The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Operations
Phio
Pharmaceuticals Corp. (“Phio,” “we,” “our” or the “Company”)
is a biotechnology company developing the next generation of immuno-oncology therapeutics based on its self-delivering RNAi (“INTASYL™”)
therapeutic platform. The Company’s efforts are focused on silencing tumor-induced suppression of the immune system through its
proprietary INTASYL platform with utility in immune cells and the tumor micro-environment. The Company’s goal is to develop powerful
INTASYL therapeutic compounds that can weaponize immune effector cells to overcome tumor immune escape, thereby potentially providing
patients with a powerful new treatment option that goes beyond current treatment modalities.
In December 2019, a novel
strain of coronavirus that causes COVID-19 was reported to have surfaced in Wuhan, China and has since spread to other parts of the world,
including the United States. In March 2020, the World Health Organization (the “WHO”) declared the outbreak a pandemic.
Our operations are being conducted in accordance with federal, state, WHO and the Center for Disease Control’s guidelines, including
the implementation of safety measures such as working remotely and flexible scheduling.
As a result of the coronavirus
pandemic, certain of our third-party suppliers and service providers on which we rely have seen impacts to their operations. The Company
has undertaken efforts to mitigate potential future impacts by identifying and engaging alternative third-party service providers and
suppliers, and because of that, the Company had been able to limit the impact of delays from our third-party service providers to its
program’s anticipated timelines. However, the continued impacts to our third-party service providers, including, for example, limited
availability in certain services and supplies, have now started to significantly affect our operations in the second quarter of 2021 resulting
in delays to certain of our clinical program timelines. If measures to contain the pandemic are insufficient, it could further reduce
or delay the availability of supplies and services that we purchase and rely on, which may in turn further slow or delay our preclinical
and clinical activities.
We believe that the coronavirus pandemic has not
had a significant impact on our financial condition to date; however a variety of factors such as those described above, may
further impact our operations and slow or diminish our research and development activities, which in turn may impact our financial condition
in the future. The extent to which the coronavirus pandemic impacts our results will depend on future developments, which are highly uncertain
and cannot be predicted.
2. Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated
financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States
of America (“GAAP”). Certain information and footnote disclosures included in the Company’s annual financial
statements have been condensed or omitted. The year-end condensed balance sheet data was derived from audited financial statements, but
does not include all disclosures required by GAAP. These statements should be read in conjunction with the consolidated financial statements
and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities
and Exchange Commission (the “SEC”). In the opinion of management, all
adjustments (including normal recurring accruals) considered necessary for a fair presentation of the condensed consolidated financial
statements have been included. Interim results are not necessarily indicative of results for a full year.
Principles of Consolidation
The condensed consolidated financial statements
include the accounts of Phio and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated
in consolidation.
Uses of Estimates in Preparation of Financial Statements
The preparation of financial statements in accordance
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. The areas subject to significant estimates and judgement include, among others, those related to the fair value
of equity awards, accruals for research and development expenses, useful lives of property and equipment, income taxes, and our valuation
allowance on our deferred tax assets. On an ongoing basis we evaluate our estimates and base our estimates on historical experience and
other relevant assumptions that we believe are reasonable under the circumstances, including as a result of new information that may emerge
concerning the coronavirus pandemic. We have made estimates of the impact of the coronavirus pandemic within our financial statements
and there may be changes to those estimates in future periods. Actual results could differ materially from these estimates.
Restricted Cash
Restricted cash consists of certificates of deposit
held by financial institutions as collateral for the Company’s corporate credit cards.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet
for restricted cash, accounts payable and accrued expenses approximate their fair values due to their short-term nature.
Leases
At the inception of a
contract, the Company determines whether the contract is or contains a lease based on all relevant facts and circumstances. For contracts
that contain a lease, the Company identifies the lease and non-lease components, determines the consideration in the contract and recognizes
the classification of the lease as operating or financing. For leases with a term greater than one year, the Company recognizes a liability
to make lease payments and an asset representing the right to use the underlying asset during the lease term at the commencement date
of the lease.
Lease liabilities and the corresponding right of
use assets are recorded based on the present value of lease payments to be made over the lease term. The discount rate used to calculate
the present value is the rate implicit in the lease, or if not readily determinable, the Company’s incremental borrowing rate. The
Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis
over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right of use asset
may be required for items such as initial direct costs or incentives received. Lease payments on operating leases are recognized on a
straight-line basis over the expected term of the lease. Lease payments on financing leases are recognized using the effective interest
method.
