations

Business Combinations

The Company accounts for its business acquisitions, such as our acquisition of Ciclofilin in June of 2016, under the acquisition method of accounting as indicated in FASB ASC 805, “Business Combinations”, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquired business; and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities and non-controlling interest in the acquiree, based on the fair value estimates as of the date of acquisition. In accordance with ASC 805, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

Contingent consideration assumed in a business combination is remeasured at fair value each reporting period and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in other expense.

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Stockholder's Equity and Derivative Liability (Tables)

3 Months Ended

Sep. 30, 2017

Schedule of changes in derivative financial instruments liability balance

Date	Description	Number of Warrants Outstanding	Derivative Instrument Liability
July 1, 2017	Balance of derivative financial instruments liability	11,414,789	$	1,702,231
	Change in fair value of warrants for the three months ended September 30, 2017	—	(93,896		)
September 30, 2017	Balance of derivative financial instruments liability	11,414,789	$	1,608,335

October 13 2015

Schedule of assumptions used to measure the warrants at issuance and remeasure liability

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	3.03 years			3.28 years
Risk-free interest rate	1.77		%	1.73		%
Expected volatility	73		%	66		%
Dividend yield	—			—

April 4 2016

Schedule of assumptions used to measure the warrants at issuance and remeasure liability

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	3.51 years			3.76 years
Risk-free interest rate	1.77		%	1.73		%
Expected volatility	73		%	66		%
Dividend yield	—			—

April 25 2017

Schedule of assumptions used to measure the warrants at issuance and remeasure liability

	September 30, 2017			June 30, 2017
Price of ContraVir common stock	$	0.52		$	0.58
Expected warrant term (years)	4.56 years			4.76 years
Risk-free interest rate	1.77		%	1.72		%
Expected volatility	73		%	66		%
Dividend yield	—			—

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Fair Value Measurements (Tables)

3 Months Ended

Sep. 30, 2017

Fair Value Measurements

Schedule of table represents the liabilities measured and recognized at fair value on a recurring basis

	Fair value			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2017
Derivative liabilities related to warrants	$	(1,608,335	)	$	—	$	—	$	(1,608,335	)
Contingent consideration	$	(3,439,699	)	$	—	$	—	$	(3,439,699	)
As of June 30, 2017
Derivative liabilities related to warrants	$	(1,702,231	)	$	—	$	—	$	(1,702,231	)
Contingent consideration	$	(3,410,000	)	$	—	$	—	$	(3,410,000	)

Schedule of changes in fair value of contingent consideration

	Acquisition- related Contingent Consideration
Liabilities
Balance at June 30, 2017	$	3,410,000
Change in fair value recorded in earnings	29,699
Balance at September 30, 2017	$	3,439,699

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Indefinite-lived Intangible Assets and Goodwill (Tables)

3 Months Ended

Sep. 30, 2017

Indefinite-lived Intangible Assets and Goodwill

Schedule of IPR&D asset

	September 30, 2017		June 30, 2017
IPR&D asset:
CRV431	$	3,190,000	$	3,190,000

Schedule of roll-forward of goodwill balance

	Amount
Goodwill balance at July 1, 2017	$	1,870,924
Changes during the three months ended September 30, 2017	—
Goodwill balance at September 30, 2017	$	1,870,924

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Accrued Liabilities (Tables)

3 Months Ended

Sep. 30, 2017

Accrued Liabilities

Schedule of accrued liabilities

	September 30, 2017		June 30, 2017
Research and development	$	242,942	$	307,544
Professional fees	—		14,304
Payroll and related costs	975,426		931,664
Legal fees	83,241		64,571
Other	25,991		—
Total accrued expenses	$	1,327,600	$	1,318,083

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Accounting for Share-Based Payments (Tables)

3 Months Ended

Sep. 30, 2017

Accounting for Share-Based Payments

Schedule of stock based compensation expense

	Three months ended September 30, 2017		Three months ended September 30, 2016
General and administrative	$	313,100	$	361,186
Research and development	78,045		139,930
Total stock-based compensation expense	$	391,145	$	501,116

Summary of stock option activity and of changes in stock options outstanding under the Plan

