Item 1. Financial Statements.
Neurotrope, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(Unaudited)
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
11,819,900
|
|
|
$
|
16,113,150
|
|
Prepaid expenses
|
|
|
1,155,274
|
|
|
|
310,437
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
12,975,174
|
|
|
|
16,423,587
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net of accumulated depreciation
|
|
|
22,236
|
|
|
|
20,655
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
12,997,410
|
|
|
$
|
16,444,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
870,340
|
|
|
$
|
1,240,033
|
|
Accrued expenses
|
|
|
145,735
|
|
|
|
268,250
|
|
Accrued expenses - related party
|
|
|
75,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
1,091,075
|
|
|
|
1,558,283
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Common stock - 150,000,000 shares authorized, $.0001 par value;
|
|
|
|
|
|
|
|
|
7,909,693 shares issued and outstanding at June 30, 2018;
|
|
|
|
|
|
|
|
|
7,895,859 shares issued and outstanding at December 31, 2017
|
|
|
791
|
|
|
|
790
|
|
Additional paid-in capital
|
|
|
78,676,539
|
|
|
|
77,544,976
|
|
Accumulated deficit
|
|
|
(66,770,995
|
)
|
|
|
(62,659,807
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
|
|
|
11,906,335
|
|
|
|
14,885,959
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
|
12,997,410
|
|
|
$
|
16,444,242
|
|
See accompanying notes to condensed consolidated
financial statements.
Neurotrope, Inc. and Subsidiary
Condensed Consolidated Statements of
Operations
(Unaudited)
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development - related party
|
|
$
|
162,893
|
|
|
$
|
89,188
|
|
|
$
|
50,000
|
|
|
$
|
76,733
|
|
Research and development
|
|
|
776,179
|
|
|
|
2,917,971
|
|
|
|
686,929
|
|
|
|
1,287,957
|
|
General and administrative - related party
|
|
|
25,000
|
|
|
|
14,418
|
|
|
|
12,500
|
|
|
|
12,500
|
|
General and administrative
|
|
|
2,075,376
|
|
|
|
2,581,000
|
|
|
|
953,055
|
|
|
|
1,357,899
|
|
Stock-based compensation - related party
|
|
|
174,936
|
|
|
|
66,803
|
|
|
|
61,803
|
|
|
|
33,586
|
|
Stock-based compensation
|
|
|
952,201
|
|
|
|
384,518
|
|
|
|
389,638
|
|
|
|
195,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
4,166,585
|
|
|
|
6,053,898
|
|
|
|
2,153,925
|
|
|
|
2,963,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on abandonment of fixed assets
|
|
|
-
|
|
|
|
(34,274
|
)
|
|
|
-
|
|
|
|
-
|
|
Gain on settlement of lease obligation
|
|
|
-
|
|
|
|
53,599
|
|
|
|
-
|
|
|
|
-
|
|
Interest income
|
|
|
55,397
|
|
|
|
26,457
|
|
|
|
31,399
|
|
|
|
17,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before income taxes
|
|
|
(4,111,188
|
)
|
|
|
(6,008,116
|
)
|
|
|
(2,122,526
|
)
|
|
|
(2,945,895
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,111,188
|
)
|
|
$
|
(6,008,116
|
)
|
|
$
|
(2,122,526
|
)
|
|
$
|
(2,945,895
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share
|
|
$
|
(0.52
|
)
|
|
$
|
(0.79
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
7,905,300
|
|
|
|
7,562,300
|
|
|
|
7,908,100
|
|
|
|
7,793,700
|
|
See accompanying notes to condensed consolidated
financial statements.
Neurotrope, Inc. and Subsidiary
Condensed Consolidated Statement of Changes
in Shareholders’ Equity
(Unaudited)
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance January 1, 2018
|
|
|
7,895,859
|
|
|
$
|
790
|
|
|
$
|
77,544,976
|
|
|
$
|
(62,659,807
|
)
|
|
$
|
14,885,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of common stock warrants
|
|
|
13,834
|
|
|
|
1
|
|
|
|
4,426
|
|
|
|
-
|
|
|
|
4,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
1,127,137
|
|
|
|
-
|
|
|
|
1,127,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,111,188
|
)
|
|
|
(4,111,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2018
|
|
|
7,909,693
|
|
|
$
|
791
|
|
|
$
|
78,676,539
|
|
|
$
|
(66,770,995
|
)
|
|
$
|
11,906,335
|
|
See accompanying notes to condensed
consolidated financial statements.
Neurotrope, Inc. and Subsidiary
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,111,188
|
)
|
|
$
|
(6,008,116
|
)
|
Adjustments to reconcile net loss to net
|
|
|
|
|
|
|
|
|
cash used by operating activities
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
1,127,137
|
|
|
|
451,321
|
|
Consulting services paid by issuance of common stock
|
|
|
-
|
|
|
|
104,540
|
|
Depreciation expense
|
|
|
1,605
|
|
|
|
2,498
|
|
Loss on abandonment of fixed assets
|
|
|
-
|
|
|
|
34,274
|
|
Change in assets and liabilities
|
|
|
|
|
|
|
|
|
Increase in prepaid expenses
|
|
|
(844,837
|
)
|
|
|
(41,033
|
)
|
Increase (Decrease) in accrued expenses - related party
|
|
|
25,000
|
|
|
|
(4,609
|
)
|
Decrease in accounts payable
|
|
|
(369,693
|
)
|
|
|
(36,381
|
)
|
Decrease in accrued expenses
|
|
|
(122,515
|
)
|
|
|
(137,783
|
)
|
Total adjustments
|
|
|
(183,303
|
)
|
|
|
372,827
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities
|
|
|
(4,294,491
|
)
|
|
|
(5,635,289
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(3,186
|
)
|
|
|
(3,585
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from exercise of common stock warrants
|
|
|
4,427
|
|
|
|
1,331,265
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
4,427
|
|
|
|
1,331,265
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH
|
|
|
(4,293,250
|
)
|
|
|
(4,307,609
|
)
|
|
|
|
|
|
|
|
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
16,113,150
|
|
|
|
25,773,533
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$
|
11,819,900
|
|
|
$
|
21,465,924
|
|
See accompanying notes to condensed consolidated
financial statements.
NEUROTROPE, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
Note 1 – Organization and Nature
of Planned Business
:
Business
Neurotrope BioScience was incorporated
in Delaware on October 31, 2012. Neurotrope BioScience was formed to advance new therapeutic and diagnostic technologies in the
field of neurodegenerative disease, primarily Alzheimer’s disease (“AD”). Neurotrope BioScience is collaborating
with Cognitive Research Enterprises, Inc. (formerly known as the Blanchette Rockefeller Neurosciences Institute, or BRNI) (“CRE”),
a related party, in this process. The exclusive rights to certain technology were licensed by CRE to the Company on February 28,
2013 (see Note 4).
Liquidity
As of August 10, 2018, the Company
had approximately $11.3 million in cash and cash equivalents. The Company expects that its existing capital resources will be sufficient
to support its projected operating requirements over at least the next 13 months from August 2018, including the continuing development
of bryostatin, our novel drug targeting the activation of PKC epsilon, through our upcoming follow-on clinical study (estimated
total cost $7.2 million). As of August 10, 2018, the Company has paid WCT approximately $1.4 million. The balance of the funds
will be used for general corporate and working capital purposes.
We expect to require additional
capital in order to pursue additional development projects in addition to our current confirmatory AD clinical trial. Additional
funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we
may not be able to pursue development of such other product candidates. If so, we could be required to delay, scale back or eliminate
some or all of our additional contemplated development programs and operations. Any additional equity financing, if available,
may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing,
if available, may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements,
we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop
or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and,
if not achieved on a timely basis, will materially harm our business, financial condition and results of operations.
Basis of Presentation
Certain information and footnote
disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the
United States (U.S. GAAP) have been condensed or omitted. However, the Company believes that the disclosures included in these
financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial
statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and
in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance
with GAAP and SEC regulations for interim financial statements. The results for the six months ended June 30, 2018 are not necessarily
indicative of the results that the Company will have for any subsequent period. These unaudited condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for
the year ended December 31, 2017 included in our Annual Report on Form 10-K.
Note 2 – Summary of Significant
Accounting Policies
:
Use of Estimates:
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalents:
The Company considers all highly
liquid temporary cash investments with an original maturity of three months or less when purchased to be cash equivalents. At June
30, 2018, the Company’s cash balances exceed the current insured amounts under the Federal Deposit Insurance Corporation.