Debt
On March 27, 2020, the
United States enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in response to the coronavirus
pandemic. The CARES Act is an emergency economic stimulus package passed in response to the coronavirus outbreak that includes, but is
not limited to, provisions providing aid to small businesses in the form of loans and grants and numerous tax provisions including, certain
payroll tax benefits, changes to the net operating loss rules and changes to the business interest expense deduction rules. On May 11,
2020, the Company received loan proceeds pursuant to the Paycheck Protection Program (the “PPP”) offered under the
CARES Act, and the loan was subsequently forgiven in February 2021. Outside of the PPP, the Company has not utilized the other loan programs
and tax provisions, such as certain payroll tax benefits.
The Company followed the
guidance under the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”)
Topic 470, “Debt” (“ASC 470”) in assessing the accounting for the PPP loan proceeds. Per ASC 470,
the Company recorded a liability on the balance sheet for the full amount of PPP loan proceeds received and accrued interest over the
term of the loan. Upon loan forgiveness, the Company recognized the extinguishment of the liability in the condensed consolidated statement
of operations as a gain on extinguishment of debt.
Derivative Financial Instruments
Financial instruments that meet the definition
of a derivative are classified as an asset or liability and measured at fair value on the issuance date and are revalued on each subsequent
balance sheet date. The changes in fair value are recognized as current period income or loss. Financial instruments that do not meet
the definition of a derivative are classified as equity and measured at fair value and recorded as additional paid-in capital in stockholders’
equity at the date of issuance. No further adjustments to their valuation are made.
Research and Development Expenses
Research
and development expenses relate to compensation and benefits for research and development personnel, facility-related expenses, supplies,
external services, costs to acquire technology licenses, expenses associated with preclinical and clinical development activities and
other operating costs. Research and development expenses are charged to expense as incurred. Payments made by the Company in advance for
research and development services not yet provided and/or for materials not yet received are recorded as prepaid expenses and expensed
when the service has been performed or when the goods have been received.
Accrued liabilities
are recorded related to those expenses for which vendors have not yet billed the Company with respect to services provided and/or materials
that it has received. Accrued liabilities for the services provided by contract research organizations (“CROs”) are
recorded during the period incurred based on such estimates and assumptions as expected cost, passage of time, the achievement of milestones
and other information available to us and are assessed on a quarterly basis. Actual results may differ from these estimates and could
have a material impact on the Company’s reported results. The Company’s historical accrual estimates have not been materially
different from its actual costs.
Stock-based Compensation
The
Company follows the provisions of the FASB ASC Topic 718, “Compensation — Stock Compensation” (“ASC
718”), which requires the measurement and recognition of compensation expense for all stock-based payment awards. The fair
value of restricted stock units is based upon the Company’s closing stock price at the grant date. The Company uses the Black-Scholes
option-pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes valuation model requires the input
of valuation assumptions to calculate the value of stock options, including expected volatility, expected term, risk-free interest rate
and expected dividends. Stock-based compensation expense is recognized over the requisite service period, which generally represents
the vesting period, and commences at the date of grant based on the fair value of the award.
Stock-based
compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest. Accordingly, we
are also required to estimate forfeitures at the time of grant and to revise those estimates in subsequent periods if actual forfeitures
differ from estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense
only for those awards that are expected to vest. Our forfeiture rate estimates are based on an analysis of our actual forfeiture experience,
employee turnover behavior, and other factors. The impact of any adjustments to our forfeiture rates is recorded as a cumulative adjustment
in the period of adjustment. To the extent that actual forfeitures differ from our estimates, the difference is recorded as a cumulative
adjustment in the period the estimates are revised.
Comprehensive Loss
The Company’s comprehensive loss is equal
to its net loss for all periods presented.
Net Loss per Share
Basic net
loss per share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted net loss per share
is computed by dividing the Company’s net loss by the weighted average number of common shares outstanding and the impact of all
dilutive potential common shares outstanding, except where such dilutive potential common shares would be anti-dilutive. Dilutive potential
common shares primarily consist of warrants, restricted stock units and stock options.
