PLUS THERAPEUTICS, INC., 10-K filed on 3/30/2020
Annual Report
v3.20.1
Document and Entity Information - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Mar. 20, 2020
Jun. 28, 2019
Cover [Abstract]      
Entity Registrant Name PLUS THERAPEUTICS, INC.    
Entity Central Index Key 0001095981    
Trading Symbol PSTV    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Interactive Data Current Yes    
Entity Current Reporting Status Yes    
Entity Filer Category Non-accelerated Filer    
Entity Public Float     $ 5.4
Entity Common Stock, Shares Outstanding   3,880,588  
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2019    
Entity Shell Company false    
Entity Small Business true    
Entity Emerging Growth Company false    
Title of 12(b) Security Common Stock, par value $0.001    
Security Exchange Name NASDAQ    
Entity File Number 001-34375    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 33-0827593    
Entity Address, Address Line One 4200 MARATHON BLVD    
Entity Address, Address Line Two SUITE 200    
Entity Address, City or Town AUSTIN    
Entity Address, State or Province TX    
Entity Address, Postal Zip Code 78756    
City Area Code (737)    
Local Phone Number 255-7194    
Document Annual Report true    
Document Transition Report false    
Documents Incorporated by Reference

Portions of the registrant’s definitive proxy statement for its 2020 Annual Meeting of Stockholders, which will be filed with the United States Securities and Exchange Commission within 120 days of December 31, 2019, are incorporated by reference into Part III of this Annual Report on Form 10-K.

   
v3.20.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 17,552 $ 5,261
Accounts receivable 1,169 178
Restricted cash 40 40
Inventories, net 107 107
Other current assets 957 785
Current assets held for sale   3,277
Total current assets 19,825 9,648
Property and equipment, net 2,179 2,299
Operating lease right-use-of assets 781  
Other assets 72 39
Noncurrent assets held for sale   11,633
Goodwill 372 372
Total assets 23,229 23,991
Current liabilities:    
Accounts payable and accrued expenses 3,279 2,777
Operating lease liability 147  
Term loan obligation, net of discount 11,060 14,202
Current liabilities held for sale   580
Total current liabilities 14,486 17,559
Other noncurrent liabilities 8 46
Noncurrent operating lease liability 646  
Warrant liability 6,929 916
Noncurrent liabilities held for sale   245
Total liabilities 22,069 18,766
Commitments and contingencies (Note 7)
Stockholders’ equity:    
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,959 and 4,606 shares issued and outstanding in 2019 and 2018, respectively
Common stock, $0.001 par value; 100,000,000 shares authorized; 3,880,588 and 296,609 shares issued and outstanding in 2019 and 2018, respectively 4  
Additional paid-in capital 426,426 418,390
Accumulated other comprehensive income   1,218
Accumulated deficit (425,270) (414,383)
Total stockholders’ equity 1,160 5,225
Total liabilities and stockholders’ equity $ 23,229 $ 23,991
v3.20.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Stockholders’ equity:    
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Preferred stock, shares issued (in shares) 1,959 4,606
Preferred stock, shares outstanding (in shares) 1,959 4,606
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 100,000,000 100,000,000
Common stock, shares issued (in shares) 3,880,588 296,609
Common stock, shares outstanding (in shares) 3,880,588 296,609
v3.20.1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Development revenues:    
Government contracts and other $ 6,998 $ 2,983
Total development revenues 6,998 2,983
Operating expenses:    
Research and development 5,365 5,523
Sales and marketing 468 643
General and administrative 4,822 5,579
Total operating expenses 10,655 11,745
Operating loss (3,657) (8,762)
Other income (expense):    
Interest income 55 43
Interest expense (1,855) (1,922)
Change in fair value of warrants 3,407 2,233
Issuance cost of warrants (1,233) (470)
Total other expense 374 (116)
Loss from continuing operations (3,283) (8,878)
Loss from discontinued operations (7,604) (3,756)
Net loss (10,887) (12,634)
Income (Loss) from continuing operations (3,283) (8,878)
Beneficial conversion feature for convertible preferred stock (554) (2,487)
Net loss allocable to common stockholders - continuing operations (3,837) (11,365)
Net loss allocable to common stockholders - discontinued operations (7,604) (3,756)
Net loss allocable to common stockholders $ (11,441) $ (15,121)
Basic and diluted net loss per share attributable to common stockholders - continuing operations $ (2.77) $ (65.37)
Basic and diluted net loss per share attributable to common stockholders - discontinued operations (5.49) (21.61)
Net loss per share, basic and diluted $ (8.27) $ (86.98)
Basic and diluted weighted average shares used in calculating net loss per share attributable to common stockholders 1,384,012 173,851
Comprehensive loss:    
Net loss $ (10,887) $ (12,634)
Other comprehensive loss – foreign currency translation adjustments 0 (169)
Comprehensive loss $ (10,887) $ (12,803)
v3.20.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Series C Convertible Preferred Stock [Member]
Convertible Preferred Stock [Member]
Convertible Preferred Stock [Member]
Series B And C Convertible Preferred Stock
Convertible Preferred Stock [Member]
Series B Convertible Preferred Stock [Member]
Convertible Preferred Stock [Member]
Series C Convertible Preferred Stock [Member]
Common Stock [Member]
Common Stock [Member]
Series B And C Convertible Preferred Stock
Common Stock [Member]
Series B Convertible Preferred Stock [Member]
Common Stock [Member]
Series C Convertible Preferred Stock [Member]
Additional Paid-in Capital [Member]
Additional Paid-in Capital [Member]
Series C Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income [Member]
Accumulated Deficit [Member]
Balance at Dec. 31, 2017 $ 13,000                   $ 413,362   $ 1,387 $ (401,749)
Balance (in shares) at Dec. 31, 2017     2,431       115,651              
Share-based compensation 355                   355      
Sale/Issuance of common stock 1,624 $ 3,041                 1,624 $ 3,041    
Sale/Issuance of common stock (in shares)           6,723 92,169              
Conversion of Convertible Preferred Stock into common stock   8                   8    
Conversion of Convertible Preferred Stock into common stock (share)         (1,320) (3,228)     7,921 80,868        
Beneficial conversion feature related to Series C Convertible Preferred Stock   2,487                   2,487    
Accretion of beneficial conversion feature related to Series C Convertible Preferred Stock   (2,487)                   (2,487)    
Foreign currency translation adjustment and accumulated other comprehensive income (169)                       (169)  
Net loss (12,634)                         (12,634)
Balance at Dec. 31, 2018 $ 5,225                   418,390   1,218 (414,383)
Balance (in shares) at Dec. 31, 2018 296,609   4,606       296,609              
Share-based compensation $ 127                   127      
Sale of common stock and pre-funded warrants, net of offering costs 4,421           $ 4       4,417      
Sale of common stock and pre-funded warrants, net of offering costs (in shares)             3,000,000              
Sale/Issuance of common stock 2,208                   2,208      
Sale/Issuance of common stock (in shares)             184,666              
Conversion of Convertible Preferred Stock into common stock (share)       (2,647)       334,199            
Exercise of warrants 490                   490      
Exercise of warrants (in shares)             65,114              
Warrant derivative liability reclasssifiedto equity due to exercise of warrants 794                   794      
Beneficial conversion feature related to Series C Convertible Preferred Stock   554                   554    
Accretion of beneficial conversion feature related to Series C Convertible Preferred Stock   $ (554)                   $ (554)    
Foreign currency translation adjustment and accumulated other comprehensive income (1,218)                       $ (1,218)  
Net loss (10,887)                         (10,887)
Balance at Dec. 31, 2019 $ 1,160           $ 4       $ 426,426     $ (425,270)
Balance (in shares) at Dec. 31, 2019 3,880,588   1,959       3,880,588              
v3.20.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical)
$ in Millions
12 Months Ended
Dec. 31, 2019
USD ($)
Statement Of Stockholders Equity [Abstract]  
Sale of stock for common stock and pre funded warrants, offering costs $ 0.6
v3.20.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Cash flows used in operating activities:    
Net loss $ (10,887) $ (12,634)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 896 2,004
Amortization of deferred financing costs and debt discount 550 578
Change in fair value of warrants (3,407) (2,233)
Allocation of issuance cost associated with warrants 1,233 470
Share-based compensation expense 127 355
Noncash lease expense 12 0
Loss on sale of business 6,508 0
Loss on asset disposal 0 36
Provision for doubtful accounts 0 18
Provision for excess inventory 0 463
Increases (decreases) in cash caused by changes in operating assets and liabilities:    
Accounts receivable (1,203) (173)
Inventories 259 475
Other current assets (211) 85
Other assets 263 23
Accounts payable and accrued expenses (28) (1,532)
Deferred revenues 29 73
Other long-term liabilities (47) 17
Net cash used in operating activities (5,906) (11,975)
Cash flows from (used in) investing activities:    
Purchases of property and equipment (67) (133)
Proceeds from sale of business 5,637 0
Net cash provided by (used in) investing activities 5,570 (133)
Cash flows from financing activities:    
Principal payments of long-term obligations (3,692) 0
Payment of financing lease liability (131) 0
Proceeds from sale of common stock and unit offering, net of offering cost 15,964 0
Proceeds from exercise of warrants 490 0
Proceeds from sale of common and preferred stock 0 7,234
Financial capital expenditures 0 (66)
Net cash provided by financing activities 12,631 7,168
Effect of exchange rate changes on cash and cash equivalents (4) 16
Net increase (decrease) in cash and cash equivalents 12,291 (4,924)
Cash, cash equivalents, and restricted cash at beginning of period 5,301 10,225
Cash, cash equivalents, and restricted cash at end of period 17,592 5,301
Cash paid during period for:    
Interest 1,188 1,331
Supplemental schedule of non-cash investing and financing activities:    
Proceeds from sales of business, net, paid directly to lender for principal payment of long-term obligations 3,050 0
Offering cost paid in warrants 213 0
Reclass of warrants upon exercise from liability to equity 794 0
Fair value of Convertible Preferred Stock beneficial conversion feature 554 2,487
Conversion of preferred stock into common $ 0 $ 8
v3.20.1
Organization and Operations
12 Months Ended
Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization and Operations

