UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 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 No. 001-37759
OUTLOOK THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
38-3982704 |
(State or other jurisdiction of
incorporation or
organization) |
|
(I.R.S. Employer
Identification
No.) |
|
|
|
7 Clarke Drive
Cranbury, New
Jersey |
|
08512 |
(Address of principal executive
offices) |
|
(Zip Code) |
(609) 619-3990
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each
class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
Common Stock |
|
OTLK |
|
Nasdaq Stock Market
LLC |
Series A Warrants |
|
OTLKW |
|
Nasdaq Stock Market
LLC |
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes x
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 x
No
¨
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “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 |
x |
|
Smaller reporting company |
x |
|
|
|
Emerging growth
company |
x |
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.
x
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
¨
No
x
The number of shares of the registrant’s common stock, $0.01 par
value per share, outstanding as of August 12, 2019 was
28,233,484.
Outlook Therapeutics, Inc.
Table of Contents
In this report, unless otherwise stated or as the context otherwise
requires, references to “Outlook Therapeutics,” “Outlook,” “the
Company,” “we,” “us,” “our” and similar references refer to Outlook
Therapeutics, Inc. (formerly known as Oncobiologics, Inc.) and its
consolidated subsidiaries. The Outlook logo, Oncobiologics logo and
other trademarks or service marks of Outlook Therapeutics, Inc.
appearing in this report are the property of Outlook Therapeutics,
Inc. This report also contains registered marks, trademarks and
trade names of other companies. All other trademarks, registered
marks and trade names appearing in this report are the property of
their respective holders.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements about us and our
industry that involve substantial risks and uncertainties. All
statements other than statements of historical facts contained in
this report, including statements regarding our future financial
condition, business strategy and plans, and objectives of
management for future operations, are forward-looking statements.
In some cases, you can identify forward-looking statements by
terminology such as “believe,” “may,” “could,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,”
“should,” “would,” “potentially” or the negative of these terms or
similar expressions in this report.
We have based these forward-looking statements largely on our
current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs. These forward-looking statements are subject to a number of
known and unknown risks, uncertainties and assumptions, including
risks described in the section titled “Risk Factors” contained in
our annual report on Form 10-K for the year ended September 30,
2018 filed with the SEC on December 18, 2018, including, among
other things, risks associated with:
|
· |
the
timing and the success of the design of the clinical trials and
planned clinical trials of our lead product candidate,
ONS-5010; |
|
· |
whether the results of our clinical trials will
be sufficient to support domestic or global regulatory
approvals; |
|
· |
our
ability to obtain and maintain regulatory approval for ONS-5010 in
the United States and other markets if we successfully complete
clinical trials; |
|
· |
our
expectations regarding the potential market size and the size of
the patient populations for our product candidates, if approved,
for commercial use; |
|
· |
our
ability to fund our working capital requirements; |
|
· |
the
rate and degree of market acceptance of our current and future
product candidates; |
|
· |
the
implementation of our business model and strategic plans for our
business and product candidates; |
|
· |
developments or disputes concerning our
intellectual property or other proprietary rights; |
|
· |
our
ability to maintain and establish collaborations or obtain
additional funding; |
|
· |
our
expectations regarding government and third-party payor coverage
and reimbursement; |
|
· |
our
ability to compete in the markets we serve; and |
|
· |
the
factors that may impact our financial results. |
These risks are not exhaustive. Additional factors could harm our
business and financial performance. Moreover, we operate in a very
competitive and rapidly changing environment. New risk factors
emerge from time to time, and it is not possible for our management
to predict all risk factors, nor can we assess the impact of all
factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in, or implied by, any
forward-looking statements.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Outlook Therapeutics, Inc.
Consolidated Balance Sheets
(unaudited)
|
|
June 30, 2019 |
|
|
September 30, 2018 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
14,026,832 |
|
|
$ |
1,717,391 |
|
Prepaid and other current assets |
|
|
4,782,750 |
|
|
|
1,585,089 |
|
Total
current assets |
|
|
18,809,582 |
|
|
|
3,302,480 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
13,921,160 |
|
|
|
18,489,976 |
|
Other assets |
|
|
483,353 |
|
|
|
491,039 |
|
Total assets |
|
$ |
33,214,095 |
|
|
$ |
22,283,495 |
|
|
|
|
|
|
|
|
|
|
Liabilities,
convertible preferred stock and stockholders’ equity (deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Convertible senior secured notes |
|
$ |
6,699,000 |
|
|
$ |
13,179,449 |
|
Current portion of long-term debt |
|
|
1,048,685 |
|
|
|
66,480 |
|
Current portion of capital lease obligations |
|
|
205,413 |
|
|
|
520,794 |
|
Stockholder notes |
|
|
3,612,500 |
|
|
|
4,612,500 |
|
Accounts payable |
|
|
2,987,622 |
|
|
|
3,609,607 |
|
Accrued expenses |
|
|
4,473,151 |
|
|
|
6,458,471 |
|
Income taxes payable |
|
|
1,856,129 |
|
|
|
1,856,129 |
|
Deferred revenue |
|
|
2,335,392 |
|
|
|
1,738,603 |
|
Total current liabilities |
|
|
23,217,892 |
|
|
|
32,042,033 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
62,856 |
|
|
|
98,487 |
|
Capital lease obligations |
|
|
3,347,025 |
|
|
|
3,453,256 |
|
Warrant liability |
|
|
428,099 |
|
|
|
1,227,225 |
|
Deferred revenue |
|
|
3,533,145 |
|
|
|
2,758,262 |
|
Other liabilities |
|
|
3,983,341 |
|
|
|
3,514,738 |
|
Total liabilities |
|
|
34,572,358 |
|
|
|
43,094,001 |
|
|
|
|
|
|
|
|
|
|
Commitments (Note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock: |
|
|
|
|
|
|
|
|
Series A convertible preferred stock, par value $0.01 per share:
1,000,000 shares authorized, no shares issued and
outstanding |
|
|
- |
|
|
|
- |
|
Series A-1 convertible preferred stock, par value $0.01 per share:
200,000 shares authorized, 64,831 shares issued and outstanding at
June 30, 2019 and 60,203 shares issued and outstanding at September
30, 2018 |
|
|
5,197,323 |
|
|
|
4,734,416 |
|
Total convertible preferred stock |
|
|
5,197,323 |
|
|
|
4,734,416 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
|
Preferred
stock, par value $0.01 per share: 7,300,000 shares authorized, no
shares issued and outstanding |
|
|
- |
|
|
|
- |
|
Series B convertible preferred stock, par value $0.01 per share:
1,500,000 shares authorized, no shares issued |
|
|
- |
|
|
|
- |
|
Common stock,
par value $0.01 per share; 200,000,000 shares authorized;
28,233,028 shares issued and outstanding at June 30, 2019 and
9,027,491 shares issued and outstanding at September 30, 2018 |
|
|
282,330 |
|
|
|
90,275 |
|
Additional paid-in capital |
|
|
237,546,229 |
|
|
|
190,672,166 |
|
Accumulated deficit |
|
|
(244,384,145 |
) |
|
|
(216,307,363 |
) |
Total stockholders' equity (deficit) |
|
|
(6,555,586 |
) |
|
|
(25,544,922 |
) |
Total liabilities, convertible preferred stock and stockholders'
equity (deficit) |
|
$ |
33,214,095 |
|
|
$ |
22,283,495 |
|
The accompanying notes are an integral part of these unaudited
interim consolidated financial statements.
Outlook Therapeutics, Inc.
Consolidated Statements of Operations
(unaudited)
|
|
Three Months Ended June 30, |
|
|
Nine months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collaboration revenues |
|
$ |
583,848 |
|
|
$ |
771,890 |
|
|
$ |
2,292,586 |
|
|
$ |
2,315,670 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
4,393,466 |
|
|
|
5,795,993 |
|
|
|
19,312,010 |
|
|
|
11,354,781 |
|
General and administrative |
|
|
1,834,545 |
|
|
|
2,195,789 |
|
|
|
6,587,691 |
|
|
|
8,191,546 |
|
|
|
|
6,228,011 |
|
|
|
7,991,782 |
|
|
|
25,899,701 |
|
|
|
19,546,327 |
|
Loss
from operations |
|
|
(5,644,163 |
) |
|
|
(7,219,892 |
) |
|
|
(23,607,115 |
) |
|
|
(17,230,657 |
) |
Interest expense, net |
|
|
1,081,779 |
|
|
|
1,147,371 |
|
|
|
3,256,505 |
|
|
|
2,786,124 |
|
Loss
on extinguishment of debt |
|
|
423,686 |
|
|
|
- |
|
|
|
607,240 |
|
|
|
1,252,353 |
|
Change in fair value of warrant liability |
|
|
(1,931,244 |
) |
|
|
64,659 |
|
|
|
(2,265,836 |
) |
|
|
(226,116 |
) |
Loss
before income taxes |
|
|
(5,218,384 |
) |
|
|
(8,431,922 |
) |
|
|
(25,205,024 |
) |
|
|
(21,043,018 |
) |
Income tax benefit |
|
|
(777,500 |
) |
|
|
- |
|
|
|
(777,500 |
) |
|
|
(3,150,716 |
) |
Net
loss |
|
|
(4,440,884 |
) |
|
|
(8,431,922 |
) |
|
|
(24,427,524 |
) |
|
|
(17,892,302 |
) |
Recognition of beneficial conversion feature upon issuance of
Series A and A-1 convertible preferred stock |
|
|
- |
|
|
|
- |
|
|
|
(61,365 |
) |
|
|
(15,736,683 |
) |
Series
A and A-1 convertible preferred stock dividends and related
settlement |
|
|
(158,128 |
) |
|
|
(652,612 |
) |
|
|
(462,907 |
) |
|
|
(1,740,108 |
) |
Deemed dividend upon modification of warrants |
|
|
- |
|
|
|
- |
|
|
|
(829,530 |
) |
|
|
- |
|
Net loss attributable to common stockholders |
|
$ |
(4,599,012 |
) |
|
$ |
(9,084,534 |
) |
|
$ |
(25,781,326 |
) |
|
$ |
(35,369,093 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share of common stock, basic and diluted |
|
$ |
(0.20 |
) |
|
$ |
(2.10 |
) |
|
$ |
(1.74 |
) |
|
$ |
(9.96 |
) |
Weighted average shares outstanding, basic and diluted |
|
|
23,007,077 |
|
|
|
4,317,502 |
|
|
|
14,787,010 |
|
|
|
3,552,853 |
|
The accompanying notes are an integral part of these unaudited
interim consolidated financial statements.
Outlook Therapeutics, Inc.
