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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
.
Commission File Number:
001-36332
ALDEYRA THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
|
|
|
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Delaware
|
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20-1968197
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|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
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131 Hartwell Avenue,
Suite 320
|
|
|
|
Lexington,
MA
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02421
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|
(Address of principal executive offices)
|
|
(Zip Code)
|
(781)
761-4904
(Registrant’s telephone number, including area code)
Securities registered pursuant to 12(b) of the Act:
|
|
|
|
Title of each class
|
Trading Symbol(s)
|
Name of exchange on which registered
|
|
Common Stock, $0.001 par value per share
|
ALDX
|
The Nasdaq Stock Market LLC
|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes
☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer a
smaller reporting company or an emerging growth company. See the
definitions of the “large accelerated filer,” “accelerated filer,”
“non-accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
|
|
|
Emerging growth company
|
☐
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of November 8, 2022 , there were
58,560,078
shares of the registrant’s common stock issued and
outstanding.
Aldeyra Therapeutics, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 2022
INDEX
2
Part I – FINANCIAL
INFORMATION
Item 1. Condensed Consolidated Financial
Statements
ALDEYRA THERAPEUTICS, INC.
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2022
|
|
|
December 31,
|
|
|
|
|
(unaudited)
|
|
|
2021
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
107,150,541
|
|
|
$
|
104,790,989
|
|
|
Cash equivalent - reverse repurchase agreements
|
|
|
21,500,000
|
|
|
|
125,000,000
|
|
|
Marketable securities
|
|
|
56,678,860
|
|
|
|
—
|
|
|
Prepaid expenses and other current assets
|
|
|
4,153,721
|
|
|
|
2,961,781
|
|
|
Total current assets
|
|
|
189,483,122
|
|
|
|
232,752,770
|
|
|
Right-of-use assets
|
|
|
181,943
|
|
|
|
351,863
|
|
|
Fixed assets, net
|
|
|
26,660
|
|
|
|
32,487
|
|
|
Total assets
|
|
$
|
189,691,725
|
|
|
$
|
233,137,120
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,306,926
|
|
|
$
|
1,019,702
|
|
|
Accrued expenses
|
|
|
10,254,451
|
|
|
|
10,523,353
|
|
|
Current portion of long-term debt
|
|
|
12,449,058
|
|
|
|
—
|
|
|
Current portion of operating lease liabilities
|
|
|
184,599
|
|
|
|
229,607
|
|
|
Total current liabilities
|
|
|
24,195,034
|
|
|
|
11,772,662
|
|
|
Operating lease liabilities, long-term
|
|
|
—
|
|
|
|
125,232
|
|
|
Long-term debt, net of current portion
|
|
|
3,303,042
|
|
|
|
15,503,703
|
|
|
Total liabilities
|
|
|
27,498,076
|
|
|
|
27,401,597
|
|
|
Commitments and contingencies (Notes 13, 14, and
15)
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value,
15,000,000 shares
authorized,
none
issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.001 par
value;
150,000,000 authorized
and
58,560,078
and
58,081,215 shares
issued and outstanding, respectively
|
|
|
58,560
|
|
|
|
58,081
|
|
|
Additional paid-in capital
|
|
|
506,235,298
|
|
|
|
500,369,444
|
|
|
Accumulated other comprehensive loss
|
|
|
(285,733
|
)
|
|
|
—
|
|
|
Accumulated deficit
|
|
|
(343,814,476
|
)
|
|
|
(294,692,002
|
)
|
|
Total stockholders’ equity
|
|
|
162,193,649
|
|
|
|
205,735,523
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
189,691,725
|
|
|
$
|
233,137,120
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
3
ALDEYRA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
11,539,620
|
|
|
$
|
12,894,344
|
|
|
$
|
38,344,594
|
|
|
$
|
32,095,132
|
|
|
General and administrative
|
|
|
3,244,936
|
|
|
|
2,546,807
|
|
|
|
10,638,602
|
|
|
|
8,720,161
|
|
|
Loss from operations
|
|
|
(14,784,556
|
)
|
|
|
(15,441,151
|
)
|
|
|
(48,983,196
|
)
|
|
|
(40,815,293
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
