Delaware
|
46-4993860
|
(State
or other jurisdiction of incorporation or
organization)
|
(IRS
Employer Identification No.)
|
Large accelerated filer
|
[
]
|
Accelerated filer
|
[
]
|
Non-accelerated
filer
|
[X]
|
Smaller reporting company
|
[X]
|
|
Emerging
growth company
|
[X]
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common
Stock, par value $0.0001 per share
|
AZRX
|
Nasdaq
Capital Market
|
|
|
Page
|
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27
|
AZURRX BIOPHARMA,
INC.
|
|
|
Consolidated Balance Sheets (unaudited)
|
|
|
|
|
|
|
March 31,
|
December 31,
|
|
2019
|
2018
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
Cash
|
$413,858
|
$1,114,343
|
Other
receivables
|
2,051,028
|
3,172,676
|
Prepaid
expenses
|
338,656
|
512,982
|
Total
Current Assets
|
2,803,542
|
4,800,001
|
|
|
|
Property,
equipment, and leasehold improvements, net
|
125,135
|
128,854
|
|
|
|
Other
Assets:
|
|
|
In
process research and development, net
|
-
|
258,929
|
License
agreements, net
|
-
|
311,548
|
Patents
|
3,802,745
|
-
|
Goodwill
|
1,887,358
|
1,924,830
|
Operating
lease right-of-use assets
|
288,653
|
-
|
Deposits
|
49,077
|
45,233
|
Total
Other Assets
|
6,027,833
|
2,540,540
|
Total
Assets
|
$8,956,510
|
$7,469,395
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
Accounts
payable and accrued expenses
|
$2,580,709
|
$2,070,396
|
Accounts
payable and accrued expenses - related party
|
643,428
|
670,095
|
Note
payable
|
160,584
|
255,032
|
Convertible
debt
|
1,728,442
|
-
|
Other
current liabilities
|
643,530
|
-
|
Total
Current Liabilities
|
5,756,693
|
2,995,523
|
|
|
|
Other
liabilities
|
486,492
|
-
|
Total
Liabilities
|
6,243,185
|
2,995,523
|
|
|
|
Stockholders'
Equity:
|
|
|
Convertible
preferred stock - Par value $0.0001 per share; 10,000,000 shares
authorized and 0 shares issued and outstanding at March 31, 2019
and December 31, 2018; liquidation preference approximates par
value
|
-
|
-
|
Common
stock - Par value $0.0001 per share; 100,000,000 shares authorized;
18,537,958 and 17,704,925 shares issued and outstanding,
respectively, at March 31, 2019 and December 31, 2018
|
1,853
|
1,771
|
Additional
paid-in capital
|
56,134,666
|
53,139,259
|
Accumulated
deficit
|
(52,177,801)
|
(47,517,046)
|
Accumulated
other comprehensive loss
|
(1,245,393)
|
(1,150,112)
|
Total
Stockholders' Equity
|
2,713,325
|
4,473,872
|
Total
Liabilities and Stockholders' Equity
|
$8,956,510
|
$7,469,395
|
AZURRX BIOPHARMA,
INC.
|
|
|
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
|
||
|
|
|
|
Three Months
|
Three Months
|
|
Ended
|
Ended
|
|
03/31/19
|
03/31/18
|
|
|
|
Research
and development expenses
|
$2,118,533
|
$1,678,029
|
General
and administrative expenses
|
2,485,111
|
1,916,333
|
Fair
value adjustment, contingent consideration
|
-
|
(10,000)
|
|
|
|
Loss
from operations
|
(4,603,644)
|
(3,584,362)
|
|
|
|
Other:
|
|
|
Interest
expense
|
(57,111)
|
(48,635)
|
Total
other
|
(57,111)
|
(48,635)
|
|
|
|
Loss
before income taxes
|
(4,660,755)
|
(3,632,997)
|
|
|
|
Income
taxes
|
-
|
-
|
|
|
|
Net
loss
|
(4,660,755)
|
(3,632,997)
|
|
|
|
Other
comprehensive loss:
|
|
|
Foreign
currency translation adjustment
|
(95,281)
|
106,020
|
Total
comprehensive loss
|
$(4,756,036)
|
$(3,526,977)
|
|
|
|
Basic
and diluted weighted average shares outstanding
|
17,719,902
|
12,447,438
|
|
|
|
Loss
per share - basic and diluted
|
$(0.26)
|
$(0.29)
|
AZURRX BIOPHARMA,
INC.
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Convertible
|
|
|
Additional
|
|
|
Other
|
|
|
|
Preferred Stock
|
Common Stock
|
Paid In
|
Subscriptions
|
Accumulated
|
Comprehensive
|
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Receivable
|
Deficit
|
Loss
|
Total
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2018
|
-
|
$-
|
12,042,574
|
$1,205
|
$37,669,601
|
$(1,071,070)
|
$(33,983,429)
|
$(955,715)
|
$1,660,592
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultants
|
|
|
751
|
-
|
-
|
|
|
|
-
|
Common
stock issued for warrant exercises
|
|
|
503,070
|
49
|
1,253,623
|
1,071,070
|
|
|
2,324,742
|
Stock-based
compensation
|
|
|
|
|
29,018
|
|
|
|
29,018
|
Restricted
stock granted to employees/directors
|
|
|
30,000
|
3
|
113,697
|
|
|
|
113,700
|
Convertible
debt converted into common stock
|
|
|
26,000
|
3
|
68,670
|
|
|
|
68,673
|
Warrant
modification
|
|
|
|
|
428,748
|
|
|
|
428,748
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
106,020
|
106,020
|
Net
loss
|
|
|
|
|
|
|
(3,632,997)
|
|
(3,632,997)
|
Balance, March 31, 2018
|
-
|
$-
|
12,602,395
|
$1,260
|
$39,563,357
|
$-
|
$(37,616,426)
|
$(849,695)
|
$1,098,496
|
Balance, January 1, 2019
|
-
|
$-
|
17,704,925
|
$1,771
|
$53,139,259
|
$-
|
$(47,517,046)
|
$(1,150,112)
|
$4,473,872
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultants
|
|
|
27,102
|
2
|
59,998
|
|
|
|
60,000
|
Common
stock issued to Mayoly for patents
|
|
|
775,931
|
77
|
1,740,882
|
|
|
|
1,740,959
|
Stock-based
compensation
|
|
|
|
|
511,335
|
|
|
|
511,335
|
Restricted
stock granted to employees/directors
|
|
|
30,000
|
3
|
296,282
|
|
|
|
296,285
|
Warrant
modification
|
|
|
|
|
325,320
|
|
|
|
325,320
|
Received
from stockholder in relation to warrant modification
|
|
|
|
|
61,590
|
|
|
|
61,590
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
(95,281)
|
(95,281)
|
Net
loss
|
|
|
|
|
|
|
(4,660,755)
|
|
(4,660,755)
|
Balance, March 31, 2019
|
-
|
$-
|
18,537,958
|
$1,853
|
$56,134,666
|
$-
|
$(52,177,801)
|
$(1,245,393)
|
$2,713,325
|
AZURRX BIOPHARMA,
INC.