Consolidated Statements of Convertible Preferred Stock and
Stockholders' Equity (Deficit)
(unaudited)
|
|
Convertible Preferred
Stock |
|
|
Stockholders' Equity
(Deficit) |
|
|
|
Series A-1 |
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated |
|
|
Total Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
Balance at April 1, 2019 |
|
|
63,250 |
|
|
$ |
5,039,195 |
|
|
|
11,759,630 |
|
|
$ |
117,596 |
|
|
$ |
211,739,503 |
|
|
$ |
(239,943,261 |
) |
|
$ |
(28,086,162 |
) |
Issuance of common stock in connection
with exercise of warrants |
|
|
- |
|
|
|
- |
|
|
|
6,133,398 |
|
|
|
61,334 |
|
|
|
(56,984 |
) |
|
|
- |
|
|
|
4,350 |
|
Issuance of common stock in connection
with public offering, net of costs |
|
|
- |
|
|
|
- |
|
|
|
10,340,000 |
|
|
|
103,400 |
|
|
|
26,053,103 |
|
|
|
- |
|
|
|
26,156,503 |
|
Series A-1 convertible preferred stock
dividends and related settlement |
|
|
1,581 |
|
|
|
158,128 |
|
|
|
- |
|
|
|
- |
|
|
|
(158,128 |
) |
|
|
- |
|
|
|
(158,128 |
) |
Stock-based compensation
expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(31,265 |
) |
|
|
- |
|
|
|
(31,265 |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,440,884 |
) |
|
|
(4,440,884 |
) |
Balance at June 30, 2019 |
|
|
64,831 |
|
|
$ |
5,197,323 |
|
|
|
28,233,028 |
|
|
$ |
282,330 |
|
|
$ |
237,546,229 |
|
|
$ |
(244,384,145 |
) |
|
$ |
(6,555,586 |
) |
|
|
Convertible Preferred
Stock |
|
|
Stockholders' Equity
(Deficit) |
|
|
|
Series A |
|
|
Series B Convertible
Preferred Stock |
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated |
|
|
Total Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
Balance at April 1, 2018 |
|
|
261,045 |
|
|
$ |
18,294,783 |
|
|
|
1,500,000 |
|
|
$ |
2,661,972 |
|
|
|
3,217,557 |
|
|
$ |
32,176 |
|
|
$ |
159,416,545 |
|
|
$ |
(195,675,782 |
) |
|
$ |
(33,565,089 |
) |
Proceeds from exercise of common stock
warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
432 |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
- |
|
|
|
- |
|
Issuance of vested restricted stock
units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,811 |
|
|
|
18 |
|
|
|
(18 |
) |
|
|
- |
|
|
|
- |
|
Private placement sale of common stock
and common stock warrants, net of costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,594,345 |
|
|
|
15,943 |
|
|
|
14,840,145 |
|
|
|
- |
|
|
|
14,856,088 |
|
Series A convertible preferred stock
dividends and related settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(652,612 |
) |
|
|
- |
|
|
|
(652,612 |
) |
Conversion of Series A convertible
preferred stock into common shares |
|
|
(208,836 |
) |
|
|
(14,359,816 |
) |
|
|
- |
|
|
|
- |
|
|
|
3,946,577 |
|
|
|
39,466 |
|
|
|
14,320,350 |
|
|
|
- |
|
|
|
14,359,816 |
|
Conversion of Series B convertible
preferred stock into common shares |
|
|
- |
|
|
|
- |
|
|
|
(1,500,000 |
) |
|
|
(2,661,972 |
) |
|
|
264,084 |
|
|
|
2,641 |
|
|
|
2,659,331 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation
expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
234,119 |
|
|
|
- |
|
|
|
234,119 |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,431,922 |
) |
|
|
(8,431,922 |
) |
Balance at June 30, 2018 |
|
|
52,209 |
|
|
$ |
3,934,967 |
|
|
|
- |
|
|
$ |
- |
|
|
|
9,024,806 |
|
|
$ |
90,248 |
|
|
$ |
190,817,856 |
|
|
$ |
(204,107,704 |
) |
|
$ |
(13,199,600 |
) |
|
|
Convertible Preferred
Stock |
|
|
Stockholders' Equity
(Deficit) |
|
|
|
Series A-1 |
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated |
|
|
Total Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
Balance at October 1, 2018 |
|
|
60,203 |
|
|
$ |
4,734,416 |
|
|
|
9,027,491 |
|
|
$ |
90,275 |
|
|
$ |
190,672,166 |
|
|
$ |
(216,307,363 |
) |
|
$ |
(25,544,922 |
) |
Cumulative effect of adoption of ASU
2014-09 (Topic 606) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,649,258 |
) |
|
|
(3,649,258 |
) |
Issuance of common stock in connection
with exercise of warrants |
|
|
- |
|
|
|
- |
|
|
|
6,134,307 |
|
|
|
61,343 |
|
|
|
(56,993 |
) |
|
|
- |
|
|
|
4,350 |
|
Issuance of common stock in connection
with public offering, net of costs |
|
|
- |
|
|
|
- |
|
|
|
10,340,000 |
|
|
|
103,400 |
|
|
|
26,053,103 |
|
|
|
- |
|
|
|
26,156,503 |
|
Private placement sale of common
stock, net of costs |
|
|
- |
|
|
|
- |
|
|
|
2,680,390 |
|
|
|
26,804 |
|
|
|
19,781,513 |
|
|
|
- |
|
|
|
19,808,317 |
|
Issuance of vested restricted stock
units |
|
|
- |
|
|
|
- |
|
|
|
446 |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
- |
|
|
|
- |
|
Issuance of common stock in connection
with conversion of senior secured notes |
|
|
- |
|
|
|
- |
|
|
|
50,394 |
|
|
|
504 |
|
|
|
401,464 |
|
|
|
- |
|
|
|
401,968 |
|
Series A-1 convertible preferred stock
dividends and related settlement |
|
|
4,628 |
|
|
|
462,907 |
|
|
|
- |
|
|
|
- |
|
|
|
(462,907 |
) |
|
|
- |
|
|
|
(462,907 |
) |
Stock-based compensation
expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,108,766 |
|
|
|
- |
|
|
|
1,108,766 |
|
Accrued directors fees settled in
fully vested stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
49,121 |
|
|
|
- |
|
|
|
49,121 |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(24,427,524 |
) |
|
|
(24,427,524 |
) |
Balance at June 30, 2019 |
|
|
64,831 |
|
|
$ |
5,197,323 |
|
|
|
28,233,028 |
|
|
$ |
282,330 |
|
|
$ |
237,546,229 |
|
|
$ |
(244,384,145 |
) |
|
$ |
(6,555,586 |
) |
|
|
Convertible Preferred
Stock |
|
|
Stockholders' Equity
(Deficit) |
|
|
|
Series A |
|
|
Series B Convertible
Preferred Stock |
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated |
|
|
Total Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
Balance at October 1, 2017 |
|
|
32,628 |
|
|
$ |
2,924,441 |
|
|
|
- |
|
|
$ |
- |
|
|
|
3,116,743 |
|
|
$ |
31,167 |
|
|
$ |
152,533,260 |
|
|
$ |
(186,215,402 |
) |
|
$ |
(33,650,975 |
) |
Proceeds from exercise of common stock
warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
432 |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
- |
|
|
|
- |
|
Issuance of vested restricted stock
units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
102,625 |
|
|
|
1,027 |
|
|
|
(1,027 |
) |
|
|
- |
|
|
|
- |
|
Private placement sale of common stock
and common stock warrants, net of costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,594,345 |
|
|
|
15,943 |
|
|
|
14,840,145 |
|
|
|
- |
|
|
|
14,856,088 |
|
Sale of Series A convertible preferred
stock and common stock warrants, net of costs |
|
|
217,372 |
|
|
|
14,265,861 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,382,181 |
|
|
|
- |
|
|
|
6,382,181 |
|
Series A convertible preferred stock
dividends and related settlement |
|
|
11,045 |
|
|
|
1,104,481 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,740,108 |
) |
|
|
- |
|
|
|
(1,740,108 |
) |
Conversion of Series A convertible
preferred stock into common shares |
|
|
(208,836 |
) |
|
|
(14,359,816 |
) |
|
|
- |
|
|
|
- |
|
|
|
3,946,577 |
|
|
|
39,466 |
|
|
|
14,320,350 |
|
|
|
- |
|
|
|
14,359,816 |
|
Conversion of senior secured notes
into Series B convertible preferred stock |
|
|
- |
|
|
|
- |
|
|
|
1,500,000 |
|
|
|
2,661,972 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,661,972 |
|
Conversion of Series B convertible
preferred stock into common shares |
|
|
- |
|
|
|
- |
|
|
|
(1,500,000 |
) |
|
|
(2,661,972 |
) |
|
|
264,084 |
|
|
|
2,641 |
|
|
|
2,659,331 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation
expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,823,728 |
|
|
|
- |
|
|
|
1,823,728 |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(17,892,302 |
) |
|
|
(17,892,302 |
) |
Balance at June 30, 2018 |
|
|
52,209 |
|
|
$ |
3,934,967 |
|
|
|
- |
|
|
$ |
- |
|
|
|
9,024,806 |
|
|
$ |
90,248 |
|
|
$ |
190,817,856 |
|
|
$ |
(204,107,704 |
) |
|
$ |
(13,199,600 |
) |
The accompanying notes are an integral part of these unaudited
interim consolidated financial statements.
Outlook Therapeutics, Inc.
Consolidated Statements of Cash Flows
(unaudited)
|
|
Nine months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(24,427,524 |
) |
|
$ |
(17,892,302 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,473,005 |
|
|
|
2,229,947 |
|
Loss
on extinguishment of debt |
|
|
607,240 |
|
|
|
1,252,353 |
|
Non-cash interest expense |
|
|
1,314,321 |
|
|
|
1,200,504 |
|
Stock-based compensation |
|
|
1,108,766 |
|
|
|
1,823,728 |
|
Change in fair value of warrant liability |
|
|
(2,265,836 |
) |
|
|
(226,116 |
) |
Loss
on disposal of property and equipment |
|
|
2,962,064 |
|
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
(2,811,592 |
) |
|
|
(606,067 |
) |
Other
assets |
|
|
(109,096 |
) |
|
|
(33,612 |
) |
Accounts payable |
|
|
(1,931,468 |
) |
|
|
(8,002,074 |
) |
Accrued expenses |
|
|
(1,089,424 |
) |
|
|
(2,101,223 |
) |
Deferred revenue |
|
|
(2,277,586 |
) |
|
|
(2,285,671 |
) |
Other liabilities |
|
|
73,531 |
|
|
|
(4,806 |
) |
Net cash used in operating activities |
|
|
(26,373,599 |
) |
|
|
(24,645,339 |
) |
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(437,306 |
) |
|
|
(1,518,349 |
) |
Net cash used in investing activities |
|
|
(437,306 |
) |
|
|
(1,518,349 |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock through private placement
and public offering, net |
|
|
45,964,820 |
|
|
|
14,856,088 |
|
Proceeds from issuance of Series A convertible preferred stock |
|
|
- |
|
|
|
21,737,200 |
|
Proceeds from exercise of common stock warrants |
|
|
4,350 |
|
|
|
- |
|
Payments of capital leases obligations |
|
|
(470,295 |
) |
|
|
(634,866 |
) |
Repayment of
debt |
|
|
(6,404,597 |
) |
|
|
(94,427 |
) |
Payment of financing costs |
|
|
- |
|
|
|
(1,089,158 |
) |
Net cash provided by financing activities |
|
|
39,094,278 |
|
|
|
34,774,837 |
|
|
|
|
|
|
|
|
|
|
Effect
of foreign exchange rate on cash |
|
|
26,068 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
increase in cash |
|
|
12,309,441 |
|
|
|
8,611,149 |
|
Cash at beginning of period |
|
|
1,717,391 |
|
|
|
3,185,519 |
|
Cash at end of period |
|
$ |
14,026,832 |
|
|
$ |
11,796,668 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
2,710,376 |
|
|
$ |
81,005 |
|
Supplemental schedule of noncash investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment in accounts payable and accrued
expenses |
|
$ |
1,048,286 |
|
|
$ |
463,007 |
|
Supplemental schedule of noncash financing activities: |
|
|
|
|
|
|
|
|
Senior secured notes and accrued interest converted into common
stock |
|
$ |
401,968 |
|
|
$ |
- |
|
Issuance of Series B convertible preferred stock upon conversion of
senior secured notes, net of unamortized debt discount |
|
$ |
- |
|
|
$ |
1,409,619 |
|
Issuance of capital lease obligations in connection with purchase
of property and equipment |
|
$ |
48,683 |
|
|
$ |
4,260,942 |
|
Change in fair value of convertible senior secured notes warrants
capitalized as deferred financing costs |
|
$ |
1,466,710 |
|
|
$ |
- |
|
Series A and A-1 convertible preferred stock dividends |
|
$ |
462,907 |
|
|
$ |
652,612 |
|
Series A and A-1 convertible preferred stock dividends
settlement |
|
$ |
462,907 |
|
|
$ |
1,104,481 |
|
Accrued directors fees settled in fully vested stock options |
|
$ |
49,121 |
|
|
$ |
- |
|
The accompanying notes are an integral part of these unaudited
interim consolidated financial statements.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
1. |
Organization and Description of Business |
Outlook Therapeutics, Inc., (formerly Oncobiologics, Inc.),
(“Outlook” or the “Company”) was incorporated in New Jersey on
January 5, 2010, started operations in July 2011,
reincorporated in Delaware by merging with and into a Delaware
corporation in October 2015 and changed its name to “Outlook
Therapeutics, Inc.” in November 2018. The Company is a late
clinical-stage biopharmaceutical company focused on developing and
commercializing ONS-5010, a complex monoclonal antibody (“mAb”)
therapeutic for various ophthalmic indications. The Company is
based in Cranbury, New Jersey.
The Company has incurred substantial losses and negative cash flows
from operations since its inception and has an accumulated deficit
of $244.4 million as of June 30, 2019. As of June 30, 2019, the
Company had substantial indebtedness that included
$6.7 million of senior secured notes that mature on December
22, 2019, $3.6 million unsecured notes that were due on demand as
of such date, and $1.0 million of unsecured notes that were
also due on demand as of such date but which are subject to a
forbearance agreement through March 7, 2020. These factors raise
substantial doubt about the Company’s ability to continue as a
going concern. The accompanying unaudited interim consolidated
financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The unaudited interim
consolidated financial statements do not include any adjustments
related to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might
result from the outcome of this uncertainty.
On November 30, 2018, the Company received approval from the New
Jersey Economic Development Authority’s Technology Business Tax
Certificate Transfer Program to sell approximately $3.7 million of
its unused New Jersey net operating losses (“NOLs”) and research
and development tax credits (“R&D credits”). The Company
received $3.4 million of proceeds from the sale of the New Jersey
NOLs and R&D credits, of which approximately $0.8 million and
$2.6 million was received in April 2019 and July 2019,
respectively.
Management believes that the Company’s existing cash as of June 30,
2019 and the proceeds from the sale of New Jersey NOLs and R&D
credits received in July 2019 of $2.6 million will be sufficient to
fund its operations into December 2019, excluding any unscheduled
repayment of debt. Substantial additional financing will be needed
by the Company to fund its operations in the future and to
commercially develop its product candidates. Management is
currently evaluating different strategies to obtain the required
funding for future operations. These strategies may include, but
are not limited to: payments from potential strategic research and
development partners, licensing and/or marketing arrangements with
pharmaceutical companies, private placements of equity and/or debt
securities, sale of its development stage product candidates to
third parties and public offerings of equity and/or debt
securities. There can be no assurance that these future funding
efforts will be successful.
The Company’s future operations are highly dependent on a
combination of factors, including (i) the timely and
successful completion of additional financing discussed above; (ii)
the Company’s ability to complete revenue-generating partnerships
with pharmaceutical companies; (iii) the success of its research
and development; (iv) the development of competitive therapies by
other biotechnology and pharmaceutical companies, and, ultimately;
(v) regulatory approval and market acceptance of the Company’s
proposed future products.
3. |
Basis of Presentation and Summary of Significant Accounting
Policies |
Basis of presentation
The accompanying unaudited interim consolidated financial
statements have been prepared in conformity with U.S. generally
accepted accounting principles (“GAAP”) for interim financial
information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Any reference in these notes to applicable
guidance is meant to refer to GAAP as found in the Accounting
Standards Codification (“ASC”) and Accounting Standards Updates
(“ASU”) of the Financial Accounting Standards Board (“FASB”).