Property and Equipment:
Property and equipment is capitalized
and depreciated on a straight line basis over the estimated useful life of the asset, which is deemed to be between three and ten
years.
Research and Development
Costs:
All research and development
costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE that do not meet the criteria
for capitalization are expensed when incurred. FASB ASC Topic 730 requires companies involved in research and development activities
to capitalize non-refundable advance payments for such services pursuant to contractual arrangements because the right to receive
those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic
benefit is realized. There were no capitalized research and development services at June 30, 2018 and December 31, 2017.
Loss Per Share:
Basic loss per common share amounts
are based on weighted average number of common shares outstanding. Diluted loss per share amounts are based on the weighted average
number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of
all potentially dilutive stock options and warrants subject to anti-dilution limitations. All such potentially dilutive instruments
were anti-dilutive as of June 30, 2018 and 2017, which were approximately 6.4 million shares and 5.8 million shares, respectively.
Income Taxes:
Income taxes are provided for
the tax effects of transactions reported in the financial statements and consist of taxes currently due and deferred taxes. Deferred
taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes
and the tax effects of net operating loss and other carryforwards. The deferred tax assets and liabilities represent the future
tax consequences of those differences and carryforwards, which will either be taxable or deductible when the related assets, liabilities
or carryforwards are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, based on the weight of
available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company applies the provisions
of FASB ASC 740-10,
Accounting for Uncertain Tax Positions
, which clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standard also provides
guidance on de-recognition, classification, interest and penalties, and accounting in interim periods, disclosure and transitions.
The Company has concluded that
there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period
that is subject to examination by major tax jurisdictions for generally three years from the date of filing.
Under Section 382 of the Internal
Revenue Code of 1986, as amended, changes in the Company's ownership may limit the amount of its net operating loss carryforwards
that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of
a cumulative change in ownership of the Company of more than 50% within a three-year period. The Company has not completed a study
to assess whether an ownership change for purposes of Section 382 has occurred, or whether there have been multiple ownership changes
since the Company's inception, due to the significant costs and complexities associated with such study.
Risks and Uncertainties:
The Company operates in an industry
that is subject to rapid technological change, intense competition and significant government regulation. The Company’s operations
are subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risk. Such
factors include, but are not necessarily limited to, the results of clinical testing and trial activities, the ability to obtain
regulatory approval, the ability to obtain favorable licensing, manufacturing or other agreements for its product candidates and
the ability to raise capital to achieve strategic objectives.
Stock Compensation:
The Company accounts for stock-based
awards to employees in accordance with applicable accounting principles, which requires compensation expense related to share-based
transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination
of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”)
pricing model. Employee stock option expense is recognized over the employee’s requisite service period (generally the vesting
period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including
the volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation
expense.
Options awarded to purchase shares
of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance with applicable
accounting principles. Such options are revalued using the Black-Scholes option pricing model until the entire award vests.
Note 3 – Collaborative Agreements
:
Stanford License Agreements
On May 12, 2014, the Company
entered into a license agreement (the “Stanford Agreement”) with The Board of Trustees of The Leland Stanford Junior
University (“Stanford”), pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right
and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology
for the use of bryostatin structural derivatives, known as “bryologs,” for use in the treatment of central nervous
system disorders, lysosomal storage diseases, stroke, cardio protection and traumatic brain injury, for the life of the licensed
patents. We are required by the Stanford Agreement to use commercially reasonable efforts to develop, manufacture and sell products
(“Licensed Products”) in the Licensed Field of Use (as define in the Stanford Agreement). In addition, we must need
specific diligence milestones, and upon meeting such milestones, make specific milestone payments to Stanford. We will also pay
Stanford royalties on net sales, if any, of Licensed Products (as defined in the Stanford Agreement).
On January 19, 2017, the Company
entered into a second license agreement with Stanford, pursuant to which Stanford has granted to the Company a revenue-bearing,
world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights
and related technology for the use of “Bryostatin Compounds and Methods of Preparing the Same,” or synthesized bryostatin,
for use in the treatment of neurological diseases, cognitive dysfunction and psychiatric disorders, for the life of the licensed
patents. The Company paid Stanford $70,000 upon executing the license and is obligated to pay an additional $10,000 annually as
a license maintenance fee. In addition, based upon certain milestones, the Company will be obligated to pay up to an additional
$2.1 million and between 1.5% and 4.5% royalty payments on certain revenues generated by the Company relating to the licensed technology.
The Company has made all required annual maintenance payments.
Mt. Sinai License Agreement
On July 14, 2014, Neurotrope
BioScience entered into an Exclusive License Agreement (the “Mount Sinai Agreement”) with the Icahn School of Medicine
at Mount Sinai (“Mount Sinai”). Pursuant to the Mount Sinai Agreement, Mount Sinai granted Neurotrope BioScience a
revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under Mount
Sinai’s interest in certain joint patents held by the Company and Mount Sinai (the “Joint Patents”) as well as
in certain results and data (the “Data Package”) and (b) non-exclusive license, with the right to grant sublicenses
on certain conditions, to certain technical information, both relating to the diagnostic, prophylactic or therapeutic use for treating
diseases or disorders in humans relying on activation of Protein Kinase C Epsilon (“PKCε”), which includes
Niemann-Pick Disease (the “Mount Sinai Field of Use”). The Mount Sinai Agreement allows Neurotrope BioScience to research,
discover, develop, make, have made, use, have used, import, lease, sell, have sold and offer certain products, processes or methods
that are covered by valid claims of Mount Sinai’s interest in the Joint Patents or an Orphan Drug Designation Application
covering the Data Package (“Mount Sinai Licensed Products”) in the Mount Sinai Field of Use (as such terms are defined
in the Mount Sinai Agreement).
Clinical Trial Services Agreements
On May 4, 2018, Neurotrope BioScience
executed a new Services Agreement (the “New Services Agreement”) with Worldwide Clinical Trials. The New Services Agreement
relates to services for Neurotrope BioScience’s Phase 2 confirmatory clinical study assessing the safety, tolerability and
efficacy of bryostatin in the treatment of moderately severe to severe AD (the “Study”). Pursuant to the terms of the
Services Agreement, WCT is providing services to target enrollment of approximately one hundred (100) Study subjects. The total
estimated budget for the services, including pass-through costs and other statistical analyses, is approximately $7.2 million.
Of the total estimated Study costs, as of June 30, 2018, the Company has incurred approximately $800,000 in expenses and has paid
WCT $1.2 million of prepaid deposits. The balance included in prepaid expenses is approximately $1.05 million.
As of August 10, 2018, the Company
has enrolled its first patient and is in the process of completing contracts with the approximately 30 clinical sites that will
participate in the Study.
This confirmatory clinical trial
will be conducted pursuant to an amendment to the Company’s existing Investigational New Drug Application IND.
Also, in connection with the
execution of the New Services Agreement, Neurotrope BioScience received consent pursuant to its CRE License Agreement (see Notes
4 and 8 below).
Note 4 – Related Party Transactions
and Licensing / Research Agreements
:
As of June 30, 2018, James Gottlieb,
a director of the Company, served as a director of CRE, and Shana Phares, also a director of the Company, served as President and
Chief Executive Officer of CRE. CRE is a stockholder of a corporation, Neuroscience Research Ventures, Inc. (“NRVI”),
which owned 3.6% of the Company's outstanding common stock as of June 30, 2018. Shana Phares served as Secretary/Treasurer of NRVI
until June 2017.
Effective October 31, 2012, Neurotrope
BioScience executed a Technology License and Services Agreement (the “TLSA”) with CRE, a related party, and NRV II,
LLC (“NRV II”), another affiliate of CRE, which was amended by Amendment No. 1 to the TLSA as of August 21, 2013. As
of February 4, 2015, the parties entered into an Amended and Restated Technology License and Services Agreement (the “CRE
License Agreement”). The CRE License Agreement provides research services and has granted Neurotrope BioScience the exclusive
and nontransferable world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions
described below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology
owned by CRE or licensed to NRV II by CRE as of or subsequent to October 31, 2012, to develop, use, manufacture, market, offer
for sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive
dysfunctions in humans or animals (the “Field of Use”). Additionally, the TLSA specifies that all patents that issue
from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential information
claimed by such patents constitute licensed technology under the CRE License. The CRE License Agreement terminates on the later
of the date (a) the last of the licensed patent expires, is abandoned, or is declared unenforceable or invalid or (b) the last
of the intellectual property enters the public domain. After the initial Series A Stock financing, the CRE License Agreement required
Neurotrope BioScience to enter into scope of work agreements with CRE as the preferred service provider for any research and development
services or other related scientific assistance and support services.