|
|
|
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
Three Months
|
Three Months
|
|
Ended
|
Ended
|
|
03/31/19
|
03/31/18
|
Cash
flows from operating activities:
|
|
|
Net
loss
|
$(4,660,755)
|
$(3,632,997)
|
Adjustments
to reconcile net loss to net cash used in
|
|
|
operating
activities:
|
|
|
Depreciation
|
17,114
|
14,763
|
Amortization
|
561,289
|
191,681
|
Fair
value adjustment, contingent consideration
|
-
|
(10,000)
|
Stock-based
compensation
|
511,335
|
29,018
|
Restricted
stock granted to employees/directors
|
296,285
|
113,700
|
Restricted
stock granted to consultants
|
60,000
|
-
|
Accreted
interest on convertible debt
|
24,658
|
-
|
Accreted
interest on debt discount - warrants
|
29,104
|
46,795
|
Warrant
modification
|
-
|
428,748
|
Changes
in assets and liabilities:
|
|
|
Other
receivables
|
(149,508)
|
120,877
|
Prepaid
expenses
|
172,886
|
59,625
|
Right
of use assets
|
(289,830)
|
-
|
Deposits
|
(4,125)
|
-
|
Accounts
payable and accrued expenses
|
514,950
|
423,523
|
Other
liabilities
|
288,800
|
-
|
Net
cash used in operating activities
|
(2,627,797)
|
(2,214,267)
|
|
|
|
Cash
flows from investing activities:
|
|
|
Purchase
of property and equipment
|
(13,352)
|
(29,521)
|
Net
cash used in investing activities
|
(13,352)
|
(29,521)
|
|
|
|
Cash
flows from financing activities:
|
|
|
Issuances
of common stock
|
-
|
2,324,742
|
Issuances
of convertible debt
|
2,000,000
|
-
|
Received
from stockholder in relation to warrant modification
|
61,590
|
|
Repayments
of note payable
|
(94,448)
|
(79,041)
|
Net
cash provided by financing activities
|
1,967,142
|
2,245,701
|
|
|
|
(Decrease)
increase in cash
|
(674,007)
|
1,913
|
|
|
|
Effect
of exchange rate changes on cash
|
(26,478)
|
(910)
|
|
|
|
Cash,
beginning balance
|
1,114,343
|
573,471
|
|
|
|
Cash,
ending balance
|
$413,858
|
$574,474
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
Cash
paid for interest
|
$3,933
|
$1,840
|
|
|
|
Cash
paid for income taxes
|
$-
|
$-
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
Conversion
of convertible debt into common stock
|
$-
|
$68,673
|
|
|
|
Common
stock issued for patents purchased from Mayoly
|
$1,740,959
|
$-
|
|
|
|
Warrant
modification related to convertible debt issuance
|
$325,320
|
$-
|
|
|
Fair Value Measured at Reporting Date Using
|
|
||
|
Carrying Amount
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
At
March 31, 2019:
|
|
|
|
|
|
Cash
|
$413,858
|
$-
|
$413,858
|
$-
|
$413,858
|
Other
receivables
|
$2,051,028
|
$-
|
$-
|
$2,051,028
|
$2,051,028
|
Note
payable
|
$160,584
|
$-
|
$-
|
$160,584
|
$160,584
|
Convertible
debt
|
$1,728,442
|
$-
|
$-
|
$1,728,442
|
$1,728,442
|
|
|
|
|
|
|
At
December 31, 2018:
|
|
|
|
|
|
Cash
|
$1,114,343
|
$-
|
$1,114,343
|
$-
|
$1,114,343
|
Other
receivables
|
$3,172,676
|
$-
|
$-
|
$3,172,676
|
$3,172,676
|
Note
payable
|
$255,032
|
$-
|
$-
|
$255,032
|
$255,032
|
|
March 31,
|
December 31,
|
|
2019
|
2018
|
R&D
tax credits
|
$2,038,311
|
$2,162,373
|
Other
|
12,717
|
1,010,303
|
Total
other receivables
|
$2,051,028
|
$3,172,676
|
|
March 31,
|
December 31,
|
|
2019
|
2018
|
Laboratory
equipment
|
$193,661
|
$190,406
|
Computer
equipment
|
78,986
|
75,417
|
Office
equipment
|
37,264
|
37,262
|
Leasehold
improvements
|
35,711
|
29,163
|
Total
property, plant and equipment
|
345,622
|
332,248
|
Less
accumulated depreciation
|
(220,487)
|
(203,394)
|
Property,
plant and equipment, net
|
$125,135
|
$128,854
|
Common
stock issued at signing to Mayoly
|
$1,740,959
|
Due
to Mayoly at 12/31/19 - €400,000
|
449,280
|
Due
to Mayoly at 12/31/20 - €350,000
|
393,120
|
Assumed
Mayoly liabilities and forgiveness of Mayoly debt
|
1,219,386
|
|
$3,802,745
|
|
March 31,
|
December 31,
|
|
2019
|
2018
|
In
process research and development
|
$-
|
$416,600
|
Less
accumulated amortization
|
-
|
(157,671)
|
In
process research and development, net
|
$-
|
$258,929
|
|
|
|
License
agreements
|
$-
|
$3,398,702
|
Less
accumulated amortization
|
-
|
(3,087,154)
|
License
agreements, net
|
$-
|
$311,548
|
|
|
|
Patents
|
$3,802,745
|
$-
|
Less
accumulated amortization
|
-
|
-
|
Patents,
net
|
$3,802,745
|
$-
|
2019
|
$395,661
|
2020
|
527,548
|
2021
|
527,548
|
2022
|
527,548
|
2023
|
527,548
|
|
Goodwill
|
Balance
at January 1, 2018
|
$2,016,240
|
Foreign
currency translation
|
(91,410)
|
Balance
at December 31, 2018
|
1,924,830
|
Foreign
currency translation
|
(37,472)
|
Balance
at March 31, 2019
|
$1,887,358
|
|
March 31,
|
December 31,
|
|
2019
|
2018
|
Trade
payables
|
$2,243,574
|
$1,532,110
|
Accrued
expenses
|
69,930
|
285,061
|
Accrued
payroll
|
267,205
|
253,225
|
Total
accounts payable and accrued expenses
|
$2,580,709
|
$2,070,396
|
|
March 31,
|
December 31,
|
|
2019
|
2018
|
Convertible
debt
|
$2,000,000
|
$-
|
Unamortized
debt discount - revalued warrants
|
(296,216)
|
-
|
Total
convertible debt
|
$1,703,784
|
$-
|
|
March 31,
|
December 31,
|
Current
|
2019
|
2018
|
Due
to Mayoly
|
$449,280
|
$-
|
Lease
liabilities
|
194,250
|
-
|
|
$643,530
|
$-
|
|
March 31,
|
December 31,
|
Long-term
|
2019
|
2018
|
Due
to Mayoly
|
$393,120
|
$-
|
Lease
liabilities
|
93,372
|
-
|
|
$486,492
|
$-
|
|
|
Exercise
|
Weighted
|
|
|
Price Per
|
Average
|
|
Warrants
|
Share
|
Exercise Price
|
|
|
|
|
Warrants outstanding and exercisable at January 1,
2018
|
3,371,385
|
$3.17 - $7.37
|
$5.28
|
|
|
|
|
Granted
during the period
|
-
|
-
|
-
|
Expired
during the period
|
-
|
-
|
-
|
Exercised
during the period
|
(503,070)
|
$2.50
|
$2.50
|
Warrants outstanding and exercisable at March 31, 2018
|
2,868,315
|
$3.17 - $7.37
|
$5.28
|
|
|
|
|
Warrants outstanding and exercisable at January 1,
2019
|
3,112,715
|
$2.55 - $7.37
|
$4.83
|
|
|
|
|
Granted
during the period
|
-
|
-
|
-
|
Expired
during the period
|
-
|
-
|
-
|
Exercised
during the period
|
-
|
-
|
-
|
Warrants outstanding and exercisable at March 31, 2019
|
3,112,715
|
$1.50 - $7.37
|
$3.53
|
|
Number of
|
Weighted Average
|
Weighted
|
|
Shares Under
|
Remaining Contract
|
Average
|
Exercise Price
|
Warrants
|
Life in Years
|
Exercise Price
|
$1.50 - $2.99
|
1,253,965
|
2.88
|
|
$3.00 - $3.99
|
636,972
|
3.06
|
|
$4.00 - $4.99
|
196,632
|
2.76
|
|
$5.00 - $5.99
|
805,476
|
2.88
|
|
$6.00 - $6.99
|
187,750
|
2.51
|
|
$7.00 - $7.37
|
31,920
|
1.71
|
|
Total
|
3,112,715
|
2.88
|
$3.53
|
|
Number
|
Average
|
Remaining Contract
|
Intrinsic
|
|
of Shares
|
Exercise Price
|
Life in Years
|
Value
|
|
|
|
|
|
Stock options outstanding at January 1, 2018
|
545,000
|
$4.05
|
7.13
|
$-
|
|
|
|
|
|
Granted
during the period
|
-
|
-
|
|
|
Expired
during the period
|
-
|
-
|
|
|
Exercised
during the period
|
-
|
-
|
|
|
Stock options outstanding at March 31, 2018
|
545,000
|
$4.05
|
6.89
|
$-
|
|
|
|
|
|
Exercisable at March 31, 2018
|
165,000
|
$4.48
|
8.85
|
$-
|
|
|
|
|
|
Non-vested stock options outstanding at January 1,
2018
|
387,500
|
$3.89
|
6.39
|
$-
|
|
|
|
|
|
Granted
during the period
|
-
|
-
|
|
|
Vested
during the period
|
7,500
|
$4.48
|
6.39
|
$-
|
Expired
during the period
|
-
|
-
|
|
|
Exercised
during the period
|
-
|
-
|
|
|
Non-vested stock options outstanding at March 31, 2018
|
380,000
|
$3.87
|
6.03
|
$-
|
Stock options outstanding at January 1, 2019
|
994,000
|
$3.58
|
5.42
|
$-
|
|
|
|
|
|
Granted
during the period
|
-
|
-
|
|
|
Expired
during the period
|
-
|
-
|
|
|
Canceled
during the period
|
-
|
-
|
|
|
Exercised
during the period
|
-
|
-
|
|
|
Stock options outstanding at March 31, 2019