In the opinion of management, the accompanying unaudited interim
consolidated financial statements include all normal and recurring
adjustments (which consist primarily of accruals, estimates and
assumptions that impact the financial statements) considered
necessary to present fairly the Company’s financial position as of
June 30, 2019 and its results of operations for the three and nine
months ended June 30, 2019 and 2018 and cash flows for the nine
months ended June 30, 2019 and 2018. Operating results for the
three and nine months ended June 30, 2019 are not necessarily
indicative of the results that may be expected for the full year
ending September 30, 2019. The unaudited interim consolidated
financial statements, presented herein, do not contain the required
disclosures under GAAP for annual consolidated financial
statements. The accompanying unaudited interim consolidated
financial statements should be read in conjunction with the annual
audited consolidated financial statements and related notes as of
and for the year ended September 30, 2018 included in the Company’s
Annual Report on Form 10-K filed with the Securities and Exchange
Commission (“SEC”) on December 18, 2018.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
Reverse stock-split
On March 15, 2019, the Company amended its amended and restated
certificate of incorporation to implement a
one-for-eight reverse stock split of its common stock. As
a result of the reverse stock split, the Company adjusted the share
amounts under its employee incentive plans, outstanding options,
restricted stock units and common stock warrant agreements with
third parties. The disclosure of common shares and per common share
data in the accompanying consolidated financial statements and
related notes reflect the reverse stock split for all periods
presented.
Use of estimates
The preparation of the unaudited interim consolidated financial
statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Due to the
uncertainty of factors surrounding the estimates or judgments used
in the preparation of the unaudited interim consolidated financial
statements, actual results may materially vary from these
estimates. Estimates and assumptions are periodically reviewed and
the effects of revisions are reflected in the unaudited interim
consolidated financial statements in the period they are determined
to be necessary.
Net loss per share
Basic and diluted net loss per common share is determined by
dividing net loss applicable to common stockholders by the
weighted-average number of shares of common stock outstanding
during the period.
For purposes of calculating diluted loss per common share, the
denominator includes both the weighted average common shares
outstanding and the number of common stock equivalents if the
inclusion of such common stock equivalents would be dilutive.
Dilutive common stock equivalents potentially include warrants,
stock options and non-vested restricted stock unit (“RSU”) awards
using the treasury stock method. The diluted loss per common share
calculation is further affected by an add-back of change in fair
value of warrant liability to the numerator under the assumption
that the change in fair value of warrant liability would not have
been incurred if the warrants had been converted into common
stock.
The following table sets forth the computation of basic earnings
per share and diluted earnings per share:
|
|
Three months ended June 30, |
|
|
Nine months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net loss attributable to
common stockholders |
|
$ |
(4,599,012 |
) |
|
$ |
(9,084,534 |
) |
|
$ |
(25,781,326 |
) |
|
$ |
(35,369,093 |
) |
Common stock outstanding (weighted
average) |
|
|
23,007,077 |
|
|
|
4,317,502 |
|
|
|
14,787,010 |
|
|
|
3,552,853 |
|
Basic and
diluted net loss per share |
|
$ |
(0.20 |
) |
|
$ |
(2.10 |
) |
|
$ |
(1.74 |
) |
|
$ |
(9.96 |
) |
The following potentially dilutive securities (in common stock
equivalents) have been excluded from the computation of diluted
weighted-average shares outstanding as of June 30, 2019 and 2018,
as they would be antidilutive:
|
|
As of June 30, |
|
|
|
2019 |
|
|
2018 |
|
Series A convertible
preferred stock |
|
|
- |
|
|
|
986,644 |
|
Series A-1 convertible preferred
stock |
|
|
1,225,172 |
|
|
|
- |
|
Convertible senior secured notes |
|
|
767,605 |
|
|
|
- |
|
Convertible unsecured notes |
|
|
149,573 |
|
|
|
- |
|
Performance-based stock units |
|
|
16,131 |
|
|
|
18,868 |
|
Restricted stock units |
|
|
3,750 |
|
|
|
10,410 |
|
Stock options |
|
|
605,452 |
|
|
|
132,759 |
|
Common stock warrants |
|
|
16,067,923 |
|
|
|
5,661,561 |
|
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
Recently issued and adopted accounting pronouncements
On October 1, 2018, the Company adopted ASU No. 2014-09, Revenue
from Contracts with Customers (“ASU 2014-09”) and changed
its revenue recognition policies accordingly. The standard’s stated
core principle is that an entity should recognize revenue to depict
the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. This
guidance also requires an entity to disclose sufficient information
to enable users of financial statements to understand the nature,
amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. Qualitative and quantitative
information is required about:
|
· |
Contracts with customers
- including revenue and impairments recognized, disaggregation of
revenue and information about contract balances and performance
obligations (including the transaction price allocated to the
remaining performance obligations). |
|
· |
Significant judgments and
changes in judgments - determining the timing of satisfaction
of performance obligations (over time or at a point in time), and
determining the transaction price and amounts allocated to
performance obligations. |
|
· |
Certain assets - assets
recognized from the costs to obtain or fulfill a contract. |
The Company’s arrangements fall under ASC 808,
Collaborations (“ASC 808”). ASC 808 does not address
recognition or measurement matters but prescribes that entities
look to other GAAP by analogy, namely ASU 2014-09. As such, the
Company completed an analysis of existing contracts with the
Company’s collaboration partners and assessed the differences in
accounting for such contracts under ASU 2014-09 compared with
current revenue accounting standards. The Company previously
recognized substantive milestones in the period the milestones were
achieved but ASU 2014-09 prescribes that those milestones are
a form of variable consideration which the Company will recognize
over the estimated performance period.
The Company adopted the new accounting standard utilizing the
modified retrospective method, and, therefore, no adjustments were
made to amounts in its prior period financial statements. The
Company recorded the cumulative effect of adopting the standard as
an adjustment to increase accumulated deficit by $3.6 million.
For the three and nine months ended June 30, 2019, the Company
would have recognized $0.3 million and $1.4 million, respectively,
of collaboration revenues under revenue recognition guidance in
effect during fiscal 2018 prior to the adoption of ASU
2014-09.
In February 2016, the FASB issued ASU No. 2016-02,
Leases (“ASC 842”). The FASB issued subsequent amendments to
the initial guidance in July 2018 with ASU 2018-10 and in
August 2018 with ASU 2018-11. ASC 842 supersedes the current
accounting for leases. The new standard requires lessees to record
a right of use asset and a related liability for the rights and
obligations associated with a lease, regardless of lease
classification, and eliminates the required use of bright-line
tests in current U.S. GAAP for determining lease classification.
This ASU is effective for annual periods beginning after
December 15, 2018 (i.e., calendar periods beginning on
January 1, 2019), and interim periods thereafter. Earlier
application is permitted for all entities, however the Company did
not early adopt. The new standard must be adopted using either the
modified retrospective approach, which requires application of the
new guidance at the beginning of the earliest comparative period
presented or the optional alternative approach, which requires
application of the new guidance at the beginning of the standard’s
effective date. The Company has arrangements currently classified
as operating leases which will be recorded as a right of use asset
and corresponding liability on the balance sheet and is currently
evaluating the impact these changes will have on the consolidated
financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value
Measurement (Topic 820): Disclosure Framework — Changes to
the Disclosure Requirements for Fair Value Measurement
(“ASU 2018-13”) ,
which removes and modifies some existing disclosure requirements
and adds others. ASU 2018-13 modifies the disclosure requirements
for fair value measurements and removes the requirement to disclose
(1) the amount of and reasons for transfers between Level 1 and
Level 2 of the fair value hierarchy, (2) the policy for timing of
transfers between levels, and (3) the valuation processes for Level
3 fair value measurements. ASU 2018-13 requires disclosure of
changes in unrealized gains and losses for the period included in
other comprehensive income (loss) for recurring Level 3 fair value
measurements held at the end of the reporting period and the range
and weighted average of significant unobservable inputs used to
develop Level 3 fair value measurements. The ASU is effective for
all entities for fiscal years beginning after
December 15, 2019, including interim periods therein. Early
adoption is permitted for any eliminated or modified disclosures
upon issuance of this ASU. The Company is currently evaluating the
impact of the adoption of this standard.
4. |
Fair Value Measurements |
Certain assets and liabilities are carried at fair value under
GAAP. Fair value is defined as the exchange price that would be
received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. Valuation techniques used to measure fair
value must maximize the use of observable inputs and minimize the
use of unobservable inputs. Financial assets and liabilities
carried at fair value are to be classified and disclosed in one of
the following three levels of the fair value hierarchy, of which
the first two are considered observable and the last is considered
unobservable:
|
· |
Level 1 - Quoted prices in active
markets for identical assets or liabilities. |
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
|
· |
Level 2 - Observable inputs (other
than Level 1 quoted prices), such as quoted prices in active
markets for similar assets or liabilities, quoted prices in markets
that are not active for identical or similar assets or liabilities,
or other inputs that are observable or can be corroborated by
observable market data. |
|
· |
Level 3 - Unobservable inputs that
are supported by little or no market activity and that are
significant to determining the fair value of the assets or
liabilities, including pricing models, discounted cash flow
methodologies and similar techniques. |
The asset’s or liability’s fair value measurement level within the
fair value hierarchy is based on the lowest level of any input that
is significant to the fair value measurement. Valuation techniques
used need to maximize the use of observable inputs and minimize the
use of unobservable inputs.
The following table presents the Company’s assets and liabilities
that are measured at fair value on a recurring basis:
|
|
June 30, 2019 |
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
428,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
liability |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,227,225 |
|
The table presented below is a summary of changes in the fair value
of the Company’s Level 3 valuation for the warrant liability for
the nine months ended June 30, 2019:
Balance at October 1, 2018 |
|
$ |
1,227,225 |
|
Senior note warrants modification |
|
|
1,466,710 |
(i) |
Change in fair
value |
|
|
(2,265,836 |
) |
Balance at June 30, 2019 |
|
$ |
428,099 |
|
|
(i) |
In connection with the November
2018 private placement to BioLexis Pte. Ltd. (“BioLexis”), the
Company reduced the exercise price of the warrants issued in
connection with the senior secured notes (the “Senior Note
Warrants”) from $24.00 to $12.00 and extended the expiration of the
Senior Note Warrants by three years. Such Senior Note Warrants now
expire eight years from their initial exercise date. |
The Senior Note Warrants issued in connection with the senior
secured notes (see Note 7) are classified as liabilities on the
accompanying consolidated balance sheet as the Senior Note Warrants
include cash settlement features at the option of the holders under
certain circumstances. The warrant liability is revalued each
reporting period with the change in fair value recorded in the
accompanying consolidated statements of operations until the
warrants are exercised or expire. The fair value of the warrant
liability is estimated using the Black-Scholes option pricing model
using the following assumptions:
|
|
June 30, |
|
|
September
30, |
|
|
|
2019 |
|
|
2018 |
|
Risk-free interest
rate |
|
|
1.79 |
% |
|
|
2.90 |
% |
Remaining contractual
life of warrant |
|
|
5.63 |
years |
|
|
3.39 |
years |
Expected
volatility |
|
|
88 |
% |
|
|
82 |
% |
Annual dividend
yield |
|
|
0 |
% |
|
|
0 |
% |
Fair
value of common stock |
|
$ |
2.08 |
per
share |
|
$ |
7.84 |
per
share |
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
5. |
Property and Equipment, Net |
Property and equipment, net, consists of:
|
|
June 30, |
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
Laboratory equipment |
|
$ |
14,428,266 |
|
|
$ |
14,333,624 |
|
Leasehold improvements |
|
|
10,129,139 |
|
|
|
10,095,100 |
|
Computer software and hardware |
|
|
497,799 |
|
|
|
483,807 |
|
Land and building |
|
|
3,000,000 |
|
|
|
3,000,000 |
|
Construction in
progress |
|
|
- |
|
|
|
2,276,737 |
|
|
|
|
28,055,204 |
|
|
|
30,189,268 |
|
Less: accumulated
depreciation and amortization |
|
|
(14,134,044 |
) |
|
|
(11,699,292 |
) |
|
|
$ |
13,921,160 |
|
|
$ |
18,489,976 |
|
Depreciation and amortization expense was $833,387 and $822,059 for
the three months ended June 30, 2019 and 2018, respectively, and $
2,473,005 and $2,229,947 for the nine months ended June 30, 2019
and 2018, respectively.
At June 30, 2019, $ 8,002,538 and at September 30, 2018, $7,953,856
represents laboratory equipment under capital leases and the
Company’s corporate office that is classified as a capital lease.
The Company’s corporate office lease matures in February 2028. The
term of the equipment leases are between 12 and 36 months and
qualify as capital leases. The equipment leases bear interest
between 4.0% and 19.4% and the effective interest rate on the
corporate office lease is 43.9%. At June 30, 2019 and September 30,
2018, $2,199,397 and $1,619,741, respectively, of accumulated
amortization related to capital leases.
The Company wrote off certain construction in progress and
laboratory equipment with a carrying amount of $50,926 and $
2,962,064 during the three and nine months ended June 30, 2019,
respectively, due to the Company changing its operations to focus
solely on developing and commercializing ONS-5010. The charge was
recorded to research and development on the consolidated statements
of operations. The Company determined that the carrying amount of
these assets was not recoverable and was less than the fair value
less the cost to sell.
Accrued expenses consists of:
|
|
June 30, |
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
Compensation |
|
$ |
1,042,905 |
|
|
$ |
2,231,122 |
|
Severance and related costs |
|
|
850,934 |
|
|
|
396,138 |
|
Research and development |
|
|
1,080,594 |
|
|
|
1,065,169 |
|
Interest payable |
|
|
1,184,329 |
|
|
|
1,991,044 |
|
Professional fees |
|
|
151,296 |
|
|
|
313,585 |
|
Director fees |
|
|
- |
|
|
|
59,122 |
|
Other accrued
expenses |
|
|
163,093 |
|
|
|
402,291 |
|
|
|
$ |
4,473,151 |
|
|
$ |
6,458,471 |
|
|
|
June 30,
2019 |
|
|
September 30,
2018 |
|
Convertible senior secured
notes |
|
$ |
6,699,000 |
|
|
$ |
13,500,000 |
|
Unamortized debt
discount |
|
|
- |
|
|
|
(320,551 |
) |
|
|
$ |
6,699,000 |
|
|
$ |
13,179,449 |
|
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
In September 2017, the Company entered into a purchase and exchange
agreement (the “Exchange Agreement”) with two existing investors
and holders of its senior secured notes (the “Exchanging
Noteholders”), pursuant to which the Exchanging Noteholders
exchanged $1.5 million aggregate principal amount of senior
secured notes for 1,500,000 shares of Series B convertible
preferred stock (“Series B Convertible”) and $41,507 of accrued
interest on such exchanged senior secured notes in October 2017.
