Delaware
|
11-3516358
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
15245 Shady Grove Road, Suite 455
Rockville, MD
|
20850
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
Common Stock, $.0001 par value
|
REXN
|
Nasdaq Capital Market
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☐ | |
Non-accelerated filer
|
☑ |
Smaller reporting company
|
☑ | |
Emerging growth company
|
☐ |
Page
|
|||
PART I
|
1
|
||
Item 1
|
1
|
||
1)
|
Condensed Balance Sheet as of September 30, 2020 and December 31, 2019 |
1
|
|
2)
|
Condensed Statement of Operations for the three and nine months ended September 30, 2020 and 2019 |
2
|
|
3)
|
Condensed Statement of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 |
3
|
|
4)
|
Condensed Statement of Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019 |
4
|
|
5)
|
Condensed Statement of Cash Flows for the nine months ended September 30, 2020 and 2019 |
6
|
|
6)
|
Notes to the Condensed Financial Statements |
7
|
|
Item 2
|
25
|
||
Item 3
|
39
|
||
Item 4
|
39
|
||
PART II
|
40
|
||
Item 1
|
40
|
||
Item 1A
|
40
|
||
Item 6
|
47
|
||
48
|
Item 1. |
September 30,
2020
|
December 31, 2019
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
8,079,511
|
$
|
9,219,547
|
||||
Marketable securities
|
-
|
2,997,220
|
||||||
Prepaid expenses and other current assets
|
573,635
|
447,206
|
||||||
Total Current Assets
|
8,653,146
|
12,663,973
|
||||||
Security Deposits
|
25,681
|
25,681
|
||||||
Operating Lease Right-of-Use Assets
|
106,126
|
203,348
|
||||||
Equipment, Net
|
48,757
|
75,770
|
||||||
Total Assets
|
$
|
8,833,710
|
$
|
12,968,772
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
2,258,481
|
$
|
1,265,731
|
||||
Deferred revenue
|
650,000
|
1,500,000
|
||||||
Operating lease liabilities, current
|
100,397
|
139,765
|
||||||
Total Current Liabilities
|
3,008,878
|
2,905,496
|
||||||
Operating Lease Liabilities, non-current
|
-
|
63,605
|
||||||
Warrant Liabilities
|
110,781
|
41,717
|
||||||
Total Liabilities
|
3,119,659
|
3,010,818
|
||||||
Commitments and Contingencies (Note 12)
|
||||||||
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, 4,483,198 and 4,019,141 issued and outstanding
|
448
|
402
|
||||||
Additional paid-in capital
|
173,537,703
|
173,278,144
|
||||||
Accumulated other comprehensive income
|
-
|
2,084
|
||||||
Accumulated deficit
|
(167,824,100
|
)
|
(163,322,676
|
)
|
||||
Total Stockholders’ Equity
|
5,714,051
|
9,957,954
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
8,833,710
|
$
|
12,968,772
|
For the Three Months
Ended September 30,
|
For the Nine Months
Ended September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
1,150,000
|
$
|
-
|
||||||||
Expenses:
|
||||||||||||||||
General and administrative
|
1,356,313
|
1,149,206
|
4,729,211
|
4,184,744
|
||||||||||||
Research and development
|
149,594
|
1,131,418
|
837,991
|
5,022,049
|
||||||||||||
Total Expenses
|
1,505,907
|
2,280,624
|
5,567,202
|
9,206,793
|
||||||||||||
Loss from Operations
|
(1,505,907
|
)
|
(2,280,624
|
)
|
(4,417,202
|
)
|
(9,206,793
|
)
|
||||||||
Other Income
|
||||||||||||||||
Interest income
|
1,774
|
78,534
|
42,235
|
256,569