|
994,000
|
$3.58
|
5.17
|
$-
|
|
|
|
|
|
Exercisable at March 31, 2019
|
994,000
|
$3.58
|
5.17
|
$-
|
|
|
|
|
|
Non-vested stock options outstanding at January 1,
2019
|
244,500
|
$3.05
|
4.53
|
$-
|
|
|
|
|
|
Granted
during the period
|
-
|
-
|
|
|
Vested
during the period
|
(244,500)
|
$3.05
|
4.53
|
|
Expired
during the period
|
-
|
-
|
|
|
Canceled
during the period
|
-
|
-
|
|
|
Exercised
during the period
|
-
|
-
|
|
|
Non-vested stock options outstanding at March 31, 2019
|
-
|
|
|
$-
|
|
March 31,
|
|
2019
|
Lease term and discount rate
|
|
Weighted-average
remaining lease term
|
1.5
years
|
Weighted-average
discount rate
|
6.0%
|
2019
|
$152,100
|
2020
|
154,448
|
Total
lease payments
|
306,548
|
Less
imputed interest
|
(18,926)
|
Present
value of lease liabilities
|
$287,622
|
ITEM 1. LEGAL
PROCEEDINGS
|
ITEM 1A. RISK FACTORS
|
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3. DEFAULTS
UPON SENIOR SECURITIES
|
ITEM 4. MINE SAFETY DISCLOSURES
|
|
ITEM 5. OTHER INFORMATION
|
ITEM 6. EXHIBITS
|
|
(b)
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
|
Form of Selling Agent Warrant
(incorporated by reference
from Exhibit 4.1 filed with the Current Report on Form 8-K, filed
April 3, 2019).
|
|
|
Form of Selling Agent Warrant
(incorporated by reference
from Exhibit 4.1 filed with the Current Report on Form 8-K, filed
May 14, 2019).
|
|
|
Note Purchase Agreement, dated February
14, 2019 (incorporated
by reference from Exhibit 10.1 filed with the Current Report on
Form 8-K, filed February 20,
2019).
|
|
|
Senior Convertible Note A, dated February
14, 2019 (incorporated
by reference from Exhibit 10.2 filed with the Current Report on
Form 8-K, filed February 20,
2019).
|
|
|
Senior Convertible Note B, dated February
14, 2019 (incorporated
by reference from Exhibit 10.3 filed with the Current Report on
Form 8-K, filed February 20,
2019).
|
|
|
Form of Pledge Agreement, dated February
14, 2019 (incorporated
by reference from Exhibit 10.4 filed with the Current Report on
Form 8-K, filed February 20,
2019).
|
|
|
Warrant Amendment Agreement, dated
February 14, 2019 (incorporated by reference from Exhibit
10.5 filed with the Current Report on Form 8-K, filed February 20,
2019).
|
|
|
Registration Rights Agreement, dated
February 14, 2019 (incorporated by reference from Exhibit
10.6 filed with the Current Report on Form 8-K, filed February 20,
2019).
|
|
|
Asset Purchase Agreement, by
and between AzurRx BioPharma,
Inc., AzurRx BioPharma SAS
and Laboratoires Mayoly Spindler SAS, dated March
27, 2019 (incorporated
by reference from Exhibit 10.25 filed with the Annual Report on
Form 10-K, filed April 1,
2019).
|
|
|
Patent License Agreement, by and
between AzurRx BioPharma, Inc.
and Laboratoires Mayoly Spindler SAS, dated March
27, 2019, (incorporated by reference from Exhibit
10.26 filed with the Annual Report on Form 10-K,
filed April 1,
2019).
|
|
|
Selling Agent Agreement, by and between
AzurRx BioPharma, Inc. and Alexander Capital, L.P., dated April 1,
2019 (incorporated by
reference from Exhibit 10.1 filed with the Current Report on Form
8-K, filed April 3, 2019).
|
|
Selling Agent Agreement, by and between
AzurRx BioPharma, Inc. and Alexander Capital, L.P., dated May 9,
2019 (incorporated by
reference from Exhibit 10.1 filed with the Current Report on Form
8-K, filed May 14, 2019).
|
||
|
|
|
|
Certification of the
Principal Executive Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
Certification of the Principal Financial
Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
|
Certification of the
Principal Executive Officer and 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 Extension Label
Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation
Linkbase
|
|
|
AZURRX
BIOPHARMA, INC.
|
|
|
|
|
|
|
|
By
|
/s/ Johan M.
(Thijs) Spoor
|
|
|
|
Johan
M. (Thijs) Spoor
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
By
|
/s/ Maged
Shenouda
|
|
|
|
Maged
Shenouda
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date:
May 15, 2019
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of AzurRx
BioPharma, 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(s) 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 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, including its consolidated subsidiaries, 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(s) 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: May 15, 2019
|
/s/ Johan M. (Thijs) Spoor
Johan M. (Thijs) Spoor
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of AzurRx
BioPharma, 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(s) 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 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, including its consolidated subsidiaries, 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(s) 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: May 15, 2019
|
/s/ Maged Shenouda
Maged Shenouda
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
(1) The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934;
and
|
|
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
|
Date: May 15, 2019
|
/s/ Johan
M. (Thijs) Spoor
|
|
Johan M. (Thijs) Spoor
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Maged
Shenouda
Maged Shenouda
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 15, 2019 |
|
Document and Entity Information | ||
Entity Registrant Name | AzurRx BioPharma, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Entity Central Index Key | 0001604191 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 21,060,055 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Trading Symbol | AZRX |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock shares, par value | $ 0.0001 | $ 0.0001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock shares, par value | $ 0.0001 | $ 0.0001 |
Common stock shares, authorized | 100,000,000 | 100,000,000 |
Common stock shares, issued | 18,537,958 | 17,704,925 |
Common stock shares, outstanding | 18,537,958 | 17,704,925 |
Consolidated Statements of Operations and Comprehensive Loss - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Statement [Abstract] | ||
Research and development expenses | $ 2,118,533 | $ 1,678,029 |
General and administrative expenses | 2,485,111 | 1,916,333 |
Fair value adjustment, contingent consideration | 0 | (10,000) |
Loss from operations | (4,603,644) | (3,584,362) |
Other: | ||
Interest expense | (57,111) | (48,635) |
Total other | (57,111) | (48,635) |
Loss before income taxes | (4,660,755) | (3,632,997) |
Income taxes | 0 | 0 |
Net loss | (4,660,755) | (3,632,997) |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (95,281) | 106,020 |
Total comprehensive loss | $ (4,756,036) | $ (3,526,977) |
Basic and diluted weighted average shares outstanding | 17,719,902 | 12,447,438 |
Loss per share - basic and diluted | $ (0.26) | $ (0.29) |
The Company and Basis of Presentation |
3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
The Company and Basis of Presentation | The Company
AzurRx BioPharma, Inc. (“AzurRx” or “Parent”) was incorporated on January 30, 2014 in the State of Delaware. In June 2014, the Company acquired 100% of the issued and outstanding capital stock of AzurRx SAS (formerly “ProteaBio Europe SAS”), a company incorporated in October 2008 under the laws of France. AzurRx and its wholly-owned subsidiary, AzurRx SAS (“ABS”), are collectively referred to as the “Company.”
