Quarterly Report (10-q)

Date : 05/10/2019 @ 12:17PM
Source : Edgar (US Regulatory)
Stock : Trevena Inc (TRVN)
Quote : 0.8826  -0.0145 (-1.62%) @ 5:00AM

Quarterly Report (10-q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

Or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission File Number 001-36193

 

Trevena, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware
(State or Other Jurisdiction of Incorporation or Organization)

26-1469215
(I.R.S. Employer Identification No.)

 

 

955 Chesterbrook Boulevard, Suite 110
Chesterbrook, PA
(Address of Principal Executive Offices)

19087
(Zip Code)

 

Registrant’s telephone number, including area code: (610) 354-8840

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

 

 

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

TRVN

The Nasdaq Stock Market LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

 

 

 

Common Stock, $0.001 par value

Shares outstanding as of May 8, 2019: 92,353,638

 

 


 

 

TABLE OF CONTENTS

 

 

 

 

 

Page

Cautionary Note Regarding Forward-Looking Statements  

iii

 

 

 

 

PART I- FINANCIAL INFORMATION

 

Item 1.  

Financial Statements (Unaudited)

1

 

Balance Sheets

1

 

Statements of Operations and Comprehensive Loss

2

 

Statement of Stockholders’ Equity

3

 

Statements of Cash Flows

4

 

Notes to Unaudited Financial Statements

5

Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.  

Controls and Procedures

27

 

PART II- OTHER INFORMATION

 

Item 1.  

Legal Proceedings

28

Item 1A.  

Risk Factors

28

Item 2.  

Unregistered Sales of Equity Securities and Use of Proceeds

60

Item 3.  

Defaults Upon Senior Securities

60

Item 4.  

Mine Safety Disclosures

60

Item 5.  

Other Information

61

Item 6.  

Exhibits

61

 

 

 

SIGNATURES  

62

 

 

 

ii

 


 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10‑Q, or this “Quarterly Report,” contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but also are contained elsewhere in this Quarterly Report, as well as in sections such as “Risk Factors” that are incorporated by reference into this Quarterly Report from our most recent Annual Report on Form 10‑K , or the “Annual Report.” In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

 

·

any ongoing or planned clinical trials and preclinical studies for our product candidates;

 

·

the extent of future clinical trials potentially required by the FDA for our product candidates;

 

·

our ability to fund future operating expenses and capital expenditures with our current cash resources or to secure additional funding in the future;

 

·

the timing and likelihood of obtaining and maintaining regulatory approvals for our product candidates;

 

·

our plans to develop and potentially commercialize our product candidates;

 

·

the clinical utility and market acceptance of our product candidates, particularly in light of existing and future competition;

 

·

our sales, marketing, and manufacturing capabilities and strategies;

 

·

our intellectual property position;

 

·

ongoing litigation; and

 

·

our ability to identify additional product candidates with significant commercial potential that are consistent with our commercial objectives.

 

You should refer to the “Risk Factors” section of this Quarterly Report and our Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

 

iii

 


 

PART I

ITEM 1. FINANCIAL STATEMENTS

TREVENA, INC.

Balance Sheets

( in thousands, except share and per share data )

 

 

 

 

 

 

 

 

    

March 31, 2019

    

December 31, 2018

 

 

 

(unaudited)

 

 

 

Assets

 

 

  

 

 

  

Current assets:

 

 

  

 

 

  

Cash and cash equivalents

 

$

20,261

 

$

32,892

Marketable securities

 

 

39,802

 

 

28,590

Prepaid expenses and other current assets

 

 

1,581

 

 

607

Total current assets

 

 

61,644

 

 

62,089

Restricted cash

 

 

1,305

 

 

1,303

Property and equipment, net

 

 

3,238

 

 

3,387

Right-of-use lease asset

 

 

5,702

 

 

 —

Total assets

 

$

71,889

 

$

66,779

Liabilities and stockholders’ equity

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Accounts payable

 

$

358

 

$

1,416

Accrued expenses and other current liabilities

 

 

1,956

 

 

3,305

Current portion of loans payable, net

 

 

14,330

 

 

12,562

Lease liability

 

 

563

 

 

 —

Deferred rent

 

 

 —

 

 

207

Total current liabilities

 

 

17,207

 

 

17,490

Loans payable, net

 

 

 —

 

 

4,811

Leases, net of current portion

 

 

8,281

 

 

20

Deferred rent, net of current portion

 

 

 —

 

 

2,931

Warrant liability

 

 

14

 

 

 1

Total liabilities

 

 

25,502

 

 

25,253

Commitments and contingencies (Note 6)

 

 

  

 

 

  

Stockholders’ equity:

 

 

  

 

 

  

Common stock—$0.001 par value; 200,000,000 shares authorized; 92,353,638 and 82,323,413 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

92

 

 

82

Preferred stock—$0.001 par value; 5,000,000 shares authorized, none issued or outstanding at March 31, 2019 and December 31, 2018

 

 

 —

 

 

 —

Additional paid-in capital

 

 

439,735

 

 

429,727

Accumulated deficit

 

 

(393,443)

 

 

(388,274)

Accumulated other comprehensive loss

 

 

 3

 

 

(9)

Total stockholders’ equity

 

 

46,387

 

 

41,526

Total liabilities and stockholders’ equity

 

$

71,889

 

$

66,779

 

See accompanying notes to financial statements.