|
||||||||||||
Unrealized gain (loss) on fair value of warrants
|
100,637
|
242,860
|
(126,457
|
)
|
2,183,714
|
|||||||||||
Total Other Income (Loss)
|
102,411
|
321,394
|
(84,222
|
)
|
2,440,283
|
|||||||||||
Net Loss Before Provision for Income Taxes
|
(1,403,496
|
)
|
(1,959,230
|
)
|
(4,501,424
|
)
|
(6,766,510
|
)
|
||||||||
Provision for Income Taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Net Loss
|
$
|
(1,403,496
|
)
|
$
|
(1,959,230
|
)
|
$
|
(4,501,424
|
)
|
$
|
(6,766,510
|
)
|
||||
Net loss per share, basic and diluted
|
$
|
(0.33
|
)
|
$
|
(0.49
|
)
|
$
|
(1.10
|
)
|
$
|
(1.72
|
)
|
||||
|
||||||||||||||||
Weighted average number of shares outstanding, basic and diluted
|
4,239,751
|
4,019,141
|
4,093,214
|
3,940,288
|
For the Three Months
Ended September 30,
|
For the Nine Months
Ended September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Net Loss
|
$
|
(1,403,496
|
)
|
$
|
(1,959,230
|
)
|
$
|
(4,501,424
|
)
|
$
|
(6,766,510
|
)
|
||||
Unrealized gain (loss) on available-for-sale securities
|
-
|
669
|
(2,084
|
)
|
25,684
|
|||||||||||
Comprehensive Loss
|
$
|
(1,403,496
|
)
|
$
|
(1,958,561
|
)
|
$
|
(4,503,508
|
)
|
$
|
(6,740,826
|
)
|
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Balances at July 1, 2020
|
4,019,141
|
$
|
402
|
$
|
173,423,515
|
$
|
(166,420,604
|
)
|
$
|
-
|
$
|
7,003,313
|
||||||||||||
Stock-based compensation
|
-
|
-
|
56,841
|
-
|
-
|
56,841
|
||||||||||||||||||
Stock issued from warrant exchanges
|
464,057
|
46
|
57,347
|
-
|
-
|
57,393
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(1,403,496
|
)
|
-
|
(1,403,496
|
)
|
||||||||||||||||
Balances at September 30, 2020
|
4,483,198
|
$
|
448
|
$
|
173,537,703
|
$
|
(167,824,100
|
)
|
$
|
-
|
$
|
5,714,051
|
||||||||||||
Balances at July 1, 2019
|
4,019,141
|
$
|
402
|
$
|
173,110,047
|
$
|
(159,494,522
|
)
|
$
|
7,179
|
$
|
13,623,106
|
||||||||||||
Stock-based compensation
|
-
|
-
|
90,695
|
-
|
-
|
90,695
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(1,959,230
|
)
|
-
|
(1,959,230
|
)
|
||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
669
|
669
|
||||||||||||||||||
Balances at September 30, 2019
|
4,019,141
|
$
|
402
|
$
|
173,200,742
|
$
|
(161,453,752
|
)
|
$
|
7,848
|
$
|
11,755,240
|
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Balances at January 1, 2020
|
4,019,141
|
$
|
402
|
$
|
173,278,144
|
$
|
(163,322,676
|
)
|
$
|
2,084
|
$
|
9,957,954
|
||||||||||||
Stock-based compensation
|
-
|
-
|
202,212
|
-
|
-
|
202,212
|
||||||||||||||||||
Stock issued from warrant exchanges
|
464,057
|
46
|
57,347
|
-
|
-
|
57,393
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(4,501,424
|
)
|
-
|
(4,501,424
|
)
|
||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(2,084
|
)
|
(2,084
|
)
|
||||||||||||||||
Balances at September 30, 2020
|
4,483,198
|
$
|
448
|
$
|
173,537,703
|
$
|
(167,824,100
|
)
|
$
|
-
|
$
|
5,714,051
|
||||||||||||
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
|
-
|
-
|
379,348
|
-
|
-
|
379,348
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(6,766,510
|
)
|
-
|
(6,766,510
|
)
|
||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