	Number of Options	Exercise Price Per Share	Weighted Average Exercise Price Per Share		Intrinsic Value		Weighted Average Remaining Contractual Term
Balance outstanding, July 1, 2017	6,481,186	$0.11—$4.38	$	1.54	$	220,019	7.53
Granted	190,000	0.50 - $0.58	$	0.55
Balance outstanding, September 30, 2017	6,671,186	$0.11—$4.38	$	1.51	$	164,024	7.30
Vested awards and those expected to vest at September 30, 2017	3,779,099	$0.11—$4.38	$	1.57	$	164,024	7.30
Vested and exercisable at September 30, 2017	6,584,423	$0.11—$4.38	$	1.51	$	163,985	7.28

Schedule of weighted-average assumptions used to estimate fair value of stock option awards granted to employees

	Three months ended September 30, 2017			Three months ended September 30, 2016
Stock price	$	0.58		$	1.07
Risk-free interest rate	1.51		%	1.25		%
Dividend yield	—			—
Expected volatility	71.8		%	80.5		%
Expected term (in years)	6.0years			5.7years

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Loss per Share (Tables)

3 Months Ended

Sep. 30, 2017

Loss per Share

Schedule of computation of basic and diluted net loss per share

	Three months ended
	September 30, 2017			September 30, 2016
Net loss	$	(5,774,176	)	$	(4,816,897	)
Weighted average common shares outstanding	76,578,997			37,919,087
Net loss per share of common stock—basic and diluted	$	(0.08	)	$	(0.13	)

Schedule of outstanding securities excluded from the computation of diluted weighted shares outstanding

	Three months ended September 30, 2017	Three months ended September 30, 2016
Common shares issuable upon conversion of Series A preferred stock 216	2,166,934	3,814,396
Stock options	6,671,186	5,738,456
Warrants	11,414,789	5,464,789
Total	20,252,909	15,017,641

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Business Overview (Details)	3 Months Ended
	Sep. 30, 2017 product
Business Overview
Novel compounds in development (number)	2

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Basis of Presentation and Going Concern (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Going Concern
Cash	$ 8,778,699	$ 3,028,160	$ 12,982,748	$ 7,403,940
Net cash used in operating activities	(5,373,075)	(4,377,960)
Net loss	(5,774,176)	$ (4,816,897)
Working capital	$ 6,100,000

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Summary of Significant Accounting Policies - Cash (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2016	Jun. 30, 2016
Cash
Cash	$ 8,778,699	$ 12,982,748	$ 3,028,160	$ 7,403,940

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Summary of Significant Accounting Policies - Goodwill and In-Process Research and Development (Details)	3 Months Ended
	Sep. 30, 2017 USD ($) segment
Goodwill
Number of Reporting Units | segment	1
Impairment on goodwill	$ 0
IPR&D
Goodwill
Impairment of In-Process Research and Development	$ 0

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Summary of Significant Accounting Policies - Research and Development (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Research and Development
Prepaid research and development costs	$ 55,123	$ 75,484

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Summary of Significant Accounting Policies - Share-based payments (Details)	3 Months Ended
	Sep. 30, 2017 USD ($)
Share-based payments
Excess tax benefits financing activities	$ 0
Excess tax benefits operating activities	$ 0