648,242
|
|
|
|
59,306
|
|
|
|
1,094,001
|
|
|
|
122,732
|
|
|
Interest expense
|
|
|
(416,917
|
)
|
|
|
(413,110
|
)
|
|
|
(1,233,279
|
)
|
|
|
(1,329,166
|
)
|
|
Total other income (expense), net
|
|
|
231,325
|
|
|
|
(353,804
|
)
|
|
|
(139,278
|
)
|
|
|
(1,206,434
|
)
|
|
Net loss
|
|
$
|
(14,553,231
|
)
|
|
$
|
(15,794,955
|
)
|
|
$
|
(49,122,474
|
)
|
|
$
|
(42,021,727
|
)
|
|
Net loss per share - basic and diluted
|
|
$
|
(0.25
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(0.80
|
)
|
|
Weighted average common shares outstanding - basic and
diluted
|
|
|
58,457,863
|
|
|
|
58,019,099
|
|
|
|
58,352,991
|
|
|
|
52,688,846
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
4
ALDEYRA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
Net loss
|
|
$
|
(14,553,231
|
)
|
|
$
|
(15,794,955
|
)
|
|
$
|
(49,122,474
|
)
|
|
$
|
(42,021,727
|
)
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on marketable securities, net of
tax
|
|
|
30
|
|
|
|
—
|
|
|
|
(285,733
|
)
|
|
|
—
|
|
|
Total other comprehensive gain (loss)
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
(285,733
|
)
|
|
$
|
—
|
|
|
Comprehensive loss
|
|
$
|
(14,553,201
|
)
|
|
$
|
(15,794,955
|
)
|
|
$
|
(49,408,207
|
)
|
|
$
|
(42,021,727
|
)
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
5
ALDEYRA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
Common Stock
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in Capital
|
|
|
Other
Comprehensive
Income/(Loss),
net of tax
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders'
Equity
|
|
|
Balance, December 31, 2021
|
|
|
58,081,215
|
|
|
$
|
58,081
|
|
|
$
|
500,369,444
|
|
|
$
|
—
|
|
|
$
|
(294,692,002
|
)
|
|
$
|
205,735,523
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
4,646,241
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,646,241
|
|
|
Release of restrictions on Helio
founders’ shares
|
|
|
10,890
|
|
|
|
11
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common stock, exercise
of stock options
|
|
|
236,962
|
|
|
|
237
|
|
|
|
1,123,190
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,123,427
|
|
|
Issuance of common stock, employee
stock purchase plan
|
|
|
28,485
|
|
|
|
29
|
|
|
|
96,636
|
|
|
|
—
|
|
|
|
—
|
|
|
|
96,665
|
|
|
Issuance of common stock, vested
restricted stock units
|
|
|
202,526
|
|
|
|
202
|
|
|
|
(202
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
(285,733
|
)
|
|
|
|
|
|
(285,733
|
)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,122,474
|
)
|
|
|
(49,122,474
|
)
|
|
Balance, September 30, 2022
|
|
|
58,560,078
|
|
|
$
|
58,560
|
|
|
$
|
506,235,298
|
|
|
$
|
(285,733
|
)
|
|
$
|
(343,814,476
|
)
|
|
$
|
162,193,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
38,667,491
|
|
|
$
|
38,667
|
|
|
$
|
296,385,619
|
|
|
$
|
—
|
|
|
$
|
(236,915,728
|
)
|
|
$
|
59,508,558
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
5,186,689
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,186,689
|
|
|
Release of restrictions on Helio
founders’ shares
|
|
|
106,182
|
|
|
|
106
|
|
|
|
(106
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common stock in connection
with Helio Vision, Inc. acquisition milestone
|
|
|
246,562
|
|
|
|
247
|
|
|
|
2,499,744
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,499,991
|
|
|
Issuance of common stock, net of
issuance costs
|
|
|
18,091,947
|
|
|
|
18,092
|
|
|
|
189,793,519
|
|
|
|
—
|
|
|
|
—
|
|
|
|
189,811,611
|
|
|
Issuance of common stock, exercise
of stock options
|
|
|
634,214
|
|
|
|
634
|
|
|
|
4,622,617
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,623,251
|
|
|
Issuance of common stock, employee
stock purchase plan
|
|
|
12,092
|
|
|
|
12
|
|
|
|
61,517
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61,529
|
|
|
Issuance of common stock, vested
restricted stock units
|
|
|
286,944
|
|
|
|
287
|
|
|
|
(287
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(42,021,727
|
)
|
|
|
(42,021,727
|
)
|
|
Balance, September 30, 2021
|
|
|
58,045,432
|
|
|
$
|
58,045
|
|
|
$
|
498,549,312
|
|
|
$
|
—
|
|
|
$
|
(278,937,455