25,684
|
25,684
|
||||||||||||||||||
Balances at September 30, 2019
|
4,019,141
|
$
|
402
|
$
|
173,200,742
|
$
|
(161,453,752
|
)
|
$
|
7,848
|
$
|
11,755,240
|
For the Nine Months Ended
September 30,
|
||||||||
2020
|
2019
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(4,501,424
|
)
|
$
|
(6,766,510
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
27,013
|
31,460
|
||||||
Loss on sale of equipment
|
-
|
9,594
|
||||||
Amortization of premiums and discounts on marketable securities, net
|
(4,864
|
)
|
(86,770
|
)
|
||||
Stock-based compensation
|
202,212
|
379,348
|
||||||
Unrealized loss (gain) on fair value of warrants
|
126,457
|
(2,183,714
|
)
|
|||||
Changes in assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
(126,429
|
)
|
333,132
|
|||||
Accounts payable and accrued expenses
|
992,750
|
(1,786,335
|
)
|
|||||
Deferred revenue
|
(850,000
|
)
|
1,500,000
|
|||||
Other, net
|
(5,751
|
)
|
5,215
|
|||||
Net Cash Used in Operating Activities
|
(4,140,036
|
)
|
(8,564,580
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Purchase of equipment
|
-
|
(19,383
|
)
|
|||||
Sale of equipment
|
-
|
5,500
|
||||||
Purchase of marketable securities
|
-
|
(8,887,566
|
)
|
|||||
Redemption of marketable securities
|
3,000,000
|
9,000,000
|
||||||
Net Cash Provided by Investing Activities
|
3,000,000
|
98,551
|
||||||
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
|
(1,140,036
|
)
|
(812,201
|
)
|
||||
Cash and Cash Equivalents - beginning of period
|
9,219,547
|
8,744,301
|
||||||
Cash and Cash Equivalents - end of period
|
$
|
8,079,511
|
$
|
7,932,100
|
||||
Supplemental Cash Flow Information
|
||||||||
Operating cash flows paid for amounts included in the measurement of lease liabilities
|
$
|
116,061
|
$
|
158,962
|
||||
Non-cash financing and investing activities:
|
||||||||
Warrants issued
|
$
|
-
|
$
|
4,735,913
|
||||
Operating lease right-of-use assets obtained in exchange for lease obligations
|
$
|
-
|
$
|
380,935
|
||||
Warrant liability extinguishment from exchange of warrants
|
$
|
57,393
|
$
|
-
|
1. |
Operations and Organization
|
2.
|
Merger Agreement and Pre-Merger Financing
|
3. |
Marketable Securities
|
December 31, 2019
|
||||||||||||||||
Cost
|
Gross
Unrealized
|
Gross
Unrealized
|
Fair
|
|||||||||||||
Basis
|
Gains
|
Losses
|
Value
|
|||||||||||||
Commercial Paper
|
$
|
1,996,216
|
$
|
1,184
|
$
|
-
|
$
|
1,997,400
|
||||||||
Corporate Bonds
|
998,920
|
900
|
-
|
999,820
|
||||||||||||
Total Marketable Securities
|
$
|
2,995,136
|
$
|
2,084
|
$
|
-
|
$
|
2,997,220
|
4. |
Equipment, Net
|
September 30,
2020
|
December 31,
2019
|
|||||||
Furniture and fixtures
|
$
|
67,650
|
$
|
67,650
|
||||
Office and computer equipment
|
163,440
|
163,440
|
||||||
Leasehold improvements
|
116,403
|
116,403
|
||||||
Total equipment
|
347,493
|
347,493
|
||||||
Less: Accumulated depreciation and amortization
|
(298,736
|
)
|
(271,723
|
)
|
||||
Net carrying amount
|
$
|
48,757
|
$
|
75,770
|
5. |
Accounts Payable and Accrued Expenses
|
September 30,
2020
|
December 31,
2019
|
|||||||
Trade payables
|
$
|
1,844,983
|
$
|
488,285
|
||||
Accrued expenses
|
287,300