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Stockholders' Equity and Derivative Liability - Preferred stock, Common Stock and Warrant Offering (Details) - USD ($)					1 Months Ended	3 Months Ended	12 Months Ended
	Apr. 25, 2017	Sep. 29, 2016	Apr. 04, 2016	Oct. 13, 2015	Sep. 30, 2016	Sep. 30, 2017	Jun. 30, 2017
Preferred stock, Common Stock and Warrant Offering
Shares converted, Common Stock		22,200,000			1,100,000
Derivative financial instruments liability - warrants	$ 4,000,000		$ 1,500,000	$ 4,400,000		$ 1,608,335	$ 1,702,231
October 13 2015
Preferred stock, Common Stock and Warrant Offering
Sale of shares (in shares)				5,000,000
Fixed combined price (in dollars per share)				$ 3.00
Gross proceeds				$ 15,000,000
Underwriting discount and other offering expenses payable				1,500,000
Additional proceeds if warrants exercised in full				$ 12,800,000
Price of ContraVir common stock						$ 0.52	$ 0.58
Expected warrant term (years)						3 years 11 days	3 years 3 months 11 days
Risk-free interest rate (as a percent)						1.77%	1.73%
Expected volatility (as a percent)						73.00%	66.00%
October 13 2015 | Over-Allotment Option
Preferred stock, Common Stock and Warrant Offering
Fixed combined price (in dollars per share)				$ 3.00
Authorized for sale (in shares)				750,000
April 4 2016
Preferred stock, Common Stock and Warrant Offering
Sale of shares (in shares)			4,929,578
Fixed combined price (in dollars per share)			$ 1.42
Gross proceeds			$ 7,000,000
Underwriting discount and other offering expenses payable			700,000
Additional proceeds if warrants exercised in full			$ 4,200,000
Price of ContraVir common stock						$ 0.52	$ 0.58
Expected warrant term (years)						3 years 6 months 4 days	3 years 9 months 4 days
Risk-free interest rate (as a percent)						1.77%	1.73%
Expected volatility (as a percent)						73.00%	66.00%
April 25 2017
Preferred stock, Common Stock and Warrant Offering
Sale of shares (in shares)	12,000,000
Fixed combined price (in dollars per share)	$ 1.00
Gross proceeds	$ 12,000,000
Underwriting discount and other offering expenses payable	500,000
Additional proceeds if warrants exercised in full	$ 7,500,000
Price of ContraVir common stock						$ 0.52	$ 0.58
Expected warrant term (years)						4 years 6 months 22 days	4 years 9 months 4 days
Risk-free interest rate (as a percent)						1.77%	1.72%
Expected volatility (as a percent)						73.00%	66.00%
Series A convertible preferred stock
Preferred stock, Common Stock and Warrant Offering
Shares converted, Preferred Stock		1,100,000
Series B convertible preferred stock
Preferred stock, Common Stock and Warrant Offering
Shares converted, Preferred Stock					120,000
Warrants | Over-Allotment Option
Preferred stock, Common Stock and Warrant Offering
Number of warrants offered for sale				450,000
Warrants | October 13 2015
Preferred stock, Common Stock and Warrant Offering
Warrants issued (in shares)				3,000,000
Exercise period for warrants				5 years
Exercise price of warrants (in dollars per share)				$ 4.25
Warrants | April 4 2016
Preferred stock, Common Stock and Warrant Offering
Warrants issued (in shares)			2,464,789
Exercise period for warrants			5 years
Exercise price of warrants (in dollars per share)			$ 1.70
Warrants | April 25 2017
Preferred stock, Common Stock and Warrant Offering
Warrants issued (in shares)	6,000,000
Exercise period for warrants	5 years
Exercise price of warrants (in dollars per share)	$ 1.25

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Stockholders' Equity and Derivative Liability - Derivative Financial Instrument Liability Underwriting Agreement (Details) - Warrants	3 Months Ended
	Sep. 30, 2017 USD ($) shares
Number of Warrants Outstanding
Balance at the beginning of the period (in shares) | shares	11,414,789
Balance at end of period (in shares) | shares	11,414,789
Significant Unobservable Inputs (Level 3)
Derivative Instrument Liability
Balance at the beginning of the period	$ 1,702,231
Change in fair value of warrants	(93,896)
Balance at end of period	$ 1,608,335

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Stockholders' Equity and Derivative Liability - Controlled Equity Offering Sales Agreement (Details) - USD ($) $ / shares in Units, shares in Millions		3 Months Ended
	Mar. 09, 2015	Sep. 30, 2017	Jun. 30, 2017
Controlled equity offering sales agreement
Common stock, par value (in dollars per share)		$ 0.0001	$ 0.0001
Net proceeds from sale of stock		$ 1,169,026
Controlled Equity Offering Sales Agreement
Controlled equity offering sales agreement
Common stock, par value (in dollars per share)	$ 0.0001
Maximum aggregate offering price	$ 50,000,000
Selling agent fee as a percentage of gross sales price per share sold	3.00%
Sale of shares (in shares)		2.2
Net proceeds from sale of stock		$ 1,200,000