1.

Organization and Operations

The Company

Plus Therapeutics, Inc. (formerly known as Cytori Therapeutics, Inc.) is a clinical-stage pharmaceutical company focused on the discovery, development, and manufacturing scale up of complex and innovative treatments for patients battling cancer and other life-threatening diseases.

Principles of Consolidation

The accompanying consolidated financial statements include the Company’s accounts and those of its subsidiaries.  All significant intercompany transactions and balances have been eliminated in consolidation.

Up to the sale transactions as described below, the Company had five wholly-owned subsidiaries located in Japan, United Kingdom, Switzerland, India and Spain that have been established primarily to support our sales and marketing activities in these regions.

On March 30, 2019, the Company entered into an Asset and Share Sale and Purchase Agreement (the “Lorem Purchase Agreement”) with Lorem Vascular Pte. Ltd. (“Lorem”), pursuant to which, among other things, Lorem agreed to purchase the Company’s UK subsidiary, Cytori Ltd. (the “UK Subsidiary”), and the Company’s Cell Therapy assets, excluding such assets used in Japan or relating to the Company’s contract with the U.S. Department of Health and Human Service’s Biomedical Advanced Research and Development Authority (“BARDA”). Both the Company and Lorem made customary representations, warranties and covenants in the Lorem Purchase Agreement. The transaction was completed on April 24, 2019 and the Company received $4.0 million of cash proceeds, of which $1.7 million was used to pay down principal, interest and fees under the Loan and Security Agreement, dated May 29, 2015 (the “Loan and Security Agreement”), with Oxford Finance, LLC (“Oxford”).

On April 19, 2019, the Company entered into an Asset and Share Sale and Purchase Agreement (the “Shirahama Purchase Agreement”) with Seijirō Shirahama, pursuant to which, among other things, Mr. Shirahama agreed to purchase the Company’s Japanese subsidiary, Cytori Therapeutics, K.K. (the “Japanese Subsidiary”), and substantially all of the Company’s Cell Therapy assets used in Japan. Both the Company and Mr. Shirahama made customary representations, warranties and covenants in the Shirahama Purchase Agreement. The transaction was completed on April 25, 2019 and the Company received $3.0 million of cash proceeds, of which $1.4 million was used to pay down principal, interest and fees under the Loan and Security Agreement (defined in Note 4).

 

Amendments to Certificate of Incorporation and Reverse Stock Split

On July 29, 2019, the Company amended its Certificate of Incorporation with the State of Delaware to change its corporate name from Cytori Therapeutics, Inc. to Plus Therapeutics, Inc. The Company also changed its trading symbol for its common stock on the Nasdaq Capital Market to “PSTV”.

On May 23, 2018, following stockholder and Board approval, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation, as amended (the “Amendment”), with the Secretary of State of the State of Delaware to (i) effectuate a one-for-ten (1:10) reverse stock split (the “Reverse Stock Split”) of its common stock, par value $0.001 per share, without any change to its par value, and (ii) increase the number of authorized shares of the Company’s common stock from 75 million to 100 million shares (which amount is not otherwise affected by the Reverse Stock Split). The Amendment became effective on the filing date. Upon effectiveness of the Reverse Stock Split, the number of shares of the Company’s common stock (x) issued and outstanding  decreased from approximately 61.6 million shares (as of May 23, 2018) to approximately 6.2 million  shares; (y) reserved for issuance upon exercise of outstanding warrants and options decreased from approximately 23.4 million shares to approximately 2.3 million shares, and (z) reserved but unallocated under our current equity incentive plans (including the stockholder-approved share increase to the Company’s 2014 Equity Incentive Plan) decreased from approximately 9.1 million common shares to approximately 0.9 million common shares. The Company’s 5,000,000 shares of authorized Preferred Stock were not affected by the Reverse Stock Split. No fractional shares were issued in connection with the Reverse Stock Split. Proportional adjustments for the reverse stock split were made to the Company's outstanding stock options, warrants and equity incentive plans for all periods presented.