|
471,700
|
||||||
Accrued research and development contract costs
|
-
|
221,170
|
||||||
Payroll liabilities
|
126,198
|
84,576
|
||||||
$
|
2,258,481
|
$
|
1,265,731
|
6. |
License Agreements
|
7. |
Leases
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Operating lease cost
|
$
|
36,770
|
$
|
36,770
|
$
|
110,311
|
$
|
164,178
|
||||||||
Variable lease cost
|
3,524
|
2,856
|
15,327
|
25,527
|
||||||||||||
Total Lease Cost
|
$
|
40,294
|
$
|
39,626
|
$
|
125,638
|
$
|
189,705
|
Year Ending December 31:
|
||||
2020 (excluding the nine months ended September 30, 2020)
|
$
|
39,219
|
||
2021
|
65,364
|
|||
Minimum lease payments
|
104,583
|
|||
Less: Imputed interest
|
(4,186
|
)
|
||
Present value of minimum lease payments
|
$
|
100,397
|
8. |
Net Loss per Common Share
|
9. |
Stock-Based Compensation
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Statement of operations line item:
|
||||||||||||||||
General and administrative
|
$
|
54,501
|
$
|
84,378
|
$
|
193,272
|
$
|
320,776
|
||||||||
Research and development
|
2,340
|
6,317
|
8,940
|
58,572
|
||||||||||||
Total
|
$
|
56,841
|
$
|
90,695
|
$
|
202,212
|
$
|
379,348
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted Average
Remaining
Contractual Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding, January 1, 2020
|
204,574
|
$
|
35.60
|
7.3 years
|
$
|
-
|
|||||||
Granted
|
-
|
$
|
-
|
||||||||||
Exercised
|
-
|
$
|
-
|
||||||||||
Expired
|
(3,162
|
)
|
$
|
155.69
|
|||||||||
Cancelled
|
(55,354
|
)
|
$
|
59.54
|
|||||||||
Outstanding, September 30, 2020
|
146,058
|
$
|
23.92
|
7.4 years
|
$
|
-
|
|||||||
Exercisable, September 30, 2020
|
102,939
|
$
|
27.98
|
7.1 years
|
$
|
-
|
2020
|
||||||||
Number of
Options
|
Weighted Average Fair
Value at Grant Date
|
|||||||
Unvested at January 1, 2020
|
81,311
|
$
|
7.90
|
|||||
Granted
|
-
|
$
|
-
|
|||||
Vested
|
(37,398
|
)
|
$
|
6.20
|
||||
Cancelled
|
(794
|
)
|
$
|
9.12
|
||||
Unvested at September 30, 2020
|
43,119
|
$
|
9.39
|
10. |
Warrants
|
Number of Warrants:
|
|||||||||||||
Warrant Issuance
|
September 30,
2020
|
December 31,
2019
|
Exercise Price
|
Expiration
Date
|
|||||||||
Liability-classified Warrants
|
|||||||||||||
November 2015 Investors
|
-
|
104,168
|
$
|
63.60
|
May 2021
|
||||||||
November 2015 Placement Agent
|
279
|
279
|
$
|
63.60
|
Nov. 2020
|
||||||||
March 2016 Investors
|
50,651
|
50,651
|
$
|
50.40
|
Sept. 2021
|
||||||||
September 2016 Investors
|
4,584
|
67,084
|
$
|
36.00
|
Mar. 2022
|
||||||||
June 2017 Investors
|
82,072
|
126,264
|
$
|
48.00
|
Dec. 2022
|
||||||||
June 2017 Placement Agent
|
15,153
|
15,153
|
$
|
49.50
|
June 2022
|
||||||||
October 2017 Investors
|
108,846
|
136,058
|
$
|
34.20
|
Apr. 2023
|
||||||||
October 2017 Placement Agent
|
16,327
|
16,327
|
$
|
36.72
|
Oct. 2022
|
||||||||
Total liability classified warrants
|
277,912
|
515,984
|
|||||||||||
Equity-classified Warrants
|
|||||||||||||
October 2018 Investors
|
160,257
|
480,771
|
$
|
20.04
|
Apr. 2024
|
||||||||
October 2018 Placement Agent
|
28,848
|
28,848
|
$
|
19.50
|
Oct. 2023
|
||||||||
January 2019 Investors
|
458,715
|
895,886
|
$
|
9.60
|
Jan. 2024
|
||||||||
