☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
|
11-3516358
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☐ |
Non-accelerated filer
|
☑ |
Smaller reporting company
|
☑ |
Emerging growth company
|
☐ |
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
Common Stock, $.0001 par value
|
RNN
|
NYSE American
|
Page
|
||
PART I
|
1
|
|
Item 1
|
1
|
|
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
6
|
||
Item 2
|
23
|
|
Item 3
|
30
|
|
Item 4
|
30
|
|
PART II
|
31
|
|
Item 1A
|
31
|
|
Item 6
|
31
|
|
32
|
March 31, 2019
|
December 31, 2018
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
6,122,787
|
$
|
8,744,301
|
||||
Marketable securities
|
11,892,819
|
5,981,520
|
||||||
Prepaid expenses and other current assets
|
976,878
|
1,173,847
|
||||||
Total Current Assets
|
18,992,484
|
15,899,668
|
||||||
Security Deposits
|
30,785
|
30,785
|
||||||
Operating Lease Right-of-Use Assets
|
303,096
|
-
|
||||||
Equipment, Net
|
99,027
|
112,473
|
||||||
Total Assets
|
$
|
19,425,392
|
$
|
16,042,926
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
2,246,200
|
$
|
3,152,550
|
||||
Deferred revenue
|
150,000
|
-
|
||||||
Operating lease liabilities, current
|
113,531
|
-
|
||||||
Total Current Liabilities
|
2,509,731
|
3,152,550
|
||||||
Operating Lease Liabilities, non-current
|
181,490
|
-
|
||||||
Warrant Liabilities
|
794,215
|
2,307,586
|
||||||
Other Liabilities
|
-
|
19,900
|
||||||
Total Liabilities
|
3,485,436
|
5,480,036
|
||||||
Commitments and
Contingencies
(note 14)
|
||||||||
Stockholders’ Equity:
|
||||||||
Preferred stock, par value $0.0001, 10,000,000 authorized shares, none issued and outstanding
|
-
|
-
|
||||||
Common stock, par value $0.0001, 75,000,000 authorized shares, 4,019,141 and 3,122,843 issued and
outstanding
|
402
|
312
|
||||||
Additional paid-in capital
|
172,982,394
|
165,267,656
|
||||||
Accumulated other comprehensive loss
|
(12,602
|
)
|
(17,836
|
)
|
||||
Accumulated deficit
|
(157,030,238
|
)
|
(154,687,242
|
)
|
||||
Total Stockholders’ Equity
|
15,939,956
|
10,562,890
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
19,425,392
|
$
|
16,042,926
|
For the Three Months Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Revenues:
|
$
|
-
|
$
|
-
|
||||
Expenses:
|
||||||||
General and administrative
|
1,695,523
|
1,827,322
|
||||||
Research and development
|
2,242,229
|
4,058,533
|
||||||
Total Expenses
|
3,937,752
|
5,885,855
|
||||||
Loss from Operations
|
(3,937,752
|
)
|
(5,885,855
|
)
|
||||
Other Income
|
||||||||
Interest income
|
81,385
|
75,736
|
||||||
Other income
|
-
|
368,750
|
||||||
Unrealized gain on fair value of warrants
|
1,513,371
|
3,366,496
|
||||||
Total Other Income
|
1,594,756
|
3,810,982
|
||||||
Net Loss Before Provision for Income Taxes
|
(2,342,996
|
)
|
(2,074,873
|
)
|
||||
Provision for income taxes
|
-
|
-
|
||||||
Net Loss
|
$
|
(2,342,996
|
)
|
$
|
(2,074,873
|
)
|
||
Net loss per share, basic and diluted
|
$
|
(0.62
|
)
|
$
|
(0.79
|
)
|
||
Weighted average number of shares outstanding, basic and diluted
|
3,779,953
|
2,639,849
|
For the Three Months Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Net Loss
|
$
|
(2,342,996
|
)
|
$
|
(2,074,873
|
)
|
||
Unrealized gain (loss) on available-for-sale securities
|
5,234
|
(32,490
|
)
|
|||||
Comprehensive Loss
|
$
|
(2,337,762
|
)
|
$
|
(2,107,363
|
)
|
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
Stockholders’
Equity
|
|||||||||||||||||||