On August 5, 2019, following stockholder and Board approval, the Company filed a Certificate of Amendment (the “August 2019 Amendment”) to its Amended and Restated Certificate of Incorporation (the Amendment), as amended, with the Secretary of State of the State of Delaware to effectuate a one-for-fifty (1:50) reverse stock split (the “August 2019 Reverse Stock Split”)) of its common stock, par value $0.001 per share, without any change to its par value. The August 2019 Amendment became effective on the filing date. The August 2019 Reverse Stock Split became effective for trading purposes as of the commencement of trading on the Nasdaq Capital Market on August 6, 2019. Upon effectiveness, each 50 shares of issued and outstanding common stock were converted into one newly issued and outstanding share of common stock. The Company’s 5,000,000 shares of authorized Preferred Stock were not affected by the August 2019 Reverse Stock Split. No fractional shares were issued in connection with the August 2019 Reverse Stock Split. Any fractional shares of common Stock that would have otherwise resulted from the August 2019 Reverse Stock Split were rounded up to the nearest whole share. Outstanding equity awards and the shares available for future grant under the Company’s 2014 Amended and Restated Equity Incentive Plan and 2015 New Employee Incentive Plan were proportionately reduced (rounded down to the nearest whole share), and the exercise prices of outstanding equity awards were proportionately increased (rounded up to the nearest whole cent) to give effect to the August 2019 Reverse Stock Split.

Certain Risks and Uncertainties

The Company’s prospects are subject to the risks and uncertainties frequently encountered by companies in the early stages of development and commercialization, especially those companies in rapidly evolving and technologically advanced industries such as the biotech/medical device field. The Company’s future viability largely depends on its ability to complete development of new products and receive regulatory approvals for those products. No assurance can be given that the Company’s new products will be successfully developed, regulatory approvals will be granted, or acceptance of these products will be achieved.

Liquidity and Going Concern

The Company incurred net losses of $10.9 million for the year ended December 31, 2019, and it had an accumulated deficit of $425.3 million as of December 31, 2019.  Additionally, the Company used net cash of $5.9 million to fund its operating activities for the year ended December 31, 2019. In addition, as discussed in Note 13, the full magnitude of the coronavirus pandemic on the Company’s financial condition, liquidity and future results of operations is uncertain. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

In September 2019, the Company finalized the indirect cost rate under the BARDA Agreement for indirect costs incurred during the years 2012 through 2019, which resulted in approximately $4.6 million of revenue recognized during the year ended December 31, 2019.

 

In September 2019, the Company entered into an underwriting agreement with H.C. Wainwright & Co., LLC (the “Representative”), as representative of the underwriters (the “Underwriters”), pursuant to which the Company sold in an underwritten public offering an aggregate of (i) 289,000 Class A Units, each consisting of one share of common stock, par value $0.001 per share, of the Company and one Series U warrant to purchase one share of common stock, and (ii) 2,711,000 Class B Units, each consisting of one pre-funded Series V warrant to purchase one share of common stock and one Series U Warrant to purchase one share of common stock at a public offering price of $5.00 per Class A Unit and $4.9999 per Class B Unit (“September 2019 Offering”). In addition, the Company granted the Underwriters a 45-day option to purchase up to an additional 450,000 shares of the Company’s common stock and/or Series U Warrants at the public offering price, less the underwriting discounts and commissions.  The Underwriters exercised their option to purchase an additional 450,000 Series U warrants. The Company also issued to the Representative warrants (in the form of the Series U warrants) to purchase 75,000 shares of common stock with an exercise price of $6.25 per share of common stock (“Representative Warrants”).

On April 24, 2019, the Company received $3.3 million of net cash proceeds related to the sale of the UK Subsidiary and the Cell Therapy assets (excluding such assets used in Japan or relating to the Company’s contract with BARDA), of which $1.7 million was used to pay down principal, interest and fees on the Loan and Security Agreement, and on April 25, 2019 the Company received $2.4 million of net cash proceeds related to the sale of the Japanese Subsidiary, and substantially all of the Company’s Cell Therapy assets used in Japan, of which $1.4 million was used to pay down principal, interests and fees on the Loan and Security Agreement.

          

        

        

On September 21, 2018, the Company entered into a purchase agreement and a registration rights agreement (“Lincoln Park Purchase Agreement”), with Lincoln Park, pursuant to which the Company has the right to sell to Lincoln Park and Lincoln Park is obligated to purchase up to $5.0 million of shares of the Company’s common stock over the 24-month period following October 15, 2018, subject to the satisfaction of certain conditions. Through December 31, 2018, the Company sold a total of 12,802 shares for proceeds of approximately $0.3 million through the Lincoln Park Purchase Agreement. During the year ended December 31, 2019, the Company sold 32,170 shares of through the Lincoln Park Purchase Agreement for proceeds of approximately $0.3 million.  The Company believes there an insignificant amount  remaining available under this financing facility.

On June 1, 2018, the Company entered into a Sales Agreement with B. Riley FBR, Inc. (“B. Riley FBR”) to sell shares of its common stock having an aggregate offering price of up to $6.5 million from time to time, through an “at the market” equity offering program (the “ATM program”) under which B. Riley FBR will act as sales agent.   The ATM Program financing facility has been exhausted and there is no availability remaining under this financing facility.  

On July 25, 2018, the Company closed a rights offering originally filed under a Form S-1 registration statement in April 2018 (“2018 Rights Offering”). Pursuant to the 2018 Rights Offering, the Company sold an aggregate of 6,723 units consisting of a total of 6,723 shares of Series C Convertible Preferred Stock,    resulting in total net proceeds to the Company of approximately $5.7 million. Refer to Note 11 for additional details on the 2018 Rights Offering.  

On August 28, 2018, the Company received a written notice from Nasdaq indicating that, based upon the closing bid price of our common stock for the prior 30 consecutive business days, the Company no longer meet the requirement to maintain a minimum bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until February 25, 2019, in which to regain compliance.  The Company was granted an additional compliance period of 180 calendar days, or until August 26, 2019, in which to regain compliance after meeting the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and providing notice to Nasdaq staff of our intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary. In order to regain compliance with the minimum bid price requirement, the closing bid price of the Company’s common stock must have been at least $1.00 per share for a minimum of ten consecutive business days during the 180-day period.