The Company is engaged in the research and development of non-systemic biologics for the treatment of patients with gastrointestinal disorders. Non-systemic biologics are non-absorbable drugs that act locally, i.e. the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation. The Company’s current product pipeline consists of two therapeutic proteins under development:
MS1819-SD
MS1819-SD is a yeast derived recombinant lipase for exocrine pancreatic insufficiency (“EPI”) associated with chronic pancreatitis (“CP”) and cystic fibrosis (“CF”). A lipase is an enzyme that breaks up fat molecules. MS1819-SD is considered recombinant because it was created from new combinations of genetic material in yeast called Yarrowia lipolytica. In June 2018, the Company completed an open-label, dose escalation Phase IIa trial of MS1819-SD in France, Australia, and New Zealand to investigate both the safety of escalating doses of MS1819-SD, and the efficacy of MS1819-SD through the analysis of each patient’s coefficient of fat absorption (“CFA”) and its change from baseline. A total of 11 CP patients with EPI were enrolled in the study and final data showed a strong safety and efficacy profile. Although the study was not powered for efficacy, in a pre-planned analysis, the highest dose cohort of MS1819-SD showed statistically significant and clinically meaningful increases in CFA compared to baseline with a mean increase of 21.8% and a p value of p=0.002 on a per protocol basis. Additionally, maximal absolute CFA response to treatment was up to 57%, with an inverse relationship to baseline CFA. In October 2018, the U.S. Food and Drug Administration (“FDA”) cleared the Company’s Investigational New Drug (“IND”) application for MS1819-SD in patients with EPI due to CF. In connection with the FDA’s clearance of the IND, in the fourth quarter of 2018 the Company initiated the multi-center Phase II OPTION study in the United States and Europe (the “OPTION Study”), which the Company expects will include approximately 30 patients. The Company dosed the first patients in the OPTION Study in February 2019 and reached 50% of its enrollment target for the OPTION Study in April 2019. The Company expects to conclude and announce topline results from the OPTION Study in the summer of 2019.
b-Lactamase Program
The Company’s b-lactamase program focuses on products with an enzymatic combination of bacterial origin for the prevention of hospital-acquired infections and antibiotic-associated diarrhea (“AAD”) by resistant bacterial strains induced by parenteral administration of several antibiotic classes. Currently, the Company has two compounds in pre-clinical development in this program, AZX1101 and AZX1103. Both AZX1101 and AZX1103 are composed of several distinct enzymes that break up individual classes of antibiotic molecules. AZX1103 is a b-lactamase enzyme combination that has shown positive pre-clinical activity, with degradation of amoxicillin in the presence of clavulanic acid in the upper gastrointestinal tract in the Gottingen minipig model. Currently, the Company is focused on advancing pre-clinical development of AZX1103. The Company is also currently assessing its plans for the continuation of the development of AZX1101.
Recent Developments Asset Purchase Agreement with Mayoly
On March 27, 2019, the Company entered into an Asset Purchase Agreement with Mayoly (the “Mayoly APA”), pursuant to which the Company purchased all rights, title and interest in and to MS1819-SD. Upon execution of the Mayoly APA, the Joint Development and License Agreement (the “JDLA”) previously executed by AzurRx SAS and Mayoly was terminated. In addition, the Company granted to Mayoly an exclusive, royalty-bearing right to revenue received from commercialization of MS1819-SD within certain territories.
In accordance with the Mayoly APA, the Company provided to Mayoly the following consideration for the purchase of MS1819-SD:
The Closing Payment Shares and the Escrow Shares were all issued upon execution of the Mayoly APA; provided, however, per the terms of the Mayoly APA, the Escrow Shares will be held in escrow until the applicable Milestone Payment date, at which time the respective Escrow Shares will be released to Mayoly. See Note 6.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2018, has been derived from audited financial statements of that date. The unaudited interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously distributed in our Annual Report Form 10-K for the year ended December 31, 2018, filed with the SEC on April 1, 2019.
The unaudited interim consolidated financial statements include the accounts of AzurRx and its wholly-owned subsidiary, AzurRx SAS. Intercompany transactions and balances have been eliminated upon consolidation.
Going Concern Uncertainty
The accompanying unaudited interim consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception, had negative working capital at March 31, 2019 of approximately $2,953,000, and had an accumulated deficit of approximately $52,178,000 at March 31, 2019. The Company is dependent on obtaining, and continues to pursue, additional working capital funding from the sale of securities and debt in order to continue to execute its development plan and continue operations. Without adequate working capital, the Company may not be able to meet its obligations and continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
Significant Accounting Policies and Recent Accounting Pronouncements |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recent Accounting Pronouncements | Use of Estimates The accompanying consolidated financial statements are prepared in conformity with U.S. GAAP and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements (including goodwill, intangible assets and contingent consideration), and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.
Concentrations Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally-insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At March 31, 2019 and December 31, 2018, the Company had approximately $133,984 and $754,261, respectively, in one account in the U.S. in excess of these limits. The Company has not experienced any losses to date resulting from this practice.
The Company also has exposure to foreign currency risk as its subsidiary in France has a functional currency in Euros.
Leases Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, "Leases." This ASU requires substantially all leases be recorded on the balance sheet as right of use assets and lease obligations. The Company adopted the ASU using a modified retrospective adoption method at January 1, 2019, as outlined in ASU No. 2018-11, "Leases - Targeted Improvements." Under this method of adoption, there is no impact to the comparative condensed consolidated statement of operations and condensed consolidated balance sheet. The Company determined that there was no cumulative-effect adjustment to beginning retained earnings on the consolidated balance sheet. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carryforward of historical lease classifications. Adoption of this standard did not materially impact the Company’s results of operations and had no impact on the consolidated statement of cash flows.
Equity-Based Payments to Non-Employees Equity-based payments to non-employees are measured at fair value on the grant date per ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
Research and Development Research and development costs are charged to operations when incurred and are included in operating expenses. Research and development costs consist principally of compensation of employees and consultants that perform the Company’s research activities, the fees paid to maintain the Company’s licenses, and the payments to third parties for clinical trial and additional product development and testing.
Foreign Currency Translation For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities are translated to U.S. dollars, which is the functional currency, at period end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments are accumulated in a separate component of shareholders’ equity.
Recent Accounting Pronouncements In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill impairment. The new guidance eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by reducing the goodwill balance by the difference between the carrying value and the reporting unit’s fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019. The Company believes that the adoption of this pronouncement will not have an impact on the Company’s measurement of goodwill impairment.
|
Fair Value Disclosures |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.
The fair value of the Company's financial instruments are as follows:
The fair value of other receivables approximates carrying value as these consist primarily of French R&D tax credits that are normally received the following year and amounts due from our collaboration partner Mayoly, see Note 14.
The fair value of note payable approximates carrying value due to the terms of such instruments and applicable interest rates.
The fair value of convertible debt is based on the par value plus accrued interest through the date of reporting due to the terms of such instruments and interest rates, or the current interest rates of similar instruments.
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Other Receivables |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Other Receivables | Other receivables consisted of the following:
The research and development (“R & D”) tax credits are the 2017 and 2018 refundable tax credits for research conducted in France. The tax credits for the years 2016 through 2018 are currently being examined by the French tax authorities which is in the normal course of business. At December 31, 2018, Other consists primarily of amounts due from collaboration partner Mayoly.
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Property, Equipment, and Leasehold Improvements |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Equipment, and Leasehold Improvements | Property, equipment and leasehold improvements consisted of the following:
Depreciation expense for the three months ended March 31, 2019 and December 31, 2018 was $17,114 and $14,763, respectively. Depreciation expense is included in general and administrative (“G&A”) expenses.
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Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Patents Pursuant to the Mayoly APA entered into on March 27, 2019, in which the Company purchased all rights, title and interest in and to MS1819-SD (see Note 14), the Company recorded Patents in the amount of $3,802,745 as follows:
Intangible assets are as follows:
Amortization expense for the three months ended March 31, 2019 and 2018 was $561,289 and $191,681, respectively. Amortization expense for the three months ended March 31, 2019 included $384,234 from In process research and development and License agreements written off as a result of the Mayoly APA.
As of March 31, 2019, amortization expense is expected to be as follows for the next five years:
Goodwill is as follows:
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Accounts Payable and Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following:
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Note Payable |
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Debt Disclosure [Abstract] | |
Note Payable | On December 14, 2018, the Company entered into a 9-month financing agreement for its directors and officer’s liability insurance in the amount of $286,203 that bears interest at an annual rate of 5.99%. Monthly payments, including principal and interest, are $32,599 per month. The balance due under this financing agreement at March 31, 2019 was $160,584.