3. Liquidity and Going Concern
The Company has reported
recurring losses from operations since its inception and expects to continue to have negative cash flows from operations for the foreseeable
future. Historically, the Company’s primary source of funding has been from the sales of its securities. The Company’s ability
to continue to fund its operations is dependent on obtaining funding from third parties, such as proceeds from the issuance of debt, sale
of equity, or strategic opportunities, in order to maintain its operations. This is dependent on a number of factors, including the market
demand or liquidity of the Company’s common stock. There is no guarantee that debt, additional equity or other funding will be available
to us on acceptable terms, or at all. If we fail to obtain additional funding when needed, we would be forced to scale back or terminate
our operations or seek to merge with or to be acquired by another company.
While we believe that
the coronavirus pandemic has not had a significant impact on our financial condition and results of operations at this time, the potential
economic impact brought by, and the duration of, the coronavirus pandemic is difficult to assess or predict. There may be developments
outside of our control that require us to adjust our operating plans and given the nature of the situation, we cannot reasonably estimate
the impact of the coronavirus pandemic on our financial condition, results of operations or cash flows in the future.
The Company believes that
its existing cash should be sufficient to fund operations for at least the next 12 months from
the date of the release of these financial statements.
4. Recent Accounting Pronouncements
In December 2019, the FASB issued Accounting Standards
Update (“ASU”) 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”
(“ASU 2019-12”). The amendments in the update simplify the accounting for income taxes by eliminating the exceptions
related to the incremental approach for intraperiod tax allocation, the recognition of a deferred tax liability for equity method investments,
not recognizing a deferred tax liability for a foreign subsidiary and the general methodology for calculating income taxes in an interim
period. The amendments also clarify and simplify other aspects of the accounting for income taxes. The amendments in ASU 2019-12
are effective for public entities for fiscal years, and the interim periods within those fiscal years, beginning after December 20, 2020.
The Company adopted ASU 2019-12 on January 1, 2021. The adoption of this standard did not have a material impact on the Company’s
consolidated financial statements.
In August 2020, the FASB issued
ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts
in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”), which simplifies the accounting
for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an
entity’s own equity. ASU 2020-06 is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity
in U.S. GAAP. For convertible instruments, the accounting models for instruments issued with beneficial conversion features or cash
conversion features are removed. For contracts in an entity’s own equity, ASU 2020-06 simplifies the settlement assessment
by removing the requirements to (1) consider whether the contract would be settled in registered shares, (2) consider whether collateral
is required to be posted, and (3) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023,
and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December
15, 2020, and interim periods within those fiscal years. The Company early adopted ASU 2020-06 on January 1, 2021. The adoption of this
standard did not have an impact on the Company’s consolidated financial statements.
In May 2021,
the FASB issued ASU 2021-04, “Earnings per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50),
Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic
815-40)” (“ASU 2021-04”). The amendments in the updates are intended to clarify and reduce diversity in an
issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified
after modification or exchange. The amendments in ASU 2021-04 are effective for all entities for fiscal years beginning after December
15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or
exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including within an
interim period. The Company is evaluating the potential impact of this guidance on its consolidated financial statements and related disclosures.
5. Leases
In January 2019, the Company amended the lease for its corporate headquarters and primary research facility in Marlborough, Massachusetts. The lease is for a total of 7,581 square feet of office and laboratory space and will expire on March 31, 2024. The lease contains an option to terminate after two or three years by providing advance written notice of termination pursuant to the terms of the agreement. The exercise of this option is not determined to be reasonably certain and thus is not included in the lease liability on the Company’s balance sheet. Additionally, the lease agreement did not contain information to determine the borrowing rate implicit in the lease. As such, the Company calculated its incremental borrowing rate based on what the Company would have to pay to borrow on a collateralized basis over the lease term for an amount equal to the remaining lease payments, taking into consideration such assumptions as, but not limited to, the U.S. treasury yield rate and borrowing rates from a creditworthy financial institution using the above lease factors.