In August 2019, the Company consummated a 1-for-50 reverse stock split pursuant to which the minimum bid price of our common stock rose above $1.00. On August 29, 2019, the Company received written notice from Nasdaq staff that the Company had regained compliance with the Nasdaq Stock Market Listing Rule 5550(a)(2) concerning our minimum bid price per share of its common stock.

On August 16, 2019, the Company received written notice from the Nasdaq indicating that the Company no longer meets the requirements for continued listing under Nasdaq Listing Rule 5550(a)(4) due to the Company’s failure to meet the minimum 500,000 publicly held shares requirement for continued listing. On September 11, 2019, we received written notice from Nasdaq staff that, based on having 786,807 publicly held shares outstanding as of August 31, 2019, we had regained compliance with Nasdaq Listing Rule 5550(a)(4).  

On August 19, 2019, the Company received written notice from Nasdaq indicating that, based on the Company’s stockholders’ deficit of $6.3 million as of June 30, 2019, as reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, it is no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1), which requires listed companies to maintain stockholders’ equity of at least $2.5 million.

Based on the Company’s stockholders’ equity of $1.2 million as of December 31, 2019, the Company does not meet the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1). The Company expects to receive written notice from Nasdaq staff to that effect following the filing of this Annual Report on Form 10-K.  

 

    

The Company continues to seek additional capital through strategic transactions and from other financing alternatives. Without additional capital, current working capital and cash generated from sales will not provide adequate funding to make debt repayments, for research, sales and marketing efforts and product development activities at their current levels. If sufficient capital is not raised, the Company will at a minimum need to significantly reduce or curtail its research and development and other operations, and this would negatively affect its ability to achieve corporate growth goals.

 

Should the Company fail to raise additional cash from outside sources, this would have a material adverse impact on its operations.

The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

v3.20.1
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting 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 revenue and expenses during the reporting period.  The most significant estimates and critical accounting policies involve recognizing revenue, reviewing assets for impairment, determining the assumptions used in measuring share-based compensation expense, valuing warrants and valuing allowances for doubtful accounts.

Actual results could differ from these estimates. Management’s estimates and assumptions are reviewed regularly, and the effects of revisions are reflected in the consolidated financial statements in the periods they are determined to be necessary.

Cash and cash equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

Cash and cash equivalents includes cash in readily available checking and savings accounts.  The Company held no investments as of December 31, 2019 and 2018.  The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held.

Restricted Cash

Restricted cash consists of cash invested in certificate of deposits used as collateral for the issuance of letters of credit pursuant to lease agreements for leasing of property at 3020 and 3030 Callan Road, San Diego, CA, which requires us to execute a letter of credit for $40,000 and $40,000 naming the landlord as a beneficiary as of December 31, 2019 and 2018, respectively.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. As of December 31, 2019, accounts receivable represents outstanding invoices under the contract BARDA for work performed prior to the BARDA contract termination.

 

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation expense, which includes the amortization of capitalized leasehold improvements, is provided for on a straight-line basis over the estimated useful lives of the assets, or the life of the lease, whichever is shorter, and range from three to five years. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is included in operations. Maintenance and repairs are charged to operations as incurred.

Impairment

The Company assesses its property and equipment for potential impairment when there is a change in circumstances that indicates carrying values of assets may not be recoverable. Such long-lived assets are deemed to be impaired when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.  The Company recognized no impairment losses during any of the periods presented in these financial statements.

Goodwill

The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill arising from business combinations requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired. 

Goodwill is not amortized; however, it is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. Goodwill considered to be impaired if the Company determines that the carrying value of the reporting unit exceeds its fair value.

The Company performs its impairment test annually during the fourth quarter by comparing the Company’s estimated fair value, calculated from the Company’s market capitalization, to its carrying amount. The Company’s annual evaluation for impairment of goodwill consists of one reporting unit. The Company completed its most recent annual evaluation for impairment as of December 31, 2019, and determined that no impairment existed and, consequently, no impairment charge has been recorded during the year.

 

Warrant Liability

 

Warrants are accounted for in accordance with the applicable authoritative accounting guidance as either derivative liabilities or as equity instruments depending on the specific terms of the agreements. Liability-classified instruments are recorded at fair value at each reporting period with any change in fair value recognized as a component of change in fair value of derivative liabilities in the consolidated statements of operations and comprehensive loss.

 

 

 

As of

December 31,

2019

 

 

As of

December 31,

2018

 

Expected term

 

1.1 years

 

 

2.1 years

 

Common stock market price

 

$

2.40

 

 

$

14.50

 

Risk-free interest rate

 

 

1.59

%

 

 

2.48

%

Expected volatility

 

 

168

%

 

 

125

%

Resulting fair value (per warrant)

 

$

1.47

 

 

$

6.50

 

 

Expected volatility was computed using daily pricing observations of traded shares of the Company for recent periods that correspond to the expected term of the warrants. The Company believes this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. The Company currently has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the warrants. The risk-free interest rate is the U.S. Treasury bond rate as of the valuation date.

Fluctuations in the fair value of the warrants are impacted by unobservable inputs. Significant increases (decreases) in this input in isolation would result in a significantly higher (lower) fair value measurement.

Refer to Note 3 for a discussion of the change in the Level 3 warrant liability value.

 

Revenue Recognition

Development Revenues

The Company earns revenue for performing tasks under research and development agreements with governmental agencies like BARDA. Revenues derived from reimbursement of direct out-of-pocket expenses for research costs associated with government contracts are recorded as government contract and other within development revenues.  Government contract revenue is recorded at the gross amount of the reimbursement.  The costs associated with these reimbursements are reflected as a component of research and development expense in our statements of operations.  The Company recognized $7.0 million and $3.0 million in BARDA revenue for the years ended December 31, 2019 and 2018, respectively.

Concentration of Significant Customers & Geographical Sales

After the Company sold its Cell Therapy business, BARDA accounted for 100% of our revenue from continuing operations which are recognized for year ended December 31, 2019 and 2018 and accounted for 100% of total outstanding accounts receivable presented in the accompanying consolidated financial statements.

Research and Development

Research and development expenditures, which are charged to operations in the period incurred, include costs associated with the design, development, testing and enhancement of the Company’s products, regulatory fees, the purchase of laboratory supplies, and pre-clinical and clinical studies as well as salaries and benefits for our research and development employees.

Also included in research and development expenditures are costs incurred to support the government reimbursement contract, including $1.5 million and $2.7 million of qualified expenses that were incurred for the years ended December 31, 2019 and 2018, related to our government contract with BARDA.