Total equity-classified warrants
|
647,820
|
1,405,505
|
|||||||||||
Total outstanding warrants
|
925,732
|
1,921,489
|
Number of Warrants
|
||||||||||||||||
Liability-
classified
|
Equity-
classified
|
Total
|
|
Weighted
average
exercise price
|
||||||||||||
Balance, January 1, 2020
|
515,984
|
1,405,505
|
1,921,489
|
$
|
22.10
|
|||||||||||
Exchanged during the period
|
(238,072
|
)
|
(757,685
|
)
|
(995,757
|
)
|
$
|
(22.64
|
)
|
|||||||
Balances, September 30, 2020
|
277,912
|
647,820
|
925,732
|
$
|
21.52
|
Fair Value as of:
|
||||||||
Warrant Issuance:
|
September 30, 2020
|
December 31, 2019
|
||||||
November 2015 Investors
|
$
|
-
|
$
|
55
|
||||
November 2015 Placement Agent
|
-
|
-
|
||||||
March 2016 Investor
|
3,026
|
439
|
||||||
September 2016 Investors
|
1,093
|
3,196
|
||||||
June 2017 Investors
|
32,218
|
11,736
|
||||||
June 2017 Placement Agent
|
3,573
|
845
|
||||||
October 2017 Investors
|
64,196
|
23,772
|
||||||
October 2017 Placement Agent
|
6,675
|
1,674
|
||||||
Total:
|
$
|
110,781
|
$
|
41,717
|
September 30, 2020
|
December 31, 2019
|
|||||||
Trading market prices
|
$
|
2.08
|
$
|
1.91
|
||||
Fundamental transaction volatility
|
134
|
%
|
102
|
%
|
||||
Dividend
|
-
|
-
|
||||||
Fundamental transaction risk-free rate
|
0.17-0.21
|
%
|
1.57-1.72
|
%
|
||||
Equivalent volatility
|
77-89
|
%
|
85-94
|
%
|
||||
Equivalent risk-free rate
|
0.10-0.12
|
%
|
1.57-1.59
|
%
|
||||
Fundamental transaction likelihood
|
90
|
%
|
50
|
%
|
||||
Fundamental transaction timing
|
November 2020
|
April 2020
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
November 2015 Investors
|
$
|
2,262
|
$
|
9,560
|
$
|
(969
|
)
|
$
|
233,713
|
|||||||
November 2015 Placement Agent
|
-
|
-
|
-
|
435
|
||||||||||||
March 2016 Investors
|
3,336
|
6,286
|
(2,587
|
)
|
153,959
|
|||||||||||
September 2016 Investors
|
8,246
|
28,382
|
(17,323
|
)
|
318,464
|
|||||||||||
June 2017 Investors
|
29,330
|
69,660
|
(42,397
|
)
|
587,610
|
|||||||||||
June 2017 Placement Agent
|
2,775
|
5,804
|
(2,728
|
)
|
62,268
|
|||||||||||
October 2017 Investors
|
50,075
|
112,729
|
(55,452
|
)
|
744,355
|
|||||||||||
October 2017 Placement Agent
|
4,613
|
10,439
|
(5,001
|
)
|
82,910
|
|||||||||||
Total:
|
$
|
100,637
|
$
|
242,860
|
$
|
(126,457
|
)
|
$
|
2,183,714
|
11.
|
Income Taxes
|
September 30,
|
December 31,
|
|||||||
2020
|
2019
|
|||||||
Net Operating Loss Carryforwards
|
$
|
45,321,000
|
$
|
43,844,000
|
||||
Stock Compensation Expense
|
556,000
|
1,191,000
|
||||||
Book Tax Differences on Assets and Liabilities
|
238,000
|
464,000
|
||||||
Valuation Allowance
|
(46,115,000
|
)
|
(45,499,000
|
)
|
||||
Net Deferred Tax Assets
|
$
|
-
|
$
|
-
|
12. |
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 September 30, 2020, the total estimated cost to complete these agreements was approximately $160,000. 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 September 30, 2020, 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 $7,840 and $16,355 for the three months ended September 30, 2020 and 2019, respectively, and $28,854 and $62,740 for the nine months ended
September 30, 2020 and 2019, respectively.