The
lease for our corporate headquarters represents substantially all of our significant lease obligations. The amounts reported in the condensed
consolidated balance sheets for operating leases in which the Company is the lessee and other supplemental balance sheet information
is set forth as follows, in thousands, except the lease term (number of years) and discount rate:
Schedule of lease and supplemental balance sheet information
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Assets
|
|
|
|
|
|
|
|
|
Right of use asset
|
|
$
|
342
|
|
|
$
|
400
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Lease liability, current
|
|
$
|
120
|
|
|
$
|
116
|
|
Lease liability, non-current
|
|
|
234
|
|
|
|
295
|
|
Total lease liability
|
|
$
|
354
|
|
|
$
|
411
|
|
Lease Term and Discount Rate
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term
|
|
|
2.75
|
|
|
|
3.71
|
|
Weighted average discount rate
|
|
|
4.70
|
%
|
|
|
4.70
|
%
|
Operating lease costs included in operating expense were $33,000 for the three months ended June 30, 2021 and 2020. Operating lease costs included in operating expense were $66,000 for the six months ended June 30, 2021 and 2020. Short-term lease costs were not material for the three and six months ended June 30, 2021 and 2020.
Cash paid for the amounts included in the measurement
of the operating lease liability on the Company’s condensed consolidated balance sheets and included within changes in the lease
liability in the operating activities of our condensed consolidated statements of cash flows was $33,100 and $32,200 for the three months
June 30, 2021 and 2020, respectively. Cash paid for the six months ended June 30, 2021 and 2020 was $65,300 and $63,400, respectively.
Future lease payments for
our non-cancellable operating leases and a reconciliation to the carrying amount of the operating lease liability presented in the condensed
consolidated balance sheet as of June 30, 2021 is as follows, in thousands:
Schedule of future minimum lease payments
|
|
|
|
|
2021 (remaining)
|
|
$
|
66
|
|
2022
|
|
|
135
|
|
2023
|
|
|
140
|
|
2024
|
|
|
35
|
|
Total lease payments
|
|
|
376
|
|
Less: Imputed interest
|
|
|
(22
|
)
|
Total operating lease liabilities (includes current portion)
|
|
$
|
354
|
|
6. Debt
On May 11,
2020, the Company received loan proceeds in the amount of $231,252 from Bank of America, N.A., as lender, pursuant to the PPP under the
CARES Act. The PPP loan had a maturity date of May 11, 2022, interest at a rate of 1% per year and monthly principal and interest payments
that were deferred to the date that the Small Business Administration (the “SBA”) remitted the borrower’s loan
forgiveness amount to the lender. When applying for the PPP loan, the Company carefully assessed the requirements for application under
the program and believed that the loan was necessary to support its operations. The loans under the PPP may be forgiven if used for eligible
purposes, including payroll, benefits, rent and utilities.
The Company followed the guidance under ASC 470 in assessing the accounting for the PPP loan proceeds. Per ASC 470, the Company recorded a liability on the balance sheet for the full amount of PPP loan proceeds received and accrued interest over the term of the loan. The Company believed it used the loan proceeds for eligible purposes and applied for full loan forgiveness. On February 18, 2021, the SBA approved the Company’s application for full loan forgiveness, and the full amount of the PPP loan was remitted to the lender for forgiveness. Upon loan forgiveness, the Company recognized a gain on the extinguishment of debt of $233,000 for the loan proceeds received and interest accrued in the condensed consolidated statements of operations for the six months ended June 30, 2021.
7. Stockholders’ Equity
January
2021 Private Placement — On January 25, 2021, the Company completed a private placement of 4,420,863
shares of the Company’s common stock at a purchase price per share of $3.07,
pre-funded warrants to purchase an aggregate of 140,065
shares of the Company’s common stock (the “January 2021 Pre-Funded Warrants”) at a purchase price per
pre-funded warrant share of $3.069
and warrants to purchase an aggregate of 3,420,696
shares of the Company’s common stock with an exercise price of $3.00
per warrant share (the “January 2021 Warrants”) (the “Private Placement”). In connection
with the Private Placement, the Company issued warrants to the placement agent, H.C. Wainwright & Co., LLC (“HCW”),
to purchase a total of 342,070
shares of the Company’s common stock at an exercise price of $3.8375
(the “January 2021 Placement Agent Warrants”). Net proceeds to the Company from the Private Placement were
$12,669,000
after deducting placement agent fees and offering expenses.
February 2021 Registered
Direct Offering — On February 17, 2021, the Company completed a registered direct offering of 2,246,784 shares of the Company’s
common stock at a purchase price of $3.42 per share (the “Offering”). In connection with the Offering, the Company
issued warrants to the placement agent, HCW, to purchase a total of 168,509 shares of the Company’s common stock at an exercise
price of $4.275 (the “February 2021 Placement Agent Warrants”). Net proceeds to the Company from the Offering were
$6,908,000 after deducting placement agent fees and offering expenses.