In addition, the CRE License
Agreement requires the Company to pay CRE a “Fixed Research Fee” of $1 million per year for five years, commencing
on the date that the Company completes a Series B Preferred Stock financing resulting in proceeds of at least $25,000,000 (the
“Series B Financing”). This Fixed Research Fee is not yet due. The CRE License Agreement also requires the payment
of royalties ranging between 2% and 5% of the Company’s revenues generated from the licensed patents and other intellectual
property, dependent upon the percentage ownership that NRVI holds in the Company. Under the CRE License Agreement, the Company
was required to prepay royalty fees at a rate of 5% of all investor funds raised in the Series A or Series B Stock financings or
any subsequent rounds of financing prior to a public offering, less commissions.
On November 12, 2015, Neurotrope
BioScience, CRE, and NRV II entered into an amendment (the “Amendment”) to the TLSA pursuant to which CRE granted rights
in certain technology to Neurotrope BioScience. Under the Amendment, the “Advances on Future Royalties” section of
the TLSA was amended and restated to (i) eliminate the requirement that Neurotrope BioScience pay CRE prepaid royalties equal to
five percent (5%) of financing proceeds received by Neurotrope BioScience in any financing prior to a public offering, and (ii)
provide that Neurotrope BioScience will deliver to CRE, following each closing pursuant to a certain securities purchase agreement,
an amount equal to 2.5% of the Post-PA Fees Proceeds received at such closing. In addition, the Amendment provides that on or prior
to December 31, 2016, Neurotrope Bioscience shall deliver to CRE an amount equal to 2.5% of the aggregate Post-PA Fee Proceeds
received at the closings. Each payment would constitute an advance royalty payment to CRE and will be offset (with no interest)
against the amount of future royalty obligations payable until such time that the amount of such future royalty obligations equals
in full the amount of the advance royalty payments made. “Post-PA Fee Proceeds” means the gross proceeds received,
less all amounts paid to the placement agent(s), in relation to such gross proceeds. No other expenses of Neurotrope Bioscience
shall be subtracted from the gross proceeds to determine the “Post-PA Fee Proceeds.” As of December 31, 2017, the Company
has paid its entire obligation of $1,166,666 resulting from this Amendment.
Note 5 – Stock Options
:
Option Grants
The following is a summary of
stock option activity under the stock option plans for the six months ended June 30, 2018:
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Term
|
|
|
Value
|
|
|
|
Shares
|
|
|
Price
|
|
|
(Years)
|
|
|
(in thousands)
|
|
Options outstanding at January 1, 2018
|
|
|
1,345,835
|
|
|
$
|
20.10
|
|
|
|
8.8
|
|
|
$
|
353.0
|
|
Options granted
|
|
|
70,000
|
|
|
$
|
8.91
|
|
|
|
|
|
|
$
|
46.0
|
|
Less options forfeited
|
|
|
(89,372
|
)
|
|
$
|
14.57
|
|
|
|
|
|
|
|
|
|
Less options expired/cancelled
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Less options exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Options outstanding at June 30, 2018
|
|
|
1,326,463
|
|
|
$
|
19.63
|
|
|
|
8.4
|
|
|
$
|
399.0
|
|
Options exercisable at June 30, 2018
|
|
|
825,217
|
|
|
$
|
22.57
|
|
|
|
8.0
|
|
|
$
|
192.8
|
|
As of June 30, 2018, there was
approximately $3.2 million of total unrecognized compensation costs related to unvested stock options. These costs are expected
to be recognized over a weighted average period of 2.2 years.
The Company used the Black-Scholes
valuation model to calculate the fair value of stock options.
The fair value of stock options
issued for the six months ended June 30, 2018 was estimated at the grant date using the following weighted average assumptions:
Dividend yield 0%; Expected term 10 years; Volatility 89.8%; Risk-free interest rate 2.87%; weighted average grant date fair value
of $7.71 per share.
The total stock option-based
compensation recorded as operating expense was $1,127,138 and $451,321 for the six months ended June 30, 2018 and 2017, respectively.
See Note 8 below (“Subsequent
Events”) for recent stock option grants.
Note 6 – Common Stock Warrants
:
The following is a summary of
common stock warrant activity for the six months ended June 30, 2018:
|
|
Number
of shares
|
|
Warrants outstanding January 1, 2018
|
|
|
5,115,274
|
|
Warrants exercised
|
|
|
(13,834
|
)
|
Warrants outstanding June 30, 2018
|
|
|
5,101,440
|
|
As of June 30, 2018, the Company’s
warrants by exercise price were as follows: 147,606 warrants exercisable at $0.32, 382,887 warrants exercisable at $6.40, 3,751,033
warrants exercisable at $12.80 and 819,914 warrants exercisable at $32.00.
Note 7 – Contingencies
Since May 17, 2017, two purported
class action lawsuits were commenced in the United States District Court for the Southern District of New York (the “NY Litigation”).
On August 10, 2017, the lawsuits were consolidated and Plaintiffs filed their Amended Consolidated Complaint on October 9, 2017.
The Amended Consolidated Complaint named as defendants the Company, its former Chief Executive Officer and its co-founder and President/Chief
Scientific Officer. The lawsuit alleged violations of the Securities Exchange Act of 1934, as amended, in connection with
allegedly false and misleading statements made by the Company in certain press releases and in its Annual Report on Form 10-K relating
to the results stemming from our Phase 2 clinical trial for bryostatin. Plaintiffs sought, among other things, damages for
purchasers of the Company’s securities between January 7, 2016 and July 18, 2017.
On November 21, 2017, the Company
and the other named defendants filed a motion to dismiss all of the claims (the “Motion”). On June 4, 2018 the
Court granted the Motion and dismissed with prejudice the NY Litigation. Plaintiffs’ time to appeal the Court’s
decision expired on July 5, 2018.
Additionally, on August 3, 2017
a derivative action was filed against the Company and all members of the Board of Directors at that time. The lawsuit alleged
that the Board of Directors breached its fiduciary duty by making misleading statements and omitting information pertaining to
the results of the Company’s Phase 2 clinical trials for bryostatin. The Company and the Board of Directors reached
an agreement with counsel for the Plaintiff to stay this action pending a decision by the Court in the NY Litigation. On
July 24, 2018, after reviewing the decision in the NY Litigation, Plaintiff voluntarily dismissed the derivative action.
Note 8 – Subsequent Events
During July 2018, the Company
granted stock options to purchase 110,000 shares of the Company’s common stock to the five members of the Company’s
newly-formed Scientific Advisory Board. The stock options have a ten year life and provide the holders the right to purchase common
stock at $10.23 per share. 90,000 of the stock options vest over a three-year period on each one year anniversary date post issuance,
20,000 vest quarterly over a three-year period.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
You should read the following discussion
and analysis of our financial condition and results of operations together with our financial statements and the related notes
appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed
in the section titled “Risk Factors” included elsewhere in this report and our annual report filed on Form 10-K for
the year ended December 31, 2017.
On August 23, 2013, our wholly-owned subsidiary,
Neurotrope Acquisition, Inc., a corporation formed in the State of Nevada on August 15, 2013 merged with and into Neurotrope BioScience.
Neurotrope BioScience was the surviving corporation in the Reverse Merger and became Neurotrope, Inc.’s wholly-owned subsidiary.
As the result of the Reverse Merger, the Company’s business changed from engaging in the business of providing software solutions
to deliver geo-location targeted coupon advertising to mobile internet devices, to the biotechnology business, including the development
of a drug candidate called bryostatin for the treatment of Alzheimer’s disease (“AD”).
The following discussion highlights our
results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital
resources for the periods described, and provides information that management believes is relevant for an assessment and understanding
of the statements of financial condition and results of operations presented herein. The following discussion and analysis are
based on the audited financial statements contained in this report, which we have prepared in accordance with United States generally
accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related
notes thereto.