|
)
|
|
$
|
219,669,902
|
|
6
ALDEYRA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
Common Voting Stock
|
|
|
|
|
|
Accumulated
Other
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in Capital
|
|
|
Comprehensive
Income/(Loss),
net of tax
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders'
Equity
|
|
|
Balance, June 30, 2022
|
|
|
58,301,491
|
|
|
$
|
58,301
|
|
|
$
|
503,517,715
|
|
|
$
|
(285,763
|
)
|
|
$
|
(329,261,245
|
)
|
|
$
|
174,029,008
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,521,074
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,521,074
|
|
|
Issuance of common stock, exercise
of stock options
|
|
|
236,962
|
|
|
|
237
|
|
|
|
1,123,190
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,123,427
|
|
|
Issuance of common stock, employee
stock purchase plan
|
|
|
21,625
|
|
|
|
22
|
|
|
|
73,319
|
|
|
|
—
|
|
|
|
—
|
|
|
|
73,341
|
|
|
Other comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30
|
|
|
|
—
|
|
|
|
30
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,553,231
|
)
|
|
|
(14,553,231
|
)
|
|
Balance, September 30, 2022
|
|
|
58,560,078
|
|
|
$
|
58,560
|
|
|
$
|
506,235,298
|
|
|
$
|
(285,733
|
)
|
|
$
|
(343,814,476
|
)
|
|
$
|
162,193,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021
|
|
|
57,997,345
|
|
|
$
|
57,997
|
|
|
$
|
496,764,448
|
|
|
$
|
—
|
|
|
$
|
(263,142,500
|
)
|
|
$
|
233,679,945
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,721,134
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,721,134
|
|
|
Release of restrictions on Helio
founders’ shares
|
|
|
35,784
|
|
|
|
36
|
|
|
|
(36
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common stock, net of
issuance costs
|
|
|
2,997
|
|
|
|
3
|
|
|
|
12,121
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,124
|
|
|
Issuance of common stock,
exercise of stock options
|
|
|
9,306
|
|
|
|
9
|
|
|
|
51,645
|
|
|
|
—
|
|
|
|
—
|
|
|
|
51,654
|
|
|
Other comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,794,955
|
)
|
|
|
(15,794,955
|
)
|
|
Balance, September 30, 2021
|
|
|
58,045,432
|
|
|
$
|
58,045
|
|
|
$
|
498,549,312
|
|
|
$
|
—
|
|
|
$
|
(278,937,455
|
)
|
|
$
|
219,669,902
|
|
7
ALDEYRA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(49,122,474
|
)
|
|
$
|
(42,021,727
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
5,467,684
|
|
|
|
6,123,554
|
|
|
Non-cash interest expense
|
|
|
248,397
|
|
|
|
326,672
|
|
|
Net amortization of premium on debt securities available for
sale
|
|
|
(26,380
|
)
|
|
|
—
|
|
|
Depreciation and amortization expense
|
|
|
192,064
|
|
|
|
202,909
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(1,191,940
|
)
|
|
|
(202,304
|
)
|
|
Accounts payable
|
|
|
287,224
|
|
|
|
86,294
|
|
|
Accrued expenses and other liabilities
|
|
|
(1,260,585
|
)
|
|
|
4,506,394
|
|
|
Net cash used in operating activities
|
|
|
(45,406,010
|
)
|
|
|
(30,978,208
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Acquisitions of fixed assets
|
|
|
(16,317
|
)
|
|
|
(7,806
|
)
|
|
Purchases of marketable securities
|
|
|
(92,938,213
|
)
|
|
|
—
|
|
|
Sales and maturities of marketable securities
|
|
|
36,000,000
|
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
|
(56,954,530
|
)
|
|
|
(7,806
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock, net of issuance
costs
|
|
|
—
|
|
|
|
189,811,611
|
|
|
Proceeds from exercise of stock options
|
|
|
1,123,427
|
|
|
|
4,623,251
|
|
|
Proceeds from employee stock purchase plan
|
|
|
96,665
|
|
|
|
61,529
|
|
|
Net cash provided by financing activities
|
|
|
1,220,092
|
|
|
|
194,496,391
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
(101,140,448
|
)
|
|
|
163,510,377
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
229,790,989
|
|
|
|
77,858,311
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
128,650,541
|
|
|
$
|
241,368,688
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
981,833
|
|
|
$
|
1,011,000
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION AND DISCLOSURES OF NONCASH
ACTIVITIES:
|
|
|
|
|
|
|
|
Common stock issued in connection with Helio Vision, Inc.