The Company recognized a loss on extinguishment of $1,252,353 in
connection with the exchange and represents the excess fair value
of the Series B Convertible issued over the net carrying amount of
the debt and accrued interest.
In November 2018, the Company reached an agreement with the holders
of its $13.5 million senior secured notes to extend the
maturity of the senior secured notes until December 22, 2019,
in exchange for making several payments of principal and interest
through August 31, 2019, as well as subject to meeting
additional capital raising commitments that the Company met in
April 2019 through the completed public offering with gross
proceeds of $28.4 million. In addition, the Company agreed to make
the senior secured notes convertible into common stock at a price
of $8.9539 per share and reduced the exercise price of warrants to
purchase 485,245 shares of common stock held by the senior secured
noteholders from $24.00 per share to $12.00 per share. The increase
in the fair value of the warrants of $1.5 million due to the
modification was recorded as additional debt discount.
On June 28, 2019, the Company repaid $1.8 million outstanding
aggregate principal amount of senior secured notes and entered into
a Third Note Amendment (the “Third Amendment”) with the holders of
the remaining $6.7 million outstanding aggregate principal amount
of senior secured notes. Under the Third Amendment, the maturity
date of the senior secured notes was amended to December 22, 2019,
and the scheduled payments of principal and interest on or prior to
each of June 30, 2019; July 31, 2019; and August 31, 2019 were
removed. The Company also agreed to increase the interest rate
payable on such senior secured notes to 12.0% per annum from 5.0%
per annum. The Third Amendment was accounted for as an
extinguishment of debt.
During February and March 2019,
senior secured notes with a carrying amount of $400,575 and accrued
interest of $1,393 were converted into 50,394 shares of the
Company’s common stock. D uring the nine months ended June 30, 2019, the
Company repaid a total of $6.4 million of principal and $1.3
million of accrued interest of such notes. As of June 30, 2019, the
senior secured notes remain classified as a current liability
because they mature in less than 12 months.
Loss on extinguishment of senior secured notes recognized during
the three months ended June 30, 2019 was $423,686. Interest expense
on the senior secured notes for the three months ended June 30,
2019 and 2018 was $526,615 and $500,012, respectively, and
$1,689,533 and $1,486,737 for the nine months ended June 30, 2019
and 2018, respectively.
On March 7, 2019, the Company entered into a Forbearance and
Exchange Agreement (the “Agreement”) with Iliad Research and
Trading, L.P., a Utah limited partnership (the "Lender").
Concurrently with the execution of this Agreement, the Lender
purchased two stockholder notes issued by the Company previously in
the original principal amount of $1,000,000 with an aggregate
outstanding balance as of March 7, 2019 of $1,947,133 including
accrued interest. The stockholder notes were accruing interest at
the rate of 2.5% per month. The Lender agreed to refrain and
forbear from bringing any action to collect under the stockholder
notes until March 7, 2020 and to reduce the interest rates
currently in effect to 12.0% per annum simple interest during such
forbearance period. The Company also agreed to, at Lender's
election, repay or exchange the stockholder notes (or portions
thereof) for shares of the Company’s common stock at an exchange
rate of $13.44 per share. The Agreement was accounted for as an
extinguishment of debt and the Company recorded a loss of $183,554
during the nine months ended June 30, 2019.
Leases
In August 2018, the Company entered into a lease termination
agreement effective September 1, 2018, to terminate the lease
for office and laboratory space in Cranbury, New Jersey. In
consideration for the termination of the lease, the Company agreed
to make payments to the landlord totaling up to $5.8 million,
which includes (i) $287,615 upon execution of the termination
agreement, (ii) $50,000 per month for up to 30 months,
commencing September 1, 2018, and (iii) a $4.0 million
payment, in any event, on or before February 1, 2021. The
Company and landlord agreed that the $174,250 security deposit will
be used to pay the 7th, 8th, 9th and a portion of the 10th monthly
payments. The Company may pay the final $4.0 million payment
at any time, whereupon the Company’s obligation to make the
remaining monthly payments terminates.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
At June 30, 2019, the lease termination obligation of $3,895,761 is
included in other liabilities on the consolidated balance sheets. A
roll forward of the charges incurred to general and administrative
expense for the nine months ended June 30, 2019 is as follows:
|
|
Balance
October 1, 2018 |
|
|
Expensed /
Accrued Expense |
|
|
Cash
Payments |
|
|
Balance
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease termination payments |
|
$ |
3,850,081 |
|
|
$ |
321,430 |
|
|
$ |
(275,750 |
) |
|
$ |
3,895,761 |
|
10. |
Common Stock, Convertible
Preferred Stock and Stockholders’ Equity (Deficit) |
Common stock
During the nine months ended June 30, 2019, the Company issued an
aggregate of 2,680,965 shares of the Company’s common stock for
gross cash proceeds of $20.0 million ($19.8 million net of issuance
costs) pursuant to the November 5, 2018 BioLexis private placement
agreement.
In April 2019, the Company issued an aggregate of 10,340,000 shares
of its common stock, 15-month warrants to purchase up to an
aggregate of 10,340,000 shares of common stock and five-year
warrants to purchase up to an aggregate of 10,340,000 shares of
common stock for approximately $26.2 million in net proceeds after
payment of fees, expenses and underwriting discounts and
commissions. The shares of common stock and the warrants were
immediately separable and were issued separately. The warrants are
exercisable immediately at an exercise price of $2.90 per
share.
During the nine months ended June 30, 2019 and 2018, the Company
issued 446 and 102,625 shares of common stock, respectively, upon
the vesting of RSUs.
Convertible preferred stock
In September 2017, the Company entered into a purchase
agreement with BioLexis, pursuant to which BioLexis agreed to
purchase, in a private placement (the “Initial Private Placement”),
$25.0 million of the Company’s newly-created voting
Series A Convertible Preferred Stock (the “Series A
Convertible”), and warrants (the “BioLexis Warrants”) to acquire
2,093,750 shares of common stock. In September 2017, the
Company completed the initial sale of 32,628 shares of
Series A Convertible to BioLexis for $3,262,800 in cash. In
October 2017, the Company completed the sale of the remaining
217,372 shares of Series A Convertible and the BioLexis
Warrants to BioLexis in the Initial Private Placement, for
$21,737,200 in cash.
The Series A Convertible was initially convertible into
4,724,493 shares of the Company’s common stock, representing an
effective conversion rate of $5.28 per share, which represented a
discount to the market value of the Company’s common stock as of
September 7, 2017 and October 31, 2017 (on which dates,
the closing price of the Company’s common stock was $7.20 and
$10.08 per share, respectively). In connection with the second
closing of the Series A Convertible in October 2017, the
Company issued the BioLexis Warrants, which have a term of 8-years
and an initial exercise price of $7.20 per share. The proceeds from
the second closing of the Series A Convertible were allocated
among the Series A Convertible and the BioLexis Warrants based
on their relative fair values. As a result of the discount to the
market value and the allocation of a portion of the proceeds to the
BioLexis Warrants, the Company recognized a beneficial conversion
charge of $15,355,019, which represents the in-the-money value of
the conversion rate as of the date of sale.
The Series A Convertible accrued dividends at a rate of 10%
per annum, compounded quarterly, payable quarterly at the Company’s
option in cash or in kind in additional shares of Series A
Convertible, although the initial dividends payable on the shares
of Series A Convertible issued in September 2017, while
accruing from issuance, was payable in December 2017. The
Series A Convertible was also entitled to dividends on an
as-if-converted basis in the same form as any dividends actually
paid on shares of common stock or other securities. The initial
conversion rate was subject to appropriate adjustment in the event
of a stock split, stock dividend, combination, reclassification or
other recapitalization affecting the common stock.
In June 2018, BioLexis converted 208,836 shares of
Series A Convertible into 3,946,577 shares of common stock,
and in July 2018 exchanged its remaining shares of
Series A Convertible for newly created Series A-1 (as
defined below). As of such exchange, there were no longer any
shares of Series A Convertible issued and outstanding.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
Series A-1 Convertible Preferred Stock
A total of 200,000 shares of Series A-1 Convertible Preferred
Stock (the “Series A-1”) have been authorized for issuance under
the Certificate of Designation of Series A-1 Convertible
Preferred Stock of the Company. The shares of Series A-1 have
a stated value of $100.00 per share, and rank senior to all junior
securities (as defined in the Certificate of Designation).
The Series A-1 accrue dividends at a rate of 10% per annum,
compounded quarterly, payable quarterly at the Company’s option in
cash or in kind in additional shares of Series A-1. The
Series A-1 is also entitled to dividends on an as-if-converted
basis in the same form as any dividends actually paid on shares of
Common Stock or other securities. The initial conversion rate is
subject to appropriate adjustment in the event of a stock split,
stock dividend, combination, reclassification or other
recapitalization affecting the Common Stock. The holders of the
Series A-1 have the right to vote on matters submitted to a
vote of the Company’s stockholders on an as-converted basis, voting
with the Company’s other stockholders as a single class. In
addition, without the prior written consent of a majority of the
outstanding shares of Series A-1, the Company may not take
certain actions, including amending its certificate of
incorporation or bylaws, or issuing securities ranking
pari passu or senior to the Series A-1.
At June 30, 2019, 64,831 shares of Series A-1 Convertible Preferred
Stock would be convertible into 1,225,172 shares of common stock.
During the nine months ended June 30, 2019, the Company issued
4,628 shares of Series A-1 Convertible to settle the related
dividends that are due on a quarterly basis.
The terms of the Series A-1 distinguish between certain
liquidation events (such as a voluntary or involuntary liquidation,
dissolution or winding up of the Company) and “deemed” liquidation
events (such as a sale of all or substantially all of the Company’s
assets, various merger and reorganization transactions, being
delisted from Nasdaq, and the occurrence of an event of default
under the terms of the senior secured notes), in each case as
defined in the Certificate of Designation. In the event of a
liquidation (as defined in the Certificate of Designation), the
liquidation preference payable equals the sum of (A) 550% of the
Series A-1 stated value per share plus (B) an amount equal to
(x) 550% of any accrued, but unpaid, preferred dividends (as
defined in the Certificate of Designation) plus (y) any unpaid
participating dividends (as defined in the Certificate of
Designation). In the case of a deemed liquidation event (as defined
in the Certificate of Designation), the multiplier is increased to
600%.
The Series A-1 is convertible at any time at the option of the
holder based on the then applicable conversion rate. If conversion
is in connection with a liquidation, the holder is entitled to
receive 550% of the number of shares of common stock issuable based
upon the then applicable conversion rate. In the event of a deemed
liquidation event, the multiplier is increased to 600%.
Additionally, the holder may irrevocably require the Company to
redeem the Series A-1 in the event of a deemed liquidation
event for the sum of (A) 600% of the Series A-1 stated value
per share plus (B) an amount equal to (x) 600% of any accrued,
but unpaid, preferred dividends plus (y) any unpaid
participating dividends, although such redemption may not be made
without the consent of the senior secured noteholders if such notes
are outstanding at the time of any such redemption.
The shares of Series A-1 have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and may
not be offered or sold in the United States without registration or
an applicable exemption from the registration requirements of the
Securities Act. The exchange of the Series A-1 for the shares
of Series A held by the Investor was made in reliance on
Sections 3(a)(9) and 4(a)(2) under the Securities Act, without
general solicitation or advertising.
Series B Convertible Preferred Stock
Concurrent with completing the sale of Series A Convertible in
October 2017, the Noteholders exchanged $1,500,000 in
aggregate principal borrowings and $41,507 in accrued interest for
1,500,000 shares of Series B Convertible. The Series B
Convertible were convertible into 264,084 shares of common stock.
The exchange was accounted for as an extinguishment of debt, See
Note 7. During May and June 2018, the Noteholders converted
all 1,500,000 shares of Series B Convertible into 264,084
shares of common stock. Accordingly, there are no longer any shares
of Series B Convertible issued and outstanding.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
Common stock warrants
As of June 30, 2019, shares of common stock issuable upon the
exercise of outstanding warrants were as follows:
Expiration Date |
|
Shares of
common stock
issuable upon
exercise of
warrants |
|
|
Exercise Price
Per Share |
|
|
|
|
|
|
|
|
November 11, 2019 |
|
|
99,910 |
|
|
$ |
0.08 |
|
July 12, 2020 |
|
|
68,250 |
|
|
$ |
2.90 |
|
February 18, 2022 |
|
|
416,666 |
|
|
$ |
12.00 |
(i) |
April 24, 2024 |
|
|
10,340,000 |
|
|
$ |
2.90 |
|
December 22, 2024 |
|
|
277,122 |
|
|
$ |
12.00 |
(ii) |
April 13, 2025 |
|
|
145,686 |
|
|
$ |
12.00 |
(ii) |
May 31, 2025 |
|
|
62,437 |
|
|
$ |
12.00 |
(ii) |
October 31, 2025 |
|
|
2,093,750 |
|
|
$ |
7.20 |
|
May 10, 2026 |
|
|
1,282,051 |
|
|
$ |
7.80 |
|
June 8, 2026 |
|
|
1,282,051 |
|
|
$ |
7.80 |
|
|
|
|
16,067,923 |
|
|
|
|
|
|
(i) |
In January 2019, the Company
reduced the exercise price of these warrants from $52.80 to $12.00
and further extended the exercise period from February 18, 2019 to
February 18, 2022. |
|
(ii) |
In November 2018, the Company
reduced the exercise price of the warrants issued in connection
with its senior secured notes from $24.00 to $12.00 and extended
the expiration of the Senior Note Warrants by three years. |
During the nine months ended June 30, 2019, warrants to purchase an
aggregate of 10,273,086 shares of common stock with a weighted
averaged exercise price of $2.90 were exercised for an aggregate
6,134,307 shares of the Company’s common stock. Of these exercised
warrants, 10,270,250 of them were 15-month warrants issued in our
April 2019 public offering that were exercised pursuant to the net
exercise provisions therein providing for the receipt of .60 of the
underlying shares in the event the weighted average price per share
of the Company’s common stock is lower than the exercise price per
share beginning May 12, 2019.