Basis of Presentation
The unaudited financial statements for
the fiscal quarters ended June 30, 2018 and 2017 include a summary of our significant accounting policies and should be read in
conjunction with the discussion below and our financial statements and related notes included elsewhere in this annual report.
In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have
been included in the financial statements. All such adjustments are of a normal recurring nature.
Overview
We are a biopharmaceutical company with
product candidates in pre-clinical and clinical development. Neurotrope BioScience began operations in October 2012. We are principally
focused on developing a product platform based upon a drug candidate called bryostatin for the treatment of Alzheimer’s disease
(“AD”), which is in the clinical testing stage. We are also developing bryostatin for other neurodegenerative or cognitive
diseases and dysfunctions, such as Fragile X and Niemann-Pick Type C, which are in pre-clinical testing. Neurotrope has been
a party to a technology license and services agreement with the original Blanchette Rockefeller Neurosciences Institute (“BRNI”)
(which has been known as Cognitive Research Enterprises, Inc. (“CRE”) since October 2016), and its affiliate NRV II,
LLC, which we collectively refer to herein as “CRE,” pursuant to which we now have an exclusive non-transferable license
to certain patents and technologies required to develop our proposed products. Neurotrope BioScience was formed for the primary
purpose of commercializing the technologies initially developed by BRNI for therapeutic applications for AD or other cognitive
dysfunctions. These technologies have been under development by BRNI since 1999 and, until March 2013, had been financed through
funding from a variety of non-investor sources (which include not-for-profit foundations, the National Institutes of Health, which
is part of the U.S. Department of Health and Human Services, and individual philanthropists). From March 2013 forward, development
of the licensed technology has been funded principally through Neurotrope BioScience in collaboration with CRE.
Pursuant to the CRE License, Neurotrope
BioScience maintained its exclusive (except as described below), non-transferable (except pursuant to the CRE License’s assignment
provision), world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions described
below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology owned
by CRE or licensed to NRV II, LLC by CRE as of or subsequent to October 31, 2012 to develop, use, manufacture, market, offer for
sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive
dysfunctions in humans or animals (the “Field of Use”). Additionally, the CRE License specifies that all patents that
issue from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential
information claimed by such patents constitute licensed technology under the CRE License. Furthermore, on July 10, 2015 under the
terms of the Statement of Work and Account Satisfaction Agreement dated February 4, 2015, Neurotrope BioScience’s rights
relating to an in vitro diagnostic test system reverted to CRE and, accordingly, Neurotrope BioScience no longer has any rights
under the CRE License for diagnostic applications using the CRE patent portfolio or technology.
Notwithstanding the above license terms,
CRE and its affiliates retain rights to use the licensed intellectual property in the Field of Use to engage in research and development
and other non-commercial activities and to provide services to Neurotrope BioScience or to perform other activities in connection
with the CRE License.
Under the CRE License, CRE is a preferred
service provider in certain circumstances and Neurotrope BioScience may not enter into sublicense agreements with third parties
except with CRE’s prior written consent, which consent shall not be commercially unreasonably withheld. Furthermore, the
CRE License dated February 4, 2015 revises the agreement that was entered into as of October 31, 2012 and amended on August 21,
2013, in that it provides that any intellectual property developed, conceived or created in connection with a sublicense agreement
that Neurotrope BioScience entered into with a third party pursuant to the terms of the CRE License will be licensed to CRE and
its affiliates for any and all non-commercial purposes, on a worldwide, perpetual, non-exclusive, irrevocable, non-terminable,
fully paid-up, royalty-free, transferable basis, with the right to freely sublicense such intellectual property. Previously, the
agreement had provided that such intellectual property would be assigned to CRE.
Under the CRE License, CRE and Neurotrope
BioScience will jointly own data, reports and information that is generated on or after February 28, 2013, by Neurotrope BioScience,
on behalf of Neurotrope BioScience by a third party or by CRE pursuant to a statement of work that the parties enter into pursuant
to the CRE License, in each case to the extent not constituting or containing any data, reports or information generated prior
to such date or by CRE not pursuant to a statement of work (the “Jointly Owned Data”). CRE has agreed not to use the
Jointly Owned Data inside or outside the Field of Use for any commercial purpose during the term of the CRE License or following
any expiration of the CRE License other than an expiration that is the result of a breach by Neurotrope BioScience of the CRE License
that caused any licensed patent to expire, become abandoned or be declared unenforceable or invalid or caused any licensed technology
to enter the public domain (a “Natural Expiration”), provided, however, CRE may use the Jointly Owned Data inside or
outside the Field of Use for any commercial purpose following any termination of the CRE License. Also, CRE granted Neurotrope
BioScience a license during the term and following any Natural Expiration, to use certain CRE data in the Field of Use for any
commercial purposes falling within the scope of the license granted to Neurotrope BioScience under the CRE License.
The CRE License further requires us to
pay CRE (i) a fixed research fee equal to a pro rata amount of $1 million in the year during which we close on a Series B Preferred
Stock financing resulting in proceeds of at least $25 million, (ii) a fixed research fee of $1 million per year for each of the
five calendar years following the completion of such financing and (iii) an annual fixed research fee in an amount to be negotiated
and agreed upon no later than 90 days prior to the end of the fifth calendar year following the completion of such financing to
be paid with respect to each remaining calendar year during the term of the CRE License. This fixed research fee is not yet due.
On November 12, 2015, we entered into an
amendment to the CRE License. Pursuant to the amendment, we paid an aggregate of approximately $348,000 to CRE following the closings
of the Series B private placement, which constituted an advance royalty payment to CRE and will be offset (with no interest) against
the amount of future royalty obligations payable until such time that the amount of such future royalty obligations equals in full
the amount of the advance royalty payments made.
The term of the CRE License continues until
the later of the date (i) the last of the licensed patents expires, is abandoned or is declared unenforceable or invalid (in each
case, determined in accordance with the CRE License) and (ii) the last of the licensed technology enters the public domain. Either
party has the right to terminate the CRE License after 30 days prior notice in certain circumstances, including if either party
were to materially breach any provisions of the CRE License and does not cure such material breach within 60-days from notice of
such material breach from the non-breaching party, and for breaches that are capable of being cured, in the event of certain bankruptcy
or insolvency proceedings.
Concurrently with the November 12, 2015
amendment to the CRE License, Neurotrope Bioscience entered into a Statement of Work Agreement pursuant to the CRE License Agreement
(the “November 2015 SOW Agreement”). The November 2015 SOW Agreement replaced the February 2015 SOW Agreement, which
was effective as of October 1, 2014 and expired on September 30, 2015.
Pursuant to the November 2015 SOW Agreement,
Neurotrope Bioscience agreed to pay CRE $1,166,666 in service fees payable in the amount of $83,333 per month for each month from
November 1, 2015 through December 31, 2016. The payments under the November 2015 SOW Agreement satisfied Neurotrope Bioscience’s
obligations to reimburse CRE for any and all attorneys’ fees, translation costs, filing fees, maintenance fees, and other
costs and expenses related to applying for, filing, prosecuting, and maintaining patents and applications for the licensed intellectual
property incurred by CRE during the term of the November 2015 SOW Agreement (but, for the avoidance of doubt, such payments shall
not satisfy any attorneys’ fees, translation costs, filing fees, maintenance fees, or other costs or expenses related to
applying for, filing, prosecuting, and maintaining patents and applications for the licensed intellectual property incurred by
CRE after the expiration or termination of the November 2015 SOW Agreement term), as well as any litigation costs which CRE may
incur related to any of the licensed intellectual property during the November 2015 SOW Agreement term. CRE shall not commence
any litigation to enforce the licensed intellectual property without the consent of Neurotrope Bioscience (which consent shall
not be unreasonably withheld, delayed, or denied). In consideration for the payments made pursuant to the November 2015 SOW Agreement,
CRE performed the services requested by Neurotrope Bioscience for the further development of Neurotrope’s bryostatin drug
platform.