February 2020 Registered Direct Offering and
Private Placement — On February 6, 2020, the Company completed a registered direct offering (the “February 2020
Registered Offering”) of 197,056 shares of the Company’s common stock at a purchase price of $8.705 per share and in a
concurrent private placement, sold warrants to purchase an aggregate of 197,056 shares of the Company’s common stock at a purchase
price of $0.125 per underlying warrant share and with an exercise price of $8.71 per share (the “February 2020 Registered Direct
Warrants”). In connection with the February 2020 Registered Offering, the Company also issued warrants to purchase a total of
14,779 shares of the Company’s common stock with an exercise price of $11.0375 per share (the “February 2020 Placement
Agent Warrants”) to the placement agent, HCW. Net proceeds to the Company from the February 2020 Registered Offering were $1,467,000
after deducting placement agent fees and offering expenses paid by the Company.
February 2020 Underwritten
Public Offering — On February 13, 2020, the Company completed an underwritten public offering of 993,633
shares of the Company’s common stock at a purchase price per share of $4.00,
pre-funded warrants (the “2020 Pre-Funded Warrants”) to purchase an aggregate of 1,006,367
shares of the Company’s common stock at a purchase price per pre-funded warrant share of $3.999
and warrants (the “February 2020 Warrants”) to purchase an aggregate of 2,000,000
shares of the Company’s common stock with an exercise price of $4.00
per warrant shares (the “February 2020 Underwritten Offering”). The 2020 Pre-Funded Warrants were immediately
exercisable at an exercise price per share of $0.001
and each share of Company common stock or 2020 Pre-Funded Warrant, as applicable, was sold with a February 2020 Warrant. In connection
with the February 2020 Underwritten Offering, the Company issued warrants to purchase up to 150,000
shares of Company common stock, immediately exercisable at an exercise price of $5.00
per share (the “February 2020 Underwriter Warrants”) to HCW, as underwriter.
In connection with the February 2020 Underwritten
Offering, the Company also granted to the underwriter, HCW, a 30-day option to purchase up to an additional 300,000 shares of the
Company’s common stock at a purchase price of $3.999 per such share and/or warrants to purchase up to 300,000 shares of the Company’s
common stock at a purchase price of $0.001 per such warrant. Such warrants have the same terms as the February 2020 Warrants. On February
12, 2020, HCW exercised its option to purchase warrants to purchase an aggregate of 300,000 shares of the Company’s common stock.
Net proceeds from the February 2020 Underwritten
Offering were $7,093,000 after deducting underwriting discounts and commissions and offering expenses paid by the Company.
April 2020 Registered
Direct Offering and Private Placement — On April 2, 2020, the Company completed a registered direct offering (the
“April 2020 Offering”) of 1,713,064 shares
of the Company’s common stock at a purchase price of $2.21 per
share and in a concurrent private placement, sold warrants to purchase an aggregate of 1,713,064 shares
of the Company’s common stock at a purchase price of $0.125 per
underlying warrant share and with an exercise price of $2.21 per
share (the “April 2020 Warrants”). In connection with the April 2020 Offering, the Company also issued warrants
to purchase a total of 128,480
shares of the Company’s common stock with an exercise price of $2.9188
per share (the “April 2020 Placement Agent Warrants”) to the placement agent, HCW. Net proceeds to the Company
from the April 2020 Offering were $3,527,000 after
deducting placement agent fees and offering expenses paid by the Company.
Warrants
The Company
first assesses the warrants it issues under the FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC
480”) to determine whether they are within the scope of ASC 480. As there were no instances outside of the Company’s control
that could require cash settlement of the warrants issued in the Private Placement and Offering, as well as warrants issued in the Company’s
prior financing transactions, the warrants are outside the scope of ASC 480.
The Company
then applies and follows the applicable accounting guidance in ASC 815. Financial instruments are accounted for as either derivative liabilities
or as equity instruments depending on the specific terms of the agreement. The warrants issued in the Private Placement and the Offering
do not meet the definition of a derivative instrument as they are indexed to the Company’s common stock and classified within stockholders’
equity, as are the warrants issued in the Company’s prior financing transactions. Based on this determination, the Company’s
warrants are classified within stockholders’ equity.