Balances at January 1, 2019
|
3,122,843
|
$
|
312
|
$
|
165,267,656
|
$
|
(154,687,242
|
)
|
$
|
(17,836
|
)
|
$
|
10,562,890
|
|||||||||||
Issuance of common stock and units, net of issuance costs
|
895,834
|
90
|
7,553,738
|
-
|
-
|
7,553,828
|
||||||||||||||||||
Common stock issued from vested restricted stock units
|
464
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Stock-based compensation
|
-
|
-
|
161,000
|
-
|
-
|
161,000
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(2,342,996
|
)
|
-
|
(2,342,996
|
)
|
||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
5,234
|
5,234
|
||||||||||||||||||
Balances at March 31, 2019
|
4,019,141
|
$
|
402
|
$
|
172,982,394
|
$
|
(157,030,238
|
)
|
$
|
(12,602
|
)
|
$
|
15,939,956
|
|||||||||||
Balances at January 1, 2018
|
2,639,319
|
264
|
157,143,930
|
(140,318,712
|
)
|
(56,886
|
)
|
16,768,596
|
||||||||||||||||
Common stock issued in exchange for services
|
625
|
-
|
12,150
|
-
|
-
|
12,150
|
||||||||||||||||||
Stock-based compensation
|
-
|
-
|
296,577
|
-
|
-
|
296,577
|
||||||||||||||||||
Common stock issued from vested restricted stock units
|
983
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(2,074,873
|
)
|
-
|
(2,074,873
|
)
|
||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(32,490
|
)
|
(32,490
|
)
|
||||||||||||||||
Balances at March 31, 2018
|
2,640,927
|
$
|
264
|
$
|
157,452,657
|
$
|
(142,393,585
|
)
|
$
|
(89,376
|
)
|
$
|
14,969,960
|
For the Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(2,342,996
|
)
|
$
|
(2,074,873
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Compensatory stock
|
-
|
12,150
|
||||||
Depreciation and amortization
|
11,533
|
14,600
|
||||||
Loss on sale of equipment
|
9,594
|
-
|
||||||
Amortization of premiums and discounts on marketable securities, net
|
(18,499
|
)
|
14,907
|
|||||
Stock-based compensation
|
161,000
|
296,577
|
||||||
Amortization and termination of deferred research and development arrangement
|
-
|
(375,000
|
)
|
|||||
Unrealized gain on fair value of warrants
|
(1,513,371
|
)
|
(3,366,496
|
)
|
||||
Amortization of deferred lease incentive
|
-
|
(3,111
|
)
|
|||||
Deferred rent
|
-
|
(5,463
|
)
|
|||||
Changes in assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
73,367
|
73,276
|
||||||
Accounts payable and accrued expenses
|
(906,350
|
)
|
(184,905
|
)
|
||||
Deferred revenue
|
150,000
|
-
|
||||||
Other, net
|
(4,373
|
)
|
-
|
|||||
Net Cash Used in Operating Activities
|
(4,380,095
|
)
|
(5,598,338
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Purchase of equipment
|
(13,181
|
)
|
(2,520
|
)
|
||||
Sale of equipment
|
5,500
|
-
|
||||||
Purchase of marketable securities
|
(8,887,566
|
)
|
-
|
|||||
Redemption of marketable securities
|
3,000,000
|
3,000,000
|
||||||
Net Cash (Used In) Provided by Investing Activities
|
(5,895,247
|
)
|
2,997,480
|
|||||
Cash Flows from Financing Activities:
|
||||||||
Issuance of common stock and units, net of issuance costs
|
7,653,828
|
-
|
||||||
Net Cash Provided by Financing Activities
|
7,653,828
|
-
|
||||||
Net Decrease in Cash and Cash Equivalents
|
(2,621,514
|
)
|
(2,600,858
|
)
|
||||
Cash and Cash Equivalents – beginning of period
|
8,744,301
|
8,899,154
|
||||||
Cash and Cash Equivalents - end of period
|
$
|
6,122,787
|
$
|
6,298,296
|
||||
Supplemental Cash Flow Information
|
||||||||
Operating cash flows paid for amounts included in the measurement of lease liabilities
|
$
|
84,651
|