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Original Issue Discounted Convertible Notes and Warrants |
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Original Issue Discounted Convertible Notes and Warrants | ADEC Notes On February 14, 2019, the Company entered into a Note Purchase Agreement (the “NPA”) with ADEC Private Equity Investments, LLC (“ADEC”), pursuant to which the Company issued to ADEC two Senior Convertible Notes (“Note A” and “Note B,” respectively, each a “Note,” and together, the “Notes”), in the principal amount of $1,000,000 per Note, resulting in gross proceeds to the Company of $2,000,000. ADEC is controlled by Burke Ross, a significant stockholder of the Company.
The Notes accrue interest at a rate of 10% per annum (the “Interest Rate”); provided, however, that in the event the Company elects to repay the full balance due under the terms of both Notes prior to December 31, 2019, then the interest rate will be reduced to 6% per annum. Interest is payable at the time all outstanding Principal Amounts owed under each Note is repaid. The Notes will mature on the earlier to occur of (i) the tenth business day following the receipt by ABS of certain tax credits that the Company expects to receive prior to July 2019 in the case of Note A (the “2019 Tax Credit”) and July 2020 in the case of Note B (the “2020 Tax Credit”), respectively, or (ii) December 31, 2019 in the case of Note A and December 31, 2020 in the Case of Note B (the “Maturity Dates”). As a condition to entering into the NPA, ABS and ADEC also entered into a Pledge Agreement, pursuant to which ABS agreed to pledge an interest in the 2019 and 2020 Tax Credits to ADEC in order to guarantee payment of all amounts due under the terms of the Notes.
Prior to their respective Maturity Dates, each of the Notes is convertible, at ADEC’s option, into shares of the Company’s common stock, at a conversion price equal to the principal and accrued interest due under the terms of the Notes divided by $2.50 (“Conversion Shares”); provided, however, that pursuant to the term of the Notes, ADEC may not convert all or a portion of the Notes if such conversion would result in Mr. Ross and/or entities affiliated with him beneficially owning in excess of 19.99% of the Company’s shares of common stock issued and outstanding immediately after giving effect to the issuance of the Conversion Shares.
As additional consideration for entering into the NPA, pursuant to a Warrant Amendment Agreement, the Company agreed to reduce the exercise price of 1,009,565 outstanding warrants previously issued by the Company to ADEC and its affiliates (the “Warrants”) to $1.50 per share. The Warrant Amendment does not alter any other terms of the Warrants. This resulted in a debt discount of $325,320 that will be accreted to additional interest expense over the lives of the Notes.
In connection with the above transaction, the Company also entered into a registration rights agreement with ADEC, pursuant to which the Company agreed to file a registration statement with the Securities and Exchange Commission no later than 45 days after the closing date of February 14, 2019 in order to register, on behalf of ADEC, the Conversion Shares. ADEC subsequently agreed to extend the date to file a registration statement to April 30, 2019. The registration statement was filed on April 25, 2019.
During the three months ended March 31, 2019, the Company accrued $24,658 of interest expense in connection with these convertible notes. During the three months ended March 31, 2019, the Company recorded $29,104 of interest expense in the form of amortization of debt discount related to the repriced warrants.
LPC OID Debenture On April 11, 2017, the Company entered into a Note Purchase Agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company issued a 12% Senior Secured Original Issue Discount Convertible Debenture (the “Debenture”) to LPC.
On July 11, 2018, the Company paid off the remaining amount due under the terms of this Debenture in the amount of $286,529.
For the three months ended March 31, 2018, the Company recorded $46,795 of interest expense related to the amortization of the debt discount related to the warrant features of the Debenture.
Convertible Debt consisted of:
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Other Liabilities |
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Other Liabilities | Other liabilities consisted of the following:
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Equity |
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Equity [Abstract] | |
Equity | On July 13, 2016, the Company amended its Certificate of Incorporation to increase the authorized shares of its common stock, $0.0001 par value, to 100,000,000 shares from 9,000,000 shares and increase the authorized shares of its preferred stock, $0.0001 par value, to 10,000,000 shares from 1,000,000 shares.
Common Stock At March 31, 2019 and December 31, 2018, the Company had 18,537,958 and 17,704,925, respectively, of shares of its common stock issued and outstanding.
Voting Each holder of common stock has one vote for each share held.
Stock Option Plan The Company’s board of directors and stockholders have adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which took effect on May 12, 2014. During the three months ended March 31, 2019 and 2018, the Company did not grant any stock options under the 2014 Plan.
Series A Convertible Preferred Stock At March 31, 2019 and December 31, 2018, there were no Series A Convertible Preferred Stock (“Series A Preferred”) outstanding. However, all terms of the Series A Preferred are still in effect.
Restricted Stock During the three months ended March 31, 2019, 102,583 restricted shares of common stock vested with a fair value of $296,285. 58,833 of these 102,583 shares having a fair value of $178,852 vested during the three months ended March 31, 2019 due to the Company dosing the first patients in the Company's Phase II study to investigate MS1819-SD in CF patients. 30,000 of these 102,583 shares having a fair value of $72,600 vested during the three months ended March 31, 2019 and have been issued to our directors as a part of Board compensation. 13,750 of these 102,583 shares having a fair value of $44,833 vested during the three months ended March 31, 2019 due to the terms of such grants.
During the three months ended March 31, 2019, the Company issued 27,102 shares of its common stock to a consultant as payment of $60,000 of accounts payable.
As of March 31, 2019, the Company had unrecognized restricted common stock expense of $438,528. $337,193 of this unrecognized expense will be recognized over the average remaining vesting term of the restricted common stock of 2.04 years. $101,335 of this unrecognized expense vests upon the enrollment of the first 30 patients in a CF trial. This milestone was not considered probable at March 31, 2019.
During the three months ended March 31, 2018, 61,500 shares of restricted common stock were granted or accrued to employees and consultants with a total value of $202,810. During the three months ended March 31, 2018, 66,917 restricted shares of common stock vested with a value of $222,310 of which an aggregate of 30,000 shares with a value of $94,200 have been issued to our directors as a part of Board compensation.
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Warrants |
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Warrants | In February 2019, as additional consideration for issuing convertible notes with ADEC and pursuant to a Warrant Amendment Agreement, the Company agreed to reduce the exercise price of certain outstanding warrants previously issued by the Company to ADEC and its affiliates, see Note 9.
Stock warrant transactions for the periods January 1 through March 31, 2019 and 2018 are as follows:
In January 2018, the Company offered certain warrant holders the opportunity to exercise their warrants at a reduced strike price of $2.50, and if so elected, would also have the opportunity to reprice other warrants that they continued to hold unexercised to $3.25. The offer, which was effective January 12, 2018, was for the repricing only and did not modify the life of the warrants. Warrant holders of approximately 503,000 shares exercised their warrants and had other warrants modified on approximately 197,000 shares, which resulted in a charge of approximately $429,000 in January 2018.
During the three months ended March 31, 2019 and 2018, no warrants were issued to non-employees.
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Stock-Based Compensation Plan |
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Stock-Based Compensation Plan | Under the 2014 Plan, the fair value of options granted is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the volatility of the common stock price and the assumed risk-free interest rate. The Company recognizes stock-based compensation expense for only those shares expected to vest over the requisite service period of the award. No compensation cost is recorded for options that do not vest and the compensation cost from vested options, whether forfeited or not, is not reversed.
During the three months ended March 31, 2019 and 2018, no stock options were granted. During the three months ended March 31, 2019, 244,500 options vested having a fair value of $511,335 and an intrinsic value of $0. 242,000 of these options valued at $501,666 vested due to the Company having its first CF patient dosed with MS1819-SD anywhere in the world, which was achieved by the dosing of the first patient in the OPTION Study. During the three months ended March 31, 2018, 7,500 options vested having a fair value of $29,018 and an intrinsic value of $0.
The expected term of the options is based on expected future employee exercise behavior. Volatility is based on the historical volatility of several public entities that are similar to the Company. The Company bases volatility this way because it does not have sufficient historical transactions in its own shares on which to solely base expected volatility. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The Company has not historically declared any dividends and does not expect to in the future.
The Company realized no income tax benefit from stock option exercises in each of the periods presented due to recurring losses and valuation allowances.