1


 

TREVENA, INC.

Statements of Operations and Comprehensive Loss (Unaudited)

( in thousands, except share and per share data )

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Revenue:

 

 

  

 

 

  

License revenue

 

$

 —

 

$

 —

Total revenue

 

 

 —

 

 

 —

Operating expenses:

 

 

  

 

 

  

General and administrative

 

 

3,060

 

 

5,072

Research and development

 

 

2,154

 

 

4,598

Restructuring charges

 

 

 —

 

 

23

Total operating expenses

 

 

5,214

 

 

9,693

Loss from operations

 

 

(5,214)

 

 

(9,693)

Other income (expense):

 

 

  

 

 

  

Change in fair value of warrant liability

 

 

(12)

 

 

 —

Net gain on asset disposals

 

 

 —

 

 

223

Other income, net

 

 

257

 

 

928

Interest income

 

 

153

 

 

199

Interest expense

 

 

(353)

 

 

(678)

Total other income

 

 

45

 

 

672

Net loss attributable to common stockholders

 

$

(5,169)

 

$

(9,021)

Other comprehensive gain (loss), net:

 

 

  

 

 

  

Unrealized gain (loss) on marketable securities

 

 

12

 

 

(4)

Other comprehensive gain (loss), net

 

 

12

 

 

(4)

Comprehensive loss

 

$

(5,157)

 

$

(9,025)

Per share information:

 

 

  

 

 

  

Net loss per share of common stock, basic and diluted

 

$

(0.06)

 

$

(0.14)

Weighted average common shares outstanding, basic and diluted

 

 

88,897,292

 

 

64,562,236

 

See accompanying notes to financial statements.

2


 

TREVENA, INC.

Statement of Stockholders’ Equity (Unaudited)
( in thousands, except share data )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

Other

 

 

 

 

 

Number

 

$0.001

 

Additional

 

 

 

 

Comprehensive

 

Total

 

 

of

 

Par

 

Paid-in

 

Accumulated

 

Income

 

Stockholders'

 

    

Shares

    

Value

    

Capital

    

Deficit

    

(Loss)

    

Equity

Balance, January 1, 2019

 

82,323,413

 

$

82

 

$

429,727

 

$

(388,274)

 

$

(9)

 

$

41,526

Stock-based compensation expense

 

 —

 

 

 —

 

 

754

 

 

 —

 

 

 —

 

 

754

Exercise of stock options

 

30,225

 

 

 —

 

 

21

 

 

 —

 

 

 —

 

 

21

Issuance of warrants to underwriters in connection with equity offering

 

 —

 

 

 —

 

 

347

 

 

 —

 

 

 —

 

 

347

Issuance of common stock, net of issuance costs

 

10,000,000

 

 

10

 

 

8,886

 

 

 —

 

 

 —

 

 

8,896

Unrealized gain on marketable securities

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12

 

 

12

Net loss

 

 —

 

 

 —

 

 

 —

 

 

(5,169)

 

 

 —

 

 

(5,169)

Balance, March 31, 2019

 

92,353,638

 

$

92

 

$

439,735

 

$

(393,443)

 

$

 3

 

$

46,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2018

 

62,310,795

 

$

62

 

$

392,103

 

$

(357,490)

 

$

(42)

 

$

34,633

Stock-based compensation expense

 

 —

 

 

 —

 

 

1,498

 

 

 —

 

 

 —

 

 

1,498

Exercise of stock options

 

88,048

 

 

 —

 

 

57

 

 

 —

 

 

 —

 

 

57

Issuance of common stock, net of issuance costs

 

5,204,893

 

 

 6

 

 

9,148

 

 

 —

 

 

 —

 

 

9,154

Unrealized gain on marketable securities

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(4)

 

 

(4)

Net loss

 

 —

 

 

 —

 

 

 —

 

 

(9,021)

 

 

 —

 

 

(9,021)

Balance, March 31, 2018

 

67,603,736

 

$

68

 

$

402,806

 

$

(366,511)

 

$

(46)

 

$

36,317

 

See accompanying notes to financial statements.

3


 

TREVENA, INC.