$
|
-
|
||||
Non-cash financing and investing activities:
|
||||||||
Warrants issued
|
$
|
4,735,913
|
$
|
-
|
||||
Operating right of use assets obtained in exchange for lease obligations:
|
$
|
380,935
|
$
|
-
|
1. |
Operations and Organization
|
2. |
Recent Accounting Pronouncements Affecting the Company
|
3. |
Marketable Securities
|
March 31, 2019
|
||||||||||||||||
Cost
Basis
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
Commercial Paper
|
$
|
5,902,433
|
$
|
-
|
$
|
(5,414
|
)
|
$
|
5,897,019
|
|||||||
Corporate Bonds
|
6,002,988
|
-
|
(7,188
|
)
|
5,995,800
|
|||||||||||
Total Marketable Securities
|
$
|
11,905,421
|
$
|
-
|
$
|
(12,602
|
)
|
$
|
11,892,819
|
December 31, 2018
|
||||||||||||||||
Cost
Basis
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
Corporate Bonds
|
$
|
5,999,356
|
$
|
-
|
$
|
(17,836
|
)
|
$
|
5,981,520
|
4. |
Prepaid Expenses and Other Current Assets
|
March 31,
2019
|
December 31,
2018
|
|||||||
Deposits on contracts
|
$
|
566,721
|
$
|
618,417
|
||||
Prepaid expenses and other current assets
|
410,157
|
555,430
|
||||||
$
|
976,878
|
$
|
1,173,847
|
5. |
Equipment, Net
|
March 31,
2019
|
December 31,
2018
|
|||||||
Furniture and fixtures
|
$
|
78,094
|
$
|
82,686
|
||||
Office and computer equipment
|
172,670
|
159,489
|
||||||
Lab equipment
|
-
|
447,653
|
||||||
Leasehold improvements
|
131,762
|
131,762
|
||||||
Total equipment
|
382,526
|
821,590
|
||||||
Less: Accumulated depreciation and amortization
|
(283,499
|
)
|
(709,117
|
)
|
||||
Net carrying amount
|
$
|
99,027
|
$
|
112,473
|
6. |
Accounts Payable and Accrued Expenses
|
March 31,
2019
|
December 31,
2018
|
|||||||
Trade payables
|
$
|
927,020
|
$
|
547,519
|
||||
Accrued expenses
|
202,068
|
140,637
|
||||||
Accrued research and development contract costs
|
923,809
|
1,782,131
|
||||||
Payroll liabilities
|
193,303
|
682,263
|
||||||
$
|
2,246,200
|
$
|
3,152,550
|
7. |
Collaboration Agreement
|
8. |
Leases
|
Right-of-Use Assets
|
$
|
303,096
|
||
Operating Lease Liabilities
|
||||
Current
|
$
|
113,531
|
||
Long Term
|
181,490
|
|||
Total Operating Lease Liabilities
|
$
|
295,021
|
Year Ending December 31:
|
||||
2019 (excluding the three months ended March 31, 2019)
|
$
|
99,819
|
||
2020
|
154,961
|
|||
2021
|
78,437
|
|||
Minimum lease payments
|
333,217
|
|||
Less: Imputed interest
|
(38,196
|
)
|
||
Present value of minimum lease payments
|
295,021
|
|||
Less: current maturities of lease obligations
|
(113,531
|
)
|
||
Long-term lease obligations
|
$
|
181,490
|
9. |
Net Loss per Common Share
|
10. |
Common Stock
|
11. |
Stock-Based Compensation
|
For the Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Statement of operations line item:
|
||||||||
General and administrative
|
$
|
116,679
|
$
|
216,415
|
||||
Research and development
|
44,321
|
80,162
|
||||||
Total
|
$
|
161,000
|
$
|
296,577
|
For the Three Months Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Black-Scholes assumptions
|
||||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected volatility
|
74
|
%
|
69-72
|
%
|
||||
Risk-free interest rate
|
2.5-2.6
|
%
|
2.3-2.7
|
%
|
||||
Expected term (in years)
|
6 years
|
6 years
|
Number of
Options
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding, January 1, 2019
|
255,922
|
$
|
41.88
|
7.8 years
|
$
|
-
|
|||||||
Granted
|
31,243
|
$
|
7.20
|
||||||||||
Exercised
|
-
|
$
|
-
|
||||||||||
Expired
|
(1,000
|
)
|
$
|
44.40
|
|||||||||
Cancelled
|