11. |
Stock-Based Compensation |
2011 Equity Incentive Plan
The Company’s 2011 Equity Compensation Plan (the “2011 Plan”)
provided for the Company to sell or issue restricted common stock,
RSUs, performance-based awards (“PSUs”), cash-based awards or to
grant stock options for the purchase of common stock to officers,
employees, consultants and directors of the Company. The 2011 Plan
was administered by the board of directors or, at the discretion of
the board of directors, by a committee of the board. The number of
shares of common stock reserved for issuance under the 2011 Plan is
106,490. As of June 30, 2019, PSUs representing 16,131 shares of
the Company’s common stock were outstanding under the 2011 Plan. In
light of the December 2015 adoption of the 2015 Equity Incentive
Plan, (the “2015 Plan”) no future awards under the 2011 Plan will
be granted.
2015 Equity Incentive Plan
In December 2015, the Company adopted the 2015 Plan. The 2015
Plan provides for the grant of stock options, stock appreciation
rights, restricted stock awards, RSU awards, performance stock
awards and other forms of equity compensation to Company employees,
directors and consultants. The aggregate number of shares of common
stock authorized for issuance pursuant to the Company’s 2015 Plan
is 1,369,596. As of June 30, 2019, 592,164 shares remained
available for grant under the 2015 Plan.
Stock options and RSUs are granted under the Company’s 2015 Plan
and generally vest over a period of two to four years from the date
of grant and, in the case of stock options, have a term
of 10 years. The Company recognizes the grant date fair
value of each option and share of RSU over its vesting period.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
The Company recorded stock-based compensation expense (income) in
the following expense categories of its statements of operations
for the three and nine months ended June 30, 2019 and 2018:
|
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
$ |
(207,015 |
) |
|
$ |
86,872 |
|
|
$ |
4,957 |
|
|
$ |
2,079 |
|
General and
administrative |
|
|
175,750 |
|
|
|
147,247 |
|
|
|
1,103,809 |
|
|
|
1,821,649 |
|
|
|
$ |
(31,265 |
) |
|
$ |
234,119 |
|
|
$ |
1,108,766 |
|
|
$ |
1,823,728 |
|
During the nine months ended June 30, 2019, the Company awarded
stock options with a fair value of $49,121 as settlement for
directors fees accrued as of September 30, 2018.
Stock options
As of June 30, 2019, options to purchase common stock of the
Company outstanding under the 2015 Plan were as follows:
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Weighted |
|
|
Remaining |
|
|
|
Number
of |
|
|
Average |
|
|
Contractual |
|
|
|
Shares |
|
|
Exercise Price |
|
|
Term (Years) |
|
Balance at October 1,
2018 |
|
|
182,120 |
|
|
$ |
7.22 |
|
|
|
|
|
Granted |
|
|
649,498 |
|
|
|
6.32 |
|
|
|
|
|
Expired |
|
|
(18,125 |
) |
|
|
7.90 |
|
|
|
|
|
Forfeited |
|
|
(208,041 |
) |
|
|
8.42 |
|
|
|
|
|
Balance at June 30,
2019 |
|
|
605,452 |
|
|
|
5.82 |
|
|
|
9.5 |
|
Vested and exercisable |
|
|
150,232 |
|
|
|
7.21 |
|
|
|
9.1 |
|
Vested and expected to vest at June 30, 2019 |
|
|
605,452 |
|
|
$ |
5.82 |
|
|
|
9.5 |
|
As of June 30, 2019, the aggregate intrinsic value of options
outstanding was zero. The aggregate intrinsic value represents the
total amount by which the fair value of the common stock subject to
options exceeds the exercise price of the related options.
The weighted average grant date fair value of the options awarded
to employees for the nine months ended June 30, 2019 and 2018 was
$4.70 and $4.16 per option, respectively. The fair value of the
options was estimated on the date of grant using a Black-Scholes
option pricing model with the following weighted-average
assumptions:
|
|
Nine Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
Risk-free interest
rate |
|
|
2.46 |
% |
|
|
2.72 |
% |
Expected life (years) |
|
|
6.00 |
|
|
|
5.99 |
|
Expected volatility |
|
|
89.5 |
% |
|
|
61.0 |
% |
Expected dividend yield |
|
|
- |
|
|
|
- |
|
As of June 30, 2019, there was $1,594,998 of unrecognized
compensation expense that is expected to be recognized over a
weighted-average period of 3.4 years.
Outlook Therapeutics, Inc.
Notes to Unaudited Interim Consolidated Financial
Statements
Performance-based stock units
The Company has issued PSUs, which generally have a ten year life
from the date of grant. Upon exercise, the PSU holder receives
common stock or cash at the Company’s discretion.
The following table summarizes the activity related to PSUs during
the nine months ended June 30, 2019:
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Number |
|
|
Base |
|
|
Remaining |
|
|
|
of |
|
|
Price |
|
|
Contractual |
|
|
|
PSUs |
|
|
Per PSU |
|
|
Term (Years) |
|
Balance at October 1, 2018 |
|
|
16,131 |
|
|
$ |
49.99 |
|
|
|
|
|
Forfeitures |
|
|
- |
|
|
|
- |
|
|
|
|
|
Balance at June 30, 2019 |
|
|
16,131 |
|
|
|
49.99 |
|
|
|
5.0 |
|
Vested and
exercisable at June 30, 2019 |
|
|
16,113 |
|
|
|
49.86 |
|
|
|
5.0 |
|
Vested and
expected to vest at June 30, 2019 |
|
|
16,131 |
|
|
$ |
49.99 |
|
|
|
5.0 |
|
Restricted stock units
The following table summarizes the activity related to RSUs during
the nine months ended June 30, 2019:
|
|
|
|
|
Weighted |
|
|
|
Number |
|
|
Average |
|
|
|
of |
|
|
Grant Date |
|
|
|
RSUs |
|
|
Fair Value |
|
Balance at October 1, 2018 |
|
|
7,638 |
|
|
$ |
153.88 |
|
Vested and settled |
|
|
(446 |
) |
|
|
188.36 |
|
Forfeitures |
|
|
(3,442 |
) |
|
|
68.92 |
|
Balance at June 30, 2019 |
|
|
3,750 |
|
|
$ |
227.78 |
|
As of June 30, 2019, there was $74,417 of unamortized expense that
will be recognized over a weighted-average period of 0.22
years.
12. |
Related-Party
Transactions |
MTTR — Strategic Partnership Agreement (ONS-5010)
In November 2018, the Board of
Directors of the Company appointed Mr. Terry Dagnon as Chief
Operating Officer, and Mr. Jeff Evanson as Chief Commercial
Officer. Both Mr. Dagnon and Mr. Evanson are providing services to
the Company pursuant to the February 2018 strategic partnership
agreement with MTTR, LLC (“MTTR”) . Mr. Dagnon and Mr. Evanson are
both principals in MTTR. The Company will not be paying Mr. Dagnon
or Mr. Evanson any direct compensation as consultants or as
employees. Both Mr. Dagnon and Mr. Evanson are compensated directly
by MTTR for services provided to the Company as the Company’s Chief
Operating Officer and Chief Commercial Officer, respectively,
pursuant to the ONS-5010 Agreement. Mr. Dagnon and Mr. Evanson have
also agreed to provide consulting services to an affiliate of
BioLexis pursuant to a separate arrangement.
In February 2018, the Company entered
into a strategic partnership agreement with MTTR to advise on
regulatory, clinical and commercial strategy and assist in
obtaining approval of ONS-5010, the Company’s bevacizumab
therapeutic product candidate for ophthalmic indications. MTTR
earned an aggregate of $ 573,983 and $1,154,894 during the
three and nine months ended June 30, 2019, respectively
, which includes monthly consulting
fees and expense reimbursement.
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of
Operations
You should read this section in conjunction with our unaudited
interim consolidated financial statements and related notes
included in Part I. Item 1 of this report and our audited
consolidated financial statements and related notes thereto and
management’s discussion and analysis of financial condition and
results of operations for the years ended September 30, 2018 and
2017 included in our Annual Report on Form 10-K for the year ended
September 30, 2018, filed with the Securities and Exchange
Commission, or SEC, on December 18, 2018.
Forward-Looking Statements
This discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
and Section 21E of the Securities Exchange Act of 1934, as amended,
or the Exchange Act. Forward-looking statements are identified by
words such as “believe,” “may,” “could,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,”
“should,” “would,” “potentially” or the negative of these terms or
similar expressions in this report. You should read these
statements carefully because they discuss future expectations,
contain projections of future results of operations or financial
condition, or state other “forward-looking” information. These
statements relate to our future plans, objectives, expectations,
intentions and financial performance and the assumptions that
underlie these statements. These forward-looking statements are
subject to certain risks and uncertainties that could cause a
difference include, but are not limited to, those discussed under
the caption “Risk Factors” in our Annual Report on Form 10-K for
the year ended September 30, 2018, filed with the SEC on December
18, 2018, and elsewhere in this report. See “Special Note Regarding
Forward-Looking Statements.” Forward-looking statements are based
on our management’s current beliefs and assumptions and based on
information currently available to our management. These
statements, like all statements in this report, speak only as of
their date, and we undertake no obligation to update or revise
these statements in light of future developments.
Overview
We are a late clinical-stage biopharmaceutical company focused on
developing and commercializing ONS-5010, a complex, technically
challenging and commercially attractive monoclonal antibody, or
mAb, for various ophthalmic indications. Our goal is to launch
ONS-5010 as the first, and only, approved bevacizumab in the United
States, Europe, Japan and other markets for the treatment of wet
age related macular degeneration, or wet AMD, diabetic macular
edema, or DME, and branch retinal vein occlusion, or BRVO.
ONS-5010 is a mAb therapeutic product candidate that was reviewed
at a successful end of Phase 2 meeting with the U.S. Food and
Drug Administration, or FDA, conducted in 2018. Our investigational
new drug, or IND, application was filed with, and accepted by, the
FDA in the first quarter of calendar 2019. We are currently
enrolling patients in two Phase 3 clinical trials evaluating
ONS-5010 against ranibizumab (Lucentis) for wet AMD. Enrollment in
the NORSE 1 study (previously referred to as ONS-5010-001) is
nearly complete with 59 of the planned 60 patients enrolled to
date, all in Australia. NORSE 2, the second of the two Phase 3
studies (previously referred to as ONS-5010-002) has been initiated
and began enrolling wet AMD patients in July 2019. NORSE 2 is
expected to enroll a total of at least 220 patients and will be
conducted in the United States. The endpoint for both studies is a
mean increase in baseline visual acuity at 11 months for ONS-5010
dosed on a monthly basis compared to Lucentis dosed using the
alternative PIER clinical trial dosing regimen of three monthly
doses followed by quarterly dosing.
Currently, the cancer drug Avastin (bevacizumab) is used off-label
for the treatment of wet AMD and other retina diseases such as DME
and BRVO even though Avastin has not been approved by regulatory
authorities for use in these diseases. If the ONS-5010 clinical
program is successful, it will support our plans to submit for
regulatory approval in multiple markets in 2020 including the
United States, Europe and Japan. Because there are no approved
bevacizumab products for the treatment of retinal diseases in such
major markets, we are developing ONS-5010 as an innovative therapy
and not using the biosimilar drug development pathway that would
normally be required if Avastin were an approved drug for the
targeted diseases. If approved, we believe ONS-5010 has potential
to mitigate risks associated with off-label use of Avastin or other
drugs. Off label use of Avastin is currently estimated to account
for at least 50% of all wet AMD prescriptions in the United
States.
Through June 30, 2019, we have funded substantially all of our
operations with $241.5 million in proceeds from the sale and
issuance of our equity and debt securities. We have also received
$29.0 million pursuant to our collaboration and licensing
agreements.
On November 30, 2018, we received approval from the New Jersey
Economic Development Authority’s Technology Business Tax
Certificate Transfer Program to sell approximately
$3.7 million of our unused New Jersey net operating losses, or
NOLs, and research and development tax credits, or R&D credits.
We received $3.4 million of proceeds from the sale of the New
Jersey NOLs and R&D credits in April 2019 ($0.8 million) and
July 2019 ($2.6 million).
In April 2019, we completed an underwritten public offering of
10,340,000 shares of our common stock, 15-month warrants to
purchase up to an aggregate of 10,340,000 shares of our common
stock and five-year warrants to purchase up to an aggregate of
10,340,000 shares of our common stock at a combined public offering
price of $2.75 per share and accompanying warrants. The shares of
common stock and the warrants were immediately separable and were
issued separately. The warrants were exercisable immediately at an
exercise price of $2.90 per share. We received approximately $26.2
million in net proceeds from the public offering after payment of
fees, expenses and underwriting discounts and commissions.
In June 2019, we redeemed approximately $1.8 million outstanding
aggregate principal amount of our senior secured notes and entered
into a third note amendment with the holders of the remaining $6.7
million outstanding aggregate principal amount of such notes. Under
the third amendment, we amended the maturity date of the senior
secured notes to December 22, 2019, and removed the scheduled
payments of principal and interest of approximately $5.0 million
that were previously to have occurred in June, July and August
2019. We also agreed to increase the interest rate payable on such
senior secured notes to 12.0% per annum from 5.0% per annum.