Deferred Financing Costs and Other Debt-Related Costs

Deferred financing costs are capitalized, recorded as an offset to debt balances and amortized to interest expense over the term of the associated debt instrument using the effective interest method.  If the maturity of the debt is accelerated because of default or early debt repayment, then the amortization would be accelerated.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.  Due to our history of losses, a full valuation allowance has been recognized against our deferred tax assets.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. For the years ended December 31, 2019 and 2018, the Company has not recorded any interest or penalties related to income tax matters. The Company does not foresee any material changes to unrecognized tax benefits within the next twelve months.

Share-Based Compensation

The Company recognizes the fair value of all share-based payment awards in our statements of operations over the requisite vesting period of each award, which approximates the period during which the employee and non-employee director is required to provide service in exchange for the award. The Company estimates the fair value of these options using the Black-Scholes option pricing model using assumptions for expected volatility, expected term, and risk-free interest rate.  Expected volatility is based primarily on historical volatility and is computed using daily pricing observations for recent periods that correspond to the expected term of the options. The expected term is calculated based on historical data for and applied to all employee awards as a single group as the Company does not expect (nor does historical data suggest) substantially different exercise or post-vesting termination behavior amongst our employee population. The risk-free interest rate is the interest rate for treasury instruments with maturities that approximate the expected term.

Segment Information

For the years ended December 31, 2019 and 2018, the Company is managed as a single operating segment, therefore we report our results in one operating segment.

Loss Per Share

Basic per share data is computed by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted per share data is computed by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding during the period increased to include, if dilutive, the number of additional common shares that would have been outstanding as calculated using the treasury stock method. Potential common shares were related entirely to outstanding but unexercised options, warrants and convertible preferred stocks for all periods presented.

The Company excluded all potentially dilutive securities from the calculation of diluted loss per share attributable to common stockholders for the years ended December 31, 2019 and 2018, as their inclusion would be antidilutive.          

Recently Issued and Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses   on Financial Instruments. The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective in the first quarter of 2023 for calendar-year SEC filers that are smaller reporting companies as of the one-time determination date. Early adoption is permitted beginning in 2019. The Company plans to adopt the new guidance on January 1, 2023, and it does not expect that adoption of this standard will have an impact on its consolidated financial statements and related disclosures.

 

Recently Adopted Accounting Pronouncements

In February 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, to simplify how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The Company adopted this ASU as of January 1, 2019 and the adopted did not have a material impact on the consolidated financial statements and related disclosures.  

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases. Under this new guidance, at the commencement date, lessees will be required to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. This guidance is not applicable for leases with a term of 12 months or less. The Company adopted ASC 842 as of January 1, 2019, electing the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. The Company elected the package of practical expedients permitted under the transition guidance. As a result of the adoption, the Company recorded right-of-use assets and liabilities. As of December 31, 2019, the Company’s right-of-use assets and liabilities were $0.8 million associated with its operating leases.

In June 2018, the FASB issued ASU No. 2018‑07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which amends the FASB Accounting Standards Codification in order to simplify the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. The guidance mandates the modified retrospective approach and is effective for annual and interim reporting periods beginning after December 31, 2018, with early adoption permitted. The Company adopted this ASU as of January 1, 2019 and the adoption did not have an impact on the Company’s consolidated financial statements.

v3.20.1
Fair Value
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value

3.

Fair Value

Measurements

Fair value measurements are market-based measurements, not entity-specific measurements.  Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability.  We follow a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values.  The basis for fair value measurements for each level within the hierarchy is described below:

 

Level 1: Quoted prices in active markets for identical assets or liabilities.

 

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

 

Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

 

Warrants issued by the Company in connection with the 2018 Rights Offering in July 2018 (“Series T Warrants”) and in September 2019 Offering (“Series U Warrants”) are classified as liabilities instruments. Because some of the inputs to our valuation model are either not observable or are not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability is classified as Level 3 in the fair value hierarchy.

 

The Series T Warrants are not traded in an active securities market, and as such the estimated the fair value as of December 31, 2019 and 2018 was determined by using an option pricing model with the following assumptions:

 

 

 

As of

December 31,

2019

 

 

As of

December 31,

2018

 

Expected term

 

1.1 years

 

 

2.1 years

 

Common stock market price

 

$

2.40

 

 

$

14.50

 

Risk-free interest rate

 

 

1.59

%

 

 

2.48

%

Expected volatility

 

 

168

%

 

 

125

%

Resulting fair value (per warrant)

 

$

1.47

 

 

$

6.50

 

 

The warrants issued in connection with the 2018 Rights Offering may be redeemed by the Company at $0.01 per warrant prior to their expiration if the Company’s common stock closes above $3.63 per share, subject to adjustment, for 20 consecutive trading days. The initial fair value of the liability associated with these warrants was $3.1 million, and the fair value decreased to $0.1 million as of December 31, 2019. The main driver for the change in the fair value of warrants at December 31, 2019 and 2018, was related to the change in our stock price.

The Company estimated the fair value of the Series U Warrants on the issuance date as well as at December 31, 2019 with the Black Scholes model. The Series U warrants will be marked to market as of each balance sheet date until they are exercised or upon expiration, with the changes in fair value recorded as non-operating income or loss in the statement of operations and comprehensive income (loss).

 

 

 

As of

December 31,

2019

 

 

As of

September 25,

2019

 

Expected term

 

4.75 years

 

 

5 years

 

Common stock market price

 

$

2.40

 

 

$

3.42

 

Risk-free interest rate

 

 

1.68

%

 

 

1.60

%

Expected volatility

 

 

134.5

%

 

 

134.9

%

Resulting fair value (per warrant)

 

$

1.94

 

 

$

2.90

 

 

The following table summarizes the change in our Level 3 warrant liability value (in thousands):

 

 

 

Years ended December 31,

 

Warrant liability

 

2019

 

 

2018

 

Beginning balance

 

$

916

 

 

$

3,148

 

Issuance of warrants

 

 

10,214

 

 

 

 

Exercises

 

 

(794

)

 

 

 

Change in fair value

 

 

(3,407

)

 

 

(2,233

)

Ending balance

 

$

6,929

 

 

$

916

 

 

Financial Instruments

Fair value information is disclosed about all financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate fair value. The disclosures of estimated fair value of financial instruments at December 31, 2019 and 2018, were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.

The carrying amounts for cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to the short-term nature of these instruments.

At December 31, 2019 and 2018, the aggregate fair value and the carrying value of the Company’s term loan were as follows (in thousands):

 

 

 

December 31, 2019

 

 

December 31, 2018

 

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

Debt

 

$

10,761

 

 

$

11,060

 

 

$

14,043

 

 

$

14,202

 

 

Carrying value is net of debt discount of $0.4 million and $0.6 million as of December 31, 2019 and 2018, respectively.  

The fair value of debt is classified as Level 3 in the fair value hierarchy as some of the inputs, primarily the effective interest rate, to the valuation model are either not observable quoted prices or are not derived principally from or corroborated by observable market data by correlation or other means.