(34,730
|
)
|
$
|
22.89
|
|||||||||
Outstanding, March 31, 2019
|
251,435
|
$
|
40.15
|
7.6 years
|
$
|
-
|
|||||||
Exercisable, March 31, 2019
|
138,292
|
$
|
60.45
|
6.2 years
|
$
|
-
|
2019
|
||||||||
Number of
Options
|
Weighted Average Fair
Value at Grant Date
|
|||||||
Unvested at January 1, 2019
|
131,531
|
$
|
13.19
|
|||||
Granted
|
31,243
|
$
|
4.78
|
|||||
Vested
|
(16,531
|
)
|
$
|
20.16
|
||||
Cancelled
|
(33,100
|
)
|
$
|
12.73
|
||||
Unvested at March 31, 2019
|
113,143
|
$
|
9.99
|
Number of RSUs
|
Weighted
Average Grant
Date Fair Value
|
|||||||
Outstanding, January 1, 2019
|
1,394
|
$
|
22.08
|
|||||
Granted
|
-
|
$
|
-
|
|||||
Vested and Released
|
(464
|
)
|
$
|
22.08
|
||||
Cancelled
|
(659
|
)
|
$
|
22.08
|
||||
Outstanding, March 31, 2019
|
271
|
$
|
22.08
|
12. |
Warrants
|
Number of Warrants:
|
|||||||||||||
Warrant Issuance
|
March 31, 2019
|
December 31,
2018
|
Exercise Price
|
Expiration
Date
|
|||||||||
Liability-classified Warrants
|
|||||||||||||
January 2014 Investor Warrants
|
-
|
39,683
|
$
|
153.60
|
Jan. 2019
|
||||||||
November 2015 Investor Warrants
|
104,168
|
104,168
|
$
|
63.60
|
May 2021
|
||||||||
November 2015 Placement Agent Warrants
|
279
|
279
|
$
|
63.60
|
Nov. 2020
|
||||||||
March 2016 Investor Warrants
|
50,651
|
50,651
|
$
|
50.40
|
Sept. 2021
|
||||||||
September 2016 Investor Warrants
|
67,084
|
67,084
|
$
|
36.00
|
Mar. 2022
|
||||||||
June 2017 Investor Warrants
|
126,264
|
126,264
|
$
|
48.00
|
Dec. 2022
|
||||||||
June 2017 Placement Agent Warrants
|
15,153
|
15,153
|
$
|
49.50
|
Jun. 2022
|
||||||||
October 2017 Investor Warrants
|
136,058
|
136,058
|
$
|
34.20
|
Apr. 2023
|
||||||||
October 2017 Placement Agent Warrants
|
16,327
|
16,327
|
$
|
36.72
|
Oct. 2022
|
||||||||
Total liability classified warrants
|
515,984
|
555,667
|
|||||||||||
Equity-classified Warrants
|
|||||||||||||
October 2018 Investor Warrants
|
480,771
|
480,771
|
$
|
20.04
|
Apr. 2024
|
||||||||
October 2018 Placement Agent Warrants
|
28,848
|
28,848
|
$
|
19.50
|
Oct. 2023
|
||||||||
January 2019 Investor Warrants
|
895,886
|
-
|
$
|
9.60
|
Jan. 2024
|
||||||||
Total equity-classified warrants
|
1,405,505
|
509,619
|
|||||||||||
Total outstanding warrants
|
1,921,489
|
1,065,286
|
Number of Warrants
|
||||||||||||||||
Liability-
classified
|
Equity-
classified
|
Total
|
Weighted
average
exercise price
|
|||||||||||||
Balance, January 1, 2019
|
555,667
|
509,619
|
1,065,286
|
$
|
37.52
|
|||||||||||
Issued during the period
|
-
|
895,886
|
895,886
|
$
|
9.60
|
|||||||||||
Exercised during the period
|
-
|
-
|
-
|
$
|
-
|
|||||||||||
Expired during the period
|
(39,683
|
)
|
-
|
(39,683
|
)
|
$
|
153.60
|
|||||||||
Balance, March 31, 2019
|
515,984
|
1,405,505
|
1,921,489
|
$
|
22.10
|
Fair Value as of:
|
||||||||
Warrant Issuance:
|
March 31, 2019
|
December 31, 2018
|
||||||
November 2015 Investor Warrants
|
37,834
|
234,918
|
||||||
November 2015 Placement Agent Warrants
|
55
|
435
|
||||||
March 2016 Investor Warrants
|
45,300
|
160,099
|
||||||
September 2016 Investor Warrants
|
115,965
|
333,834
|
||||||
June 2017 Investor Warrants
|
234,933
|
623,324
|
||||||
June 2017 Placement Agent Warrants
|
23,238
|
65,149
|
||||||
October 2017 Investor Warrants
|
305,050
|
801,551
|
||||||
October 2017 Placement Agent Warrants
|
31,840
|
88,276
|
||||||
Total:
|
$
|
794,215
|
$
|
2,307,586
|
March 31, 2019
|
December 31, 2018
|
|||||||
Trading market prices
|
$
|
6.12
|