acquisition milestone
|
|
$
|
—
|
|
|
$
|
2,499,991
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
8
ALDEYRA THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)
1. NATURE OF BUSINESS
Aldeyra Therapeutics, Inc., together with its wholly-owned
subsidiaries (the “Company” or “Aldeyra”), a Delaware corporation,
is a clinical-stage biotechnology company developing innovative
therapies designed to treat immune-mediated diseases.
The Company’s principal activities to date include research and
development activities along with related general business
planning, including raising capital.
2. BASIS OF PRESENTATION
The accompanying interim condensed consolidated financial
statements and related disclosures are unaudited and have been
prepared in accordance with U.S. generally accepted accounting
principles (GAAP) for interim financial information and the
instructions to Form 10-Q and Regulation S-X. Accordingly, they do
not include all the information and footnotes required by GAAP for
complete financial statements and should be read in conjunction
with the Company’s audited consolidated financial statements and
related notes included in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021, which was filed with the
Securities and Exchange Commission on March 17, 2022 (2021 Form
10-K).
The financial information as of September 30, 2022, and the three
and nine months ended September 30, 2022 and 2021, respectively, is
unaudited. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments considered
necessary for the fair presentation of financial position, results
of operations, and cash flows at the dates and for the periods
presented, have been included. The balance sheet data as of
December 31, 2021 was derived from audited consolidated financial
statements. The results of the Company’s operations for any interim
periods are not necessarily indicative of the results that may be
expected for any other interim period or for a full fiscal
year.
Based on its current operating plan, the Company believes that its
cash, cash equivalents, and marketable securities as of September
30, 2022, will be sufficient to fund currently projected operating
expenses through the end of 2023,
including the planned new drug application (NDA) submissions and
initial commercialization for reproxalap and ADX-2191, if approved;
and continued early and late-stage development of the Company’s
product candidates in ocular and systemic immune-mediated diseases.
As a result of the COVID-19 pandemic, clinical site availability,
staffing, and patient recruitment have been negatively affected and
the timelines to complete the Company’s clinical trials may be
delayed. The Company’s assessment of its liquidity and capital
resources includes an estimate of the financial impacts of these
changes. The Company has based its projections of operating capital
requirements on its current operating plan, which includes several
assumptions that may prove to be incorrect, and Company may use all
of its available capital resources sooner than the Company expects.
The Company will need to secure additional funding in the future,
from one or more equity or debt financings, collaborations, or
other sources, in order to carry out all of the Company’s planned
research and development activities and regulatory activities;
commence or continue ongoing commercialization activities,
including manufacturing, sales, marketing and distribution, for any
of our product candidates for which we may receive marketing
approval; or conduct any substantial, additional development
requirements requested by the Food and Drug Administration (FDA).
Additional funding may not be available to the Company on
acceptable terms, or at all. If the Company is unable to secure
additional funding, it will be required to significantly decrease
the amount of planned expenditures and may be required to cease
operations.
Curtailment of operations would cause significant delays in the
Company’s efforts to develop and introduce its products to market,
which is critical to the realization of its business plan and the
future operations of the Company.
The preparation of condensed consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions, including fair value estimates for investments that
affect the reported amounts of assets and liabilities, and the
disclosure of contingent assets and liabilities at the date of the
condensed consolidated financial statements, and the reported
amounts of expenses during the reporting periods. The Company’s
management evaluates its estimates and assumptions on an ongoing
basis. Management’s most significant estimates in the Company’s
condensed consolidated financial statements include, but are not
limited to, clinical trial accruals, deferred and accrued research
and development costs, stock-based compensation, and accounting for
income taxes and related valuation allowance. Although these
estimates and assumptions are based on the Company’s knowledge of
current events and actions it may undertake in the future, actual
results may ultimately materially differ from these estimates and
assumptions.
9
Summary of Significant Accounting Policies
There were no changes to significant accounting policies during the
nine months ended September 30, 2022, as compared to those
identified in the 2021
Form 10-K.