On July 28, 2016, CRE filed a petition
for Chapter 11 Reorganization in the United States Bankruptcy Court for the Northern District of West Virginia. As part of the
bankruptcy filing, CRE asked the Bankruptcy Court to reject certain executory contracts including employment agreements with a
number of its researchers and other personnel, including, without limitation, Dr. Daniel Alkon, who is our President and Chief
Scientific Officer and was also the former scientific director of BRNI (prior to its name change to Cognitive Research Enterprises,
Inc.), and who led a team of scientists who were principally involved on behalf of BRNI in support of the CRE License. CRE has
not requested that the CRE License itself be rejected. We do not believe that CRE, as a matter of law, has a right to terminate
the CRE License as a result of the bankruptcy filing and have been advised by CRE’s representatives that there will be no
action regarding the CRE License and that CRE intends to meet all of its obligations in support of the Company’s work. On
September 23, 2016, the United States Bankruptcy Court for the Northern District of West Virginia entered an order approving the
sale of a substantial amount of CRE's assets to West Virginia University (“WVU”). The Court also entered an order approving
a settlement agreement between Dr. Alkon, CRE and WVU. As part of the asset sale, CRE sold the BRNI name and all derivatives to
WVU. Consequently, the Board of CRE resolved on September 28, 2016 to change its name to Cognitive Research Enterprises, Inc. CRE
continues to own the assets that are being licensed to us under the CRE License. We are in the process of negotiating with WVU
and CRE regarding the license of certain assets that were previously returned to CRE in December 2013. Some of these assets were
subsequently transferred to WVU as part of CRE’s asset sale and others were retained by CRE.
On May 12, 2014, we entered into a license
agreement (the “Stanford Agreement”) with The Board of Trustees of the Leland Stanford Junior University (“Stanford”)
pursuant to which Stanford granted us a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses
(on certain conditions), under certain patent rights and related technology for the use of bryostatin structural derivatives, known
as “bryologs,” for use in the treatment of central nervous system disorders, lysosomal storage diseases, stroke, cardio
protection and traumatic brain injury, for the life of the licensed patents. Pursuant to the Stanford Agreement, we paid a $60,000
license initiation fee to Stanford. We currently pay Stanford a $10,000 annual license maintenance fee, and will pay milestone
payments in the aggregate amount of up to $3,700,000 upon the achievement of certain product development events commencing upon
the filing of the first IND application through approval of an applicable product, as well as low single-digit royalties on net
sales of the licensed products. Each party has the right to terminate the Stanford Agreement for an uncured material breach of
the other party. Additionally, we may terminate the Stanford Agreement at any time upon 60 days written notice to Stanford. In
January 2017, we entered into an additional license agreement with Stanford relating to an accelerated synthesis of bryostatin-1.
Pursuant to this additional license agreement, we paid a $70,000 license initiation fee
to Stanford. We will pay Stanford a $10,000 annual license maintenance fee, and will pay milestone payments in the aggregate amount
of up to $2,100,000 upon the achievement of certain product development events commencing upon the dosing of the first patient
with synthesized bryostatin, as well as low single-digit royalties on net sales of the licensed products. Each party has the right
to terminate the Stanford Agreement for an uncured material breach of the other party. Additionally, we may terminate the Stanford
Agreement at any time upon 60 days written notice to Stanford.
Following on the results of its first Phase
2 clinical trial completed in March 2015, on October 9, 2015, Neurotrope BioScience executed a Services Agreement with Worldwide
Clinical Trials, Inc. (“WCT”), effective as of August 31, 2015. The Services Agreement relates to services for Neurotrope
BioScience’s second Phase 2 clinical study assessing the safety, tolerability and efficacy of bryostatin in the treatment
of moderately severe to severe AD (the “Study”). Pursuant to the terms of the Services Agreement, WCT was to provide
services to enroll approximately 150 study subjects at approximately 30 sites across the United States. We began enrollment at
the initial sites at the end of 2015, completed enrollment in November 2016, announced top-line results May 1, 2017 and announced
additional data analyses on January 5, 2018. This trial was designed to administer dosing of bryostatin for up to six months for
moderately severe to severe AD patients but was amended to administer dosing of bryostatin for up to three months (see details
of the amendment below). Among the trial’s endpoints were the measurement of improvement in cognition, activities of daily
living and behavior.
On July 27, 2016, we received approval
of the institutional review board (“IRB”) for our amended protocol submitted on July 21, 2016 to the FDA relating to
the Phase 2 clinical trial of our lead drug candidate, bryostatin-1, for the treatment of advanced AD, which amended protocol eliminated
the second, exploratory, study period following the first 12 weeks of treatment. The primary objective was the assessment of safety
and tolerability of bryostatin to occur at 13 weeks and that was not changed with this amendment. The secondary objective was to
assess efficacy, also at week 13. Such amendment, to cut the exploratory part of the study, was made for business reasons in order
to provide earlier completion of the study and for the planning of future studies. The changes to the study design were not due
to any safety concerns. In the study, two doses of bryostatin, 20 μg or 40 μg, were compared to placebo. Study subjects received
a total of 7 doses of the study drug over 12 weeks of treatment, followed by safety and efficacy assessments at week 13 and a final
study visit at week 16. There was no second randomization for additional treatment.
Results of Phase 2 Clinical Trial
On May 1, 2017, we reported certain relevant
top-line results from our Phase 2 exploratory clinical trial based on a preliminary analysis of a limited portion of the complete
data set generated. A total of 147 patients were enrolled into the study; 135 patients in the mITT population and 113 in the Completer
population. This study was the first repeat dose study of bryostatin-1 in patients with late stage AD (defined as a Mini Mental
State Exam 2 (“MMSE-2”) of 4-15), in which two dose levels of bryostatin-1 were compared with placebo to assess safety
and preliminary efficacy (p < 0.1, one-tailed) after 12 weeks of treatment. The pre-specified primary endpoint, the Severe Impairment
Battery (the “SIB”) (used to evaluate cognition in severe dementia), compared each dose of bryostatin-1 with placebo
at Week 13 in two sets of patients: (1) the modified intent-to-treat (the “mITT”) population, consisting of all patients
who received study drug and had at least one efficacy/safety evaluation, and (2) the Completer population, consisting of those
patients within the mITT population who completed the 13-week dosing protocol and cognitive assessments.
These announced top-line results indicated
that the 20 µg dose, administered after two weekly 20 µg doses during the first two weeks and every other week thereafter,
met the pre-specified primary endpoint in the Completer population, but not in the mITT population. Among the patients who completed
the protocol (n = 113), the patients on the 20 µg dose at 13 weeks showed a mean increase on the SIB of 1.5 vs. a decrease
in the placebo group of -1.1 (net improvement of 2.6, p < 0.07), whereas, in the mITT population, the 20 µg group had
a mean increase on the SIB of 1.2 vs. a decrease in the placebo group of -0.8 (net improvement of 2.0, p < 0.134). At the pre-specified
5 week secondary endpoint, the Completer patients in the 20 µg group showed a net improvement of 4.0 SIB (p < 016), and
the mITT population showed a net improvement of 3.0 (p< ,056).Unlike the 20 µg dose, there was no therapeutic signal observed
with the 40 µg dose.
The Alzheimer Disease Cooperative Study
Activities of Daily Living Inventory Severe Impairment version (ADCS-ADL-SIV) was another pre-specified secondary endpoint. The
p values for the comparisons between 20 µg and placebo for the ADCS-ADL endpoint at 13 weeks were 0.082 for the Completers
and 0.104, for the mITT population.
Together, these initial results after preliminary
analysis of this exploratory trial, indicated that bryostatin-1, at the 20 µg dose, caused sustained improvement in important
functions that are impaired in patients with moderate to severe Alzheimer’s disease i.e., cognition and the ability to care
for oneself. Since most of the patients in this study were already taking donepezil and/or memantine, the efficacy of bryostatin-1
was evaluated in the Top Line results over and above the standard of care therapeutics.
The safety profile of bryostatin-1 20 µg
was minimally different from the placebo group except for a higher incidence of diarrhea and infusion reactions (11% versus 2%
for diarrhea and 17% versus 6% for infusion reactions). Fewer adverse events were reported in patients in the 20 µg group,
compared to the 40 µg group. Patients dosed with 20 µg had a dropout rate less than or identical to placebo, while
patients dosed at 40 µg experienced poorer safety and tolerability, and had a higher dropout rate. Treatment emergent adverse
events (“TEAEs”) were mostly mild or moderate in severity. TEAEs, including serious adverse events, were more common
in the 40 µg group, as compared to the 20 µg and placebo groups. The mean age of patients in the study was 72 years
and similar across all three treatment groups.
Following presentation of the top line
results in July 2017 at the Alzheimer’s Association International Conference in London, a much more extensive analysis
of a more complete set of the Phase 2 trial data was conducted.