$
|
11.16
|
||||
Estimated future volatility
|
103
|
%
|
105
|
%
|
||||
Dividend
|
-
|
-
|
||||||
Estimated future risk-free rate
|
2.09-2.20
|
%
|
2.35-2.53
|
%
|
||||
Equivalent volatility
|
91-101
|
%
|
99-104
|
%
|
||||
Equivalent risk-free rate
|
2.31-2.40
|
%
|
2.51-2.55
|
%
|
||||
Fundamental transaction likelihood, at end of warrant term
|
5
|
%
|
5
|
%
|
For the Three Months Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Expired Warrants
|
$
|
-
|
$
|
64,281
|
||||
November 2015 Investor Warrants
|
197,084
|
640,954
|
||||||
November 2015 Placement Agent Warrants
|
380
|
1,578
|
||||||
March 2016 Investor Warrants
|
114,799
|
327,454
|
||||||
September 2016 Investor Warrants
|
217,869
|
434,375
|
||||||
June 2017 Investor Warrants
|
388,391
|
823,171
|
||||||
June 2017 Placement Agent Warrants
|
41,911
|
97,309
|
||||||
October 2017 Investor Warrants
|
496,501
|
872,346
|
||||||
October 2017 Placement Agent Warrants
|
56,436
|
105,028
|
||||||
Total:
|
$
|
1,513,371
|
$
|
3,366,496
|
13. |
Income Taxes
|
March 31,
2019
|
December 31,
2017
|
|||||||
Net Operating Loss Carryforwards
|
$
|
42,300,000
|
$
|
41,184,000
|
||||
Stock Compensation Expense
|
1,618,000
|
1,608,000
|
||||||
Book tax differences on assets and liabilities
|
109,000
|
195,000
|
||||||
Valuation Allowance
|
(44,027,000
|
)
|
(42,987,000
|
)
|
||||
Net Deferred Tax Assets
|
$
|
-
|
$
|
-
|
14. |
Commitments and Contingencies
|
|
a) |
The Company has contracted with various vendors for services, with terms that require payments over the terms of the agreements, usually ranging from two to 36 months.
The costs to be incurred are estimated and are subject to revision. As of March 31, 2019, the total estimated cost to complete these agreements was approximately $4,790,000. All of these agreements may be terminated by either party
upon appropriate notice as stipulated in the respective agreements.
|
|
b) |
On June 22, 2009, the Company entered into a License Agreement with Korea Research Institute of Chemical Technology (“KRICT”) to acquire the rights to all intellectual
property related to quinoxaline-piperazine derivatives that were synthesized under a Joint Research Agreement. The agreement with KRICT calls for a one-time milestone payment of $1,000,000 within 30 days after the first achievement
of marketing approval of the first commercial product arising out of or in connection with the use of KRICT’s intellectual property. As of March 31, 2019, the milestone has not occurred.
|
|
c) |
The Company has established a 401(k) plan for its employees. The Company has elected to match 100% of the
first 3% of an employee’s compensation plus 50% of an additional 2% of the employee’s deferral. Expense related to this matching contribution aggregated to $
27,879
and $35,809
for the three months ended March 31, 2019 and 2018, respectively.
|
|
d) |
On February 5, 2018, the Company and NEXT BT Co. Ltd (“Next BT”) terminated a research collaboration agreement between the Company and Rexgene Biotech Co., Ltd, a
predecessor in interest to Next BT. In exchange for Next BT terminating its rights to RX-0201 in Asia, the Company agreed to pay Next BT a royalty in the low single digits of any net sales of RX-0201 the Company makes in Asia and 50%
of the Company’s licensing revenue related to licensing of RX-0201 in Asia, up to an aggregate of $5,000,000. As of March 31, 2019, the Company has not made any royalty payments to Next BT.