The following table summarizes
the Company’s outstanding equity-classified warrants at June 30, 2021:
Summary of outstanding warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
Expiration
|
|
Balance
December
31,
|
|
|
Warrants
|
|
|
Warrants
|
|
|
Warrants
|
|
|
Balance
June
30,
|
|
Description
|
|
Price
|
|
|
Date
|
|
2020
|
|
|
Issued
|
|
|
Exercised
|
|
|
Expired
|
|
|
2021
|
|
December 2016 Warrants
|
|
$
|
495.00
|
|
|
12/21/2021
|
|
|
23,233
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
23,233
|
|
April 2018 Warrants
|
|
$
|
173.25
|
|
|
5/31/2023
|
|
|
20,599
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
20,599
|
|
April 2018 Placement Agent Warrants
|
|
$
|
223.00
|
|
|
4/9/2023
|
|
|
1,373
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,373
|
|
October 2018 Warrants
|
|
$
|
10.45
|
|
|
10/3/2025
|
|
|
389,610
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
389,610
|
|
October 2018 Underwriter Warrants
|
|
$
|
13.06
|
|
|
10/1/2023
|
|
|
29,220
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
29,220
|
|
November 2019 Placement Agent Warrants
|
|
$
|
6.875
|
|
|
11/18/2024
|
|
|
13,636
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
13,636
|
|
February 2020 Registered Direct Warrants
|
|
$
|
8.71
|
|
|
8/6/2025
|
|
|
197,056
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
197,056
|
|
February 2020 Placement Agent Warrants
|
|
$
|
11.0375
|
|
|
2/4/2025
|
|
|
14,779
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
14,779
|
|
February 2020 Underwritten Offering Warrants
|
|
$
|
4.00
|
|
|
2/13/2025
|
|
|
1,326,500
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,326,500
|
|
February 2020 Underwriter Warrants
|
|
$
|
5.00
|
|
|
2/11/2025
|
|
|
150,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
150,000
|
|
April 2020 Warrants
|
|
$
|
2.21
|
|
|
10/2/2025
|
|
|
1,284,798
|
|
|
|
–
|
|
|
|
(856,532
|
)
|
|
|
–
|
|
|
|
428,266
|
|
April 2020 Placement Agent Warrants
|
|
$
|
2.9188
|
|
|
3/31/2025
|
|
|
128,480
|
|
|
|
–
|
|
|
|
(86,724
|
)
|
|
|
–
|
|
|
|
41,756
|
|
January 2021 Pre-Funded Warrants
|
|
$
|
0.001
|
|
|
No expiration
|
|
|
–
|
|
|
|
140,065
|
|
|
|
(140,065
|
)
|
|
|
–
|
|
|
|
–
|
|
January 2021 Warrants
|
|
$
|
3.00
|
|
|
7/27/2026
|
|
|
–
|
|
|
|
3,420,696
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,420,696
|
|
January 2021 Placement Agent Warrants
|
|
$
|
3.8375
|
|
|
7/27/2026
|
|
|
–
|
|
|
|
342,070
|
|
|
|
–
|
|
|
|
–
|
|
|
|
342,070
|
|
February 2021 Placement Agent Warrants
|
|
$
|
4.275
|
|
|
2/12/2026
|
|
|
–
|
|
|
|
168,509
|
|
|
|
–
|
|
|
|
–
|
|
|
|
168,509
|
|
|
|
|
|
|
|
|
|
|
3,579,284
|
|
|
|
4,071,340
|
|
|
|
(1,083,321
|
)
|
|
|
–
|
|
|
|
6,567,303
|
|
No warrants were exercised during the three months
ended June 30, 2021. During the three months ended June 30, 2020, the Company received net proceeds of $3,863,000 from the exercise of
warrants. The Company received net proceeds of $2,146,000 and $3,864,000 from the exercise of warrants during the six months ended June
30, 2021 and 2020, respectively.
Of the warrants
exercised during the three and six months ended June 30, 2020, 428,266 of the Company’s April 2020 Warrants were exercised via
a cashless exercise transaction and as a result a total of 225,796 shares of common stock were issued. There were no cashless exercises
of warrants for the same periods in the current year.