Stock option activity under the 2014 Plan is as follows:
635,067 shares of common stock were available for future issuance under the 2014 Plan as of March 31, 2019.
As of March 31, 2019, the Company did not have any unrecognized stock-based compensation expense.
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Agreements |
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Agreements | |
Agreements | Mayoly Agreement During the three months ended March 31, 2019 and 2018, the Company charged $403,020 and $125,986, respectively, to Mayoly under the JDLA that was in effect during both periods.
On March 27, 2019, the Company entered into the Mayoly APA pursuant to which the Company purchased substantially all rights, title and interest in and to MS1819-SD, see Recent Developments above.
INRA Agreement In February 2006, Mayoly and INRA TRANSFERT, on behalf of INRA and CNRS, entered into a Usage and Cross-Licensing Agreement granting Mayoly exclusive worldwide rights to exploit Yarrowia lipolytica and other lipase proteins based on their patents for use in humans. The INRA Agreement provides for the payment by Mayoly of royalties on net sales, subject to Mayoly’s right to terminate such obligation upon the payment of a lump sum specified in the agreement. Upon execution of the Mayoly APA, all rights, obligations and interests under the INRA Agreement were transferred to the Company.
TransChem Sublicense On August 7, 2017, the Company entered into a Sublicense Agreement with TransChem, Inc. (“TransChem”), pursuant to which TransChem granted the Company an exclusive license to patents and patent applications relating to Helicobacter pylori 5’methylthioadenosine nucleosidase inhibitors (the “Licensed Patents”) currently held by TransChem (the “Sublicense Agreement”). The Company may terminate the Sublicense Agreement and the licenses granted therein for any reason and without further liability on 60 days’ notice. Unless terminated earlier, the Sublicense Agreement will expire upon the expiration of the last Licensed Patents. Upon execution, the Company paid an upfront fee to TransChem and agreed to reimburse TransChem for certain expenses previously incurred in connection with the preparation, filing, and maintenance of the Licensed Patents. The Company also agreed to pay TransChem certain future periodic sublicense maintenance fees, which fees may be credited against future royalties. The Company may also be required to pay TransChem additional payments and royalties in the event certain performance-based milestones and commercial sales involving the Licensed Patents are achieved. The Licensed Patents will allow the Company to develop compounds for treating gastrointestinal and other infections which are specific to individual bacterial species. H.pylori bacterial infections are a major cause of chronic gastritis, peptic ulcer disease, gastric cancer and other diseases. No payments were made under this agreement in the three months ended March 31, 2019 and 2018.
Employment Agreements
Johan (Thijs) Spoor
On January 3, 2016, the Company entered into an employment agreement with its President and Chief Executive Officer, Johan Spoor. The employment agreement provides for a term expiring January 2, 2019. Either party may terminate Mr. Spoor’s employment at any time and for any reason, or for no reason. During the term and for a period of twelve (12) months thereafter, Mr. Spoor shall not engage in competition with the Company either directly or indirectly, in any manner or capacity.
The Company will pay Mr. Spoor a base salary of $350,000 per year, which automatically increased to $425,000 per year upon the consummation of the IPO which occurred on October 11, 2016. At the sole discretion of the board of directors or the compensation committee of the board, following each calendar year of employment, Mr. Spoor shall be eligible to receive an additional cash bonus based on his attainment of certain financial, clinical development, and/or business milestones to be established annually by the board of directors or the compensation committee.
Mr. Spoor was originally entitled to 380,000 10-year stock options pursuant to the 2014 Plan. In the first quarter of 2017, 100,000 options having a value of $386,900 were granted and expensed. On September 29, 2017, Mr. Spoor was granted 100,000 shares of restricted common stock subject to vesting conditions as follows: (i) 75% upon FDA acceptance of a U.S. IND application for MS1819-SD, and (ii) 25% upon the Company completing a Phase IIa clinical trial for MS1819-SD, in satisfaction of the Company’s obligation to issue the additional 280,000 options to Mr. Spoor described above, with an estimated fair value at the grant date of $425,000 to be expensed when the probability of these milestones can be determined. All of these shares vested and the $425,000 was expensed in the second and fourth quarters in 2018 due to the Company completing both milestones.
On June 28, 2018, Mr. Spoor was granted 200,000 shares of restricted common stock subject to vesting conditions as follows: (i) 50% shall vest in three equal installments beginning one year from the date of issuance, and (ii) the remaining 50% shall vest as follows: one-third shall vest upon U.S. acceptance of IND for MS1819-SD, one-third upon the first dosing of a CF patient with MS1819-SD anywhere in the world, and the remaining one-third upon enrollment of the first 30 patients in a CF trial. These restricted shares had an estimated fair value at the grant date of $608,000 to be expensed when the above milestones are probable. 8,333 shares with a fair value of $25,332 vested and was expensed in the three months ended March 31, 2019 due to being earned over that time. 33,333 shares with a fair value of $101,332 vested and was expensed in the three months ended March 31, 2019 due to the first dosing of CF patients with MS1819-SD anywhere in the world.
On June 28, 2018, the Board approved a 2017 annual incentive bonus pursuant to his employment agreement in the amount of $212,500.
Maged Shenouda
On September 26, 2017, the Company entered into an employment agreement with Maged Shenouda, a member of the Company’s Board of Directors, pursuant to which Mr. Shenouda serves as the Company’s Chief Financial Officer. Mr. Shenouda’s employment agreement provides for the issuance of stock options to purchase 100,000 shares of the Company’s common stock, issuable pursuant to the 2014 Plan. These options will vest as follows so long as Mr. Shenouda is serving as either Executive Vice-President of Corporate Development or as Chief Financial Officer (i) 75% upon FDA acceptance of a U.S. IND application for MS1819-SD, and (ii) 25% upon the Company completing a Phase IIa clinical trial for MS1819-SD. The option is exercisable for $4.39 per share and will expire on September 25, 2027. All of these shares vested and the $336,500 was expensed in 2018 due to the Company completing both milestones listed above in 2018.
On June 28, 2018, Mr. Shenouda was granted stock options to purchase 100,000 shares of the Company’s common stock, issuable pursuant to the 2014 Plan, subject to vesting conditions as follows: (i) 50% upon U.S. acceptance of an IND for MS1819-SD, and (ii) 50% upon the first CF patient doses with MS1819-SD anywhere in the world. These options had an estimated fair value at the grant date of $207,300 to be expensed when the above milestones are probable. 50,000 of these options having a fair value of $103,650 vested and was expensed in 2018 due to the FDA acceptance of the Company’s IND application for MS1819-SD. The remaining 50,000 options having a fair value of $103,650 vested and was expensed in the three months ended March 31, 2019 due to the first dosing of CF patients with MS1819-SD anywhere in the world.
On June 28, 2018, the Board approved a 2017 annual incentive bonus pursuant to his employment agreement in the amount of $82,500.
Dr. James E. Pennington
On May 28, 2018, the Company entered into an employment agreement with Dr. Pennington to serve as the Company’s Chief Medical Officer. The employment agreement with Dr. Pennington provides for a base annual salary of $250,000. In addition to his salary, Dr. Pennington is eligible to receive an annual milestone bonus, awarded at the sole discretion of the Board based on his attainment of certain financial, clinical development, and/or business milestones established annually by the Board or Compensation Committee. The employment agreement is terminable by either party at any time. In the event of termination by the Company other than for cause, Dr. Pennington is entitled to three months’ severance payable over such period. In the event of termination by the Company other than for cause in connection with a Change of Control, Dr. Pennington will receive six months’ severance payable over such period.
On June 28, 2018, Mr. Pennington was granted stock options to purchase 75,000 shares of the Company’s common stock, issuable pursuant to the 2014 Plan, subject to vesting conditions as follows: (i) 50% upon U.S. acceptance of an IND for MS1819-SD, and (ii) 50% upon the first CF patient doses with MS1819-SD anywhere in the world. These options had an estimated fair value at the grant date of $155,475 to be expensed when the above milestones are probable. 37,500 of these options vested and $77,738 was expensed in 2018 due to the FDA acceptance of the Company’s IND application for MS1819-SD in 2018. 37,500 of these options having a fair value of $77,738 vested and was expensed in the three months ended March 31, 2019 due to the first dosing of CF patients with MS1819-SD anywhere in the world. |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
The Company adopted ASU 2016-02, Leases, as of January 1, 2019, using the modified retrospective approach. Prior year financial statements were not recast under the new standard.