|
15. |
Fair Value Measurements
|
Level 1 Inputs
|
—
|
Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by the Company;
|
Level 2 Inputs
|
—
|
Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or
indirectly; and
|
Level 3 Inputs
|
—
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
Fair Value Measurements at December 31, 2018
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Corporate Bonds
|
$
|
5,981,520
|
$
|
-
|
$
|
5,981,520
|
$
|
-
|
||||||||
Liabilities:
|
||||||||||||||||
Warrant Liabilities
|
$
|
2,307,586
|
$
|
-
|
$
|
-
|
$
|
2,307,586
|
Warrant Liabilities
|
||||
Balance at January 1, 2019
|
$
|
2,307,586
|
||
Unrealized gains, net
|
(1,513,371
|
)
|
||
Balance at March 31, 2019
|
$
|
794,215
|
16. |
Subsequent Events
|
|
• |
our understandings and beliefs regarding the role of certain biological mechanisms and
processes in cancer;
|
|
• |
our drug candidates being in early stages of development, including in preclinical
development;
|
|
• |
our ability to initially develop drug candidates for orphan indications to reduce the
time-to-market and take advantage of certain incentives provided by the U.S. Food and Drug Administration;
|
|
• |
our ability to successfully and timely complete clinical trials for our drug candidates
in clinical development;
|
|
• |
uncertainties related to the timing, results and analyses related to our drug
candidates in preclinical development;
|
|
• |
our ability to obtain the necessary U.S. and international regulatory approvals for our
drug candidates;
|
|
• |
our reliance on third-party contract research organizations and other investigators and
collaborators for certain research and development services;
|
|
• |
our ability to maintain or engage third-party manufacturers to manufacture, supply,
store and distribute supplies of our drug candidates for our clinical trials;
|
|
• |
our ability to form strategic alliances and partnerships with pharmaceutical companies
and other partners for development, sales and marketing of certain of our product candidates;
|
|
• |
demand for and market acceptance of our drug candidates;
|
|
• |
the scope and validity of our intellectual property protection for our drug candidates
and our ability to develop our candidates without infringing the intellectual property rights of others;
|
|
• |
our lack of profitability and the need for additional capital to operate our business;
|
|
• |
other risks and uncertainties, including those set forth herein and in our Annual
Report on Form 10-K for the year ended December 31, 2018 under the caption “Risk Factors” and those detailed from time to time in our filings with the Securities and Exchange Commission.
|
|
• |
RX-3117
is a novel, investigational oral, small molecule nucleoside compound.
Once intracellularly activated (phosphorylated) by the enzyme UCK2, it is incorporated into the DNA or RNA of cells and inhibits both DNA and RNA synthesis, which induces apoptotic cell death of tumor cells. Because UCK2 is
overexpressed in multiple human tumors, but has a very limited presence in normal tissues, RX-3117 offers the potential for a targeted anti-cancer therapy with an improved efficacy and safety profile, and we believe it has therapeutic
potential in a broad range of cancers, including pancreatic, bladder, colon, lung and cervical cancer. RX-3117 is currently being evaluated in a Phase 2a clinical trial in combination with Celgene’s Abraxane® (paclitaxel
protein-bound particles for injectable suspension) as a first-line treatment in patients newly diagnosed with metastatic pancreatic cancer. Preliminary safety and efficacy data from this trial reported in January 2019 showed a 38%
overall response rate in the 24 patients who had at least one scan on treatment and were included in the preliminary evaluation of overall response. The trial began dosing patients in November 2017 and reached the target enrollment
of 40 patients in February 2019. RX-3117 has received “orphan drug designation” from the U.S. Food and Drug Administration (“FDA”) and from the European Commission for pancreatic cancer. RX-3117 is also being evaluated in a Phase
2a clinical trial in advanced bladder cancer. We presented updated preliminary safety and efficacy data from this trial in February 2019.
|
|
• |
RX-5902 is a potential first-in-class small molecule modulator of the Wnt/beta-catenin pathway which plays a key role in cancer cell proliferation and tumor growth.
RX-5902 modulates the pathway through inhibition of phosphorylated p68, a protein that helps to transport beta-catenin from the cytoplasm into the cell nucleus. Once inside the nucleus, beta-catenin turns on various oncogenes,
thereby promoting cancer cell proliferation and tumor growth. We believe that by inhibiting phosphorylated p68, RX-5902 hinders the transport of beta-catenin into the nucleus and reduces the activation of cancer genes. In addition,
multiple preclinical models have shown that RX-5902 activates the immune system against cancer and enhances the ability of immune cells to infiltrate the tumor and kill tumor cells. In preclinical models of colorectal and triple
negative breast cancer (“TNBC”), the effects of RX-5902 were observed to be synergistic with other immunotherapy agents such as checkpoint inhibitors. We have evaluated RX-5902 in a Phase 1 dose escalation study in patients with a
diverse range of metastatic, treatment-refractory tumors, including breast, ovarian, colorectal, and neuro-endocrine tumors. In February 2017, we initiated a Phase 2a clinical trial of RX-5902 in patients with metastatic TNBC. In
August 2018, we entered into a collaboration with Merck Sharp & Dohme B.V. (“Merck”) to evaluate the combination of RX-5902 and Merck’s anti-PD-1 therapy, KEYTRUDA
®
(pembrolizumab) in a Phase 2 trial in patients with
metastatic TNBC. In December 2018, we ceased enrollment in the ongoing Phase 2a monotherapy trial of RX-5902 in TNBC to focus RX-5902 development activities on planning the proposed combination trial with KEYTRUDA. We are currently
evaluating the development strategy for RX-5902 and may or may not proceed with this trial.