Nonfinancial Assets and Liabilities

The Company applies fair value techniques on a non-recurring basis, if and when necessary, associated with: (1) valuing potential impairment losses related to goodwill which are accounted for pursuant to the authoritative guidance for intangibles—goodwill and other; and (2) valuing potential impairment losses related to long-lived assets which are accounted for pursuant to the authoritative guidance for property, plant and equipment.

 

v3.20.1
Discontinued Operations
12 Months Ended
Dec. 31, 2019
Discontinued Operations And Disposal Groups [Abstract]  
Discontinued Operations

4.

Discontinued Operations

 

As explained in Note 1, on April 24, 2019 and April 25, 2019, the Company completed the sale of its Cell Therapy business to Lorem and Mr. Shirahama.  The following table summarizes the calculation of the loss on sale of the Cell Therapy business, which was finalized during the fourth quarter of 2019 (in thousands):

 

Consideration received

 

$

7,000

 

Transaction costs

 

 

(1,363

)

Net cash proceeds

 

 

5,637

 

Less:

 

 

 

 

Carrying value of business and assets sold

 

 

12,145

 

Net loss on sale of business

 

$

(6,508

)

 

There were no assets or liabilities related to discontinued operations as of December 31, 2019. Assets and liabilities related to discontinued operations or held for sale as of December 31, 2018 consisted of the following:

 

 

 

December 31,

2018

 

Assets

 

 

 

 

Current assets held for sale:

 

 

 

 

Accounts receivable, net

 

$

108

 

Inventory, net

 

 

2,841

 

Other current assets

 

 

328

 

 

 

$

3,277

 

Long-term assets held for sale:

 

 

 

 

Property and equipment, net

 

 

260

 

Other noncurrent assets

 

 

1,866

 

Goodwill

 

 

3,550

 

Intangible assets, net

 

 

5,957

 

 

 

 

11,633

 

Total assets

 

$

14,910

 

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities held for sale:

 

 

 

 

Accounts payable and accrued liabilities

 

$

580

 

Long-term liabilities held for sale:

 

 

 

 

Other noncurrent liabilities

 

 

78

 

Deferred revenues

 

 

167

 

Noncurrent liabilities

 

$

245

 

Total liabilities

 

$

825

 

 

The following table summarizes the results of discontinued operations for the periods presented (in thousands).

 

 

 

Year ended December 31,

 

 

 

2019

 

 

2018

 

Product revenue

 

$

901

 

 

$

2,671

 

License revenue

 

 

 

 

 

1,000

 

Total revenues

 

 

901

 

 

 

3,671

 

Cost of revenue

 

 

857

 

 

 

2,373

 

Gross profit

 

 

44

 

 

 

1,298

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

656

 

 

 

3,099

 

Sales and marketing

 

 

411

 

 

 

1,375

 

General and administrative

 

 

185

 

 

 

760

 

Total operating expenses

 

 

1,252

 

 

 

5,234

 

Operating loss

 

 

(1,208

)

 

 

(3,936

)

Other income (expense)

 

 

112

 

 

 

180

 

Loss from discontinued operations

 

$

(1,096

)

 

$

(3,756

)

Loss from sale of business

 

 

(6,508

)

 

 

 

Net loss from discontinued operations

 

$

(7,604

)

 

$

(3,756

)

 

During the year ended December 31, 2019, revenues from discontinued operations were related to the Cell Therapy business. Because of the sale of the Cell Therapy business to Lorem and Mr. Shirahama, all product revenues and costs of product revenues for these periods have been recorded in loss from discontinued operations in the consolidated statements of operations.

 

Included in the statement of cash flows are the following non-cash adjustments related to the discontinued operations (in thousands):

 

 

 

For the year ended December 31,

 

 

 

2019

 

 

2018

 

Depreciation and amortization

 

$

467

 

 

$

1,625

 

Provision for excess inventory

 

$

 

 

$

463

 

Loss on asset disposal

 

$

 

 

$

(36

)

 

v3.20.1
Loss per Share
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Loss per Share

Net loss per share for year ended December 31, 2019 included a deemed dividend of $554,000 due to beneficial conversion feature recorded as a result of the adjustment of the conversion price of Series C Preferred Stock from $39.93 to $7.50 per share in August 2019. Net loss per share for year ended December 31, 2018 included a deemed dividend of $2.5 million to account for the beneficial conversion feature in connection with issuance of Series C Preferred Stock.

 

The following were excluded from the diluted loss per share calculation for the periods presented because their effect would be anti-dilutive:

 

 

 

For the Year Ended December 31,

 

 

 

2019

 

 

2018

 

Outstanding stock options

 

 

1,865

 

 

 

3,000

 

Preferred stock

 

 

298,000

 

 

 

95,000

 

Outstanding warrants

 

 

3,637,000

 

 

 

178,000

 

Total

 

 

3,936,865

 

 

 

276,000

 

 

v3.20.1
Composition of Certain Financial Statement Captions
12 Months Ended
Dec. 31, 2019
Composition Of Certain Financial Statement Captions [Abstract]  
Composition of Certain Financial Statement Captions

6.

Composition of Certain Financial Statement Captions

 

Other Current Assets

As of December 31, 2019 and 2018, other current assets were comprised of the following (in thousands):

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Prepaid services

 

$

277

 

 

$

166

 

Prepaid insurance

 

 

536

 

 

 

564

 

Other receivables

 

 

144

 

 

 

55

 

 

 

$

957

 

 

$

785

 

 

Property and Equipment, net

As of December 31, 2019 and 2018, property and equipment, net, were comprised of the following (in thousands):

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Office and computer equipment

 

$

1,518

 

 

$

1,279

 

Leasehold improvements

 

 

1,682

 

 

 

1,682

 

 

 

 

3,200

 

 

 

2,961

 

Less accumulated depreciation

 

 

(1,021

)

 

 

(662

)

 

 

$

2,179

 

 

$

2,299

 

 

Depreciation expense totaled $0.4 million and $0.3 million for the years ended December 31, 2019 and 2018, respectively.

 

Accounts Payable and Accrued Expenses

As of December 31, 2019 and 2018, accounts payable and accrued expenses were comprised of the following (in thousands):

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Accrued expenses

 

$

791

 

 

$

824

 

Accounts payable

 

 

327

 

 

 

721

 

Accrued payroll and bonus

 

 

679

 

 

 

423

 

Accrued professional fees

 

 

332

 

 

 

186

 

Accrued vacation and compensation

 

 

166

 

 

 

192

 

Accrued R&D studies

 

 

858

 

 

 

230

 

Finance lease obligation - current

 

 

120

 

 

 

 

Other current liabilities

 

 

6

 

 

 

201

 

 

 

$

3,279

 

 

$

2,777

 

 

v3.20.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2019
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

7.