8. Net Loss per Share
The following table sets
forth the potential common shares excluded from the calculation of net loss per share because their inclusion would be anti-dilutive:
Schedule of antidilutive stock
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Options to purchase common stock
|
|
|
2,499
|
|
|
|
2,637
|
|
Nonvested restricted stock units
|
|
|
335,379
|
|
|
|
11,155
|
|
Warrants to purchase common stock
|
|
|
6,567,303
|
|
|
|
3,579,284
|
|
Total
|
|
|
6,905,181
|
|
|
|
3,593,076
|
|
9. Stock-based Compensation
Restricted Stock Units
Restricted stock units (“RSUs”)
are issued under the Company’s 2020 Long-Term Incentive Plan (the “2020 Plan”) or as inducement grants issued
outside of the plan to new employees. RSUs are generally subject to graded vesting and the satisfaction of service requirements. Upon
vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock. Employee RSU recipients may elect to
net share settle upon vesting, in which case the Company pays the employee’s income taxes due upon vesting and withholds a number
of shares of equal value. The fair value of the RSUs awarded are based upon the Company’s closing stock price at the grant date
and are expensed over the requisite service period.
The following table summarizes
the activity of the Company’s RSUs for the six months ended June 30, 2021:
Summary of RSU activity
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Unvested units at December 31, 2020
|
|
|
9,699
|
|
|
$
|
19.97
|
|
Granted
|
|
|
328,250
|
|
|
|
3.07
|
|
Vested
|
|
|
(2,570
|
)
|
|
|
15.08
|
|
Forfeited
|
|
|
–
|
|
|
|
–
|
|
Unvested units at June 30, 2021
|
|
|
335,379
|
|
|
$
|
3.47
|
|
Stock-based
compensation expense related to RSUs was $124,000 and $19,000 for the three months ended June 30, 2021 and 2020, respectively. Stock-based
compensation expense related to RSUs was $181,000 and $48,000 for the six months ended June 30, 2021 and 2020, respectively.
Stock Options
Stock options
are issued under the 2020 Plan or as inducement grants issued outside of the plan to new employees. Stock options are generally subject
to graded vesting and the satisfaction of service requirements. Upon the exercise of a stock option, the Company issues new shares
and delivers them to the recipient. The Company does not expect to repurchase shares to satisfy stock option exercises.
The Company
uses the Black-Scholes option-pricing model to determine the fair value of all its option grants. The risk-free interest rate used for
each grant was based upon the yield on zero-coupon U.S. Treasury securities with a term similar to the expected life of the related option.
The Company’s expected stock price volatility assumption is based upon the Company’s own implied volatility. As the Company
has limited stock option exercise information, the expected life assumption used for option grants is based upon the simplified method
provided for under ASC 718. The dividend yield assumption is based upon the fact that the Company has never paid cash dividends and presently
has no intention of paying cash dividends.
The Company
did not grant stock options during the three and six months ended June 30, 2021 and 2020.
The following table summarizes
the activity of the Company’s stock options for the six months ended June 30, 2021:
Summary of Stock Option Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
|
Aggregate
Intrinsic
Value
|
|
Balance at December 31, 2020
|
|
|
2,570
|
|
|
$
|
3,334.06
|
|
|
|
|
|
Granted
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Cancelled
|
|
|
(71
|
)
|
|
|
946.27
|
|
|
|
|
|
Balance at June 30, 2021
|
|
|
2,499
|
|
|
$
|
3,401.90
|
|
|
$
|
–
|
|
Exercisable at June 30, 2021
|
|
|
1,807
|
|
|
$
|
4,666.97
|
|
|
$
|
–
|
|
Stock-based compensation expense related to stock
options for the three months ended June 30, 2021 and 2020 was $8,000 and $11,000, respectively. Stock-based compensation expense related
to stock options for the six months ended June 30, 2021 and 2020 was $18,000 and $25,000, respectively.
Compensation Expense Related to Equity Awards
The following table sets
forth total stock-based compensation expense for the three and six months ended June 30, 2021 and 2020, in thousands:
Details of Stock-based Compensation Expense Recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Research and development
|
|
$
|
31
|
|
|
$
|
5
|
|
|
$
|
44
|
|
|
$
|
11
|
|
General and administrative
|
|
|
101
|
|
|
|
25
|
|
|
|
155
|
|
|
|
62
|
|
Total stock-based compensation
|
|
$
|
132
|
|
|
$
|
30
|
|
|
$
|
199
|
|
|
$
|
73
|
|