On January 5, 2018, we announced that a
post-hoc analysis of a comprehensive data set from our recent Phase 2 trial in patients with advanced Alzheimer’s disease
(“AD”) found evidence of sustained improvement in cognition in patients receiving the 20 μg bryostatin regimen.
In addition, patients who did not receive memantine, an approved AD treatment, as background therapy showed greater SIB improvement.
These findings suggested that this investigational drug could potentially treat Alzheimer’s disease itself and help reduce
and/or reverse the progression of AD, rather than only alleviate its symptoms.
The comprehensive follow-on analysis found
that patients in the 20 μg treatment arm showed a sustained improvement in cognition over baseline compared to the placebo group
at week 15 (30 days after last dose at week 11). These data were observed in the study population as a whole.
The follow-on analysis of the data evaluated
SIB scores of patients at 15 weeks, 30 days after all dosing had been completed – a pre-specified exploratory endpoint. For
the 20 μg group, patients in the mITT population (n=34) showed an overall improvement compared to controls (n=33) of 3.59 (
p
=0.0503)
and in the Completers population (n=34) showed an overall improvement compared to controls (n=33) of 4.09 (
p
=0.0293). In
summary, patients on the 20 μg dose showed a persistent SIB improvement 30 days after all dosing had been completed. These p-values
and those below are one-tailed.
Additional analyses compared 20 µg
dose patients who were on baseline therapy of Aricept vs. patients off Aricept. No significant differences were observed. Another
analysis compared the 20 µg dose patients who were on or off baseline therapy of memantine. Post-hoc analysis comparing SIB
scores in non-memantine versus memantine patients found the following:
·
|
At week 15, non-memantine patients in the mITT Group treated with 20 μg (n=14) showed an SIB improvement of 5.88, while the placebo patients (n=11) showed a decline in their SIB scores of
-
0.05 for an overall treatment Δ of 5.93 from baseline (
p
=0.0576).
|
·
|
At week 15, non-memantine patients in the Completers Group treated with 20 μg (n=14) showed an SIB improvement of 6.24, while the placebo patients (n=11) showed a decline in their SIB scores of
-
0.12 for an overall treatment Δ of 6.36 from baseline (p=0.0488)
.
|
·
|
Patients taking memantine as background therapy in the 20 μg (n=20) and control (n=22) groups showed no improvement in SIB scores.
|
Memantine, an NMDA receptor antagonist,
is marketed under the brand names Namenda®, Namenda® XR, and Namzaric® (a combination of memantine and donepezil) for
the treatment of dementia in patients with moderate-to-severe AD. It has been shown to delay cognitive decline and help reduce
disease symptoms.
On May 4, 2018, we announced a confirmatory,
100 patient, double-blinded clinical trial for the safe, effective 20 μg dose protocol for advanced AD patients not taking memantine
as background therapy to evaluate improvements in SIB scores with an increased number of patients. As such, we have again engaged
WCT, in conjunction with consultants and investigators at leading academic institutions to collaborate on the design and conduct
of the next trial, which began in April, 2018. During July 2018, the first patient was enrolled in this study.
To the extent resources permit, we intend
to pursue development of selected technology platforms with indications – such as Fragile X disease - related to the treatment
of AD and other neurodegenerative disorders based on our current licensed technology and / or technologies available from third
party licensors or collaborators.
Strategy
Our strategy is to efficiently utilize
our licensed proprietary and patented technologies to further the development of those technologies toward commercializing a therapeutic
for AD and potentially utilize these technologies to treat other neurological diseases. We may also seek to acquire, by license
or otherwise, other development stage products that are consistent with our product portfolio objectives and commercialization
strategy including partnering with companies that have expertise in certain therapeutic areas. In addition, we are evaluating our
options to utilize technologies licensed from CRE and Mount Sinai in order to pursue therapeutics for orphan drug indications,
including Fragile X Syndrome and Niemann-Pick Type C disease.
Through an agreement with CRE, we have
the exclusive worldwide license relating to Fragile X Syndrome (“FXS”). FXS is the most common cause of inherited intellectual
disability and the most common known genetic cause of autism or autism spectrum disorders. Symptoms of FXS include a range from
learning disabilities to more severe cognitive or intellectual disabilities. Delays in speech and language development are common,
as are a variety of physical and behavioral characteristics. FXS is caused by a “full mutation” of the FMR1 Gene. There
are approximately 135,000 Fragile X Syndrome patients in the United States and a similar number in Europe. Neurotrope BioScience
received support from the FRAXA Research Foundation, Inc. (“FRAXA”) to fund a pre-clinical FXS behavior study for bryostatin
at FRAXA’s sponsored laboratory located at the University of Chile in Santiago, Chile. FRAXA provided full funding for a
preclinical study to evaluate the behavioral effects of bryostatin-1 in an FXS mouse model. Twice weekly treatment for 13 weeks
yielded statistically significant improvements in outcome measures with bryostatin compared to placebo. We have formed and are
advancing our discussions with an experienced clinical advisory board to assist us with protocol development for a planned Phase
2a study in FXS patients. We seek resources to initiate the first clinical trial with bryostatin in patients with FXS. We have
been granted orphan drug designation by the FDA for the use of bryostatin in the treatment of Fragile X Syndrome.
Use of bryostatin to treat a serious and
deadly lysosomal storage disorder, Niemann-Pick Type C Disease (“NP-C”), is being explored by us in collaboration with
the Icahn School of Medicine at Mount Sinai in New York City. NP-C mainly affects children who develop severe neurologic symptoms
including gait disturbance and cognitive deficits early in life. There are approximately 3,500 NP-C patients in the United States
and a similar number in Europe. Patients with NP-C have a gene defect that results in the loss of the “normal” NPC1
or NPC2 protein that is important for cholesterol trafficking.
A study was funded by several family foundations
under the auspices of SOAR-NPC. This study examined the effects of various dosing regimens of bryostatin in NP-C mice over a brief
treatment period. Although bryostatin showed mixed results
in vivo
, the SOAR study did not find encouraging results
with its
in vivo
animal model. Another
in vivo
study began at the beginning of 2016, and was
completed at Mt. Sinai, to evaluate the effect of bryostatin in an animal model (NPC1 mice) of Niemann-Pick Type C. Depending upon
available funding, we will work towards completion of the necessary pre-clinical work in order to file and obtain FDA approval
of an IND, or investigational new drug application. We are encouraged by preliminary data in the NPC1 animal model. Assuming that
the pre-clinical work shows positive activity, we expect to apply for orphan drug designation for this indication.
We entered into a research collaboration
with the International Rett Syndrome Foundation (“Foundation”), under the Rett Syndrome.org Scout Program, funded by
the Foundation, whereby bryostatin will continue to be tested using mouse models. We intend to further explore whether bryostatin
will activate key synaptic growth factors that are deficient in patients suffering from Rett Syndrome.
We are also advancing our drug development
program through a licensing agreement with Stanford regarding the synthesis of bryologs and related technology.
Critical Accounting Policies, Estimates,
and Judgments
Our financial statements are prepared in
accordance with accounting principles that are generally accepted in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting
period. We continually evaluate our estimates and judgments, the most critical of which are those related to accounting for equity
compensation and our commitments to strategic alliance partners and the timing of the achievement of collaboration milestones.
We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances.
Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates
identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and
related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and
expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical
experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur
as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.
There have been no changes in accounting
policies during the six months ended June 30, 2018.
Comparison of the six months ended
June 30, 2018 and June 30, 2017
The following table summarizes our results
of operations for the six months ended June 30, 2018 and 2017:
|
|
Six Months ended June 30,
|
|
|
Dollar
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
% Change
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
0
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses – Related Party
|
|
$
|
162,893
|
|
|
$
|
89,188
|
|
|
$
|
73,705
|
|
|
|
82.6
|
%
|
Research and development expenses – Other
|
|
$
|
776,179
|
|
|
$
|
2,917,971
|
|
|
$
|
(2,141,792
|
)
|
|
|
(73.4
|
)%
|
General and administrative expenses – Related party
|
|
$
|
25,000
|
|
|
$
|
14,418
|
|
|
$
|
10,582
|
|
|
|
73.4
|
%
|
General and administrative expenses – Other
|
|
$
|
2,075,376
|
|
|
$
|
2,581,000
|
|
|
$
|
(505,624
|
)
|
|
|
(19.6
|
)%
|
Stock based compensation expenses – Related Party
|
|
$
|
174,936
|
|
|
$
|
66,803
|
|
|
$
|
108,133
|
|
|
|
161.9
|
%
|
Stock based compensation expenses - Other
|
|
$
|
952,201
|
|
|
$
|
384,518
|
|
|
$
|
567,683
|
|
|
|
147.6
|
%
|
Other income, net
|
|
$
|
55,397
|
|
|
$
|
45,782
|
|
|
$
|
9,615
|
|
|
|
21.0
|
%
|
Net loss
|
|
$
|
4,111,188
|
|
|
$
|
6,008,116
|
|
|
$
|
(1,896,928
|
)
|
|
|
(31.6
|
)%
|
Revenues
We did not generate any revenues for the
six months ended June 30, 2018 and 2017.