We have incurred recurring losses and negative cash flows from
operations since inception and had an accumulated deficit at June
30, 2019 of $244.4 million. As of June 30, 2019, we had
substantial indebtedness that included $6.7 million of senior
secured notes that that mature on December 22, 2019, $3.6 million
unsecured notes that are due on demand, and $1.0 million of
unsecured notes that are due on demand but are subject to a
forbearance agreement through March 7, 2020. We will need to raise
substantial additional capital to fund our planned future
operations, commence clinical trials, receive approval for and
commercialize ONS-5010, or to develop other product candidates. We
plan to finance our future operations with a combination of
proceeds from potential licensing and/or marketing arrangements
with pharmaceutical companies, the issuance of equity securities,
and the issuance of additional debt, potential collaborations and
revenues from potential future product sales, if any. There are no
assurances that we will be successful in obtaining an adequate
level of financing for the development and commercialization of
ONS-5010 or any other current or future product candidates. If we
are unable to secure adequate additional funding, our business,
operating results, financial condition and cash flows may be
materially and adversely affected. These matters raise substantial
doubt about our ability to continue as a going concern. Our
consolidated financial statements do not include any adjustments
that might be necessary if we are unable to continue as a going
concern.
Our current cash resources of $14.0 million as of June 30, 2019,
and the proceeds from the sale of our remaining New Jersey NOLs and
R&D credits received in July 2019 of $2.6 million, are expected
to fund our operations into December 2019, excluding any
unscheduled repayment of debt. To provide additional working
capital, we continue to engage in active discussions with global
and regional pharmaceutical companies for licensing and/or
co-development rights to ONS-5010. If we are not successful in
raising additional capital or entering into one or more licensing
and/or co-development rights agreements, we may be required to,
among other things, modify our clinical trial plans for ONS-5010 in
additional indications, make reductions in our workforce,
discontinue our development programs, liquidate all or a portion of
our assets, and/or seek protection under the provisions of the U.S.
Bankruptcy Code.
We do not have any products approved for sale and we have only
generated revenue from our collaboration agreements. We have
incurred operating losses and negative operating cash flows since
inception and there is no assurance that we will ever achieve
profitable operations, and if achieved, that profitable operations
will be sustained. Our net loss for the nine months ended June 30,
2019 was $24.4 million. In addition, development activities,
clinical and preclinical testing and commercialization of our
product candidates will require significant additional
financing.
Collaboration, License and Strategic Partnership
Agreements
From time to time, we enter into collaboration and license
agreements for the research and development, manufacture and/or
commercialization of our products and/or product candidates. These
agreements generally provide for non-refundable upfront license
fees, development and commercial performance milestone payments,
cost sharing, royalty payments and/or profit sharing.
MTTR, LLC — ONS 5010
In February 2018, we entered into a strategic partnership agreement
with MTTR, LLC, or MTTR, to advise on regulatory, clinical and
commercial strategy and assist in obtaining approval of ONS-5010,
our bevacizumab therapeutic product candidate for ophthalmic
indications. Under the terms of the agreement, we paid MTTR a
$58,333 monthly consulting fee through December 2018. Beginning
January 2019, the monthly fee increased to $105,208 per month, and
then, after launch of ONS-5010 in the United States, will increase
to $170,833 per month (the amount of which is reduced by 50% in the
event net sales of ONS-5010 are below a certain threshold million
per year). We also agreed to pay MTTR a tiered percentage of the
net profits of ONS-5010 ranging in the low- to mid-teens, with the
ability to credit monthly fees paid to MTTR. In March 2018, we
amended the MTTR agreement and agreed to pay a one-time fee of
$268,553 to MTTR by September 2020 if certain regulatory milestones
are achieved earlier than anticipated.
In June 2019, we entered into a further amendment of our strategic
partnership agreement with MTTR pursuant to which we increased the
aggregate monthly payments to MTTR under the existing agreement
from $105,208 to $170,724 through December 2019 by adding an
additional monthly retainer of $115,916, and an offset of $50,000
to the existing monthly retainer while the additional monthly
retainer is in effect. MTTR earned an aggregate $573,983 and
$1,154,894 during the three and nine months ended June 30, 2019,
respectively, which includes monthly consulting fees and expense
reimbursement.
Selexis SA
In October 2011, we entered into a research license agreement with
Selexis SA, or Selexis, whereby we acquired a non-exclusive license
to conduct research internally or in collaboration with third
parties to develop recombinant proteins from cell lines created in
mammalian cells using the Selexis expression technology, or the
Selexis Technology. The original research license had a three-year
term, but on October 9, 2014, it was extended for an additional
three-year term through October 9, 2017, and then a limited scope
license was extended for one more year through October 9, 2018. We
may sublicense our rights with Selexis’ prior written consent but
are prohibited from making commercial use of the Selexis Technology
or the resultant recombinant proteins comprising our product
candidates in humans, or from filing an investigational new drug,
absent a commercial license agreement with Selexis covering the
particular product candidate developed under the research license.
In connection with the entry into the research license, we paid
Selexis an initial fee and agreed to make additional annual license
maintenance payments of the same amount for each of the three years
that the research license agreement term was extended and for a pro
rata amount for the most current one-year license extension that
expired on October 9, 2018. As such, we are no longer using the
Selexis Technology in our research.
Selexis also granted us a non-transferrable option to obtain a
perpetual, non-exclusive, worldwide commercial license under the
Selexis Technology to manufacture, or have manufactured, a
recombinant protein produced by a cell line developed using the
Selexis Technology for clinical testing and commercial sale. We
exercised this option in April 2013 and entered into three
commercial license agreements with Selexis for our ONS-3010,
ONS-1045 (which covers ONS-5010) and ONS-1050 product candidates.
We paid an upfront licensing fee to Selexis for each commercial
license and also agreed to pay a fixed milestone payment for each
licensed product. In addition, we are required to pay a
single-digit royalty on a final product-by-final product and
country-by-country basis, based on worldwide net sales of such
final products by us or any of our affiliates or sub-licensees
during the royalty term. At any time during the term, we have the
right to terminate our royalty payment obligation by providing
written notice to Selexis and paying Selexis a royalty termination
fee.
As of June 30, 2019, we have paid Selexis an aggregate of
approximately $0.4 million under the commercial license
agreements.
Components of our Results of Operations
Collaboration Revenue
To date, we have derived revenue only from activities pursuant to
our emerging market collaboration and licensing agreements related
to our inactive biosimilar development program. We have not
generated any revenue from commercial product sales. For the
foreseeable future, we expect all of our revenue, if any, will be
generated from our collaboration and licensing agreements. If any
of our product candidates currently under development are approved
for commercial sale, we may generate revenue from product sales, or
alternatively, we may choose to select a collaborator to
commercialize our product candidates.
On October 1, 2018, we adopted Accounting Standards Update, or ASU,
No. 2014-09, Revenue from Contracts with Customers , or
ASU 2014-09, and changed our revenue recognition policies
accordingly. The standard’s stated core principle is that an entity
should recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. Our arrangements fall under
Accounting Standards Codification, or ASC, 808,
Collaborations , or ASC 808. ASC 808 does not address
recognition or measurement matters but prescribes that entities
look to other GAAP by analogy, namely ASU 2014-09. As such, we
completed an analysis of existing contracts with our collaboration
partners and assessed the differences in accounting for such
contracts under ASU 2014-09 compared with current revenue
accounting standards. We previously recognized substantive
milestones in the period the milestones were achieved, but
ASU 2014-09 prescribes that those milestones are a form of
variable consideration and should be recognized when the
performance obligation is satisfied, which results in such amounts
being recognized over the estimated performance period. We adopted
the new accounting standard utilizing the modified retrospective
method, and recorded the cumulative effect of adopting the standard
as an adjustment to increase accumulated deficit by $3.6
million.
Research and Development Expenses
Research and development expense consists of expenses incurred in
connection with the discovery and development of our product
candidates. We expense research and development costs as incurred.
These expenses include:
|
· |
expenses incurred under agreements
with contract research organizations, or CROs, as well as
investigative sites and consultants that conduct our preclinical
studies and clinical trials; |
|
· |
manufacturing scale-up expenses and
the cost of acquiring and manufacturing preclinical and clinical
trial materials and commercial materials, including manufacturing
validation batches; |
|
· |
outsourced professional scientific
development services; |
|
· |
employee-related expenses, which
include salaries, benefits and stock-based compensation; |
|
· |
payments made under a third-party
assignment agreement, under which we acquired intellectual
property; |
|
· |
expenses relating to regulatory
activities, including filing fees paid to regulatory agencies; |
|
· |
laboratory materials and supplies
used to support our research activities; and |
|
· |
allocated expenses, utilities and
other facility-related costs. |
The successful development of ONS-5010 and any of our other product
candidates is highly uncertain. At this time, we cannot reasonably
estimate or know the nature, timing and costs of the efforts that
will be necessary to complete the remainder of the development of,
or when, if ever, material net cash inflows may commence from
ONS-5010 or any of our other product candidates. This uncertainty
is due to the numerous risks and uncertainties associated with the
duration and cost of clinical trials, which vary significantly over
the life of a project as a result of many factors, including:
|
· |
the number of clinical sites
included in the trials; |
|
· |
the length of time required to
enroll suitable patients; |
|
· |
the number of patients that
ultimately participate in the trials; |
|
· |
the number of doses patients
receive; |
|
· |
the duration of patient
follow-up; |
|
· |
the results of our clinical
trials; |
|
· |
the establishment of commercial
manufacturing capabilities; |
|
· |
the receipt of marketing approvals;
and |
|
· |
the commercialization of product
candidates. |
Our expenditures are subject to additional uncertainties, including
the terms and timing of regulatory approvals. We may never succeed
in achieving regulatory approval for any of ONS-5010 or our other
product candidates. We may obtain unexpected results from our
clinical trials. We may elect to discontinue, delay or modify
clinical trials of some product candidates or focus on others. A
change in the outcome of any of these variables with respect to the
development of a product candidate could mean a significant change
in the costs and timing associated with the development of that
product candidate. For example, if the FDA or other regulatory
authorities were to require us to conduct clinical trials beyond
those that we currently anticipate, or if we experience significant
delays in enrollment in any of our clinical trials, we could be
required to expend significant additional financial resources and
time on the completion of clinical development. Product
commercialization will take several years and millions of dollars
in development costs.
Research and development activities are central to our business
model. Product candidates in later stages of clinical development
generally have higher development costs than those in earlier
stages of clinical development, primarily due to the increased
size, complexity and duration of later-stage clinical trials.
General and Administrative Expenses
General and administrative expenses consist principally of salaries
and related costs for personnel in executive, administrative,
finance and legal functions, including stock-based compensation,
travel expenses and recruiting expenses. Other general and
administrative expenses include facility related costs, patent
filing and prosecution costs and professional fees for business
development, legal, auditing and tax services and insurance
costs.
We anticipate that our general and administrative expenses will
increase if and when we believe a regulatory approval of a product
candidate appears likely, and we anticipate an increase in payroll
and expense as a result of our preparation for commercial
operations, particularly as it relates to the sales and marketing
of our product.
Interest Expense
Interest expense consists of cash paid and non-cash interest
expense related to our senior secured notes, former bank loans, and
notes with current and former stockholders, equipment loans,
capital lease and other finance obligations.
Loss on Extinguishment of Debt
We recorded a loss on extinguishment of debt of $0.4 million and
$0.6 million during the three and nine months ended June 30, 2019,
respectively, in connection with a March 2019 forbearance and
exchange agreement in respect of two previously issued stockholder
notes having an aggregate original principal amount of $1.0 million
and outstanding balance of $1.9 million including accrued interest;
and the June 2019 third note amendment of our $6.7 million
outstanding aggregate principal amount of senior secured notes in
which (i) the maturity date of the senior secured notes was amended
to December 22, 2019, (ii) the scheduled payments of principal and
interest on or prior to each of June 30, 2019; July 31, 2019; and
August 31, 2019 were removed, and (iii) the interest rate payable
on such senior secured notes was increased to 12.0% per annum from
5.0% per annum.
We recorded a loss on the extinguishment of debt of $1.3 million
during the nine months ended June 30, 2018 related to the exchange
of $1.5 million aggregate principal amount of our senior secured
notes for shares of our Series B Convertible Preferred
Stock.
Change in Fair Value of Warrant Liability
Warrants to purchase our common stock that have been issued in
conjunction with our senior secured notes are classified as
liabilities and recorded at fair value. The warrants are subject to
re-measurement at each balance sheet date and we recognize any
change in fair value in our statements of operations.
We recorded income of $1.9 million and $2.3
million, respectively, related to the decrease in the fair value of
our common stock warrant liability associated with the warrants
issued in connection with our senior secured notes during the three
and nine months ended June 30, 2019, respectively, which resulted
from a decrease in the price of our common stock.
Income Taxes
On November 30, 2018, we received approval from the New Jersey
Economic Development Authority’s Technology Business Tax
Certificate Transfer Program to sell approximately
$3.7 million of our unused New Jersey NOLs and R&D
credits. We received approximately $3.4 million of proceeds
from the sale of the New Jersey NOLs and R&D credits, of which
$0.8 million and $2.6 million was received in April 2019 and July
2019, respectively. Since inception, we have not recorded any U.S.
federal or state income tax benefits (excluding the sale of New
Jersey NOLs and R&D credits) for the net losses we have
incurred in each year or on our earned R&D credits, due to our
uncertainty of realizing a benefit from those items. As of
September 30, 2018, we had federal and state NOL carryforwards
of $164.2 million and $67.6 million, respectively that
will begin to expire in 2030 and 2036, respectively. As of
September 30, 2018, we had federal foreign tax credit
carryforwards of $2.4 million available to reduce future tax
liabilities, which begin to expire starting in 2023. As of
September 30, 2018, we also had federal R&D credit
carryforwards of $8.5 million that begin to expire in
2032.