|
|
d) |
On February 5, 2018, the Company and Next BT terminated a research collaboration agreement between the Company and Rexgene Biotech Co., Ltd, a predecessor in interest to Next BT. 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. On June 18, 2018, the Company
reinstated the exclusive license to RX-0201 in Asia, which had no effect on the potential royalty payments granted to Next BT in February 2018. As of September 30, 2020, the Company has not made any royalty payments to Next BT.
|
|
e) |
Legal Proceedings
|
13. |
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;
|
|
Level 3 Inputs
|
—
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
Warrant Liabilities
|
||||
Balance at January 1, 2020
|
$
|
41,717
|
||
Unrealized losses, net
|
126,457
|
|||
Liability extinguished in warrant exchange
|
(57,393
|
)
|
||
Balance at September 30, 2020
|
$
|
110,781
|
14. |
Subsequent Events
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
• |
uncertainties about the Merger (as defined below), including but not limited to our ability to close the Merger, our ability to obtain adequate liquidity to fund our operations,
meet our obligations, and continue as a going concern if the Merger is not completed, and that the Merger may not enhance shareholder value and may create a distraction or uncertainty that may
adversely affect our operating results, business, or investor perceptions;
|
|
• |
our ability to control and correctly estimate our operating expenses, our estimated warrant liabilities and our expenses associated with the Merger, including litigation expenses, which could
result in us having significantly less net cash than currently anticipated, which may prevent us from consummating the Merger or result in our stockholders owning significantly less of the combined company than currently estimated;
|
|
• |
conditions to payment under the contingent value rights (“CVRs”) may not be met and the
CVRs may never deliver any value to our stockholders;
|
|
• |
uncertainties about the paths of our programs and our ability to evaluate and identify a path forward for those programs, particularly given the constraints we have as a small company with limited financial,
personnel and other operating resources;
|
|
• |
the impact of the COVID-19 pandemic on the economy, our industry, and our financial condition and results of operations, as well as our ability to consummate the Merger;
|
|
• |
our understandings and beliefs regarding the role of certain biological mechanisms and processes in cancer;
|
|
• |
our product candidates being in early stages of development, including in preclinical development;
|
|
• |
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; and
|
|
• |
other risks and uncertainties, including those set forth herein and in the 2019 Form 10-K 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. RX-3117 has been the subject of 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. The trial reached its target enrollment in February 2019. As of July 24, 2019, an
overall response rate of 23% had been observed in 40 patients that had at least one scan on treatment. Preliminary and unaudited data indicates that the median progression free survival for patients in the study is approximately 5.4
months. Complete data from the trial is expected to be available in 2020. We do not plan to conduct or sponsor any additional trials with RX-3117.
|
|
• |
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. In August 2018, we entered into a Clinical Trial Collaboration and
Supply Agreement (the “Collaboration Agreement”) 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 triple negative breast cancer (“TNBC”). On April 7, 2020, we notified Merck that we were terminating the Collaboration Agreement, effective immediately, in
connection with our determination to discontinue development of RX-5902 for the treatment of TNBC. We do not plan to conduct or sponsor any additional trials with RX-5902.
|
|
• |
RX-0301 is a potential best-in-class, potent inhibitor of the synthesis 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 currently in preclinical development by Zhejiang HaiChang Biotechnology Co., Ltd. (“HaiChang”) as a nano-liposomal formulation of RX-0201 (Archexin®) using
HaiChang’s proprietary QTsome™ technology. On February 8, 2020, we entered into an exclusive license agreement with HaiChang (the “HaiChang License Agreement”) pursuant to which we granted HaiChang an exclusive (even as to us),
royalty-bearing, sublicensable worldwide license to research, develop and commercialize RX-0201 and RX-0301. The HaiChang License Agreement supersedes a prior agreement with HaiChang to develop RX-0301 under which HaiChang was to conduct
certain preclinical and clinical activities through completion of a Phase 2a proof-of-concept clinical trial in hepatocellular carcinoma.