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update (ASU) No. 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments (ASU 2016-13). ASU 2016-13 requires that
credit losses be reported as an allowance using an expected losses
model, representing the entity’s current estimate of credit losses
expected to be incurred. The accounting guidance currently in
effect is based on an incurred loss model. For available-for-sale
debt securities with unrealized losses, this standard now requires
allowances to be recorded instead of reducing the amortized cost of
the investment. The amendments under ASU 2016-13 are effective for
interim and annual fiscal periods beginning after December 15,
2022. The Company is continuing to evaluate the impact of ASU
2016-13 but does not expect the adoption of this ASU to have a
material impact on its consolidated financial
statements.
3.
Helio Vision Acquisition
On January 28, 2019 (Closing Date), the Company acquired Helio
Vision, Inc. (Helio). As a result of the acquisition, the Company
initially issued an aggregate of
1,160,444
shares of common stock to the former securityholders and an advisor
of Helio. The founders of Helio were issued
568,627
shares and non-founders were issued
591,817
shares. The Helio founders’ shares were subject to vesting based on
continued service to the Company through January 28, 2022. The
Company recognized the expense associated with the founders’
restricted shares as research and development compensation expense
on a straight-line basis as the shares vested over the
three-year
period.
For the nine months ended September 30, 2022 and 2021, the Company
recorded
$0.1
million
and $0.9
million of research and development compensation expense,
respectively, for the founders’ restricted shares.
In January 2021, pursuant to the terms of the acquisition
agreement, the Company issued
246,562
shares of its common stock to the former securityholders of Helio
(January Shares). In addition, the Company, subject to the
conditions of the acquisition agreement, is contingently obligated
to make additional payments to the former securityholders of Helio
as follows: (a) $10.0
million of common stock following approval by the FDA of an NDA for
the prevention and/or treatment of proliferative vitreoretinopathy
or a substantially similar label prior to the 10th anniversary of
the Closing Date; and (b) $2.5
million of common stock following FDA approval of an NDA for an
indication (other than proliferative vitreoretinopathy or a
substantially similar label) prior to the 12th anniversary of the
Closing Date (the shares of common stock issuable pursuant to the
preceding clauses (a) and (b) are referred to herein as the
Milestone Shares), provided that in no event shall the Company be
obligated to issue more than an aggregate of
5,248,885
shares of common stock in connection with the Helio acquisition.
Additionally, in the event of certain change of control or
divestitures by the Company, certain former convertible noteholders
of Helio will be entitled to a tax gross-up payment in an amount
not to exceed $1.0
million in the aggregate.
The Company determined that liability accounting is not required
for the Milestone Shares under FASB ASC Topic 480,
Distinguishing Liabilities from Equity
(ASC 480). The Company also determined that the Milestone Shares
meet the scope exception as a derivative under FASB ASC Topic 815,
Derivatives and Hedging (ASC 815), from inception of the Milestone
Shares through September 30, 2022.
Accordingly, the Milestone Shares are evaluated under FASB ASC
Topic 450, Contingencies (ASC 450) and the Company will record a
liability related to the Milestone Shares if the milestones are
achieved, and the obligation to issue the Milestone Shares becomes
probable. At such time, the Company will record the cost of the
Milestone Shares issued to the Helio founders as a compensation
expense and to the Helio non-founders as an in-process research and
development (IPR&D) expense if there is no alternative future
use. At December 31, 2020, the issuance of the January Shares was
considered probable and $2.5
million was accrued as contingent consideration payable in stock
and the Company recorded $1.8
million to IPR&D (Milestone IPR&D), which included a
$0.5
million income tax benefit, and $1.2
million of compensation expense related to the January Shares,
which amounted to
246,562
shares and were issued during the quarter ended March 31, 2021. No
other milestones related to the remaining Milestone Shares are
probable of being achieved as of
September 30, 2022.
4. NET LOSS PER SHARE
For the three and nine months ended September 30, 2022 and 2021,
diluted weighted average common shares outstanding is equal to
basic weighted average common shares due to the Company’s net loss
position.