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Fair Value Measurements (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017
Fair value measurements
Contingent consideration	$ (3,439,699)		$ (3,410,000)
Change in fair value of contingent consideration
Change in fair value recorded in earnings	29,699	$ 5,000
Significant Unobservable Inputs (Level 3)
Change in fair value of contingent consideration
Balance at beginning of the period	3,410,000
Change in fair value recorded in earnings	29,699
Balance at end of the period	3,439,699
Recurring basis
Fair value measurements
Derivative liabilities related to Warrants	(1,608,335)		(1,702,231)
Contingent consideration	(3,439,699)		(3,410,000)
Recurring basis | Significant Unobservable Inputs (Level 3)
Fair value measurements
Derivative liabilities related to Warrants	(1,608,335)		(1,702,231)
Contingent consideration	$ (3,439,699)		$ (3,410,000)

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Indefinite-lived Intangible Assets and Goodwill - IPR&D (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Jun. 30, 2017
Indefinite-lived Intangible Assets
In-process research and development	$ 3,190,000	$ 3,190,000
IPR&D
Indefinite-lived Intangible Assets
In-process research and development	3,190,000	$ 3,190,000
Impairment losses on IPR&D	$ 0

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Indefinite-lived Intangible Assets and Goodwill - Goodwill (Details)	3 Months Ended
	Sep. 30, 2017 USD ($)
Roll-forward of goodwill balance
Beginning balance	$ 1,870,924
Ending balance	1,870,924
Impairment on goodwill	$ 0

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Accrued Liabilities (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Accrued Liabilities
Research and development	$ 242,942	$ 307,544
Professional fees		14,304
Payroll and related costs	975,426	931,664
Legal fees	83,241	64,571
Other	25,991
Total accrued expenses	$ 1,327,600	$ 1,318,083

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Accounting for Share-Based Payments - Equity Incentive Plan (Details) - USD ($)		3 Months Ended
	Jun. 03, 2013	Sep. 30, 2017	Sep. 30, 2016
Accounting for Shared-Based Payments
Vesting period (in years)	3 years
Contractual term	10 years
Authorized number of options (in shares)		7,700,000
Common stock available for grant under the plan		1,028,814
Stock based compensation expense
Total stock based compensation expense		$ 391,145	$ 501,116
General and administrative
Stock based compensation expense
Total stock based compensation expense		313,100	361,186
Research and development
Stock based compensation expense
Total stock based compensation expense		$ 78,045	$ 139,930

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Accounting for Share-Based Payments - Activity (Details) - Stock option - USD ($)	3 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2016
Share-based payments
Weighted average grant date fair value (in dollars per share)	$ 0.37		$ 0.72
Unrecognized compensation cost related to non-vested stock options outstanding
Unrecognized compensation cost related to non-vested stock (in dollars)	$ 1,600,000
Weighted average remaining vesting period over which unrecognized compensation is expected to be recognized	2 years 26 days
Exercise Price Range $0.11-$4.38
Number of Options
Balance outstanding at the beginning of the period (in shares)	6,481,186
Balance outstanding at the end of the period (in shares)	6,671,186	6,481,186
Vested awards and those expected to vest at the end of the period (in shares)	3,779,099
Vested and exercisable at the end of the period (in shares)	6,584,423
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)	$ 0.11	$ 0.11
Exercise price, high end of the range (in dollars per share)	4.38	4.38
Weighted Average Exercise Price Per Share
Balance outstanding at the beginning of the period (in dollars per share)	1.54
Balance outstanding at the end of the period (in dollars per share)	1.51	$ 1.54
Vested awards and those expected to vest at the end of the period (in dollars per share)	1.57
Vested and exercisable at the end of the period (in dollars per share)	$ 1.51
Intrinsic Value
Balance outstanding at the beginning of the period (in dollars)	$ 220,019
Balance outstanding at the end of the period (in dollars)	164,024	$ 220,019
Vested awards and those expected to vest at the end of the period (in dollars)	164,024
Vested and exercisable at the end of the period (in dollars)	$ 163,985
Weighted Average Remaining Contractual Term (in years)
Balance outstanding term (in years)	7 years 3 months 18 days	7 years 6 months 11 days
Vested awards and those expected to vest at the end of the period (in years)	7 years 3 months 18 days
Vested and exercisable at the end of the period (in years)	7 years 3 months 11 days
Exercise Price Range $0.50 - $0.58
Number of Options
Granted (in shares)	190,000
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)	$ 0.50
Exercise price, high end of the range (in dollars per share)	0.58
Weighted Average Exercise Price Per Share
Granted (in dollars per share)	$ 0.55