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Clinical Candidates:
|
||||||||||||||||
RX-3117
|
$
|
36,400
|
$
|
609,800
|
$
|
449,300
|
$
|
2,746,200
|
||||||||
RX-5902
|
3,100
|
245,100
|
14,800
|
775,300
|
||||||||||||
RX-0201
|
-
|
-
|
1,800
|
171,100
|
||||||||||||
Preclinical, Personnel and Overhead
|
110,094
|
276,518
|
372,091
|
1,329,449
|
||||||||||||
Total Research and Development Expenses
|
$
|
149,594
|
$
|
1,131,418
|
$
|
837,991
|
$
|
5,022,049
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors.
|
|
• |
our ability to consummate the Merger;
|
|
• |
the level of development and commercialization efforts of BioSense and HaiChang and the receipt of milestone and other payments, if any, from such parties under their respective agreements with us;
|
|
• |
the scope, rate of progress and cost of our preclinical and clinical trials for any product candidate in our future pipeline and results of future clinical trials;
|
|
• |
the cost and timing of regulatory filings and approvals for any product candidates that successfully complete clinical trials;
|
|
• |
the timing and nature of any additional strategic transactions that we undertake, including potential partnerships, if the Merger is not consummated;
|
|
• |
the effect of competing technological and market developments;
|
|
• |
the cost incurred in responding to actions by activist stockholders; and
|
|
• |
the cost of filing, prosecuting, defending and enforcing our intellectual property rights.
|
|
• |
general business, economic or political conditions affecting the industries in which we or Ocuphire, as applicable, operate;
|
|
• |
any natural disaster or any acts of war, armed hostilities or terrorism;
|
|
• |
changes in financial, banking or securities markets;
|
|
• |
any change in our stock price or trading volume excluding any underlying effect that may have caused such change, unless such effect is otherwise exempt from causing a material adverse effect under the Merger
Agreement;
|
|
• |
any change in, or any compliance with or action taken for the purpose of complying with, applicable laws or U.S. GAAP, or interpretations thereof;
|
|
• |
continued losses from operations or decreases in our cash balances; and
|
|
• |
the taking of any action, or failure to take action, by us or Ocuphire required to comply with the terms of the Merger Agreement.
|
|
• |
investors react negatively to the prospects of the combined company’s product candidates, business and financial condition following the Merger;
|
|
• |
the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or
|
|
• |
the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.
|
|
• |
the attention of our remaining management and employees may be directed toward the completion of the Merger and related matters and may be diverted from our day-to-day business operations; and
|
|
• |
third parties may seek to terminate or renegotiate their relationships with us as a result of the Merger, whether pursuant to the terms of their existing agreements with us or otherwise.
|
Item 6. |
Exhibits.
|
Exhibit No.
|
Description
|
Agreement and Plan of Merger, dated as of June 17, 2020, by and among the Company, Merger Sub and Ocuphire, filed as Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2020 is incorporated herein by
reference.
|
|
First Amendment to Agreement and Plan of Merger and Reorganization, dated as of June 29, 2020, by and among the Company, Merger Sub and Ocuphire, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 1, 2020 is
incorporated herein by reference.
|
|
Warrant Exchange Agreement, dated July 31, 2020, by and between the Company and Armistice Capital Master Fund Ltd, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 3, 2020 is incorporated herein by
reference.
|
|
Warrant Exchange Agreement, dated September 1, 2020, by and between the Company and Anson Investments Master Fund LP, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 2, 2020 is incorporated by
reference.
|
|
Warrant Exchange Agreement, dated September 10, 2020, by and between the Company and Empery Asset Master, Ltd., filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 11, 2020 is incorporated by reference.
|
|
Warrant Exchange Agreement, dated September 10, 2020, by and between the Company and Empery Tax Efficient, LP, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 11, 2020 is incorporated by reference.
|
|
Warrant Exchange Agreement, dated September 10, 2020, by and between the Company and Empery Tax Efficient II, LP, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 11, 2020 is incorporated by
reference.
|
|
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.
|
* |
Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
|
REXAHN PHARMACEUTICALS, INC.
|
||
(Registrant)
|
||
By:
|
/s/ Douglas J. Swirsky
|
|
Date: October 29, 2020
|
Douglas J. Swirsky
|
|
Chief Executive Officer and President
(principal executive, financial and accounting officer)
|
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 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: October 29, 2020
|
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.
|
|
A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.
|