The Company leases its office and research facilities under operating leases which are subject to various rent provisions and escalation clauses expiring at various dates through 2020. The escalation clauses are indeterminable and considered not material and have been excluded from minimum future annual rental payments.
Lease expense amounted to $50,655 and $31,227, respectively, in the three months ended March 31, 2019 and 2018.
The weighted-average remaining lease term and weighted-average discount rate under operating leases at March 31, 2019 are:
Maturities of operating lease liabilities at March 31, 2019 are as follows:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company is subject to taxation at the federal level in both the United States and France and at the state level in the United States. At March 31, 2019 and December 31, 2018, the Company had no tax provision for either jurisdiction.
At March 31, 2019 and December 31, 2018, the Company had gross deferred tax assets of approximately $13,650,000 and $12,490,000, respectively. As the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of approximately $13,650,000 and $12,490,000, respectively, has been established at March 31, 2019 and December 31, 2018. The change in the valuation allowance in the three months ended March 31, 2019 and 2018 was $1,160,000 and $925,000, respectively.
At March 31, 2019, the Company has gross net operating loss (“NOL”) carry-forwards for U.S. federal and state income tax purposes of approximately $23,983,000 and $24,058,000, respectively. The NOL’s expire between the years 2034 and 2039. The Company’s ability to use its NOL carryforwards may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended. An ownership change generally occurs if certain stockholders increase their aggregate percentage ownership of a corporation’s stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change.
At March 31, 2019 and December 31, 2018, the Company had approximately $16,113,000 and $15,406,000, respectively, in net operating losses which it can carryforward indefinitely to offset against future French income.
At March 31, 2019 and December 31, 2018, the Company had taken no uncertain tax positions that would require disclosure under ASC 740, Accounting for Income Taxes.
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Net Loss per Common Share |
3 Months Ended |
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Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss per Common Share | Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.
At March 31, 2019, diluted net loss per share did not include the effect of 3,112,715 shares of common stock issuable upon the exercise of outstanding warrants, 416,000 shares of restricted stock not yet issued, and 994,000 shares of common stock issuable upon the exercise of outstanding options as their effect would be antidilutive during the periods prior to conversion.
At March 31, 2018, diluted net loss per share did not include the effect of 2,868,315 shares of common stock issuable upon the exercise of outstanding warrants, 545,000 shares of common stock issuable upon the exercise of outstanding options, and 74,000 shares of common stock issuable upon the conversion of convertible debt as their effect would be antidilutive during the periods prior to conversion.
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Related Party Transactions |
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Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | During the year ended December 31, 2015, the Company employed the services of JIST Consulting (“JIST”), a company controlled by Johan (Thijs) Spoor, the Company’s current Chief Executive Officer and president, as a consultant for business strategy, financial modeling, and fundraising. Included in accounts payable at both March 31, 2019 and December 31, 2018 is $478,400 for JIST relating to Mr. Spoor’s services. Mr. Spoor received no other compensation from the Company other than as specified in his employment agreement.
During the year ended December 31, 2015, the Company's President, Christine Rigby-Hutton, was employed through Rigby-Hutton Management Services (“RHMS”). Ms. Rigby-Hutton resigned from the Company effective April 20, 2015. Included in accounts payable at both March 31, 2019 and December 31, 2018 is $38,453 for RHMS for Ms. Rigby-Hutton’s services.
Starting on October 1, 2016 until his appointment as the Company’s Chief Financial Officer on September 25, 2017, the Company used the services of Maged Shenouda as a financial consultant. Included in accounts payable at March 31, 2019 and December 31, 2018 is $10,000 and $50,000, respectively, for Mr. Shenouda’s services.
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Subsequent Events |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | April 2019 Public Offering of Common Stock
On April 2, 2019, the Company completed a public offering of 1,294,930 shares of its common stock at a public offering price of $2.13 per share, resulting net proceeds of approximately $2,500,000, after deducting the selling agent fee payable to Alexander Capital, L.P. (“Alexander Capital”) and other offering expenses payable by the Company (the “April 2019 Public Offering”). The April 2019 Public Offering was completed pursuant to the terms of a Selling Agent Agreement executed by the Company and Alexander Capital on April 1, 2019. The April 2019 Public Offering was completed pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-225935) and the prospectus supplement was filed on May 1, 2019.
In connection with the April 2019 Public Offering, the Company entered into a Selling Agent Agreement with Alexander Capital, pursuant to which the Company paid Alexander Capital (i) a cash fee equal to 7% of the aggregate gross proceeds of the April 2019 Public Offering, and (ii) to issue Alexander Capital warrants to purchase 38,848 shares of the Company’s common stock (the “Selling Agent Warrants”), an amount equal to 3% of the aggregate number of shares of the Company’s common stock sold in the April 2019 Public Offering. The Company also agreed to reimburse Alexander Capital for its expenses in connection with the April 2019 Public Offering on a non-accountable basis in an amount equal to 1% of the gross proceeds of the Offering and up to $50,000 for other accountable expenses. The Selling Agent Warrants will become exercisable one year from the date of issuance, expire on April 2, 2024 and have an exercise price of $2.55 per share.
May 2019 Public Offering of Common Stock
In May 2019, the Company completed a public offering of 1,227,167 shares of its common stock at a public offering price of $2.35 per share, resulting in net proceeds of approximately $2.55 million, after deducting the selling agent fee payable to Alexander Capital and other offering expenses payable by the Company (the “May 2019 Public Offering”). The May 2019 Public Offering was completed pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-225935) and the prospectus supplement was filed on May 9, 2019.
In connection with the May 2019 Public Offering, the Company entered into a Selling Agent Agreement with Alexander Capital, pursuant to which the Company paid to Alexander Capital (i) a cash fee equal to 7.0% of the aggregate gross proceeds of the May 2019 Public Offering, and (ii) issued to Alexander Capital 36,815 Selling Agent Warrants, an amount equal to 3.0% of the aggregate number of shares of common stock sold in the May 2019 Public Offering. The Company also reimbursed Alexander Capital for its expenses on a non-accountable basis in an amount equal to 1.0% of the gross proceeds of the May 2019 Offering and up to $50,000 for other accountable expenses. The Selling Agent Warrants will become exercisable one year from the date of issuance, expire on May 9, 2024, and have an exercise price of $2.82 per share.
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Significant Accounting Policies and Recent Accounting Pronouncements (Policies) |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates | The accompanying consolidated financial statements are prepared in conformity with U.S. GAAP and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements (including goodwill, intangible assets and contingent consideration), and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.
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Concentrations | Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally-insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At March 31, 2019 and December 31, 2018, the Company had approximately $133,984 and $754,261, respectively, in one account in the U.S. in excess of these limits. The Company has not experienced any losses to date resulting from this practice.
The Company also has exposure to foreign currency risk as its subsidiary in France has a functional currency in Euros.
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Leases | Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, "Leases." This ASU requires substantially all leases be recorded on the balance sheet as right of use assets and lease obligations. The Company adopted the ASU using a modified retrospective adoption method at January 1, 2019, as outlined in ASU No. 2018-11, "Leases - Targeted Improvements." Under this method of adoption, there is no impact to the comparative condensed consolidated statement of operations and condensed consolidated balance sheet. The Company determined that there was no cumulative-effect adjustment to beginning retained earnings on the consolidated balance sheet. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carryforward of historical lease classifications. Adoption of this standard did not materially impact the Company’s results of operations and had no impact on the consolidated statement of cash flows.
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Equity-Based Payments to Non-Employees | Equity-based payments to non-employees are measured at fair value on the grant date per ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
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Research and Development | Research and development costs are charged to operations when incurred and are included in operating expenses. Research and development costs consist principally of compensation of employees and consultants that perform the Company’s research activities, the fees paid to maintain the Company’s licenses, and the payments to third parties for clinical trial and additional product development and testing.
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Foreign Currency Translation | For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities are translated to U.S. dollars, which is the functional currency, at period end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments are accumulated in a separate component of shareholders’ equity.
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Recent Accounting Pronouncements | In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill impairment. The new guidance eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by reducing the goodwill balance by the difference between the carrying value and the reporting unit’s fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019. The Company believes that the adoption of this pronouncement will not have an impact on the Company’s measurement of goodwill impairment.