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Accounting for Share-Based Payments - Assumptions (Details) - Stock option - $ / shares	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Weighted-average assumptions to determine fair value of stock option awards
Stock price (in dollars per share)	$ 0.58	$ 1.07
Risk-free interest rate (as a percent)	1.51%	1.25%
Expected volatility (as a percent)	71.80%	80.50%
Expected term (in years)	6 years	5 years 8 months 12 days
Actual forfeiture rate (as a percent)	3.00%

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Loss per Share (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Loss per Share
Net loss	$ (5,774,176)	$ (4,816,897)
Weighted average common shares outstanding (in shares)	76,578,997	37,919,087
Net loss per share of common stock-basic and diluted (in dollars per share)	$ (0.08)	$ (0.13)
Securities excluded from the computation of diluted weighted shares outstanding
Anti-dilutive securities (in shares)	20,252,909	15,017,641
Series A convertible preferred stock
Securities excluded from the computation of diluted weighted shares outstanding
Anti-dilutive securities (in shares)	2,166,934	3,814,396
Stock option
Securities excluded from the computation of diluted weighted shares outstanding
Anti-dilutive securities (in shares)	6,671,186	5,738,456
Warrants
Securities excluded from the computation of diluted weighted shares outstanding
Anti-dilutive securities (in shares)	11,414,789	5,464,789

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Commitments and Contingencies - License Agreement with Chimerix, Inc. (Details) - USD ($)		3 Months Ended
	Dec. 17, 2014	Sep. 30, 2017	Sep. 30, 2016
Agreement
Research and development		$ 3,963,477	$ 3,129,708
License Agreement | Chimerix, Inc.
Agreement
Potential milestone payment	$ 20,000,000
Agreement termination notice (in days)	60 days
Research and development	$ 1,200,000
Milestone payment accrual		$ 0
License Agreement | Chimerix, Inc. | Series B convertible preferred stock
Agreement
Upfront payment (in shares)	120,000
Stated value (in dollars per share)	$ 10.00
Fair value of shares issued	$ 1,200,000

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Commitments and Contingencies - License Agreement with Cardiff (Details)			3 Months Ended
	Aug. 05, 2013 shares	Mar. 27, 2007 USD ($) item	Sep. 30, 2017 USD ($)
Contribution Agreement
Agreement
Shares issued for assets (in shares) | shares	9,000,000
Percentage of outstanding shares of common stock upon issuance	100.00%
License Agreement | Cardiff
Agreement
Agreement termination notice (in days)		90 days
Default or breach cure period		90 days
Late payment period		1 month
Number of occasions in 12 month period | item		2
First written notice period		120 days
Royalty threshold rate (as a percent)		30.00%
Second written notice period		90 days
Initial base payment made		$ 270,000
Cardiff Agreement
Agreement
Potential milestone payment		400,000
Cardiff Agreement | Initiation of Phase 3 clinical trial
Agreement
Potential milestone payment		150,000
Cardiff Agreement | Upon approval of first NDA
Agreement
Potential milestone payment		250,000
BMS Agreement
Agreement
Initial base payment made		1,000,000
Potential milestone payment		9,000,000
Milestone payments made			$ 0
Milestone payment accrual			$ 0
BMS Agreement | Marketing FDA Approval
Agreement
Potential milestone payment		3,000,000
BMS Agreement | Aggregate net sales equal to or greater than $125 million
Agreement
Potential milestone payment		$ 6,000,000

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Related Party Transactions (Details)	3 Months Ended
	Sep. 30, 2017 USD ($) employee	Sep. 30, 2016 USD ($)
Principal stockholder
Related Party Transactions
Expenses for services	$ 30,000	$ 30,000
Director
Related Party Transactions
Number of employee | employee	1
Expenses for services	$ 25,000	$ 25,000

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Subsequent Event (Details) $ in Millions	1 Months Ended
	Nov. 30, 2017 USD ($)
Subsequent events | New Jersey Technology Business Tax Certificate Transfer (NOL) Program
Subsequent Event
Proceeds from sale of tax credits	$ 1.6