In general, under Section 382 of the Internal Revenue Code of 1986,
as amended, or the Code, a corporation that undergoes an “ownership
change” is subject to limitations on its ability to utilize its
NOLs to offset future taxable income. We have not completed a study
to assess whether an ownership change has occurred in the past. Our
existing NOLs may be subject to limitations arising from previous
ownership changes, and if we undergo an ownership change, our
ability to utilize NOLs could be further limited by Section 382 of
the Code. Future changes in our stock ownership, some of which are
outside of our control, could result in an ownership change under
Section 382 of the Code. Our NOLs are also subject to international
regulations, which could restrict our ability to utilize our
NOLs.
Furthermore, our ability to utilize NOLs of companies that we may
acquire in the future, if any, may be subject to limitations. There
is also a risk that due to regulatory changes, such as suspensions
on the use of NOLs, or other unforeseen reasons, our existing NOLs
could expire or otherwise be unavailable to offset future income
tax liabilities.
Results of Operations
Comparison of Three Months Ended June 30, 2019 and
2018
|
|
Three months ended June 30, |
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Collaboration revenues |
|
$ |
583,848 |
|
|
$ |
771,890 |
|
|
$ |
(188,042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
4,393,466 |
|
|
|
5,795,993 |
|
|
|
(1,402,527 |
) |
General
and administrative |
|
|
1,834,545 |
|
|
|
2,195,789 |
|
|
|
(361,244 |
) |
|
|
|
6,228,011 |
|
|
|
7,991,782 |
|
|
|
(1,763,771 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(5,644,163 |
) |
|
|
(7,219,892 |
) |
|
|
1,575,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
1,081,779 |
|
|
|
1,147,371 |
|
|
|
(65,592 |
) |
Loss on extinguishment of debt |
|
|
423,686 |
|
|
|
- |
|
|
|
423,686 |
|
Change in fair
value of warrant liability |
|
|
(1,931,244 |
) |
|
|
64,659 |
|
|
|
(1,995,903 |
) |
Loss before income taxes |
|
|
(5,218,384 |
) |
|
|
(8,431,922 |
) |
|
|
3,213,538 |
|
Income tax
benefit |
|
|
(777,500 |
) |
|
|
- |
|
|
|
(777,500 |
) |
Net loss |
|
$ |
(4,440,884 |
) |
|
$ |
(8,431,922 |
) |
|
$ |
(3,991,038 |
) |
Collaboration Revenues
The following table sets forth a summary of revenue recognized from
our collaboration and licensing agreements for the three months
ended June 30, 2019 and 2018, all of which was from the recognition
of deferred revenues under such agreements:
|
|
Three months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
IPCA Collaboration |
|
$ |
128,007 |
|
|
$ |
65,268 |
|
Liomont Collaboration |
|
|
84,414 |
|
|
|
59,160 |
|
Huahai Collaboration |
|
|
371,427 |
|
|
|
178,712 |
|
BioLexis
Collaboration |
|
|
- |
|
|
|
468,750 |
|
|
|
$ |
583,848 |
|
|
$ |
771,890 |
|
Collaboration revenues decreased by $0.2 million to $0.6 million
for the three months ended June 30, 2019, as compared to $0.8
million for the three months ended June 30, 2018. The decrease is
primarily due to a $0.5 million decrease from the BioLexis
collaboration revenue due to the full recognition of related
milestones in the second quarter of fiscal 2019. This decrease was
offset by a $0.3 million increase from the IPCA, Liomont and Huahai
collaborations due to the adoption of ASU No. 2014-09, effective
October 1, 2018, which changed our revenue recognition policies for
milestone payments. We previously recognized substantive milestones
in the period the milestones were achieved but ASU 2014-09
prescribes that those milestones are a form of variable
consideration and should be recognized when the performance
obligation is satisfied, which results in such amounts being
recognized over the estimated performance period.
Research and Development Expenses
The following table summarizes our research and development
expenses by functional area for the three months ended June 30,
2019 and 2018:
|
|
Three months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
ONS-5010 development |
|
$ |
1,160,019 |
|
|
$ |
1,692,797 |
|
Compensation and related benefits |
|
|
1,296,798 |
|
|
|
1,760,865 |
|
Stock-based compensation |
|
|
(207,015 |
) |
|
|
86,872 |
|
Loss on disposal of property and
equipment |
|
|
50,927 |
|
|
|
- |
|
Other research
and development |
|
|
2,092,737 |
|
|
|
2,255,459 |
|
Total
research and development expenses |
|
$ |
4,393,466 |
|
|
$ |
5,795,993 |
|
Research and development expenses for the three months ended June
30, 2019 decreased by $1.4 million compared to the three months
ended June 30, 2018. The decrease was primarily due to lower
compensation and related benefits, and lower stock-based
compensation of an aggregate of $0.8 million due to the elimination
of a senior executive position during the third quarter of fiscal
2019, and a decrease in ONS-5010 development costs of $0.5 million
as we reduced our in-house testing capabilities in anticipation of
outsourcing this work as part of the ONS-5010 commercial planning
process.
General and Administrative Expenses
The following table summarizes our general and administrative
expenses by type for the three months ended June 30, 2019 and
2018:
|
|
Three months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
754,509 |
|
|
$ |
785,549 |
|
Compensation and related benefits |
|
|
226,166 |
|
|
|
677,733 |
|
Stock-based compensation |
|
|
175,750 |
|
|
|
147,247 |
|
Facilities, fees
and other related costs |
|
|
678,120 |
|
|
|
585,260 |
|
Total
general and administrative expenses |
|
$ |
1,834,545 |
|
|
$ |
2,195,789 |
|
General and administrative expenses for the three months ended June
30, 2019 decreased by $0.4 million compared to the three months
ended June 30, 2018. The decrease was primarily due to reduced
compensation and related benefits in 2019.
Interest Expense
Interest expense decreased by $0.1 million to $1.1 million for the
three months ended June 30, 2019 as compared to $1.2 million for
the three months ended June 30, 2018. The decrease was primarily
due to repayment of senior secured notes, during the year offset by
an increase in interest on the lease termination obligation during
the three months ended June 30, 2019.
Comparison of Nine Months Ended June 30, 2019 and
2018
|
|
Nine months ended June 30, |
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Collaboration revenues |
|
$ |
2,292,586 |
|
|
$ |
2,315,670 |
|
|
$ |
(23,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
19,312,010 |
|
|
|
11,354,781 |
|
|
|
7,957,229 |
|
General and administrative |
|
|
6,587,691 |
|
|
|
8,191,546 |
|
|
|
(1,603,855 |
) |
|
|
|
25,899,701 |
|
|
|
19,546,327 |
|
|
|
6,353,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(23,607,115 |
) |
|
|
(17,230,657 |
) |
|
|
(6,376,458 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
3,256,505 |
|
|
|
2,786,124 |
|
|
|
470,381 |
|
Loss on extinguishment of debt |
|
|
607,240 |
|
|
|
1,252,353 |
|
|
|
(645,113 |
) |
Change in fair
value of warrant liability |
|
|
(2,265,836 |
) |
|
|
(226,116 |
) |
|
|
(2,039,720 |
) |
Loss before income taxes |
|
|
(25,205,024 |
) |
|
|
(21,043,018 |
) |
|
|
(4,162,006 |
) |
Income tax
benefit |
|
|
(777,500 |
) |
|
|
(3,150,716 |
) |
|
|
2,373,216 |
|
Net loss |
|
$ |
(24,427,524 |
) |
|
$ |
(17,892,302 |
) |
|
$ |
(6,535,222 |
) |
Collaboration Revenues
The following table sets forth a summary of revenue recognized from
our collaboration and licensing agreements for the nine months
ended June 30, 2019 and 2018, all of which was from the recognition
of deferred revenues under such agreements:
|
|
Nine months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
IPCA Collaboration |
|
$ |
384,021 |
|
|
$ |
195,804 |
|
Liomont Collaboration |
|
|
268,242 |
|
|
|
177,482 |
|
Huahai Collaboration |
|
|
1,114,281 |
|
|
|
536,134 |
|
BioLexis
Collaboration |
|
|
526,042 |
|
|
|
1,406,250 |
|
|
|
$ |
2,292,586 |
|
|
$ |
2,315,670 |
|
Collaboration revenues were relatively flat for the nine months
ended June 30, 2019, as compared to the same period of the prior
year as a result of a $0.9 million decrease from the BioLexis
collaboration revenue, which offset an increase from the IPCA,
Liomont and Huahai collaborations of $0.9 million. The BioLexis
collaboration revenue decreased due to the full recognition of
related milestones in the second quarter of fiscal 2019. The IPCA,
Liomont and Huahai collaborations revenue increase was due to the
adoption of ASU No. 2014-09, effective October 1, 2018, which
changed our revenue recognition policies for milestone payments. We
previously recognized substantive milestones in the period the
milestones were achieved but ASU 2014-09 prescribes that those
milestones are a form of variable consideration and should be
recognized when the performance obligation is satisfied, which
results in such amounts being recognized over the estimated
performance period.
Research and Development Expenses
The following table summarizes our research and development
expenses by functional area for the nine months ended June 30, 2019
and 2018:
|
|
Nine months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
ONS-5010 development |
|
$ |
6,153,101 |
|
|
$ |
3,730,327 |
|
Settlement of clinical development
contract |
|
|
- |
|
|
|
(3,228,613 |
) |
Compensation and related benefits |
|
|
4,693,270 |
|
|
|
4,863,686 |
|
Stock-based compensation |
|
|
4,957 |
|
|
|
2,079 |
|
Loss on disposal of property and
equipment |
|
|
2,962,065 |
|
|
|
- |
|
Other research
and development |
|
|
5,498,617 |
|
|
|
5,987,302 |
|
Total
research and development expenses |
|
$ |
19,312,010 |
|
|
$ |
11,354,781 |
|
Research and development expenses for the nine months ended June
30, 2019 increased by $8.0 million compared to the nine months
ended June 30, 2018. The increase was primarily due to increased
ONS-5010 development costs of $2.4 million as we progressed into
Phase 3 clinical trials near the end of fiscal year 2018, and a
$3.0 million write off of certain construction in progress assets
and laboratory equipment resulting from our decision to outsource
the commercial manufacturing and remaining development for the
ONS-5010 program. In addition, 2018 reflects a $3.2 million
favorable settlement of a contract related to our inactive
biosimilar product candidates.
General and Administrative Expenses
The following table summarizes our general and administrative
expenses by type for the nine months ended June 30, 2019 and
2018:
|
|
Nine Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
2,884,838 |
|
|
$ |
2,213,073 |
|
Compensation and related benefits |
|
|
817,474 |
|
|
|
1,982,597 |
|
Stock-based compensation |
|
|
1,103,809 |
|
|
|
1,821,649 |
|
Facilities, fees
and other related costs |
|
|
1,781,570 |
|
|
|
2,174,227 |
|
Total
general and administrative expenses |
|
$ |
6,587,691 |
|
|
$ |
8,191,546 |
|
General and administrative expenses for the nine months ended June
30, 2019 decreased by $1.6 million compared to the nine months
ended June 30, 2018. The decrease was primarily due to a reduction
in compensation and related benefits of $1.2 million and
stock-based compensation expense of $0.7 million, which decreased
because the first quarter of fiscal 2018 reflected the completion
of the vesting period for many of our pre-IPO equity grants and a
decrease in compensation expense related to the reversal of
previously accrued compensation cost. Additionally, our ongoing
efforts to reduce expenses to support the ongoing development of
ONS-5010 resulted in a reduction in facilities and other costs of
approximately $0.4 million which were offset by an increase in
professional fees of $0.6 million due to advisory services related
to the restructuring of our senior secured notes earlier in fiscal
2019.
Interest Expense
Interest expense increased by $0.5 million to $3.3 million for the
nine months ended June 30, 2019 as compared to $2.8 million for the
nine months ended June 30, 2018. The increase was primarily due to
a $0.2 million increase in amortization of debt discount and
interest expense on the senior secured notes issued due to the
modification of the interest rate made to the notes and a $0.3
million increase in lease termination obligation interest, during
the nine month period.
Liquidity and Capital Resources
We have not generated any revenue from product sales. Since
inception, we have incurred net losses and negative cash flows from
our operations. Through June 30, 2019, we have funded substantially
all of our operations through the receipt of $241.5 million
net proceeds from the issuance of our equity securities, debt
securities and borrowings under debt facilities. We have also
received an aggregate of $29.0 million pursuant to emerging
markets collaboration and licensing agreements for our inactive
biosimilar development programs.
In November 2018, we received approval from the New Jersey
Economic Development Authority’s Technology Business Tax
Certificate Transfer Program to sell approximately
$3.7 million of our unused New Jersey NOLs and R&D
credits, of which approximately $0.8 million was received in April
2019. We received the balance of $2.6 million of proceeds from
the sale of the New Jersey NOLs and R&D credits in July
2019.
In April 2019, we completed an underwritten public offering of
10,340,000 shares of our common stock, 15-month warrants to
purchase up to an aggregate of 10,340,000 shares of our common
stock and five-year warrants to purchase up to an aggregate of
10,340,000 shares of our common stock at a combined public offering
price of $2.75 per share and accompanying warrants. The shares of
common stock and the warrants were immediately separable and were
issued separately. The warrants were exercisable immediately at an
exercise price of $2.90 per share. We received approximately $26.2
million in net proceeds from the public offering after payment of
fees, expenses and underwriting discounts and commissions.