10
The following potentially dilutive securities outstanding have been
excluded from the computation of diluted weighted-average shares
outstanding, because such securities had an antidilutive
impact:
|
|
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Options to purchase common stock
|
|
|
5,403,982
|
|
|
|
4,562,870
|
|
|
Nonvested restricted stock units
|
|
|
1,184,603
|
|
|
|
501,254
|
|
|
Nonvested Helio founder shares
(1)
|
|
|
—
|
|
|
|
46,674
|
|
|
Total of common stock equivalents
|
|
|
6,588,585
|
|
|
|
5,110,798
|
|
(1)
Represents
46,674
shares of common stock that are issued and outstanding but that
were subject to vesting based on service requirements at
September 30, 2021,
and were not included in stockholders’ equity at such
date.
5. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
At
September 30, 2022, cash, cash equivalents, and marketable
securities were comprised of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Amount
|
|
|
Unrecognized
Loss
|
|
|
Estimated
Fair Value
|
|
|
Cash and Cash
Equivalents
|
|
|
Current
Marketable
Securities
|
|
|
Cash
|
|
$
|
106,539,605
|
|
|
$
|
—
|
|
|
$
|
106,539,605
|
|
|
$
|
106,539,605
|
|
|
$
|
—
|
|
|
Money market funds
|
|
|
610,936
|
|
|
|
—
|
|
|
|
610,936
|
|
|
|
610,936
|
|
|
|
—
|
|
|
Reverse repurchase agreements
|
|
|
21,500,000
|
|
|
|
—
|
|
|
|
21,500,000
|
|
|
|
21,500,000
|
|
|
|
—
|
|
|
Total cash and cash equivalents
|
|
$
|
128,650,541
|
|
|
$
|
—
|
|
|
$
|
128,650,541
|
|
|
$
|
128,650,541
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency securities
|
|
|
56,964,593
|
|
|
|
(285,733
|
)
|
|
|
56,678,860
|
|
|
|
—
|
|
|
|
56,678,860
|
|
|
Available for sale
(1)
|
|
|
56,964,593
|
|
|
|
(285,733
|
)
|
|
|
56,678,860
|
|
|
|
—
|
|
|
|
56,678,860
|
|
|
Total cash, cash equivalents, and current marketable
securities
|
|
|
|
|
|
|
|
|
|
|
$
|
128,650,541
|
|
|
$
|
56,678,860
|
|
At December 31, 2021, cash, cash equivalents, and marketable
securities were comprised of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Amount
|
|
|
Unrecognized
Loss
|
|
|
Estimated
Fair Value
|
|
|
Cash and Cash
Equivalents
|
|
|
Current
Marketable
Securities
|
|
|
Cash
|
|
$
|
100,364,523
|
|
|
$
|
—
|
|
|
$
|
100,364,523
|
|
|
$
|
100,364,523
|
|
|
$
|
—
|
|
|
Money market funds
|
|
|
4,426,466
|
|
|
|
—
|
|
|
|
4,426,466
|
|
|
|
4,426,466
|
|
|
|
—
|
|
|
Reverse repurchase agreements
|
|
|
125,000,000
|
|
|
|
—
|
|
|
|
125,000,000
|
|
|
|
125,000,000
|
|
|
|
—
|
|
|
Total cash and cash equivalents
|
|
$
|
229,790,989
|
|
|
$
|
—
|
|
|
$
|
229,790,989
|
|
|
$
|
229,790,989
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total cash, cash equivalents, and current marketable
securities
|
|
|
|
|
|
|
|
|
|
|
$
|
229,790,989
|
|
|
$
|
—
|
|
There were
no
marketable securities held at
December 31, 2021.
(1)
Available for sale securities are reported at fair value with
unrealized gains and losses reported net of taxes, if material, in
other comprehensive income.
The contractual maturities of all available for sale securities
were less than one year at September 30, 2022.
11
6. FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value
are performed in a manner to maximize the use of observable inputs
and minimize the use of unobservable inputs. ASC 820,
Fair Value Measurements,
establishes a fair value hierarchy based on three levels of inputs,
of which the first two are considered observable and the last
unobservable, that may be used to measure fair value, which are the
following:
Level 1
– Quoted prices in active markets that are accessible at the market
date for identical unrestricted assets or liabilities.
Level 2
– Inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs for which all significant inputs are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities.
Level 3
– Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
There were
no
liabilities measured at fair value at
September 30, 2022 or December 31, 2021.
Money market funds included in cash and cash equivalents in the
consolidated balance sheets are valued at quoted market prices in
active markets. They are recorded at fair value and considered as
Level 1 inputs under the fair value hierarchy.