Operating Expenses
Overview
Total operating expenses for the six months
ended June 30, 2018 were $4,166,585 as compared to $6,053,898 for the six months ended June 30, 2017, a decrease of approximately
31%. The decrease in total operating expenses is due primarily to the decrease in research and development expenses associated
primarily with completing our Phase 2 clinical trial in AD offset by the initiation of our confirmatory Phase 2 trial and a decrease
in our general and administrative expenses, offset by the increase in related party research and development expenses and an increase
in stock-based compensation expenses.
Research and Development Expenses
For the six months ended June 30, 2018,
we incurred $162,893 of research and development expenses with a related party as compared to $89,188 for the six months ended
June 30, 2017. The total amounts incurred during the six months ended June 30, 2018 were for patent maintenance expenses versus
the total amounts incurred during the six months ended June 30, 2017 which consisted of lab testing of drug materials.
For the six months ended June 30, 2018,
we incurred $776,179 in research and development expenses with non-related parties as compared to $2,917,971 for the six months
ended June 30, 2017. These expenses were incurred pursuant to developing the potential AD therapeutic product, specifically expenses
relating to the Phase 2 clinical trial for AD and products relating to orphan drug indications. Of these expenses, for the six
months ended June 30, 2018, a credit of $163,400 was reflected related to closing out our AD Phase 2 clinical trial, which was
substantially completed in 2017, plus $832,011 incurred relating to our current confirmatory clinical trial, and related storage
of drug product, $72,372 for clinical consulting services, $20,735 of amortization of prepaid licensing fees relating to the Stanford
and Mount Sinai license agreements and $14,461 for development of alternative drug supply with Stanford University as compared
to, for the six months ended June 30, 2017, $2,599,302 related to conducting our AD Phase 2 clinical trials and related storage
of drug product, $251,218 for clinical consulting services, $40,189 of licensing payment amortization relating to the Stanford
and Mount Sinai license agreements, $12,000 for orphan drug development costs and $15,262 for development of alternative drug supply
with Stanford University. We expect our research and development expenses to increase, as our resources permit, in order to advance
our potential products specifically relating to conducting our next Phase 2 confirmatory clinical trial.
General and Administrative Expenses
We incurred related party general and administrative
expenses totaling $25,000 for the six months ended June 30, 2018 as compared to $14,418 for the six months ended June 30, 2017.
The amounts for the six months ended June 30, 2018 and 2017, respectively, are attributable to director fees paid to members of
the Board of Directors.
We incurred $2,075,376 and $2,581,000 of
other general and administrative expenses for the six months ended June 30, 2018 and 2017, respectively, a decrease of approximately
20%. Of the amounts for the six months ended June 30, 2018, as compared to the comparable 2017 period: $835,173 was incurred primarily
for wages, vacation pay, severance, taxes and insurance, versus $875,344 for the 2017 comparable period; $279,176 was incurred
for ongoing legal expenses associated with ongoing obligations, regulatory compliance and litigation, versus $781,431 for the 2017
comparable period as the Company incurred additional expenses relating to regulatory matters, $308,275 was incurred for outside
operations consulting services, as we paid certain consulting fees of $160,375 to recruiting consultants for our recent CEO executive
search, versus $195,476 for the 2017 comparable period; $90,130 was incurred for travel expenses, versus $93,493 for the 2017 comparable
period; $168,186 was incurred for investor relations services versus $220,513 for the 2017 comparable period which included expenses
relating to announcing top-line results of our Phase 2 clinical trial; $84,552 was incurred for professional fees associated with
auditing, financial, accounting and tax advisory services, versus $102,755 for the 2017 comparable period; $214,208 was incurred
for insurance, with the increase primarily relating to increased coverages, versus $178,473 for the 2017 comparable period; and
$95,675 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other versus $133,518 for the 2017
comparable period which included expenses associated with the listing of our common stock on the Nasdaq Capital Market.
Stock Based Compensation Expenses
We incurred related party non-cash expenses
totaling $174,936 and $66,803 for the six months ended June 30, 2018 and 2017, respectively. The increase is primarily attributable
to newly issued stock options in late 2017.
We incurred $952,201 and $384,518 of non-related
party non-cash expenses for the six months ended June 30, 2018 and 2017, respectively. The increase for the comparable period is
attributable to newly issued stock options in late 2017.
Other Income, net
We earned $55,397 of interest income for
the six months ended June 30, 2018 as compared to $26,457 for the six months ended June 30, 2017 on funds temporarily deposited
in interest bearing money market accounts. In addition, during the six months ended June 30, 2017, we incurred a loss of
$34,274 from abandonment of furniture and fixtures relating to the closing of our Newark, New Jersey Office and a gain of $53,599
upon settlement of our Newark, New Jersey lease obligation.
Net loss and loss per share
We incurred losses of $4,111,188 and $6,008,116
for the six months ended June 30, 2018 and 2017, respectively. The decreased loss was primarily attributable to our decrease in
expenses associated with our current Phase 2 clinical trial and the decrease in our general and administrative expenses, offset
by the increases in stock-based compensation expense and our related party research and development activities. Earnings (losses)
per common share were ($0.52) and ($0.82) for the six months ended June 30, 2018 and 2017, respectively. The decrease in loss per
share is primarily attributable to the increased weighted average common shares outstanding and the decrease in net loss.
The computation of diluted loss per share
for the six months ended June 30, 2018 excludes 5,101,440 warrants and options to purchase 1,326,463 shares of our common stock
as they are anti-dilutive due to our net loss. For the six months ended June 30, 2017, the computation excludes 5,115,274 warrants
and options to purchase 683,235 shares of our common stock, as they are anti-dilutive due to our net loss.
Comparison of the three months ended
June 30, 2018 and June 30, 2017
The following table summarizes our results
of operations for the three months ended June 30, 2018 and 2017:
|
|
Three Months ended June 30,
|
|
|
Dollar
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
% Change
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
0
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses – Related Party
|
|
$
|
50,000
|
|
|
$
|
76,733
|
|
|
$
|
(26,733
|
)
|
|
|
(34.8
|
)%
|
Research and development expenses – Other
|
|
$
|
686,929
|
|
|
$
|
1,287,957
|
|
|
$
|
(601,028
|
)
|
|
|
(46.7
|
)%
|
General and administrative expenses – Related party
|
|
$
|
12,500
|
|
|
$
|
12,500
|
|
|
$
|
0
|
|
|
|
0
|
%
|
General and administrative expenses – Other
|
|
$
|
953,055
|
|
|
$
|
1,357,899
|
|
|
$
|
(404,844
|
)
|
|
|
(29.8
|
)%
|
Stock based compensation expenses – Related Party
|
|
$
|
61,803
|
|
|
$
|
33,586
|
|
|
$
|
28,217
|
|
|
|
84.0
|
%
|
Stock based compensation expenses - Other
|
|
$
|
389,638
|
|
|
$
|
195,003
|
|
|
$
|
194,635
|
|
|
|
99.8
|
%
|
Other income, net
|
|
$
|
31,399
|
|
|
$
|
17,783
|
|
|
$
|
13,616
|
|
|
|
76.6
|
%
|
Net loss
|
|
$
|
2,122,526
|
|
|
$
|
2,945,895
|
|
|
$
|
(823,369
|
)
|
|
|
(27.9
|
)%
|
Revenues
We did not generate any revenues for the
three months ended June 30, 2018 and 2017.
Operating Expenses
Overview
Total operating expenses for the three
months ended June 30, 2018 were $2,153,925 as compared to $2,963,678 for the three months ended June 30, 2017, a decrease of approximately
27%. The decrease in total operating expenses is due primarily to the decrease in research and development expenses associated
primarily with completing our Phase 2 clinical trial in AD, offset by the initiation of our confirmatory Phase 2 trial and a decrease
in our general and administrative expenses, offset by the increase in related party research and development expenses and an increase
in stock-based compensation expenses.
Research and Development Expenses
For the three months ended June 30, 2018,
we incurred $50,000 of research and development expenses with a related party as compared to $76,733 for the three months ended
June 30, 2017. The total amounts incurred during the three months ended June 30, 2018 were for patent maintenance expenses versus
the total amounts incurred during the three months ended June 30, 2017 which consisted of lab testing of drug materials.
For the three months ended June 30, 2018,
we incurred $686,929 in research and development expenses with non-related parties as compared to $1,287,957 for the three months
ended June 30, 2017. These expenses were incurred pursuant to developing the potential AD therapeutic product, specifically expenses
relating to the initiation of our confirmatory Phase 2 clinical trial for AD and products relating to orphan drug indications.
Of these expenses, for the three months ended June 30, 2018, a credit of $163,400 was reflected related to closing out our previous
AD Phase 2 clinical trial which was substantially completed in 2017, plus $800,677 relating to our current confirmatory Phase 2
clinical trial, and related storage of drug product, $34,479 for clinical consulting services, $9,128 of amortization of prepaid
licensing fees relating to the Stanford and Mount Sinai license agreements and $6,045 for development of alternative drug supply
with Stanford University as compared to, for the three months ended June 30, 2017, $1,083,243 related to conducting our AD Phase
2 clinical trials and related storage of drug product, $168,782 for clinical consulting services, $22,454 of licensing payment
amortization relating to the Stanford and Mount Sinai license agreements, $6,000 for orphan drug development costs and $7,478 for
development of alternative drug supply with Stanford University. We expect our research and development expenses to increase, as
our resources permit, in order to advance our potential products specifically relating to conducting our next Phase 2 confirmatory
clinical trial.
General and Administrative Expenses
We incurred related party general and administrative
expenses totaling $12,500 for the three months ended June 30, 2018 and 2017. The amounts for the three months ended June 30, 2018
and 2017, respectively, are attributable to director fees paid to members of the Board of Directors.
We incurred $953,055 and $1,357,899 of
other general and administrative expenses for the three months ended June 30, 2018 and 2017, respectively, a decrease of approximately
30%. Of the amounts for the three months ended June 30, 2018, as compared to the comparable 2017 period: $448,511 was incurred
primarily for wages, vacation pay, severance, taxes and insurance, versus $436,874 for the 2017 comparable period; $126,826 was
incurred for ongoing legal expenses associated with ongoing obligations, regulatory compliance and litigation, versus $449,779
for the 2017 comparable period which included expenses relating to regulatory matters, $95,041 was incurred for outside operations
consulting services, as we paid certain consulting fees of $160,375 to recruiting consultants for our recent CEO executive search,
versus $90,615 for the 2017 comparable period; $42,183 was incurred for travel expenses, versus $46,814 for the 2017 comparable
period; $54,154 was incurred for investor relations services versus $132,448 for the 2017 comparable period primarily relating
to announcing top-line results of our Phase 2 clinical trial; $22,225 was incurred for professional fees associated with auditing,
financial, accounting and tax advisory services, versus $31,055 for the 2017 comparable period; $107,129 was incurred for insurance,
with the increase primarily relating to increased coverages, versus $123,471 for the 2017 comparable period, and; $56,986 was incurred
for utilities, supplies, license fees, filing costs, rent, advertising and other versus $46,843 for the 2017 comparable period.
Stock Based Compensation Expenses
We incurred related party non-cash expenses
totaling $61,803 and $33,586 for the three months ended June 30, 2018 and 2017, respectively. The increase is primarily attributable
to newly issued stock options in late 2017.
We incurred $389,638 and $195,003 of non-related
party non-cash expenses for the three months ended June 30, 2018 and 2017, respectively. The increase for the comparable period
is attributable to newly issued stock options in late 2017.
Other Income, net
We earned $31,399 of interest income for
the three months ended June 30, 2018 as compared to $17,783 for the three months ended June 30, 2017 on funds temporarily deposited
in interest bearing money market accounts.
Net loss and loss per share
We incurred losses of $2,122,526 and $2,945,895
for the three months ended June 30, 2018 and 2017, respectively. The decreased loss was primarily attributable to our decrease
in expenses associated with our current Phase 2 clinical trial and the decrease in our general and administrative expenses, offset
by the increases in stock-based compensation expense and our related party research and development activities. Earnings (losses)
per common share were ($0.27) and ($0.38) for the three months ended June 30, 2018 and 2017, respectively. The decrease in loss
per share is primarily attributable to the increased weighted average common shares outstanding and the decrease in net loss.
The computation of diluted loss per share
for the three months ended June 30, 2018 excludes 5,101,440 warrants and options to purchase 1,326,463 shares of our common stock
as they are anti-dilutive due to our net loss. For the three months ended June 30, 2017, the computation excludes 5,115,274 warrants
and options to purchase 683,235 shares of our common stock, as they are anti-dilutive due to our net loss.
Financial Condition, Liquidity and Capital
Resources
Cash and Working Capital
Since inception, we have incurred negative
cash flows from operations. As of June 30, 2018, we had an accumulated deficit of $66,770,995 and had working capital of $11,884,099
as compared to working capital of $14,865,304 as of December 31, 2017. The $2,981,205 decrease in working capital was primarily
attributable to expenditures relating to development of a potential therapeutic product and general and administrative expenses,
which resulted in a net loss, excluding non-cash stock compensation expense, of $1,127,143 for the six months ended June 30, 2018,
partially offset by net proceeds from the exercise of warrants totaling $4,427.
Sources and Uses of Liquidity
Since inception, we have satisfied our
operating cash requirements from the private placement of equity securities sold principally to outside investors. We expect to
continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as
we continue to develop AD therapeutic products. We anticipate that this development will include continuing our current clinical
trials as well as new clinical trials and additional research and development expenditures.
|
|
Six Months ended June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Cash used in operating activities
|
|
$
|
(4,294,491
|
)
|
|
$
|
(5,635,289
|
)
|
Cash used in investing activities
|
|
|
(3,186
|
)
|
|
|
(3,585
|
)
|
Cash provided by financing activities
|
|
|
4,427
|
|
|
|
1,331,265
|
|
Net Cash Used in Operating Activities
Cash used in operating activities was $4,294,491
for the six months ended June 30, 2018, compared to $5,635,289 for the six months ended June 30, 2017. The $1,340,798 decrease
primarily resulted from the decreased net loss, the utilization of prepaid expenses and a decrease in accounts payable and accrued
expenses, for the six months ended June 30, 2018.
Net Cash Used in Investing Activities
Net cash used in investing activities was
$3,186 for the six months ended June 30, 2018 compared to $3,585 for the six months ended June 30 2017. The cash used in investing
activities was for capital expenditures.
Net Cash Provided by Financing Activities
Net cash provided by financing activities
was $4,427 for the six months ended June 30, 2018 compared to net cash provided by financing activities of $1,331,265 for the six
months ended June 30, 2017. The cash provided by financing activities during the six months ended June 30, 2018 and 2017, respectively,
was primarily the result of funds raised through exercise of warrants to purchase common stock from investors in our historical
private placements.
As of August 10, 2018, we have paid WCT
approximately $9.4 million relating to our recently completed Phase 2 clinical trial, representing the total for that clinical
trial, and approximately $1.2 million relating to our recently initiated confirmatory trial for deposit payments in advance of
WCT incurring expenses associated with the new trial.
As of August 10, 2018, we had approximately
$11.3 million in cash, cash equivalents. We expect that our existing capital resources will be sufficient to support our projected
operating requirements for at least the next 13 months, including the continuing development of bryostatin, our novel drug targeting
the activation of PKC epsilon. Funds are anticipated to be used to fund our confirmatory clinical study treating patients similar
to those in our recently completed Phase 2 study. We also plan to possibly initiate an open label study in Fragile X syndrome.
The balance of the funds will be used for general corporate and working capital purposes.
We expect to require additional capital
in order to initiate, pursue and complete clinical trials and development of bryostatin following our recently initiated confirmatory
clinical trial. Additional funding may not be available to us on acceptable terms, or at all. If we are unable to access additional
funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development
of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and
operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly
dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we are able to access
funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product
candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability
to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial
condition and results of operations.