Commitments and Contingencies

Leases

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on the rate implicit in the lease or an incremental borrowing rate commensurate with the term of the lease.

The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. Right-of-use assets for financing leases are recorded within property and equipment, net in the Balance Sheet. Leases with an initial term of 12 months or less are not recorded on the Balance Sheet. Instead, the Company recognizes lease expense for these leases on a straight-line basis over the lease term. In connection with certain operating leases, the Company has security deposits recorded and maintained as restricted cash totaling $40 thousand as of December 31, 2019.

The Company leases laboratory, office and storage facilities in San Antonio, Texas, under operating lease agreements that expire in 2028. The Company also leases certain office space in Austin, Texas under a month-to-month operating lease agreement. In addition, the Company leases certain equipment under various operating and finance leases. The lease agreements      generally provide for periodic rent increases, and renewal and termination options. The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants.

Certain leases require the Company to pay taxes, insurance, and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components.

The table below summarizes the Company’s lease liabilities and corresponding right-of-use assets (in thousands, except years and rates):

 

 

 

December 31,

2019

 

Assets

 

 

 

 

Operating

 

$

781

 

Financing

 

 

134

 

Total leased assets

 

$

915

 

 

 

 

 

 

Liabilities

 

 

 

 

Current:

 

 

 

 

Operating

 

$

147

 

Financing

 

 

120

 

Noncurrent:

 

 

 

 

Operating

 

$

646

 

Financing

 

 

8

 

Total lease liabilities

 

$

921

 

Weighted-average remaining lease term (years) - operating

   leases

 

 

6.89

 

Weighted-average remaining lease term (years) - finance leases

 

 

1.08

 

Weighted-average discount rate - operating leases

 

 

7.93

%

Weighted-average discount rate - finance leases

 

 

5.00

%

 

The table below summarizes the Company’s lease costs from its consolidated statements of operations, and cash payments from its consolidated statements of cash flows during year ended December 31, 2019.

 

 

 

Year ended

December 31,

2019

 

Lease expense:

 

 

 

 

Operating lease expense

 

$

225

 

Finance lease expense:

 

 

 

 

Depreciation of right-of-use assets

 

 

116

 

Interest expense on lease liabilities

 

 

9

 

Total lease expense

 

$

350

 

 

 

 

 

 

Cash payment information:

 

 

 

 

Operating cash used for operating leases

 

$

213

 

Financing cash used for financing leases

 

 

131

 

Total cash paid for amounts included in the measurement of

   lease liabilities

 

$

344

 

 

Total rent expenses for the year ended December 31, 2019 was $0.7 million, which includes leases in the table above, month-to-month operating leases, and common area maintenance charges.

 

The Company’s future minimum annual lease payments under operating and financing leases at December 31, 2019 are as follows (in thousands):

 

 

 

Financing

Leases

 

 

Operating

Leases

 

2020

 

 

123

 

 

 

211

 

2021

 

 

7

 

 

 

183

 

2022

 

 

 

 

 

123

 

2023

 

 

 

 

 

100

 

Thereafter

 

 

 

 

 

447

 

Total minimum lease payments

 

$

130

 

 

$

1,064

 

Less: amount representing interest

 

 

(2

)

 

 

(271

)

Present value of obligations under leases

 

 

128

 

 

 

793

 

Less: current portion

 

 

(120

)

 

 

(147

)

Noncurrent lease obligations

 

$

8

 

 

$

646

 

 

 

Prior to December 2019, the Company also maintained office space for its former corporate headquarters in San Diego, California (the “Lease”). The initial term of the Lease is 63 months and may be extended upon mutual agreement. In connection with a restructuring announced in September 2017, the Company began negotiations with the landlord and in February 2018, announced a buy-out of its obligations with the Lease of approximately $0.6 million, included in the general and administrative expenses.

As of December 31, 2018, future minimum lease payments under the Company’s lease obligations under ASC 840 were as follows:

 

Years Ending December 31,

 

Obligation

 

2019

 

$

1,282

 

2020

 

 

638

 

2021

 

 

638

 

2022

 

 

192

 

Total

 

$

2,750

 

 

Rent expenses, which includes common area maintenance, for the year ended December 31, 2018 was $1.9 million.

Other commitments

We have entered into agreements with various research organizations for pre-clinical and clinical development studies, which have provisions for cancellation. Under the terms of these agreements, the vendors provide a variety of services including conducting research, recruiting and enrolling patients, monitoring studies and data analysis. Payments under these agreements typically include fees for services and reimbursement of expenses. The timing of payments due under these agreements is estimated based on current study progress.  As of December 31, 2019, we have clinical research study obligations of $0.9 million,  which is expected to be paid within a year.   

 

 

We are subject to various claims and contingencies related to legal proceedings.  Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions.  Management assesses the probability of loss for such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate.  

On July 25, 2019, Tap Advisors LLC (“Tap”) filed suit against the Company in the Supreme Court of the State of New York, County of New York, alleging the Company breached an agreement made in 2017, whereby Tap would provide certain financial advisory services to the Company.  Tap sought to recover fees of approximately $3.7 million (plus attorneys’ fees) that allegedly had not been paid by the Company related to the sale of its Cell Therapy business in April 2019. In December 2019, the Company settled the Tap litigation with cash payment of $0.7 million, which is included in the loss from discontinued operations for the year ended December 31, 2019.

v3.20.1
Term Loan Obligations
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Term Loan Obligations

8.

Term Loan Obligations

On May 29, 2015, the Company entered into the Loan and Security Agreement, with Oxford (the “Loan and Security Agreement”), pursuant to which it funded an aggregate principal amount of $17.7 million (“Term Loan”), subject to the terms and conditions set forth in the Loan and Security Agreement. The Term Loan accrues interest at a floating rate of at least 8.95% per annum, comprised of three-month LIBOR rate with a floor of 1.00% plus 7.95%.  Pursuant to the Loan and Security Agreement, we were previously required to make interest only payments through June 1, 2016 and thereafter we were required to make payments of principal and accrued interest in equal monthly installments sufficient to amortize the Term Loan through June 1, 2019, the maturity date. On February 23, 2016, we received an acknowledgement and agreement from Oxford related to the positive data on our U.S. ACT-OA clinical trial. As a result, pursuant to the Loan and Security Agreement, the period for which we are required to make interest-only payments was extended from July 1, 2016 to January 1, 2017. All unpaid principal and interest with respect to the Term Loan was originally due and payable in full on June 1, 2019. The interest-only payment period and maturity date of the Term Loan were further amended as described in more details below.  At maturity of the Term Loan, or earlier repayment in full following voluntary prepayment or upon acceleration, we are required to make a final payment in an aggregate amount equal to approximately $1.1 million. In connection with the Term Loan, on May 29, 2015, we issued to Oxford warrants to purchase an aggregate of 188 shares of our common stock at an exercise price of $5,175 per share. These warrants became exercisable as of November 30, 2015 and will expire on May 29, 2025 and, following the authoritative accounting guidance, are equity classified and its respective fair value was recorded as a discount to the debt.