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Fair Value Disclosures (Tables) |
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Property, Equipment, and Leasehold Improvements (Tables) |
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Intangible Assets and Goodwill (Tables) |
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Accounts Payable and Accrued Expenses (Tables) |
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Original Issue Discounted Convertible Notes and Warrants (Tables) |
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Other Liabilities (Tables) |
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Warrants (Tables) |
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Warrants by exercise price |
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Stock-Based Compensation Plan (Tables) |
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity |
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||
Operating lease information |
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|||||||||||||||||||||||||
Maturities of operating lease liabilities |
|
The Company and Basis of Presentation (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
State of incorporation | Delaware | |
Date of incorporation | Jan. 30, 2014 | |
Accumulated deficit | $ (52,177,801) | $ (47,517,046) |
Significant Accounting Policies and Recent Accounting Pronouncements (Details Narrative) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounting Policies [Abstract] | ||
Cash in excess of FDIC limit | $ 133,984 | $ 754,261 |
Fair Value Disclosures (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Cash | $ 413,858 | $ 1,114,343 |
Other receivables | 2,051,028 | 3,172,676 |
Notes payable | 160,584 | 255,032 |
Convertible debt | 1,728,442 | 0 |
Level 1 | ||
Cash | 0 | 0 |
Other receivables | 0 | 0 |
Notes payable | 0 | 0 |
Convertible debt | 0 | |
Level 2 | ||
Cash | 413,858 | 1,114,343 |
Other receivables | 0 | 0 |
Notes payable | 0 | 0 |
Convertible debt | 0 | |
Level 3 | ||
Cash | 0 | 0 |
Other receivables | 2,051,028 | 3,172,676 |
Notes payable | 160,584 | $ 255,032 |
Convertible debt | $ 1,728,442 |
Other Receivables (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Receivables [Abstract] | ||
R&D tax credits | $ 2,038,311 | $ 2,162,373 |
Other | 12,717 | 1,010,303 |
Other receivables | $ 2,051,028 | $ 3,172,676 |
Property, Equipment, and Leasehold Improvements (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, equipment and leasehold improvements, gross | $ 345,622 | $ 332,248 |
Less accumulated depreciation | (220,487) | (203,394) |
Property, equipment and leasehold improvements, net | 125,135 | 128,854 |
Laboratory Equipment | ||
Property, equipment and leasehold improvements, gross | 193,661 | 75,417 |
Computer Equipment | ||
Property, equipment and leasehold improvements, gross | 78,986 | 37,262 |
Office Equipment | ||
Property, equipment and leasehold improvements, gross | 37,264 | 190,406 |
Leasehold Improvements | ||
Property, equipment and leasehold improvements, gross | $ 35,711 | $ 29,163 |
Property, Equipment, and Leasehold Improvements (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 17,114 | $ 14,763 |
Intangible Assets and Goodwill (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Patents | $ 3,802,745 | $ 0 |
Common stock issued at signing to Mayoly | ||
Patents | 1,740,959 | |
Due to Mayoly at 12/31/19 | ||
Patents | 449,280 | |
Due to Mayoly at 12/31/20 | ||
Patents | 393,120 | |
Assumed Mayoly liabilties and forgiveness of Mayoly debt | ||
Patents | $ 1,219,386 |
Intangible Assets and Goodwill (Details 1) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
License Agreements | ||
Intangible assets, gross | $ 0 | $ 416,600 |
Less accumulated amortization | 0 | (157,671) |
Intangible assets, net | 0 | 258,929 |
In Process Research and Development | ||
Intangible assets, gross | 0 | 3,398,702 |
Less accumulated amortization | 0 | (3,087,154) |
Intangible assets, net | 0 | 311,548 |
Patents | ||
Intangible assets, gross | 3,802,745 | 0 |
Less accumulated amortization | 0 | 0 |
Intangible assets, net | $ 3,802,745 | $ 0 |
Intangible Assets and Goodwill (Details 2) |
Mar. 31, 2019
USD ($)
|
---|---|
Amortization expense | |
2019 | $ 395,661 |
2020 | 527,548 |
2021 | 527,548 |
2022 | 527,548 |
2023 | $ 527,548 |
Intangible Assets and Goodwill (Details 3) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning | $ 1,924,830 | $ 2,016,240 |
Foreign currency translation | (37,472) | (91,410) |
Goodwill, ending | $ 1,887,358 | $ 1,924,830 |
Intangible Assets and Goodwill (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 561,289 | $ 191,681 |
Accounts Payable and Accrued Expenses (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Payables and Accruals [Abstract] | ||
Trade payables | $ 2,243,574 | $ 1,532,110 |
Accrued expenses | 69,930 | 285,061 |
Accrued payroll | 267,205 | 253,225 |
Total accounts payable and accrued expenses | $ 2,580,709 | $ 2,070,396 |
Original Issue Discounted Convertible Notes and Warrants (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Disclosure [Abstract] | ||
Convertible debt, gross | $ 2,000,000 | $ 0 |
Unamortized debt discount - revalued warrants | (296,216) | 0 |
Convertible debt, net | $ 1,728,442 | $ 0 |
Other Liabilities (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Liabilities [Abstract] | ||
Due to Mayoly, current | $ 449,280 | $ 0 |
Lease liabilities, current | 194,250 | 0 |
Other liabilities, current | 643,530 | 0 |
Due to Mayoly, long-term | 393,120 | 0 |
Lease liabilities, long-term | 93,372 | 0 |
Other liabilities, long-term | $ 486,492 | $ 0 |
Equity (Details Narrative) - shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Equity [Abstract] | ||
Common stock shares, outstanding | 18,537,958 | 17,704,925 |
Warrants (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Warrants issued and exercisable, beginning | 3,112,715 | 3,371,385 |
Granted | 0 | 0 |
Expired | 0 | 0 |
Exercised | 0 | (503,070) |
Warrants issued and exercisable, ending | 3,112,715 | 2,868,315 |
Exercise price granted | $ .00 | $ .00 |
Exercise price expired | .00 | .00 |
Exercise price exercised | .00 | 2.50 |
Weighted average exercise price, beginning | 4.83 | 5.28 |
Weighted average exercise price, granted | .00 | .00 |
Weighted average exercise price warrants, expired | .00 | .00 |
Weighted average exercise price warrants, exercised | .00 | 2.50 |
Weighted average exercise price, ending | 4.83 | 5.28 |
Minimum | ||
Exercise price outstanding, beginning | 2.55 | 3.17 |
Exercise price outstanding, ending | 1.50 | 3.17 |
Maximum | ||
Exercise price outstanding, beginning | 7.37 | 7.37 |
Exercise price outstanding, ending | $ 7.37 | $ 7.37 |
Leases (Details) |
Mar. 31, 2019 |
---|---|
Leases [Abstract] | |
Weighted-average remaining lease term | 1 year 6 months |
Weighted-average discount rate | 6.00% |
Leases (Details 1) |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 152,100 |
2020 | 154,448 |
Total lease payments | 306,548 |
Less: imputed interest | (18,926) |
Present value of lease liabilities | $ 287,622 |
Leases (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Leases [Abstract] | ||
Lease expense | $ 50,655 | $ 31,227 |
Income Taxes (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Gross deferred tax asset | $ 13,650,000 | $ 12,490,000 | |
Deferred tax asset valuation allowance | (13,650,000) | (12,490,000) | |
Net operating loss carry-forwards | 16,113,000 | $ 15,406,000 | |
Change in valuation allowance | $ 1,160,000 | $ 925,000 |
Net Loss per Common Share (Details Narrative) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Warrants | ||
Anti-dilutive shares excluded from earnings per share | 2,112,715 | 2,868,315 |
Stock Option | ||
Anti-dilutive shares excluded from earnings per share | 416,000 | 545,000 |
Convertible Debt | ||
Anti-dilutive shares excluded from earnings per share | 994,000 | 74,000 |
Related Party Transactions (Details Narrative) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts payable | $ 2,580,709 | $ 2,070,396 |
JIST | ||
Accounts payable | 478,400 | 478,400 |
RHMS | ||
Accounts payable | 38,453 | 38,453 |
Consultant | ||
Accounts payable | $ 10,000 | $ 50,000 |
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