|
|
• |
RX-0301 is a potential best-in-class, potent inhibitor of the protein kinase Akt-1, which we believe plays a critical role in cancer cell proliferation, survival,
angiogenesis, metastasis and drug resistance. RX-0301 is the subject of a research and development collaboration with Zhejiang Haichang Biotechnology Co., Ltd (“Haichang”) for the development of RX-0301 to conduct certain preclinical
and clinical activities through completion of a Phase 2a proof-of-concept clinical trial in hepatocellular carcinoma. RX-0301 is being developed as a nano-liposomal formulation of RX-0201 (Archexin
®
) using Haichang’s
proprietary QTsome™ technology. Rexahn was previously developing RX-0201 for the treatment of renal cell carcinoma (“RCC”). In February 2018, in response to the changing treatment landscape for metastatic RCC over the prior two years
with the approval of new therapies by the FDA, we announced plans to discontinue the internally funded programs of RX-0201 and ceased enrolling patients in a Phase 2a proof-of-concept clinical trial of RX-0201 in patients with
metastatic RCC. RX-0301 is currently in preclinical development.
|
For the Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Clinical Candidates:
|
||||||||
RX-3117
|
$
|
1,078,400
|
$
|
2,111,600
|
||||
RX-5902
|
342,400
|
914,400
|
||||||
RX-0201
|
115,800
|
152,800
|
||||||
|
||||||||
Preclinical, Personnel and Overhead
|
705,629
|
879,733
|
||||||
Total Research and Development Expenses
|
$
|
2,242,229
|
$
|
4,058,533
|
|
• |
the progress of our product development activities;
|
|
• |
the number and scope of our product development programs;
|
|
• |
the progress of our preclinical and clinical trial activities;
|
|
• |
the progress of the development efforts of parties with whom we have entered into collaboration agreements;
|
|
• |
our ability to maintain current collaboration programs and to establish new collaboration arrangements;
|
|
• |
the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and
|
|
• |
the costs and timing of regulatory approvals.
|
Exhibit No.
|
Description
|
|
Amended and Restated Certificate of Incorporation, filed
as Appendix G to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 29, 2005, is incorporated herein by reference.
|
||
Certificate of Amendment to Amended and Restated
Certificate of Incorporation, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 30, 2018, is incorporated herein by reference.
|
||
Certificate of Amendment of Amended and Restated
Certificate of Incorporation, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 12, 2019, is incorporated herein by reference.
|
||
Form of Warrant, filed as Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed on January 25, 2019, is incorporated herein by reference.
|
||
Sixth Amendment to Lease Agreement, dated as of March
18, 2019, by and between the registrant and SG Plaza Holdings, LLC.
|
||
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) / 15d-14(a)
|
||
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101
|
The following materials from Rexahn Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q, formatted in Extensible Business Reporting Language
(“XBRL”): (i) Condensed Balance Sheet; (ii) Condensed Statement of Operations; (iii) Condensed Statement of Comprehensive Loss; (iv) Condensed Statement of Stockholders’ Equity; (v) Condensed Statement of Cash Flows; and (vi) Notes to
the Financial Statements.
|
REXAHN PHARMACEUTICALS, INC.
|
||
(Registrant)
|
||
By:
|
/s/ Douglas J. Swirsky
|
|
Date: May 10, 2019
|
Douglas J. Swirsky
|
|
Chief Executive Officer and President
(principal executive, financial and accounting officer)
|
|
1. |
Effective July
1, 2019
(the “Effective Date”), the rentable area of the Premises shall be amended to decrease the Original Premises by one thousand seven hundred twenty-seven
(1,727)
rentable square feet consisting of Suite
475
(hereinafter called “Surrender Space”) to five thousand four hundred sixty-six
(5,466)
rentable square feet consisting of Suite
455
(hereinafter called “Reduced Premises”). On or before the Effective Date, Tenant shall surrender the Surrender Space to Landlord in accordance with Section
7.2
(b) of the Lease and, subject to those provisions contained in the Lease which by their terms
specifically survive the expiration or
earlier termination of the Lease, the Lease shall terminate with respect to the Surrender Space effective on the
Effective Date. From and after the Effective Date, except as otherwise provided herein, all references in the Lease to the Premises shall refer to the Reduced Premises.
|
|
2. |
The terms of the Lease shall be extended for an additional period of sixty
(60)
calendar months. This period shall commence July
1, 2019
and shall terminate upon June
30, 2024.
Both Landlord and Tenant agree that there are no options in which this Lease may be further extended and any term or provision in the Lease that may give rise to any such right to extend the
Lease is hereby deemed to be deleted from the Lease and of no further force or effect.
|
|
3. |
The “Base Rent” shall be modified to show the minimum annual rent to be as follows:
|
|
4. |
Effective as of July
1, 2020
and as of the first day of each July thereafter, during the term hereof, the Base Rent then in effect shall be increased by the product of (i) two and one-half percent
(2.5%)
and (ii) the Base Rent in effect immediately prior to such increase, and the monthly
installments of Base Rent shall be upwardly adjusted accordingly.
|
|
5. |
Notwithstanding the foregoing, Tenant shall receive an abatement of Base Rent for the month of July
2019.
|
|
6. |
Tenant shall have the right to terminate this Lease as of June
30, 2021
(the “Early Termination Date”) by timely notifying Landlord in writing of its intention to exercise such right at least
six
(6)
months prior to the Early Termination Date (the “Early Termination Notice”)
provided that (i) Landlord receives the Early Termination Notice from Tenant sent via certified or registered mail, return receipt requested or by any national overnight courier service, (ii) no default beyond any applicable notice
and cure periods is occurring on the date Tenant provides the Early Termination Notice or at any time thereafter prior to the Early Termination Date, and
(iii) Tenant surrenders the Reduced Premises to Landlord in the condition as described in Section
7.2
(b) of the Lease. If Tenant timely provides the Early
Termination Notice to Landlord but fails to vacate the Reduced Premises completely and in the condition required by this Lease on or before the Early Termination Date, then, at Landlord’s option (A) Tenant shall be treated as a
holdover tenant subject to the terms and condition of Section
30
of the Lease or (B) Tenant’s right to terminate this Lease pursuant to this Section shall
automatically lapse and be of no further force or effect. Except in the event of a Permitted Transfer as defined in Section 12.8 of the Lease, Tenant’s right to terminate this Lease pursuant to this Section is personal to Tenant and
may not be exercised by any transferee or assignee of Tenant it being understood that Tenant’s right under this Section shall immediately lapse and be of no further force or effect upon any assignment of this Lease or sublease of any
portion of the Reduced Premises.
|
|
7. |
Notwithstanding anything to the contrary contained in the Lease, the following set forth herein below shall
control:
|
|
8. |
All sums payable by Tenant shall be paid to Landlord in legal tender of the United States, at the address
to which notices to Landlord are to be given or to such other party or such other address as Landlord may designate in writing. Upon receipt of written notice from Landlord, Tenant shall be obligated to make all subsequent payments
of Base Rent and additional rent by automatic electronic funds transfer or an automated clearing house (ACH) to an account specified by Landlord. Tenant shall immediately notify Landlord of any changes to Tenant’s bank account
that would alter the electronic funds transfer or ACH process. Landlord’s acceptance of rent after it shall have become due and payable shall not excuse a delay upon subsequent occasions nor constitute a waiver of rights,
notwithstanding any endorsement or restriction that Tenant may include with such payment.
|
|
9. |
Landlord and Tenant recognize CBRE, Inc., as Tenant’s agent, as the sole broker (“Broker’’) with
respect to this Sixth Amendment. Landlord agrees to be responsible for the payment of any leasing commissions owed to the Broker in accordance with the terms of a separate commission agreement entered into between Landlord and
Broker. Landlord and Tenant each represent and warrant to the other that no other broker has been employed in carrying on any negotiations relating to this Sixth Amendment and shall each indemnify and hold harmless the other
from any claim for brokerage or other commission arising from or out of any breach of the foregoing representation and warranty.
|
|
10. |
Tenant shall be liable to all of the terms, covenants and conditions of the Lease and this Sixth Amendment.
|
|
11. |
All other terms, covenants and conditions of the Lease shall remain the same.
|
Landlord:
|
Shady Grove Plaza Rockville, Md. LLC
|
By
/s/ William Sondericker
|
|
William Sondericker, Vice President
|
|
Date:
March 19,2019
|
Tenant:
|
Rexahn Pharmaceuticals, Inc.
|
By:
/s/Douglas J. Swirsky
|
|
Name:
Douglas J. Swirsky
|
|
Title:
President and CEO
|
|
Date:
March 18, 2019
|
STATE OF Maryland | ) |
COUNTY OF Montgomery ) ss.: |
/s/ Sherri N. Spence
|
|
Notary Public
|
|
(Remainder of page intentionally left blank)
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Rexahn Pharmaceuticals, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: May 10, 2019
|
By:
|
/s/ Douglas J. Swirsky
|
|
Douglas J. Swirsky,
|
|||
Chief Executive Officer and President
|
* |
This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of
Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.
|