In September 2017 and June 2018, the Company entered into two amendments to the Term Loan which extended the interest-only period, and the Company agreed to pay Oxford an amendment fee of $250,000 at the earlier of maturity or acceleration of the loan.

    

    

On August 31, 2018, the Company entered into a third amendment (the “Third Amendment”) to the Term Loan with Oxford. The Third Amendment extends the interest-only period under the Term Loan to December 31, 2018 and also requires that the Company pay to Oxford, in accordance with its pro rata share of the loans, 75% of all proceeds received (i) from the issuance and sale of unsecured subordinated convertible debt, (ii) in connection with a joint venture, collaboration or other partnering transaction, (iii) in connection with any licenses, (iv) from dividends (other than non-cash dividends from wholly owned subsidiaries) and (v) from the sale of any assets (such requirement, the “Prepayment Requirement”).  The Prepayment Requirement does not apply to proceeds from the sale and issuance of the Company’s equity securities, other than convertible debt.  The Prepayment Requirement shall apply until an aggregate principle amount of $7.0 million has been paid pursuant to the Prepayment Requirement.  However, if less than $7.0 million has been paid pursuant to the Prepayment Requirement on December 31, 2018 then the Company is required to promptly make additional payments until an aggregate principal amount of $7.0 million has been paid. The Company agreed to pay Oxford an amendment fee of $50,000 at the earlier of maturity or acceleration of the loan.

On December 31, 2018, the Company entered into a fourth amendment (the “Fourth Amendment”) to the Term Loan with Oxford. Oxford agreed to extend the maturity date from June 1, 2019 to June 1, 2020.  The Amendment increases the minimum liquidity covenant level from $1.5 million to $2.0 million and extends the interest-only period under the Loan Agreement to March 1, 2019. The Amendment also requires that the Company achieve one of the following by January 31, 2019: enter into an asset sale agreement with a minimum unrestricted net cash proceeds to the Company of $4.0 million; enter into a binding agreement for the issuance and sale of its equity securities or unsecured convertible subordinated debt which would result in unrestricted gross cash proceeds of not less than $7.5 million; or enter into a merger agreement pursuant to which the obligations under the Loan Agreement would be paid down to a level satisfactory to Oxford. The Company agreed to pay Oxford an amendment fee of $350,000 at the earlier of maturity or acceleration of the loan.

On February 13, 2019, the Company entered into a fifth amendment of the loan agreement to primarily extend the January 31, 2019 obligations under the Fourth Amendment to February 28, 2019. On March 4, 2019, the Company entered into a sixth amendment of the loan agreement to primarily extend the February 13, 2019 obligations under the fifth amendment to March 29, 2019.

On April 29, 2019, the Company entered into a seventh amendment (the “Seventh Amendment”) to the Term Loan, pursuant to which, among other things, Oxford agreed to interest only payments starting May 1, 2019, with amortization payments resuming on May 1, 2020. On July 15, 2019, the Company entered into an eighth amendment (the “Eighth Amendment”) to the Term Loan primarily to obtain the consent from Oxford for its name change to Plus Therapeutics, Inc.

As described in more detail in Note 13, on March 29, 2020 the Company entered into a ninth amendment to the Loan and Security Agreement (the “Ninth Amendment”).

The Term Loan, as amended, is collateralized by a security interest in substantially all of the Company’s existing and subsequently acquired assets, including its intellectual property assets, subject to certain exceptions set forth in the Loan and Security Agreement, as amended.  The intellectual property asset collateral will be released upon the Company achieving certain liquidity levels when the total principal outstanding under the Loan Agreement is less than $3 million. As of December 31, 2019, we were in compliance with all of the debt covenants under the Loan and Security Agreement.

The Term Loan Agreement contains customary indemnification obligations and customary events of default, including, among other things, our failure to fulfill certain obligations under the Term Loan, as amended, and the occurrence of a material adverse change, which is defined as a material adverse change in our business, operations, or condition (financial or otherwise), a material impairment of the prospect of repayment of any portion of the loan. In the event of default by us or a declaration of material adverse change by our lender, under the Term Loan, the lender would be entitled to exercise its remedies thereunder, including the right to accelerate the debt, upon which we may be required to repay all amounts then outstanding under the Term Loan, which could materially harm our financial condition. As of December 31, 2019, we were in compliance with all covenants under the Term Loan and have not received any notification or indication from Oxford to invoke the material adverse change clause. However, due to our current cash flow position and the substantial doubt about our ability to continue as a going concern, the entire principal amount of the Term Loan has been reclassified to short-term. We will continue to evaluate the debt classification on a quarterly basis and evaluate for reclassification in the future should our financial condition improve.

Additional details relating to the outstanding Term Loan as of December 31, 2019 and 2018 are presented in the following table (in thousands):

 

Year ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origination Date

 

Original

Loan

Amount

 

 

Interest

Rate**

 

 

Current

Monthly

Payment***

 

 

Original

Term

 

Remaining

Principal

(Face Value)

 

May 2015

 

$

17,700

 

 

 

8.95

%

 

$

72

 

 

48 Months

 

$

9,288

 

 

Year ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origination Date

 

Original

Loan

Amount

 

 

Interest

Rate**

 

 

Current

Monthly

Payment*

 

 

Original

Term

 

Remaining

Principal

(Face Value)

 

May 2015

 

$

17,700

 

 

 

8.95

%

 

$

100

 

 

48 Months

 

$

12,980

 

 

*

Monthly payment as of December 2018, which reflects interest only

**

3 month LIBOR rate with a floor of 1% plus 7.95%

***

Monthly payment as of December 2019, which reflects interest only

 

As of December 31, 2019, the future contractual principal and final fee payments on all of our debt obligations are as follows (as thousands):

 

Years Ending December 31,

 

 

 

 

2020

 

$

5,308

 

2021

 

 

6,180

 

Total

 

$

11,488

 

 

Reconciliation of Face Value to Book Value as of December 31, 2019

 

 

 

 

Total debt obligations, including final payment fee

   (Face Value)

 

$

11,488

 

Less: Debt discount

 

 

(428

)

Total obligation

 

$

11,060

 

 

Our interest expense for the years ended December 31, 2019 and 2018 was $1.9 million and $1.9 million, respectively.  Interest expense is calculated using the effective interest method, therefore it is inclusive of non-cash amortization in the amount of $0.5 million and $0.6 million, respectively, related to the amortization of the debt discount, capitalized loan costs, and accretion of final payment.

v3.20.1
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes