Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 8 – STOCKHOLDERS’ EQUITY

Common Stock – At the Market Offerings

During the year ended December 31, 2020, the Company issued and sold 178,600 shares of common stock at an average price of $5.45 per share under the 2020 ATM agreement. The aggregate net proceeds were approximately $0.8 million after BTIG’s commission and other offering expenses. 

During the year ended December 31, 2021, the Company sold 1,439,480 shares of its common stock at an average price of $20.17 per share under the 2020 ATM agreement. The aggregate net proceeds were approximately $28.4 million after BTIG’s commission and other offering expenses. 

During the year ended December 31, 2021, the Company sold 713,192 shares of its common stock at an average price of $21.73 per share under the 2021 ATM agreement. The aggregate net proceeds were approximately $14.9 million after BTIG’s commission and other offering expenses. 

Registered Direct Offering

During July 2021, the Company completed a registered direct offering whereby the Company sold 1,818,182 shares of its common stock to investors for gross proceeds of $38.0 million (net proceeds of $36.9 million).

Underwritten Stock Offering

During July 2020, the Company completed an underwritten public offering in which it sold 2,500,000 shares of common stock at a public offering price of $10.00 per share. The 2,500,000 shares sold included the full exercise of the underwriters’ option to purchase 326,086 shares at a price of $10.00 per share. Aggregate net proceeds from the underwritten public offering were $23.1 million, net of approximately $1.9 million in underwriting discounts and commissions and offering expenses.

Issuance of shares to Xencor

On June 10, 2021, the Company and Xencor entered into an Option Cancellation Agreement whereby the Company issued 192,533 shares of its common stock to Xencor (See Note 4).

Lincoln Park

On May 15, 2019, the Company entered into both a securities purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $20.0 million in shares of the Company’s common stock, subject to certain limitations, over the 24-month period that commenced on May 15, 2019. During the year ended December 31, 2020, the Company issued 196,000 shares of its common stock to Lincoln Park for approximately $1.0 million of cash.

During April 2021, the Company terminated the securities purchase agreement with Lincoln Park.

Purchase and retirement of common stock

During January 2020, the Company purchased and cancelled 220,000 shares of its common stock from a shareholder in exchange for $1,012,000 of cash. Immediately following the purchase, the investor owned less than 10% of the outstanding common stock of the Company.

Common Stock Issued for Services

During July 2020, the Company granted a consultant 50,000 fully vested warrants with a 5-year term, of which 25,000 warrants had an exercise price of $5.50 per share and 25,000 warrants had an exercise price of $10.00 per share. The fair value of these warrants was $356,874 based on the Black-Scholes Option Pricing Model and was recorded within general and administrative expense. The assumptions used for these warrants consist of the exercise prices, expected dividends of 0%, expected volatility of 111.67% based on the trading history of similar companies, risk-free rate of 0.30% based on the applicable US Treasury bill rate and an expected life of 5.0 years. During July 2020, the Company issued the consultant 20,000 shares of common stock and cancelled the 50,000 warrants. The 20,000 shares were issued from the Company’s 2019 Incentive Stock Plan and had a fair value of approximately $230,000 based on the market value of the Company’s common stock on the grant date. The Company accounted for the exchange of the warrants for shares of common stock as a modification and recorded no additional expense in connection with the exchange as the fair value of warrants exceeded the fair value of the shares issued.

Settlement

In 2016, the Company entered into a settlement agreement whereby the Company agreed to issue 33,335 shares of the Company’s common stock to an individual to settle a claim in full. During 2020, the Company issued the 33,335 shares.

Stock options

During September 2020, the Company granted an employee an option to purchase 40,000 shares of its common stock pursuant to the 2019 Incentive Stock Plan. The stock options vest over four years and had a fair value of $339,731 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.46% based on the applicable US Treasury bill rate (2) expected life of 6.25 years, (3) expected volatility of approximately 106% based on the trading history of similar companies, and (4) zero expected dividends.

During 2021, the Company granted various employees, consultants and directors options to purchase 823,000 shares of common stock pursuant to the 2021, 2019 and 2017 Incentive Stock Plans. The stock options vest over zero to four years and had a fair value of $14,027,000 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.78-1.49%% based on the applicable US Treasury bill rate (2) expected life of 6.00-10.00 years, (3) expected volatility of approximately 105%-114% based on the trading history of similar companies, and (4) zero expected dividends.

The following table summarizes stock option activity:

(in thousands, except share and per share amounts)	Number of Shares			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2020		3,417,000		$	5.77		9.03		-
Options granted		40,000		$	10.38		-		-
Options exercised		-		$	-		-		-
Options cancelled		-		$	-		-		-
Outstanding at January 1, 2021		3,457,000		$	5.82		8.05		-
Options granted		823,000		$	20.63		10.0		-
Options exercised		(183,000	)	$	6.21		-		-
Options cancelled		-		$	-		-		-
Outstanding at December 31, 2021		4,097,000		$	8.67		7.21	$	14,414
Exercisable at December 31, 2021		2,743,760		$	6.45		6.91	$	10,890

The Company received $1,135,000 in cash proceeds from exercises of stock options during the year ended December 31, 2021.

During the years ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $4,796,000 and $2,755,000, respectively, related to stock options. As of December 31, 2021, there was $13,308,000 of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.52 years.

Warrants

The Company issued 45,386 warrants to the Company’s lenders upon obtaining its loan in June 2021. The warrants have a 10-year term and an exercise price of $14.05. The warrants have a fair value of approximately $0.6 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.45% based on the applicable US Treasury bill rate (2) expected life of 10.0 years, (3) expected volatility of approximately 103% based on the trading history of similar companies, and (4) zero expected dividends. At December 31, 2021, the intrinsic value of these warrants is $0.

In connection with the Company’s initial public offering in February 2019, the Company issued warrants to the placement agents to purchase the Company’s common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023. During the year ended December 31, 2021, 6,147 of these warrants were exercised on a cashless basis in exchange for 3,758 shares of common stock. At December 31, 2021, 28,688 of these warrants are outstanding and the intrinsic value is $17,000.

On June 30, 2017, the Company issued fully vested warrants to purchase 31,667 shares of the Company’s common stock to a third party in conjunction with the common stock sold for cash. The warrants have a $1.50 exercise price and expire on June 30, 2022. During the year ended December 31, 2021, 11,875 of these warrants were exercised for cash proceeds of $18,000. At December 31, 2021, 19,792 of these warrants are outstanding, with an intrinsic value of $172,000.

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the years ended December 31, 2021 and 2020 respectively:

	Year Ended December 31, 2021		Year Ended December 31, 2020
Research and development	$	1,651,000	$	583,000
General and administrative		3,145,000		2,529,000
Total	$	4,796,000	$	3,112,000

Shareholder Rights Agreement

On December 30, 2020, the Board of Directors (the “Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business on January 11, 2021. When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of $300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board. The Rights Agreement was scheduled to expire on December 30, 2021 but was extended until December 30, 2022 by the Board.

Preferred Stock

In 2020, the Company designated 45,000 shares of its preferred stock with par value of $0.001 per share as Series A Junior Participating Preferred Stock. The remaining 9,955,000 shares of preferred stock with par value of $0.001 remain undesignated. None of the preferred shares were issued and outstanding at December 31, 2021 and 2020.