In June 2019, we redeemed approximately $1.8 million outstanding
aggregate principal amount of our senior secured notes and entered
into a third note amendment with the holders of the remaining $6.7
million outstanding aggregate principal amount of such notes. Under
the third note amendment, we amended the maturity date of the
senior secured notes to December 22, 2019, and removed the
scheduled payments of principal and interest of approximately $5.0
million that were previously to have occurred in June, July and
August 2019. We also agreed to increase the interest rate payable
on such senior secured notes to 12.0% per annum from 5.0% per
annum. We paid $7.7 million of principal and interest on the senior
secured notes through June 30, 2019.
As of June 30, 2019, we had an accumulated deficit of $244.4
million and a cash balance of $14.0 million. In addition, we have
$6.7 million of senior secured notes that become due in December
2019, $3.6 million unsecured notes, which are due on demand as of
such date, and $1.0 million of unsecured notes that are due on
demand but are subject to a forbearance agreement through March 7,
2020. These matters raise substantial doubt about our ability to
continue as a going concern. Our consolidated financial statements
do not include any adjustments related to the recoverability and
classification of recorded asset amounts or the amounts and
classification of liabilities that might result from the outcome of
this uncertainty. We anticipate incurring additional losses until
such time, if ever, that we can generate significant sales of our
product candidates currently in development. We will need
substantial additional financing to fund our operations and to
commercially develop our product candidates. Management is
currently evaluating various strategic opportunities to obtain the
required funding for future operations. These strategies may
include, but are not limited to payments from potential strategic
research and development, licensing and/or marketing arrangements
with pharmaceutical companies, private placements and/or public
offerings of equity and/or debt securities. There can be no
assurance that these future funding efforts will be successful.
Our future operations are highly dependent on a combination of
factors, including (i) the timely and successful completion of
additional financing discussed above, (ii) our ability to complete
revenue-generating partnerships with pharmaceutical companies,
(iii) the success of our research and development, (iv) the
development of competitive therapies by other biotechnology and
pharmaceutical companies, and, ultimately, (v) regulatory
approval and market acceptance of our proposed future products.
Funding Requirements
We plan to focus in the near term on advancing ONS-5010 through
clinical trials to support the filing of a Biologics License
Application with the FDA to support the generation of commercial
revenues. We anticipate we will incur net losses and negative cash
flow from operations for the foreseeable future. We may not be able
to complete the development and initiate commercialization of
ONS-5010 if, among other things, our clinical trials are not
successful or if the FDA does not approve our application arising
out of our current clinical trials when we expect, or at all.
Our primary uses of capital are, and we expect will continue to be,
compensation and related expenses, manufacturing and facility
costs, external research and development services, laboratory and
related supplies, legal and other regulatory expenses, and
administrative and overhead costs. Our future funding requirements
will be heavily determined by the resources needed to support
development of our lead product candidate.
We believe our existing cash as of June 30, 2019, together with
proceeds from the sale of New Jersey NOLs and R&D credits
received in July 2019 of $2.6 million will provide adequate
financial resources to fund our operations into December 2019,
excluding any unscheduled repayment of debt. We have based this
estimate on assumptions that may prove to be wrong, and we could
utilize our available capital resources sooner than we expect. We
will need to raise substantial additional capital in order to
complete our planned ONS-5010 development program. We plan to
finance our future operations with a combination of proceeds from
potential strategic collaborations, sale of the development and
commercial rights to our drug product candidates, the issuance of
equity securities, the issuance of additional debt, and revenues
from potential future product sales, if any. If we raise additional
capital through the sale of equity or convertible debt securities,
your ownership will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect
your rights as a holder of our common stock. There are no
assurances that we will be successful in obtaining an adequate
level of financing for the development and commercialization of
ONS-5010 or any other current or future product candidates.
Alternatively, we will be required to, among other things, modify
our clinical trial plans for ONS-5010 in additional indications,
make reductions in our workforce, scale back our plans and place
certain activities on hold, discontinue our development programs,
liquidate all or a portion of our assets, and/or seek protection
under the provisions of the U.S. Bankruptcy Code.
Cash Flows
The following table summarizes our cash flows for each of the
periods presented:
|
|
Nine months ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
Net cash used in operating
activities |
|
$ |
(26,373,599 |
) |
|
$ |
(24,645,339 |
) |
Net cash used in investing
activities |
|
|
(437,306 |
) |
|
|
(1,518,349 |
) |
Net cash provided by financing
activities |
|
|
39,094,278 |
|
|
|
34,774,837 |
|
Operating Activities.
During the nine months ended June 30, 2019, we used $26.4 million
of cash in operating activities resulting primarily from our net
loss of $24.4 million, This use of cash was partially offset by
$6.2 million of noncash items such as non-cash interest expense,
stock-based compensation, change in fair value of warrant
liability, loss on disposal of property and equipment, loss on
extinguishment of debt and depreciation and amortization expense.
The change in our operating assets and liabilities was primarily
due to prepayments associated with our clinical trials and ONS 5010
development costs and payments of our accrued expenses from
September 30, 2018 as well as the amortization of our deferred
revenues from collaborations.
During the nine months ended June 30, 2018, we used $24.6 million
of cash in operating activities resulting from our net loss
of $17.9 million and the change in our operating assets and
liabilities of $13.0 million. This use of cash was partially offset
by $6.3 million of non-cash items such as non-cash interest
expense, stock-based compensation, change in fair value of warrant
liability, loss on extinguishment of debt and depreciation and
amortization expense. The change in our operating assets and
liabilities was primarily due to payments of our outstanding
accounts payable and accrued expenses from September 30, 2017 as
well as the prepayment of certain research and development expenses
and the amortization of our deferred revenues from
collaborations.
Investing Activities.
During the nine months ended June 30, 2019 and 2018, we used cash
of $0.4 and $1.6 million, respectively in investing activities for
the purchase of property and equipment.
Financing Activities.
During the nine months ended June 30, 2019, net cash provided by
financing activities was $39.1 million, primarily attributable to
$19.8 million in net proceeds from the November 2018 BioLexis
private placement, and approximately $26.2 in next proceeds from
the April 2019 public offering. In November 2018 through February
2019, we issued BioLexis an aggregate of 2,680,965 shares of our
common stock for gross cash proceeds of $20.0 million. In April 2019, we completed a public offering of
10,340,000 shares of our common stock, 15-month warrants to
purchase up to an aggregate of 10,340,000 shares of our common
stock and five-year warrants to purchase up to an aggregate of
10,340,000 shares of our common stock for net proceeds of $26.2
million. We also made $6.9 million in debt and capital lease
obligations payments.
During the nine months ended June 30, 2018, net cash provided by
financing activities was $34.8 million, primarily attributable to
$20.6 million in net proceeds from our second closing of our Series
A Convertible in October 2017 and $14.9 million in net proceeds
from the sale of common stock and warrants to BioLexis in May and
June 2018. We also made $0.7 million in debt payments.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30,
2019.
Contractual Obligations and Commitments
Not applicable.
Critical Accounting Policies and Significant Judgments and
Estimates
The Critical Accounting Policies and Significant Judgments and
Estimates included in our Form 10-K for the fiscal year ended
September 30, 2018, filed with the SEC on December 18, 2018, have
not materially changed with the exception of our revenue
recognition policies.
On October 1, 2018, we adopted ASU No. 2014-09 and changed our
revenue recognition policies accordingly. The standard’s stated
core principle is that an entity should recognize revenue to depict
the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. This
guidance also requires an entity to disclose sufficient information
to enable users of financial statements to understand the nature,
amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. Qualitative and quantitative
information is required about:
|
· |
Contracts with customers - including
revenue and impairments recognized, disaggregation of revenue and
information about contract balances and performance obligations
(including the transaction price allocated to the remaining
performance obligations). |
|
· |
Significant judgments and changes in
judgments - determining the timing of satisfaction of
performance obligations (over time or at a point in time), and
determining the transaction price and amounts allocated to
performance obligations. |
|
· |
Certain assets - assets recognized from
the costs to obtain or fulfill a contract. |
Our arrangements fall under ASC 808. ASC 808 does not address
recognition or measurement matters but prescribes that entities
look to other GAAP by analogy, namely ASU 2014-09. As such, we
completed an analysis of existing contracts with our collaboration
partners and assessed the differences in accounting for such
contracts under ASU 2014-09 compared with current revenue
accounting standards. We previously recognized substantive
milestones in the period the milestones were achieved, but
ASU 2014-09 prescribes that those milestones are a form of
variable consideration that results in such amounts being
recognized over the estimated performance period. For the three and
nine months ended June 30, 2019, we would have recognized $0.3
million and $1.4 million, respectively, of collaboration revenues
under revenue recognition guidance in effect during fiscal 2018
prior to the adoption of ASU 2014-09.
JOBS Act Accounting Election
The JOBS Act, permits an “emerging growth company” such as us to
take advantage of an extended transition period to comply with new
or revised accounting standards applicable to public companies
until those standards would otherwise apply to private companies.
We have irrevocably elected to “opt out” of this provision and, as
a result, we will comply with new or revised accounting standards
when they are required to be adopted by public companies that are
not emerging growth companies.
Item 3. Quantitative and Qualitative
Disclosures about Market Risk
Not applicable.
Item 4. Controls and
Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act refers to controls
and procedures that are designed to ensure that information
required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that
information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and
communicated to the company’s management, including its principal
executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions
regarding required disclosure. Because there are inherent
limitations in all control systems, a control system, no matter how
well conceived and operated, can provide only reasonable, as
opposed to absolute, assurance that the objectives of the control
system are met. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts
of some persons, by collusion of two or more people, or by
management override of the control. Further, the design of a
control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered
relative to their costs. Our management, with the participation of
our chief executive officer and chief financial officer, evaluated
the effectiveness of our disclosure controls and procedures as of
the end of the period covered by this report. Based on that
evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures were
effective, at the reasonable assurance level, as of the end of the
period covered by this report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial
reporting (as defined in Rules 13a-15(d) and 15d-15(f) under the
Exchange Act) that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting during our third fiscal quarter ended June 30, 2019.
Part II. Other Information
Item 1. Legal
Proceedings
From time to time, we may become involved in litigation relating to
claims arising from the ordinary course of business. Our management
believes that there are currently no claims or actions pending
against us, the ultimate disposition of which would have a material
adverse effect on our results of operations, financial condition or
cash flows.
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior
Securities
Not applicable.
Item 4. Mine Safety
Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
EXHIBIT INDEX
Exhibit
Number |
|
Description |
|
|
|
3.1 |
|
Amended
and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to the Registrant’s current report on Form
8-K filed with the SEC on May 19, 2016). |
3.2 |
|
Certificate of Designation of Series A-1
Convertible Preferred Stock (incorporated by reference to Exhibit
3.1 to the Registrant’s current report on Form 8-K filed with the
SEC on July 19, 2018). |
3.3 |
|
Certificate of Amendment to the Amended and
Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to the Registrant’s current report on Form 8-K filed
with the SEC on December 6, 2018). |
3.4 |
|
Amended
and Restated Bylaws (incorporated by reference to Exhibit 3.2 to
the Registrant’s current report on Form 8-K filed with the SEC on
May 19, 2016). |
3.5 |
|
Amendment to the Amended and Restated Bylaws
(incorporated by reference to Exhibit 3.1 to the Registrant’s
current report on Form 8-K filed with the SEC on November 29,
2016). |
10.1 |
|
Warrant Agreement, including form of
15-Month Warrant and form of Five-Year Warrant by and between the
Registrant and American Stock Transfer & Trust Company, LLC, as
Warrant Agent, dated April 12, 2019 (incorporated by reference to
Exhibit 10.1 to the Registrant’s quarterly report on Form 10-Q
filed with the SEC on May 15, 2019). |
10.2 |
|
Amendment #1 dated June 11, 2019 of
Warrant Agreement by and between the Registrant and American Stock
Transfer & Trust Company, LLC, as Warrant Agent, dated April
12, 2019 (incorporated by reference to Exhibit 10.1 to the
Registrant’s current report on Form 8-K filed with the SEC on June
14, 2019). |
10.3 + |
|
Separation and Release Agreement between the
Registrant and Kenneth M. Bahrt, M.D., dated April 23, 2019
(incorporated by reference to Exhibit 10.1 to the
Registrant’s current report on Form 8-K filed with the SEC on
April 26, 2019). |
10.4† |
|
Amendment dated June 4, 2019 of Strategic
Partnership Agreement between the Registrant and MTTR LLC effective
as of February 15, 2018, as amended (incorporated by reference to
Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed
with the SEC on June 10, 2019). |
10.5 |
|
Third
Note Amendment between the Registrant and the holders of its senior
secured notes dated June 28, 2019 (incorporated by reference to
Exhibit 10.1 to the Registrant’s current report on Form 8-K filed
with the SEC on July 1, 2019). |
31.1 |
|
Certification of Principal Executive and
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. |
32.1* |
|
Certification of Principal Executive and
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
101.INS |
|
XBRL Instance Document |
101.SCH |
|
XBRL Taxonomy Extension Schema
Document |
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase
Document |
101.DEF |
|
XBRL Definition Linkbase Document |
101.LAB |
|
XBRL Taxonomy Extension Labels Linkbase
Document |
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase
Document |
+ |
Indicates management or compensatory
arrangement. |
† |
Certain portions of this exhibit (indicated by
“[***]”) have been omitted because they are both (i) not material
and (ii) would be competitively harmful if publicly
disclosed. |
* |
This certification is being furnished solely to
accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350,
and is not being filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and is not to be incorporated by
reference into any filing of the registrant, whether made before or
after the date hereof, regardless of any general incorporation
language in such filing. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
|
OUTLOOK THERAPEUTICS, INC. |
|
|
|
Date:
August 14, 2019 |
By: |
/s/ Lawrence A. Kenyon |
|
|
Lawrence
A. Kenyon |
|
|
Chief Executive Officer and Chief Financial Officer
(Principal Executive, Accounting, and Financial Officer)
|
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