Statements of Cash Flows (Unaudited)

( in thousands )

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(5,169)

 

$

(9,021)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

  

 

 

  

Depreciation and amortization

 

 

149

 

 

171

Stock-based compensation

 

 

754

 

 

1,498

Noncash interest expense on loans

 

 

123

 

 

237

Revaluation of warrant liability

 

 

12

 

 

 —

Amortization (accretion) of bond premium (discount) on marketable securities

 

 

(159)

 

 

(5)

Changes in operating assets and liabilities:

 

 

 

 

 

  

Prepaid expenses and other assets

 

 

(974)

 

 

(454)

Accounts payable, accrued expenses and other liabilities

 

 

(2,419)

 

 

(2,832)

Net cash used in operating activities

 

 

(7,683)

 

 

(10,406)

Investing activities:

 

 

  

 

 

  

Purchases of property and equipment

 

 

 —

 

 

(144)

Maturities of marketable securities

 

 

18,179

 

 

16,500

Purchases of marketable securities

 

 

(29,219)

 

 

(10,402)

Net cash (used in) provided by investing activities

 

 

(11,040)

 

 

5,954

Financing activities:

 

 

  

 

 

  

Proceeds from exercise of common stock options

 

 

21

 

 

57

Proceeds from issuance of common stock, net

 

 

9,243

 

 

9,154

Capital lease payments

 

 

(3)

 

 

(3)

Repayments of loans payable, net

 

 

(3,167)

 

 

(3,167)

Net cash provided by financing activities

 

 

6,094

 

 

6,041

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(12,629)

 

 

1,589

Cash, cash equivalents and restricted cash—beginning of period

 

 

34,195

 

 

17,970

Cash, cash equivalents and restricted cash—end of period

 

$

21,566

 

$

19,559

Supplemental disclosure of cash flow information:

 

 

  

 

 

  

Cash paid for interest

 

$

229

 

$

464

Fair value of common stock warrants issued to underwriters

 

$

347

 

$

 —

 

See accompanying notes to financial statements.

4


 

TREVENA, INC.

Notes to Unaudited Financial Statements

March 31, 2019

1. Organization and Description of the Business

Trevena, Inc., or the Company, was incorporated in Delaware as Parallax Therapeutics, Inc. on November 9, 2007. The Company began operations in December 2007, and its name was changed to Trevena, Inc. on January 3, 2008. The Company is a biopharmaceutical company focused on the development and commercialization of novel medicines for patients affected by central nervous system, or CNS, conditions. The Company operates in one segment and has its principal office in Chesterbrook, Pennsylvania.

 

Since commencing operations in 2007, the Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials. The Company has never been profitable and has not yet commenced commercial operations. On November 2, 2018, the U.S. Food and Drug Administration, or FDA, issued a complete response letter, or CRL, with respect to the Company’s new drug application, or NDA, for oliceridine. In the CRL, the FDA requested additional clinical data on the QT interval and indicated that the submitted safety database was not of adequate size for the proposed labeling. The FDA also requested certain additional nonclinical data and validation reports. On January 28, 2019, the Company announced the receipt of the official Type A meeting minutes from the FDA regarding the CRL wherein it agreed that the current oliceridine safety database will support labeling at a maximum daily dose of 27 mg. The FDA also agreed that the Company can conduct a study in healthy volunteers to collect the requested QT interval data and that the study should include placebo- and positive-control arms. The Company submitted a detailed protocol and analysis plan to the FDA and has received feedback from the FDA on key design elements for the study and analysis plan. The Company anticipates initiating the study in the first half of 2019. To address remaining items in the CRL, the FDA indicated that the Company should include supporting nonclinical data related to the characterization of the 9662 metabolite and the remaining product validation reports when the Company resubmits the oliceridine NDA.

 

Since its inception, the Company has incurred losses and negative cash flows from operations. At March 31, 2019, the Company had an accumulated deficit of $393.4 million. The Company’s net loss was $5.2 million and $9.0 million for the three months ended March 31, 2019 and 2018, respectively. The Company expects its cash and cash equivalents of $20.3 million and marketable securities of $39.8 million as of March 31, 2019, together with interest thereon, to be sufficient to fund its operating expenses and capital expenditure requirements into the third quarter of 2020.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB. The Company’s functional currency is the U.S. dollar.

The financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s balance sheet as of March 31, 2019, its results of operations and its comprehensive loss for the three months ended March 31, 2019 and 2018, its statement of stockholders’ equity for the period from January 1, 2019 to March 31, 2019, and its cash flows for the three months ended March 31, 2019 and 2018. The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s most recent Annual Report on Form 10‑K for the year ended December 31, 2018. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies. The financial data and other information disclosed in these notes related to the three months ended March 31, 2019 and 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2019, any other interim periods, or any future year or period.

5


 

Leases

The Company adopted ASU 2016‑02, Leases (Topic 842) , and all applicable amendments as of January 1, 2019 using a modified retrospective approach. The Company determines if an arrangement is a lease at inception. Operating leases are included in long-term right-of-use assets and current and long term lease liabilities on our consolidated balance sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The right-of-use assets are tested for impairment according to ASC 360. See Note 6 for details. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these immaterial leases on a straight-line basis over the lease term. 

The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component under the practical expedient provisions of the standard. Lease payments, which may include lease and non-lease components, are included in the measurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable amounts that depend on a rate or index as stipulated in the lease contract.    

Revenue

In accordance with FASB’s ASC 606, Revenue from Contracts with Customers , or ASC 606 , the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, it performs the following five steps:

(i)

identify the contract(s) with a customer;

(ii)

identify the performance obligations in the contract;

(iii)

determine the transaction price;

(iv)

allocate the transaction price to the performance obligations in the contract; and

(v)

recognize revenue when (or as) the entity satisfies a performance obligation.

The Company applies the five-step model to contracts when it determines that it is probable it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the Company’s balance sheet. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date are classified as Current portion of deferred revenue. Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date are classified as Deferred revenue, net of current portion.

License Revenues

The Company’s revenues have primarily been generated through licensing arrangements. The terms of these agreements typically include payment to the Company of one or more of the following: nonrefundable, up-front license fees; regulatory and commercial milestone payments; payments for manufacturing supply services; and royalties on net sales of licensed products. See Note 7.

6


 

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps:

(i)

identification of the promised goods or services in the contract;

(ii)

determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii)

measurement of the transaction price, including the constraint on variable consideration;

(iv)

allocation of the transaction price to the performance obligations; and

(v)

recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company also assesses whether there is an option in a contract to acquire additional goods or services. An option gives rise to a performance obligation only if the option provides a material right to the customer that it would not receive without entering into that contract. Factors that the Company considers in evaluating whether an option represents a material right include, but are not limited to: (i) the overall objective of the arrangement, (ii) the benefit the collaborator might obtain from the arrangement without exercising the option, (iii) the cost to exercise the option (e.g. priced at a significant and incremental discount), and (iv) the likelihood that the option will be exercised. With respect to options determined to be performance obligations, the Company recognizes revenue when those future goods or services are transferred or when the options expire.

 

The Company’s revenue arrangements may include the following:

 

Up-front License Fees: If a license is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from nonrefundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

 

Milestone Payments: At the inception of an agreement that includes regulatory or commercial milestone payments, the Company evaluates whether each milestone is considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At each reporting period, the Company assesses the probability of achievement of each milestone under its current agreements.

 

Research and Development Activities: Under the Company’s current collaboration and license arrangements, if the Company is entitled to reimbursement for costs for services provided by the Company, it expects such reimbursement would be an offset to research and development expenses.

 

Royalties: If the Company is entitled to receive sales-based royalties from its collaborator, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, provided the reported sales are reliably measurable, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

 

Manufacturing Supply and Research Services: Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations.

 

7


 

The Company receives payments from its licensees based on schedules established in each contract. Upfront payments are recorded as deferred revenue upon receipt, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less.

 

Income Taxes

Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as consideration of the available facts and circumstances. To date, the Company has not taken any uncertain tax position or recorded any reserves, interest or penalties.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. Additionally, the SEC staff issued SAB 118, which provides guidance on accounting for the effects of the Tax Act.

 

Recently Adopted Accounting Standards

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which provides the option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings. This option would be available in each period in which the effect of the change in the U.S. federal corporate income tax rate in the TCJA (or a portion thereof) is recorded. This is effective for the Company beginning after December 15, 2018, with early adoption permitted. These amendments should be applied in the period of adoption or retrospectively to each period in which the effect of the change in the U.S federal corporate income tax rate in the TCJA is recognized. The adoption of this standard did not have an impact on the Company’s consolidated financial statements and related disclosures.

 

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, or SAB 118, which provides guidance on accounting for the tax effects of the TCJA. SAB 118 was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act and allows the Company to record provisional amounts during a measurement period not to extend beyond one year of the TCJA enactment date. The Company has completed its analysis of the impacts of the TCJA, including analyzing the effects of any Internal Revenue Service, or IRS, and U.S. Treasury guidance issued, and state tax law changes enacted, within the maximum one year measurement period resulting in no significant adjustments to the provisional amount previously recorded.

 

In May 2017, the FASB issued ASU No. 2017-09,  Stock Compensation - Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements. The amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is effective for fiscal years beginning after December 15, 2017. The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), to clarify how certain cash receipts and payments should be presented in the statement of cash flows. The standard is effective for annual

8


 

periods beginning after December 15, 2017 and interim periods within that reporting period. The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842) , which requires lessees to record most leases on their balance sheets and disclose key information about leasing arrangements in an effort to increase transparency and comparability among organizations. The standard is effective for annual periods beginning after December 15, 2018 and interim periods within that reporting period. The Company adopted the standard on January 1, 2019 using a modified retrospective approach. The Company recognized a right-of-use asset and corresponding lease liability related to its operating leases as of the date of adoption. The Company elected to apply the package of practical expedients which allows entities not to reassess whether contracts are or contain leases, lease classification, and whether initial direct costs qualify for capitalization. The Company elected not to separate lease and non-lease components and will not apply the hindsight practical expedient. The adoption of this standard resulted in recording additional net lease assets and lease liabilities of approximately $5.7 million and $8.8 million, respectively. The standard did not materially impact our consolidated net earnings and had no impact on cash flows.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer in an amount reflecting the consideration it expects to receive in exchange for those goods or services. Additionally, in March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations . ASU 2016-08 amends the principal versus agent guidance in ASU 2014-09 to clarify how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principal to certain types of arrangements. The effective date for both standards is January 1, 2018. The Company adopted these standards on January 1, 2018 and elected the modified retrospective transition method, meaning the cumulative effect of applying the new guidance, if any, was recognized at that date as an adjustment to the opening accumulated deficit balance. There was no impact to the Company’s financial statements upon adoption, as the Company did not have any contracts with customers as of the adoption date.

 

Recent Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement . The new guidance modifies the disclosure requirements related to fair value measurements in Topic 820, Fair Value Measurement , including removing certain previous disclosure requirements, adding certain new disclosure requirements, and modifying certain other disclosure requirements. The ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effect this standard will have on its financial statements and related disclosures.

3. Fair Value of Financial Instruments

ASC 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

·

Level 1‑Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

·

Level 2‑Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

9


 

·

Level 3‑Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Cash, Cash Equivalents and Marketable Securities

The following table presents fair value of the Company’s cash, cash equivalents, and marketable securities as of March 31, 2019 and December 31, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

    

Adjusted 

   

Unrealized

   

Unrealized

   

 

 

   

Cash and Cash

   

Restricted

   

Marketable

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Equivalents

 

Cash

 

Securities

Cash

 

$

9,212

 

$

 —

 

$

 —

 

$

9,212

 

$

7,907

 

$

1,305

 

$

 —

Level 1 (1):

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Money market funds

 

 

11,356

 

 

 —

 

 

 —

 

 

11,356

 

 

11,356

 

 

 —

 

 

 —

U.S. treasury securities

 

 

37,303

 

 

 —

 

 

 3

 

 

37,306

 

 

998

 

 

 —

 

 

36,308

Subtotal

 

 

48,659

 

 

 —

 

 

 3

 

 

48,662

 

 

12,354

 

 

 —

 

 

36,308

Level 2 (2):

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

U.S. government agency securities

 

 

3,494

 

 

 —

 

 

 —

 

 

3,494

 

 

 —

 

 

 —

 

 

3,494

Total

 

$

61,365

 

$

 —

 

$

 3

 

$

61,368

 

$

20,261

 

$

1,305

 

$

39,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

Adjusted 

 

Unrealized

 

Unrealized

 

 

 

 

Cash and Cash

 

Restricted

 

Marketable

 

    

Cost

    

Gains

    

Losses

    

Fair Value

    

Equivalents

    

Cash

    

Securities

Cash

 

$

10,992

 

$

 —

 

$

 —

 

$

10,992

 

$

9,689

 

$

1,303

 

$

 —

Level 1 (1):

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Money market funds

 

 

23,203

 

 

 —

 

 

 —

 

 

23,203

 

 

23,203

 

 

 —

 

 

 —

U.S. treasury securities

 

 

18,938

 

 

 —

 

 

(4)

 

 

18,934

 

 

 —

 

 

 —

 

 

18,934

Subtotal

 

 

42,141

 

 

 —

 

 

(4)

 

 

42,137

 

 

23,203

 

 

 —

 

 

18,934

Level 2 (2):

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

U.S. government agency securities

 

 

9,661

 

 

 —

 

 

(5)

 

 

9,656

 

 

 —

 

 

 —

 

 

9,656

Total

 

$

62,794

 

$

 —

 

$

(9)

 

$

62,785

 

$

32,892

 

$

1,303

 

$

28,590


(1)

The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities.

(2)

The fair value of Level 2 securities is estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

The Company classifies investments available to fund current operations as current assets on its balance sheets. As of March 31, 2019, the Company did not hold any investment securities exceeding a one-year maturity.

Unrealized gains and losses on marketable securities are recorded as a separate component of accumulated other comprehensive income (loss) included in stockholders’ equity. Realized gains (losses) are included in interest income (expense) in the statement of operations and comprehensive income (loss) on a specific identification basis. The Company did not record any realized gains or losses during the three months ended March 31, 2019 and 2018. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value.

10


 

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers between Level 2 and Level 3 during the three months ended March 31, 2019 or the year ended December 31, 2018.

4. Loans Payable

In September 2014, the Company entered into a loan and security agreement with Oxford Finance LLC and Pacific Western Bank (formerly Square 1Bank) (together, the lenders), pursuant to which the lenders agreed to lend the Company up to $35.0 million in a three-tranche series of term loans (Term Loans A, B, and C). Upon initially entering into the agreement, the Company borrowed $2.0 million under Term Loan A. In April 2015, the Company amended the agreement with the lenders to change the draw period for Term Loan B. In December 2015, the Company further amended the agreement with the lenders to, among other things, change the draw period for Term Loan C, modify the interest only period, and modify the maturity date of the loan. In December 2015, the Company borrowed the Term Loan B tranche of $16.5 million. The Company’s ability to draw an additional $16.5 million under Term Loan C was subject to the satisfaction of one or more specified triggers related to the results of the Company’s Phase 2b clinical trial of TRV027, which were announced in May 2016. Although those triggers were not attained, in December 2016, the Company and the lenders modified the terms and conditions under which the Company could exercise an option to draw $10.0 million of Term Loan C. In March 2017, the Company borrowed the Term Loan C tranche of $10.0 million.

Borrowings under Term Loans A and B accrue interest at a fixed rate of 6.50% per annum. Borrowings under Term Loan C accrue interest at a fixed rate of 6.98% per annum. The Company was required to make payments of interest only on borrowings under the loan agreement on a monthly basis through and including January 1, 2018. Payments of principal in equal monthly installments and accrued interest began on January 1, 2018 and will continue to be due until the loan matures on March 1, 2020. As of December 31, 2018, there was $15.8 million aggregate principal balance outstanding under the term loans. Upon the last payment date of the amounts borrowed under the agreement, the Company will be required to pay a final payment fee equal to 6.6% of the aggregate amounts borrowed, which is recorded as interest expense over the term of the loans payable. In addition, if the Company repays Term Loan A, Term Loan B, or Term Loan C prior to the applicable maturity date, it will pay the lenders a prepayment fee of 1.0% of Term Loan C.

The Company’s obligations under the loan and security agreement are secured by a first priority security interest in substantially all of the assets of the Company, including the Company’s cash, cash equivalents, and marketable securities but excluding the Company’s intellectual property (together, the collateral). The Company has agreed not to pledge or otherwise encumber its intellectual property, other than through grants of certain permitted non-exclusive or exclusive licenses or other conveyances of its intellectual property.

The loan and security agreement includes affirmative and restrictive covenants, including: (a) financial reporting requirements; (b) limitations on the incurrence of indebtedness; (c) limitations on liens; (d) limitations on certain merger and acquisition transactions; (e) limitations on dispositions of certain assets; (f) limitations on fundamental corporate changes (including changes in control); (g) limitations on investments; (h) limitations on payments and distributions and (i) other covenants. The agreement also contains certain events of default, including for payment defaults, breaches of covenants, a material adverse change in the Company’s business, operations or condition (financial or otherwise), a material impairment in the value of the collateral or in the prospect of repayment of the Company’s obligations to the lender, certain levies, attachments and other restraints on the Company’s business, insolvency, defaults under other agreements and misrepresentations. Upon an event of default, the lenders have the right to foreclose upon the available collateral, including the Company’s existing cash and cash equivalents and marketable securities.

In connection with entering into the agreement, the Company issued to the lenders and the placement agent warrants to purchase an aggregate of 7,678 shares of Trevena’s common stock, of which 5,728 shares remain outstanding as of March 31, 2019. These detachable warrant instruments have qualified for equity classification and have been allocated upon the relative fair value of the base instrument and the warrants, according to the guidance of ASC 470-20-25-2. These warrants are exercisable immediately and have an exercise price of $5.8610 per share. The warrants may be exercised on a cashless basis and will terminate on the earlier of September 19, 2024 or the closing of a merger or consolidation transaction in which the Company is not the surviving entity. In connection with the draw of Term Loan B, the Company issued to the lenders and the placement agent additional warrants to purchase an aggregate of 34,961 shares of Trevena common stock. These warrants have substantially the same terms as those noted above, have

11


 

an exercise price of $10.6190 per share and an expiration date of December 23, 2025. In connection with draw of Term Loan C, the Company issued to the lenders and placement agent additional warrants to purchase an aggregate of 62,241 shares of the Company’s common stock. These warrants have substantially the same terms as those noted above, and have an exercise price of $3.6150 per share and an expiration date of March 31, 2027.

As of March 31, 2019, borrowings of $12.7 million attributable to Term Loans A, B, and C are outstanding. Interest expense of $0.2 million and $0.4 million was recorded during the three months ended March 31, 2019 and 2018, respectively. The Company incurred lender and third-party costs of $1.0 million related to the issuance of its term loans. Per ASU 2015‑03, Interest-Imputation of Interest , debt discount and debt issuance costs are to be presented as a contra-liability to the debt on the balance sheet. These costs will be amortized to interest expense over the life of the loans using the effective interest method. Immaterial amounts of debt discount and debt issuance cost were amortized to interest expense during the three months ended March 31, 2019 and 2018, respectively.

The following table summarizes how the issuance of Term Loans A, B, and C are reflected on the balance sheet at March 31, 2019 and December 31, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

    

March 31, 

 

December 31, 

    

 

 

2019

 

2018

 

Gross proceeds

 

$

12,667

 

$

15,833

 

Debt discount and debt issuance costs

 

 

1,663

 

 

1,540

 

Carrying value

 

 

14,330

 

 

17,373

 

Current portion of loans payable, net

 

 

14,330

 

 

12,562

 

Loans payable, net

 

$

 —

 

$

4,811

 

 

 

5. Stockholders’ Equity

Equity Offerings

On December 14, 2015, the Company entered into an at the market, or ATM, sales agreement, or the Prior ATM Agreement, with Cowen and Company, LLC, or Cowen, to offer and sell, from time to time at the Company’s sole discretion, shares of its common stock, having an aggregate offering price of up to $75.0 million through Cowen as its sales agent. Sales under the Prior ATM Agreement are deemed to be “at the market offerings,” as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act. Under the Prior ATM Agreement, the Company was required to pay Cowen a commission of up to three percent of the gross sales proceeds and provided Cowen with customary indemnification rights. In 2018, the Company issued and sold 11.4 million shares of common stock under the Prior ATM Agreement at a weighted average price per share of $1.80. The net offering proceeds to the Company in 2018 for sales under the Prior ATM Agreement were approximately $20.0 million after deducting related expenses, including commissions. Sales of common stock under the Prior ATM Agreement terminated on June 29, 2018 when the Company’s Registration Statement on Form S-3 (File No. 333-225685) was declared effective by the SEC. Accordingly, as of March 31, 2019, there was no remaining capacity available under this ATM facility.

In June 2018, the Company filed a $175.0 million shelf registration statement that included an ATM sales facility to offer and sell, from time to time at the Company’s sole discretion, shares of its common stock having an aggregate offering price of up to $50.0 million. Sales of the shares are deemed to be “at the market offerings,” as defined in Rule 415 under the Securities Act. During 2018, the Company sold approximately 8.5 million shares under this facility, at a weighted average share price of $1.60, which yielded net proceeds to the Company of approximately $13.2 million after deducting related expenses, including commissions. There were no sales under this facility during the three months ended March 31, 2019. As of March 31, 2019, there was approximately $36.4 million of available capacity under this ATM facility.  See Note 11 for additional details surrounding the Company’s ATM facility.

 

On January 29, 2019, the Company entered into securities purchase agreements with two institutional investors wherein the Company agreed to sell to the investors an aggregate of 10,000,000 shares of its common stock, at an offering price of $1.00 per share, in a registered direct offering made pursuant to the Company’s existing registration statement on Form S-3. The net proceeds to the Company from the offering were approximately $9.2 million, after deducting fees and the expenses of the placement agent.

12


 

Pursuant to a letter agreement dated January 28, 2019, the Company engaged H.C. Wainwright & Co., LLC, or Wainwright, to act as its exclusive placement agent in connection with the issuance and sale of the shares. The Company paid Wainwright 7.0% of the aggregate gross proceeds in the offering and $50,000 for certain expenses, and it issued warrants to purchase 500,000 shares of common stock to certain designees of Wainwright. These warrants have a term of five years, are immediately exercisable and have an exercise price of $1.25 per share. The warrants are classified as equity and recorded at fair value as of the date of issuance on the Company’s Consolidated Balance Sheets and no further adjustments to their valuation are made. The letter agreement also includes indemnification obligations of the Company and other provisions customary for transactions of this nature.

Equity Incentive Plans

The Company utilizes equity incentive plans to grant various forms of stock options and restricted stock to eligible employees, directors and consultants to the Company. Under all of such plans, the amount, terms of grants and exercisability provisions are determined by the board of directors or its designee. The term of the options may be up to 10 years, and options are exercisable in cash or as otherwise determined by the board of directors. Vesting generally occurs over a period of not greater than four years. For performance-based stock awards, the Company recognizes expense when achievement of the performance factor is probable, over the requisite service period.

The estimated grant-date fair value of the Company’s stock-based awards is amortized ratably over the awards’ service periods. Stock-based compensation expense recognized was as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2019

    

2018

    

Research and development

 

$

232

 

$

358

 

General and administrative

 

 

522

 

 

1,140

 

Total stock-based compensation

 

$

754

 

$

1,498

 

 

Stock Options

 

A summary of stock option activity and related information through March 31, 2019 follows:

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

    

 

    

 

 

    

Weighted 

 

 

 

 

 

 

 

Average 

 

 

 

 

Weighted 

 

Remaining 

 

 

 

 

Average 

 

Contractual 

 

 

Number of 

 

Exercise 

 

Term 

 

 

Shares

 

Price

 

(in years)

Balance, December 31, 2018

 

8,265,207

 

$

3.99

 

6.99

Granted

 

27,000

 

 

1.53

 

 

Exercised

 

(30,225)

 

 

0.68

 

 

Forfeited/Cancelled

 

(1,222,863)

 

 

(5.02)

 

 

Balance, March 31, 2019

 

7,039,119

 

$

3.82

 

7.18

Vested or expected to vest at March 31, 2019

 

7,039,119

 

$

3.82

 

7.18

Exercisable at March 31, 2019

 

3,753,725

 

$

4.90

 

5.77

 

The intrinsic value of the options exercisable as of March 31, 2019 was $0.2 million, based on the Company’s closing stock price of $1.56 per share and a weighted average exercise price of $4.90 per share. At March 31, 2019, there was $4.4 million of total unrecognized compensation expense related to unvested options that will be recognized over the weighted average remaining period of 2.04 years.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s common stock, assumptions related to the expected price volatility of the Company’s common stock, the period during which the options will be outstanding, the rate of return on risk-free investments and the expected dividend yield for the Company’s common stock.

13


 

The per-share weighted-average grant date fair value of the options granted to employees and directors during the three months ended March 31, 2019 and 2018 was estimated at $1.04 and $1.19 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

 

 

 

 

 

 

 

 

 

March 31, 

 

 

 

    

2019

    

2018

    

    

Expected term of options (in years)

 

6.3

 

5.8

 

 

Risk-free interest rate

 

2.5

%  

2.7

%  

 

Expected volatility

 

75.4

%  

76.0

%  

 

Dividend yield

 

 0

%  

 0

%  

 


Restricted Stock Units

On December 6, 2018, the Company granted 1,255,000 restricted stock unit awards, or RSUs, to employees. The units vest subject to the satisfaction of service requirements as follows: 25% vest on June 1, 2019, 25% vest on December 1, 2019, and the remaining vest on December 6, 2021. The closing price of the Company’s common stock on the date of the grant was $0.64 per share, which is the fair market value per unit of the RSUs.

For the three months ended March 31, 2019, the Company recorded $0.1 million in stock-based compensation expense related to RSUs, which is reflected in the statement of operations. As of March 31, 2019, there were 1,240,000 RSUs outstanding.

As of March 31, 2019, there was $0.7 million of total unrecognized compensation expense related to unvested restricted stock units that will be recognized over the weighted average remaining period of 1.69 years.

Shares Available for Future Grant

At March 31, 2019, the Company has the following shares available to be granted under its equity incentive plans:

 

 

 

 

 

 

    

 

    

Inducement 

 

 

2013 Plan

 

Plan

Available at December 31, 2018

 

2,603,983

 

144,125

Authorized

 

3,292,936

 

 —

Granted

 

(82,000)

 

 —

Forfeited/Cancelled

 

1,279,488

 

13,375

Available at March 31, 2019

 

7,094,407

 

157,500

 

Shares Reserved for Future Issuance

At March 31, 2019, the Company has reserved the following shares of common stock for issuance:

 

 

 

Stock options outstanding under 2013 Plan

    

6,696,619

Restricted stock units outstanding under 2013 Plan

 

1,240,000

Shares available for future grant under 2013 Plan

 

7,094,407

Stock options outstanding under Inducement Plan

 

342,500

Shares available for future grant under Inducement Plan

 

157,500

Employee stock purchase plan

 

225,806

Warrants outstanding

 

623,091

Total shares of common stock reserved for future issuance

 

16,379,923

 

 

14


 

6. Commitments and Contingencies

Leases

We lease office space in Chesterbrook, Pennsylvania and equipment. We sublease the second floor of our Chesterbrook, Pennsylvania office space to a third party. Rent expense and associated sublease income are recorded in the Company’s statements of operations and comprehensive loss as other income (expense).

Supplemental balance sheet information related to leases was as follows:

 

 

 

 

 

 

 

 

 

    

March 31, 2019

    

December 31, 2018

 

Operating Leases

 

 

  

 

 

  

 

Operating lease right-of-use assets

 

$

5,702

 

$

 —

 

 

 

 

 

 

 

 

 

Other current liabilities

 

 

563

 

 

 —

 

Operating lease liabilities

 

 

8,281

 

 

 —

 

Total operating lease liabilities

 

$

8,844

 

$

 —

 

 

 

 

 

 

 

 

 

Finance Leases

 

 

 

 

 

 

 

Property and equipment, at cost

 

$

59

 

$

59

 

Accumulated depreciation

 

 

(31)

 

 

(29)

 

Property and equipment, net

 

 

28

 

 

30

 

Other current liabilities

 

 

10

 

 

10

 

Other long-term liabilities

 

 

18

 

 

20

 

Total finance lease liabilities

 

$

28

 

$

30

 

 

The components of lease expense were as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Operating lease costs:

 

 

 

 

 

 

Operating lease rental expense

 

$

306

 

$

453

Other income

 

 

(328)

 

 

 —

Total operating lease costs

 

$

(22)

 

$

453

 

 

 

 

 

 

 

Finance lease costs:

 

 

 

 

 

 

Amortization of right-of-use assets

 

 

3

 

 

3

Interest on lease liabilities

 

 

1

 

 

1

Total finance lease costs

 

$

4

 

$

4

 

15


 

Supplemental cash flow information related to leases was as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Cash paid for amounts included in the measurement of lease liabilities

 

 

  

 

 

  

Operating cash flows from operating leases

 

$

(22)

 

$

(453)

Operating cash flows from finance leases

 

 

 —

 

 

 —

Financing cash flows from finance leases

 

 

(3)